Proponents tout virtues of federal Inflation Reduction Act for cheap power

Gas-fired electric plants are less competitive now than before the August 2022, federal Inflation Reduction Act. The IRA’s tax incentives will accelerate deployment of cleaner, cheaper electricity.

So, the decision by retiring Yellowstone County Judge Michael Moses to require reevaluation of NorthWestern Energy’s attempt to build gas fueled electric generation in Laurel will save Montanans money as the Moses’-ordered reevaluation progresses.

Colorado’s premier Rocky Mountain Institute (RMI) identified “the lowest cost portfolio of wind, solar, battery energy storage, energy efficiency and demand flexibility that can provide the same estimated services as a proposed fossil gas plant.”

Evaluating 76 GW of fossil gas plants proposed before 2035, RMI found clean energy now “outcompetes 93 percent of proposed fossil gas plants”—an increase of 20% since August 2022. When taking additional advantage of IRA’s bonuses provisions RMI also concluded:

• For investment in energy communities, use of domestically sourced resources, or siting in low-income communities,[1] in nearly every instance, clean energy beats gas on cost alone.

That means that when taking full advantage of the tax credits in the IRA, clean, renewable sources will be cheaper than 99 percent of proposed gas plants — [that are contributing to price volatility in American energy bills].

Credit Suisse, for example, projected $5/MWh wind and solar by 2029. Others forecast $10/MWh solar in 2030 falling to $5/MWh by 2035.

While the low end of Lazard’s Levelized Cost of Energy (LCOE) for both onshore wind and solar dropped to $24/MWh in 2023, the midpoint and high end doubled probably mostly due to the War in Ukraine and related supply and demand issues.

The 2023 mean unsubsidized LCOE for combined cycle natural gas was $117/MWh (natural gas peaking was at $168/MWh), well above the $50/MWh mean for onshore wind and $60/MWh mean for utility scale solar Photovoltaic (PV).

Utility scale solar PV’s $60/MWh was down from $359/MWh in 2009 (demonstrating the tremendous drop in solar prices), but up from $38/MWh in 2021 (reflecting war and demand price-rise issues).

RMI notes that most renewable cost forecasts fall below the go-forward cost of a combined cycle gas plant of at least $30–$40/MWh.

So, building new wind and solar will be cheaper on a per megawatt hour basis than continuing to operate existing gas-fired electric generation.

Instead of gutting our constitutional right to a clean and healthful environment with legislation like Fort Benton Republican, Rep. Josh Kassmier’s HB 971, and repealing state energy policy with bills like Libby Republican Rep. Steve Gunderson’s unconstitutional HB 170, Montana’s utilities, regulators and legislators should facilitate Montana’s share ($861,739) of the IRA’s projected $5 billion in savings for our taxpayers by the start of 2025.

New resource plans can include updated resource costs that accurately represent the new tax credits, deliver ratepayer savings with cleaner options, and demonstrate how IRA funding sources such as the Energy Infrastructure Reinvestment program can revitalize coal communities like Colstrip and Sidney while also reducing the federal deficit by $300 billion in its first nine years, six-times that over two decades.

Updated forecasting is showing results:

· Minnesota Public Utilities Commission approved Xcel Energy’s request to build 460 MW of solar at a retiring (Sherco) coal plant site — avoiding a new gas plant and anticipating ratepayer savings of 30 percent over Xcel’s reported initial estimate of project costs.

· Duke Energy is refunding $56 million to its Florida customers to reflect solar tax credits.

Montanans also can use the IRAs (6417 & 6418) direct payment sections to cover 30% of the solar, and other conservation costs for installations undertaken by their churches, school districts, local governments, rural electric cooperatives and non-profits.

For example, the IRA direct payment to the Greeley, Colorado, First United Church of Christ will be $107,000, equal to the 30% investment tax credit that businesses and individuals have been able to write off for solar installations.

Prior to the IRA, non-profits and others without a tax liability could not use the tax credit. So, they had to pay 30% more for their solar. Now, the Greeley project with 102 MW of solar panels and 12 backup batteries will be paid for in about 7 years.

Unfortunately, monopoly-supported Montana law limits customer-owned solar to only 50 MW. Because of that limitation, Montana’s smaller, non-profit solar projects will garner only $53,000 from IRA funding.

Hopefully legislators will agree — nobody sets their own house on fire to keep temporarily warm, especially when it costs more than transitioning to a better energy source.

About the Authors: Russ Doty is a former Montana legislator from Great Falls, counsel for the Montana Public Service Commission & retired Montana, Minnesota, and Colorado lawyer living in Greeley, CO. Rev. Ken Crouch, is a retired UCC minister and former Billings city councilman.