Houston to get state's largest solar plant

NRG plans to spend $40 million to build a 10-megawatt solar plant on land near a natural gas plant that the company operates, NRG and the city said Thursday in a news release.

That is one small and expensive power plant. But building one of the first such plants in Texas allows NRG to study the technology and decide whether to install more solar arrays.

The project also allows the city of Houston to diversify its fuel mix – a key concern after hurricanes Katrina and Rita wiped out some Gulf Coast oil and natural gas infrastructure.

"Many people, including the city, have seen our electricity costs climb up by as much as 30 percent" since the hurricanes, said Issa Dadoush, the director of Houston's general services department. "We could no longer be exposed just to natural gas price fluctuation."

He said the city already gets 32 percent of the power it needs for city buildings from wind. City officials, driven by Mayor Bill White, wanted to add solar to the mix.

The solar plant is large for its type, but tiny and pricey for a power plant. Compare the solar array to NRG's plans for new nuclear reactors. The reactors would have 2,700 megawatts of capacity and cost $10 billion. So, at $3.7 million per megawatt, even a nuclear plant costs less than a solar array, at $4 million per megawatt.

"We're going to make an acceptable return on our capital," said Kevin Howell, president of NRG's Texas operations. "It's not something that's going to drastically improve the economic outcome of NRG as a whole."

He said the panels make sense for NRG, because it can erect the system on land it already owns, near power plants with grid connections.

The solar plant is scheduled to be on line in the second quarter of next year. The city will pay 8.2 cents per kilowatt-hour for 10 megawatts of electricity capacity. But since the solar panels only make electricity when the sun is shining, NRG will supplement with power from other plants.

For the solar portion of the power, Houston will pay 19.8 cents per kilowatt-hour, Dadoush said. The city will pay a market rate for the rest of the power, amounting to a total rate of around 8.2 cents.