Nevada approves NV Energy gas-fired projects after solar-plus-storage delays

NV Energy Inc. can move ahead with several natural gas, solar-plus-storage and transmission proposals after the Public Utilities Commission of Nevada agreed the projects are needed to address resource adequacy concerns as the utility aims to decarbonize its power system by midcentury.

In an order adopted March 1, the PUC partly granted a fifth round of amendments to the 2021 joint integrated resource plan of NV Energy operating arms Nevada Power Co. and Sierra Pacific Power Co. In doing so, the regulators acknowledged the need for resources after several major battery-backed solar projects were canceled.

Regulators also largely shunned recommendations from clean energy advocates to reject the proposals, or to at least delay a decision, and defended their action as an overall balanced move that included cost controls.

"The draft order before us today is an excellent example of the very work we're charged to do daily, balancing the interests of the ratepayer as well as the interests of the regulated utility," Commissioner Randy Brown said before the agency's 3-0 vote. (Docket No. 23-08015)

Regulators approved NV Energy's request to convert its 522-MW coal-fired North Valmy Station to natural gas, with unit 1 planned to come online in December 2025 followed by unit 2 in May 2026, and to operate the repowered plant through 2049.

The Humboldt County, Nev., facility, NV Energy's last coal generation asset, is co-owned by Idacorp Inc. subsidiary Idaho Power Co., though operated by NV Energy. It had been planned for retirement at the end of 2025.

Regulators approved $50.43 million of the $83 million that NV Energy had sought to repower the Valmy units and add emissions controls.

In addition, regulators approved the utility's request to continue the operation of two units at its gas-fired Frank A. Tracy Generating Station, also known as Tracy CC, through 2049. Units 4 and 5 began operating in the mid 1990s and were previously scheduled to be retired in 2031. Regulators approved $12 million of the $54 million the utility had requested to extend the units.

"We look forward to getting to work to implement these important projects," NV Energy President and CEO Doug Cannon said in a March 1 statement. NV Energy is a subsidiary of Berkshire Hathaway Energy.

But the PUC's actions drew sharp criticism from trade group Advanced Energy United, which participated in the proceeding.

"It appears NV Energy has successfully jammed the [PUC] with a bait-and-switch of their decade-old promise to retire the Valmy coal plant and Tracy gas units and replace them with clean energy," Brian Turner, the group's director, said in a March 1 statement after the vote. "NV Energy didn't do the work to follow through on that promise, and now they've gotten the [commission] to bail them out at ratepayers' expense."

$1.5B solar-battery project approved

NV Energy said the gas projects were necessary in part because of cancellations in mid 2023 of previously approved solar-plus-storage projects. That includes Primergy Solar LLC's 250-MW Iron Point Solar Project, once planned with the 200-MW Iron Point Battery Storage facility, and its 350-MW Hot Pot Solar Project, which has been terminated along with its 280-MW Hot Pot Battery Storage Project.

The Iron Point and Hot Pot projects, both in Humboldt County, Nev., were originally scheduled for completion in December 2023 and 2024, respectively.

Other canceled projects include Avantus LLC's 300-MW Southern Bighorn Solar Center and 135-MW Southern Bighorn Battery Storage Center in Clark County, Nev., and EDF Renewables Inc.'s 200-MW Chuckwalla Solar Project and 180-MW Chuckwalla Battery Storage Project, also in Clark County, according to the utility.

"The Commission finds there to be a reasonable need to begin to address the loss of these projects now, so as not to unduly delay addressing resource adequacy in Nevada," said the order.

Toward that end, regulators also conditionally approved NV Energy's request to purchase, own and operate the Sierra Solar Photovoltaic & Battery Energy Storage System, a 400-MW solar farm under development with 400 MW/1,600 MWh of battery storage resources in northern Nevada's Churchill County.

The PUC capped construction costs at $1.54 billion and also approved NV Energy's request to spend roughly $71 million on transmission infrastructure to connect the Sierra solar and storage project, proposed to come online in July 2026.

That would make the facility "the most expensive [power] project ever proposed to be built or owned by NV Energy," the order said.

NV Energy estimated the projected 30-year levelized cost of the hybrid project at $86.77/MWh, including an energy price of $38.24/MWh and a capacity price of $13,622.56 MW-month, which it said was competitive with recent market prices.

The order "recognizes the project will achieve the important and necessary outcomes of ensuring the utilities' compliance with Nevada's renewable energy portfolio standards and enhancing resource adequacy," Brown said. "It does so without writing a blank check. It limits costs to protect against unreasonable rate impact to customers in the future."

Transmission overruns, approvals

PUC staff flagged NV Energy's rising price tag for its Greenlink transmission project as an example of the risks of approving rate-based projects at estimated costs, noting that the utility's latest $2.9 billion estimate is more than $400 million overbudget.

The March 1 order authorized over $180 million in additional infrastructure investments, including $62 million for NV Energy's Apex Central substation and $15 million for its Apex East substation in North Las Vegas, a fast-growing city in southern Nevada. Regulators also approved $106 million for transformers at the Esmeralda and Amargosa substations.

The PUC denied NV Energy's request to purchase the Crescent Valley Solar project under development in Lander County, Nev., with 149 MW of solar and 149 MW of storage, from Invenergy LLC. Regulators called the request "premature" considering NV Energy plans to file its 2024 integrated resource plan in June and can bring forward the proposal in that proceeding rather than in a "piecemeal fashion."