Tri-State Generation and Transmission, the power supplier for Southwest Colorado, announced Wednesday it plans to build solar arrays in the region as part of a larger plan to replace coal-fired power plants in Colorado and New Mexico.
Tri-State announced last week it plans to close the Escalante Station near Prewitt, New Mexico, by the end of 2020 and the Craig Station and Colowyo Mine in northwest Colorado by 2030. The move will eliminate Tri-State’s coal emissions in both states.
To help replace the power produced by those plants, Tri-State plans to build eight new solar and wind projects by 2024, enough to power more than 800,000 homes, Tri-State CEO Duane Highley said. The projects will increase the percentage of renewable power consumed by Tri-State customers from about 33% to 50% by 2024.
The transition is expected to drive lower rates for customers because the price of renewable power has fallen by 85% in 10 years and is cheaper than any form of fossil fuel, he said. He described the savings as a “green-energy dividend” that will also allow Tri-State to pay off its coal-power plants on an accelerated timetable, he said.
Gov. Jared Polis appeared with Highley at the state Capitol during the announcement and lauded Tri-State for its planned renewable energy projects.
“I want to salute their forward-looking leadership,” he said.
Tri-State was facing significant pressure from some of its largest customers, including La Plata Electric Association, to transition to renewable energy, and the threat of co-ops’ departure helped encourage Tri-State to invest in clean energy, Polis said.
The projects planned for Southwest Colorado include a 120-megawatt solar array in La Plata County, which could power about 36,000 homes. In Dolores County, a 110-megawatt array is planned that could power 32,000 homes, according to a news release. Projects are also planned in the communities where coal plants will be shuttered.
LPEA CEO Jessica Matlock said in a news release that Tri-State’s renewable energy plans would help LPEA meet its goal of reducing its carbon footprint by 50% by 2030, but there are many unknowns about Tri-State’s plan, including cost.
“We do not yet know what the costs of its plan will be to our members and what LPEA’s role will be for producing local, renewable energy into the future,” she said in the release.
Tri-State did not alert LPEA to the plan to build a solar project in the county, she said.
Matlock said LPEA would have liked to have worked with Tri-State on the project and contracted with a local solar installer to build it.
Both the La Plata and Dolores county projects are expected to be built in 2023 by Juwi Solar, a company based in Boulder and owned by a German company.
LPEA would like to develop, own and operate renewable energy projects to support local economic development through job creation, construction and operation, she said.
The co-op is seeking an estimate from the Colorado Public Utilities Commission to determine how much a buyout from Tri-State would cost to inform a decision to leave Tri-State and have greater freedom to purchase and develop renewable energy, she said.
However, Highley said Tri-State will need co-ops to invest in their own renewable projects in coming years because the company will need more than double the power production capacity it announced Wednesday to replace its coal-power plants.
The rocky relationship between Tri-State and some of its larger co-ops, such as LPEA, has already triggered some consequences as Tri-State looks to transition away from coal.
S&P Global Ratings lowered Tri-State’s bond rating from an A to an A- in November because some of Tri-State’s larger customers, including LPEA, are threatening to leave.
The loss of large customers would erode Tri-State’s revenue stream and could make it a riskier investment, said David Bodek, a primary credit analyst with S&P.
However, an A- is still a solid bond rating, meaning Tri-State is a low-risk for investors and can be expected to pay its debt, he said.
A lower bond rating can result in higher interest rates when utilities borrow money, which can consequently leave members paying higher bills, he said. Tri-State’s move toward renewables is positive for Tri-State’s bond rating, but S&P will be interested to see how it is received by LPEA and United Power, a co-op in the Denver area, he said.
“I think it’s a fluid situation, and we will be watching to see what La Plata and United decide,” he said.