The “Suniva effect” is expanding.
Developers first noticed the phenomenon earlier this year, when competitors started hoarding modules at current prices to head off possibly steep price increases as the result of any tariffs that could be imposed as a result of the Suniva/SolarWorld trade case that had yet to be decided by the U.S. International Trade Commission (USITC) at that time. It’s also affecting the prices solar companies are offering to utilities when they requests bids for new projects.
Now that the initial finding of injury has been made and the case has entered the penalty phase through which tariff levels will be determined (the USITC is expected to announce its recommendations on October 31), utilities are following developers’ leads and hedging against potential price spikes. As Tariff Day rapidly approaches, Dominion Virginia is one of the first to add an additional calculation for solar bidders to their proposal requests.
It’s no surprise Dominion is requiring power purchase agreement (PPA) calculations that include potential tariff increases. Without price stability, it would be nearly impossible to sign agreements for developments past 2017. The additional calculation gives utilities a way of adding some stability to their solar contracts in a time when instability is the rule rather than the exception.
The utility has requested proposals for new solar and onshore wind facilities between 10 to 150 MW-AC that requires solar bidders to include an additional price per megawatt-hour (MWh) for the first year, calculated on every 10 cents of tariff imposed, if any. The solicitation also includes a provision that allows for a 2.5% “escalation factor” on those prices for every year after the first.
Dominion’s request includes no breakdown of solar vs. wind, suggesting the two renewable energy sources may compete against each other in the approval process. Any projects must be located in Virginia, interconnect to Dominion’s grid and commit to being operational in either 2019 or 2020.
Interested parties must submit a “notice of intent to bid” and confidentiality agreements due October 27. Final proposals are due on December 1.