Two New Mexico solar projects break ground

Wed Dec 15, 2010 5:40pm EST

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* Xcel to buy power from state's largest solar plant

* El Paso Electric also working on first solar project

HOUSTON Dec 15 (Reuters) - Two solar facilities will begin construction before the end of the year in New Mexico as utilities work to meet the state's renewable energy mandate.

Xcel Energy's (XEL.N) utility serving New Mexico and Texas broke ground on Wednesday on a 54-megawatt photovoltaic solar project to be built and operated by SunEdison, a subsidiary of MEMC Electronic Materials Inc WFR.N.

The solar project, which will be the state's largest, will allow the utility to fulfill a New Mexico mandate that utilities use renewable sources to supply 15 percent of their electricity needs by 2015, the company said.

The renewable mandate increases to 20 percent by 2020.

The SunEdison facility will include solar arrays at five sites in Lea and Eddy counties and is expected to be operational by the end of 2011, said a spokesman for Xcel's Southwestern Public Service regional operating company.

The project will generate more than 2 million megawatt-hours of renewable energy over 20 years -- enough to supply more than 192,000 average U.S. homes for one year, Xcel said.

Southwestern Public Service will pay 10.3 cents per kilowatt-hour for the plant's output in the first year, an Xcel spokesman said. The price will increase by 3.3 percent per year over the 20-year contract.

About a quarter of SPS' 400,000 customers live in New Mexico.

Separately, NRG Energy (NRG.N) said earlier this month it will start construction on a 20-MW solar photovoltaic facility near Santa Teresa, New Mexico, called the Roadrunner Solar Electric Facility.

Output from that facility, also expected to be completed next year, will be sold to El Paso Electric (EE.N) which serves 372,000 customers in New Mexico and far west Texas.

First Solar Inc (FSLR.O) will provide engineering and construction services for the Roadrunner project.

El Paso Electric will pay a flat-fee of roughly 12.7 cents per kwh for the solar output over the life of a 20-year power purchase agreement with NRG, a utility spokeswoman said.

NRG said it plans to invest up to $21 million in the project over the next three years, subject to final negotiations. (Reporting by Eileen O'Grady; Editing by Marguerita Choy)

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