“Solar is now bankable,” Harris said. “When solar was perceived as more risky it required a premium,” and now it’s “becoming part of a much broader capital market.”
Long-term power-purchase contracts are the key to making solar a reliable investment, Harris said. Utilities in sunny states such as California, Arizona and Nevada have agreed to pay premiums for electricity generated by sunshine.
In California, where the largest plants are beginning to produce power, regulators approved contracts in 2010 for utilities to pay $161 to $232 a megawatt-hour for solar energy. That’s at least four times the $40 average wholesale price in Southern California at the time. Most such contracts are confidential to promote competition. <read more>