Louisiana Public Service Commission paves way for commercial and industrial access to 500 MW of renewable energy

In a significant move to strengthen access to renewable energy, the Louisiana Public Service Commission has introduced a new rule allowing large commercial and industrial customers to use up to 500 megawatts (MW) of renewable energy. The move is designed to keep those customers competitive in their markets.

According to the Solar Energy Industries Association, Louisiana currently has 600 MW of solar capacity, which accounts for less than 1% of the state’s electricity.

Monika Gerhart, executive director of the Gulf States Renewable Energy Industries Association (GSREIA), expressed optimism about the rule. “Our member companies are very encouraged by this consumer demand for renewable energy development,” she said. GSREIA, along with several other stakeholders, actively participated in the four-year regulatory process that resulted in the rule.

The new regulation introduces a “sleeve” power purchase agreement (PPA) as an option for large electricity consumers. This agreement allows customers to negotiate directly with renewable energy producers for capacity, energy and renewable attributes, and then the contract is executed by the customer’s utility.

This policy adds an alternative to the standard PPA option. For example, McDonald’s entered into two PPAs with Lightsource bp to acquire solar power from projects in Louisiana: one for the entire 180 MW project output and a second, in partnership with eBay, for a portion of the 345 MW project output.

Once a utility is notified of its intent to enter into a shielded PPA, customers will ask the utility to develop a rate schedule within 60 days and submit it to state regulators, who will then have 90 days to approve or reject the proposal.

The proposed price list must identify the fees charged to customers and the allowances for a covered PPA, typically including an allowance for accredited capacity supplied by a renewable energy producer.

The rule limits the maximum renewable capacity eligible for sleeved PPAs to 5% of each utility’s summer peak demand. For example, Entergy Louisiana, the state’s largest utility, recently experienced summer peak demand of nearly 10,000 MW. Therefore, up to 500 MW of renewable capacity (5% of 10,000 MW) would be eligible for sleeved PPAs for Entergy Louisiana alone.

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