Get Big Pivots

G&T attributes ownership plan to changes wrought by Inflation Reduction Act

 

by Allen Best

Own or rent? Most people, if there is a choice, will want to own their homes. For one reason, there are tax advantages.

With parallel logic, Tri-State Generation and Transmission has now purchased two solar projects in western Colorado that are projected to begin delivering electricity in late 2025. At the same time, it is hewing to the old approach of power-purchase agreements for three other solar projects, the equivalent of paying rent.

First, the two purchased projects: The 110-megawatt Dolores Canyon Solar will be in southwest Colorado, between Cortez and Dove Creek.

The second project, the 145-megawatt Axial Basin Solar, will be in northwest Colorado, on land near the Colowyo Mine. The mine delivers coal to the Craig Generating Station, which is to close later this decade. Boulder-based JUWI was the developer of both projects.

These will be the first two renewable projects owned by Tri-State.

The trigger for this were provisions in the Inflation Reduction Act, the enormously important but extremely wonky bill passed by Congress in August 2022. The law allows Tri-State and other not-for-profit electric cooperatives to receive direct payment of federal renewable energy tax credits.

Before, Tri-State and other cooperatives could not directly benefit from federal renewable energy tax incentives. Those incentives were reserved for for-profit investor-owned utilities such as Xcel Energy and independent power producers.

“We didn’t have a tax appetite, so we couldn’t take the tax credit. That means we had to have a tax-equity partner to build a solar farm or wind farm,” explained Duane Highley, the chief executive, in a webinar several days before the announcement.

“When you have a tax equity partner, they don’t do that for free. They want the tax benefit, but they’re going to keep a portion of it, maybe a third, maybe a fourth.”

When the solar projects were first announced in 2020, Tri-State had explained that the Axial Basin project was chosen in part because it would help provide tax base and jobs for Moffat County once the coal plant was closed. The closure of the last unit of Craig by 2030 had been announced earlier that year. That retirement date has been moved up to 2028.

Even as it became a solar owner outright on these two projects, Tri-State is adding power from three other projects in 2024 through the conventional power-purchase agreements. Spanish Peaks and Spanish Peaks II are both in southern Colorado. The third is Escalante Solar, located in New Mexico at the site of the coal plant that Tri-State operated there until 2020. (See Escalante solar panels in top photo).

Why not try to buy those projects, too? “We want to have a balance between owned projects and PPAs, which helps hedge and manage risks. We will gain invaluable experience owning and developing these two projects,” said Lee Boughey, Tri-State spokesman.

By the end of 2025, Tri-State will have 680 megawatts of solar capacity located at eight facilities and will have surpassed 50% of its generating base from renewables.

Allen Best
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