Solar Prices “Xcel” in CO: Reading into the Low-Priced RFP Bids

30 Jan 2018

This article was co-written by Will Patterson and William Graves

This is an excerpt from the January 2018 edition of The SOL SOURCE, a monthly electronic newsletter analyzing the latest trends in renewable energy based on our unique position in the solar industry. To receive future editions of the journal, please subscribe.

For an industry that has long continued to reduce the cost and increase the scale of its product, most of the solar (and wind) industry still marveled at the low prices seen in bids for Xcel Energy’s RFP to replace 660MW of generation from two retiring coal plants in Colorado. Though the bids are for utility-scale projects that will be put online in 2023, solar, wind and storage-added projects from both technologies shattered previous price floors in their bids, providing a glimpse into how inexpensive renewable energy and storage are likely to become. However, it should be noted that these bids likely include several optimistic pricing assumptions, leaving Xcel – and anyone following the news – to ponder, “Which of these is realistic?” For developers and customers alike, these bids provide a valuable look into the future of renewables prices, as well as offering customers a chance to learn how to handle lower-than-expected prices in RFP bids.

A Window into the Future

Given the long-term outlook of the Xcel bids, we have an opportunity to glimpse into future renewable energy + storage pricing, or at the very least, the future prices developers are confident in now. Although caveats do exist, such as the high irradiance in the state of Colorado, Xcel called the pricing “unprecedented.” To put this into context, the current utility solar landscape has recently seen PPA prices fall between lows of $35-$60/MWh. In response to Xcel’s RFP, the median price of solar bids came out to $28/MWh. Not bad.

Even more surprising were the solar+storage bids. The median price of $36/MWh of solar+storage bids shattered previous pricing records, as the lowest recorded price for a solar+storage PPA is currently $45/MWh. Wind+storage bids were even lower, giving a clear vote of confidence to the continued fall of battery prices. When comparing the response with coal, the Denver Post noted that wind+storage came out cheaper than coal generation in the state, and solar+storage cheaper than 75 percent of the state’s coal.

A Race to the Bottom

As RFPs are designed to evoke the most competitive pricing possible from bidders, the responses also indicate a clear fight to offer, unsurprisingly, the least expensive bid. It’s important to note that RFPs soliciting this amount of energy will require performance/bid bonds to ensure the developer can deliver on the pricing. In addition, RFP reviewers will evaluate bidder qualifications and financial stability to assess whether the bidder can finance and deliver an energy system at the pricing specified in the bid. Regardless, developers are incentivized to bid as aggressively as possible, which often leaves little to no flexibility for development risk. These factors leave much for the customer to evaluate, and low prices like those featured in the Xcel bid leave questions to be answered.

Weeding Out the Right Responses

When presented with these numbers, customers need to understand exactly why some bids are so much lower than the competition. Customers should work to understand if a developer’s set of assumptions is reasonable. Because RFPs encourage low bids, developers often are looking to win the bid, get a seat at the table, and if necessary, walk back some portion of the bid before the PPA is signed. This makes it tough to for developers to make conservative, and sometimes even just reasonable assumptions in bids, as more aggressive bidders will often win simply on the lower price based on their less-reasonable assumptions.

Another good practice for RFP reviewers to undertake is a deep dive into the performance history of low bidders. Reviews of timelines and work products of past bids can provide valuable insight into the how the bid sitting on their table may end up shaking out if that company is awarded. References provided in the response also give customers a chance to hear firsthand from other offtakers about their experience working with the bidder. Only by doing the proper diligence will a customer be able to assess whether the low-cost provider is actually competitive, or something to be avoided.

Time will tell how realistic the Xcel bids are, as well as how competitive renewables will continue to become against fossil fuels. The numbers look promising, but as all who have spent time in this industry know, there’s always so much that can change for better or for worse.


Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered 650MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit

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William Patterson

William Patterson