NV Energy puts new steam into renewables sector

Solar, wind and geothermal energy suppliers, including Ormat Technologies Inc., will soon be submitting their bids to supply NV Energy with 100 megawatts of renewable energy.

The electric utility earlier this month posted the first of three requests for proposals required by a law passed by the 2013 Nevada Legislature. Additional, similar RFPs are scheduled for 2015 and 2016.

The law, best known as Senate Bill 123, calls for the retirement of coal to be partially replaced by 350MW of renewable energy.

“SB 123 is a game changer,” says Bob Sullivan, vice president at Reno-headquartered Ormat.

“It goes further than anywhere else in the West. They’re shutting down coal in California, too, but it’s not tied to renewables.”

The demand comes just in time. Nevada’s renewable portfolio standard, enacted in 1997, has worked. In 2013, NV Energy exceeded its requirement that 18 percent of its retail sales be from renewable energy.

Sullivan says without SB 123, there might not have been demand for additional renewable energy in Nevada until 2018 or 2019.

That’s especially important for geothermal producers such as Ormat, which face increasingly stiff competition from other energy sources. The price of solar panels have been dropping thanks to China’s entrance into the market, says Sullivan. And natural gas prices are still low, making it a preferred baseload source over geothermal, which is needed to backup intermittent sources such as solar and wind.

But Sullivan argues that both solar and wind come with unaccounted for costs and that using natural gas, at least in Nevada, is counterproductive.

“We don’t want to funnel all the money to natural gas, it just goes outside the state,” says Sullivan, because it’s produced outside Nevada. “Geothermal is a great indigenous resource. And it’s a jobs engine.”

Geothermal may be getting some break in California, where the cost of integrating an energy source onto the grid must now be considered when evaluating bids. Sullivan says studies show that it costs anywhere between $3 and $18 per MW to integrate solar.

“Theoretically, it will make geothermal more competitive,” he says. “But there’s already an unfair playing field in terms of tax incentives.”

In Nevada, once the RFPs mandated by SB 123 are fulfilled, there could be a five-year drought in demand for renewables unless the RPS is beefed up. There has been talk of retiring the RPS, saying it has exceeded its goal and outlived its purpose. But Sullivan is confident it will be made more aggressive instead.

The main driver may the kinds of businesses that the state is eagerly trying to recruit here. Apple Inc., for example, is building a solar farm to power its data center east of Reno and Tesla Motors has committed to zero emissions at its giant battery factory planned at the Tahoe Reno Industrial Center.

Ormat is working now to boost its McGinness Hills power plant in Lander County from 30MW to 60MW and will go on line in the first half of 2015 and the company has signed a power purchase agreement with NV Energy.

Sullivan, who estimates there is about 1,500 MW of untapped geothermal resources in Nevada, says Ormat will likely talk next year about a few additional projects it is working on now.

“We like to be quiet, but we are exploring in Oregon and California and doing a lot in Nevada,” says Sullivan. “It’s driven by the market. If we get a power purchase agreement, we’ll develop.”