BILLINGS, Mont. — Montana utility regulators have approved more favorable contract terms for a proposed solar farm west of Billings. But developers still aren’t sure the numbers will work out to sell the power to NorthWestern Energy.
The Public Service Commission on Thursday approved a 15-year contract for MTSUN’s proposed $110 million, three-quarter square mile (2 square kilometer) solar farm. It could sell electricity for about $28 or $37 per megawatt hour, depending on demand.
MTSUN appealed after the commission approved a 10-year contract with rates at $20 per megawatt hour.
States must set price and contract lengths for renewable energy projects under a federal law that encourages such projects. The commission had previously granted 25-year contracts. Regulators set 10-year contract limits for utilities and independent power developers, as well.
MTSUN wants to sell the electricity to NorthWestern Energy, which also appealed the commission’s decision to limit contracts to 10 years. Both said it would hurt investment in power projects in the state. Members of the commission had argued the 25-year contracts could lock ratepayers into paying above-market rates for years.
MTSUN, NorthWestern Energy and the commission’s staff had all recommended contracts last at least 20 years.
“A 15-year contract provides sufficient protection for the ratepayer, while giving investors the certainty that they need to move forward with energy projects in Montana,” Commissioner Bob Lake, R-Hamilton, said in a statement Thursday. The commission also affirmed that the 15-year contract limit applies to all new power plants, regardless of ownership.
Developer Mark Klein said Friday he’s happy that the commission agreed to a longer contract, but he’s not sure the rate is high enough. He said the company still plans to build the solar project and may have to look at other markets in the state and the northwestern U.S.
MTSUN initially proposed a 25-year contract to sell the power to NorthWestern Energy for $64 a megawatt hour. The company rejected NorthWestern’s offer of about $43.50 per megawatt hour in November 2016.
The solar project could generate enough electricity to power about 14,400 homes at peak production, the Billings Gazette has reported.