San Antonio's municipally owned utility on Monday announced a landmark solar manufacturing deal that officials say will create 805 jobs and catapult Texas into the top five of the nation's solar-producing states.
CPS Energy, the nation's largest municipally owned natural gas and electric utility, is leveraging its large, captive customer base to lure solar manufacturing with a 25-year power purchase agreement.
OCI Solar Power, a consortium of manufacturers, will make San Antonio its headquarters for producing components for solar generation for North America and South America.
Within a couple of years, Nexolon America LLC, the anchor manufacturer, is to invest more than $100 million in a facility in San Antonio and create 400 jobs. The other 405 jobs, not counting construction jobs, will be created within the first four years, according to CPS Energy officials.
The solar project is the largest in the nation for city-owned utilities, according to CPS Energy, and will provide 400 megawatts of electricity to 70,000 local households -- or about 10 percent of CPS Energy's electricity customers -- within four years.
The solar installations will be in San Antonio and around the state, with some as far away as West Texas.
"We believe that with this 400 megawatts we should be in the top five states going forward," CPS Energy President Doyle Beneby said.
For its part, CPS Energy will be buying solar energy for the next 25 years from their partners.
Beneby declined to say what CPS Energy will pay for the solar energy, except to say, "It's very, very competitive."
"We are thrilled to call San Antonio our home," said Tony Dorazio, who will lead OCI Solar Power.
Woo-Jeong Lee, Nexolon's board chairman added, "We expect to contribute greatly to San Antonio's New Energy Economy."
Overall, the agreement is projected to provide nearly $40 million in annual payroll, a $700 million annual economic impact and $1 billion in construction investment, CPS officials said.
Beneby said the deal adds a large amount of clean energy as a hedge against environmental regulations, provides electricity during times of peak demand for power and enhances economic development in the region.
"CPS Energy is, undoubtedly, a player on the national clean energy front," CPS Energy board Chairman Derrick Howard said. "We anticipate even greater things to come."
The announcement, more than a year in the making, comes as the solar manufacturing industry is consolidating. Weaker companies that cannot compete on price are failing, and stronger firms will benefit.
It also comes as Austin Energy, another publicly owned utility that has pursued renewable energy without the direct jobs benefit, is being second-guessed in the wake of a contentious rate increase.
Austin Energy's suburban customers are threatening to appeal their rates to the state Public Utility Commission, while the Austin City Council is considering whether it should step aside as the utility's manager. Some officials, including Austin Mayor Lee Leffingwell, favor CPS Energy's model of an appointed board dedicated to overseeing the utility.
At a recent Capitol hearing, Beneby touted his utility's track record -- with San Antonio lawmakers joining in -- while Leffingwell defended the Austin City Council's role in the recent rate controversy.
CPS Energy claims it offers the lowest rates among the top 10 largest U.S. cities, while ranking first in wind-energy capacity among city-owned utilities and first in Texas for solar generation.
Robert King, president of Good Company Associates, an Austin-based energy consultant, said San Antonio could benefit from timing as solar prices are dropping and Chinese export practices are drawing scrutiny.
"We were ahead of everybody in renewables," King said of Austin. "Now we're just trying to pay for it."
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