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The Gigafactory’s new neighbor: Gigawatt

February 8th, 2018 · No Comments

Gigawatt Nevada
Switch’s vision Greens the Desert in a Different Way

Telecommunications firm Switch just announced plans for the largest U.S. solar installation: a gigawatt solar farm in Nevada. Not only will, with this attention capturing number, this Gigawatt installation be twice the largest existing US solar facility, the Switch Gigawatt project will deliver electricity to consumers at very low prices:

Customers will pay $0.049/kWh, an average all-in rate the company says includes NV Energy’s distribution charges.


(Not surprisingly, this project is pricing well below what EIA projects for solar pricing for years to come.)

Let’s recognize that the US Southwest should be one of the Saudi Arabia’s of solar. Along with locations like the Chilean desert, the extremely good solar conditions beg for solar installation. (As well, these desert areas are also challenged in water resources and, unlike fossil fuel systems, solar pv plants require minimal water.)  Just prior to learning of this project, I was discussing with someone that a key reason for Musk to locate the Gigafactory where it is are almost certainly these solar resources: that the battery factory would have access to essentially unlimited solar resources with ever decreasing electricity prices.

“The foundation of Gigawatt Nevada is that Nevada should harness the sun the same way Alaska harnesses its oil to significantly benefit all Nevadans,” Rob Roy said.  “Nevada enjoys the best solar window in the nation and so we Nevadans should not only be using solar for ourselves, but exporting it throughout the Western U.S. to create new jobs, tax revenue, economic diversification, and raise energy independence.”

Switch is truly a leader in the industry — driving sustainability in data centers (leading edge efficiency plus 100% sourcing of clean electricity requirements). As to that sustainability, a Greenpeace perspective (from the Switch press release):

“Climate scientists have repeatedly warned that we must move to renewable energy as rapidly as possible, but many monopoly utilities continue to hold us back from making this transition,” said Gary Cook, Senior IT Sector Analyst and Energy Campaigner at Greenpeace.  “Gigawatt 1 shows that when Switch and other leading companies don’t take ‘no’ for an answer, they can work together and kick open the door to large scale sources of renewable energy that are better for the planet, and better for the economy in Nevada.”

Greenpeace awarded Switch all A grades, in its most recent Clicking Clean Report, noting Switch “scored among the highest for any class of company and is the definitive leader among colocation operators for its efforts to transition its data center fleet to renewables as fast as possible through a combination of renewable energy procurement and aggressive advocacy.”[2]

And, Switch is leveraging this for increased profitability and competitive advantage.

Roy is also a leader in the business community in seeing — and pushing forward — how leveraging the Southwest US desert region as the Saudi Arabia of solar will foster new, dynamic economic opportunities.  Switch had already developed a 179MW Nevada solar system to meet its own needs. This gigawatt will go well beyond that, with a range of potential other major firms sourcing clean electrons from this project.

Clean, however, could well be a lesser-included condition for business decision-making when it comes to these electrons.  While the commercial rates are, at this time, publicly unavailable, look at the project’s offer for delivered kilowatt hours to an average retail customer:

The current “dirty” price for electrons: 12 cents per kilowatt hour. Switch has announced that it will offer the electricity at 4.9 cents per kilowatt hour … delivered to your house.  That is nearly a 60% cost savings. Ask yourself a simple question: why would you not choose to save 60% on an otherwise fixed cost? And, by the way, feel better about yourself (due to going clean solar) at the same time?

Even while this project will benefit from soon to be phased out solar benefits, this is an extraordinary next step in the clear reality of plunging solar prices and how clean energy options are pricing out other electricity sources increasingly across the world.

Consider these prices — even with various tax benefits, this project almost certainly is penciled out to produce (at utility-scale) electricity at under 4 and potentially under 3 cents per kilowatt hour.  When Secretary Steve Chu, Obama’s first Secretary of Energy, started the SunShot program, the (seemingly overly-ambitious) goal was for 5 cent per kilowatt hour utility-scale solar by 2020.  The Gigawatt Solar project in Nevada shows how the real world is blowing through that objective.

While Roy and Switch see this project as boosting the Nevada economy, it should also serve as a signpost that economic planning globally should more seriously take into account the Energy (r)Evolution implications of plunging prices of solar, wind, storage, and other related clean/smart energy options.  With the “Shale Revolution”, with dramatically lower natural gas prices with massive new US supplies, this created new market opportunities and enabled energy-intensive industries to move projects into the United States. The Gigawatt project provides another market on the path toward utility scale solar below 1.5 cents per kilowatt hour. With that sort of pricing, industry after industry will start following the sun — fertilizer production (using electrons to crack water), aluminum (and other metals) refining, data centers, and the list is endless.  Cleaner electrons aren’t, anymore, desirable as simply a ‘social good’ but as an outright economic advantage as a less-expensive (and nearly without price fluctuation risk) electricity option.

Regretfully, it seems that the U.S. government’s Energy Information Administration (EIA) doesn’t read press releases as the just-released Annual Energy Outlook 2018 (and, well, essentially every other report they produce) doesn’t give a window for planners (government, business, otherwise) as to the clean energy (r)evolution’s potential impacts on the US (and global) economy).

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Tags: economics · Energy · solar

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