SOLAR FOR COAL SWAPS

The document explores 'solar for coal swaps,' where third-party investors and developers purchase and retire a utility's coal assets in exchange for contracts to provide new solar power. This model aims to bypass utility inertia and high costs, particularly for municipal and cooperative utilities. The brief highlights that by 2025, 22.5 GW of such plants will be uneconomic compared to local solar. Case studies from New Mexico and Colorado, involving Kit Carson Cooperative, Holy Cross Energy, and Delta Montrose Electric Association, demonstrate how these swaps can reduce consumer rates and promote local economic development despite resistance from wholesale providers like Tri State Generation and Transmission Cooperative.

• Solar for coal swaps are structured as transactions where third parties—including energy marketers, renewable developers, and investors—buy and retire a regulated utility's coal assets while contracting to provide new solar power. The deal typically involves the private sector underwriting the offer, the new owner decommissioning the plant, and consumers repaying the investment through rates that are lower than the previous coal costs.
• There is a significant market opportunity for these swaps among municipal and publicly owned utilities. Analysis indicates that 11.2 GW of these plants were uneconomic compared to local solar in 2018, and this figure is projected to rise to 22.5 GW by 2025.
• The Kit Carson Cooperative in New Mexico utilized a third-party provider, Guzman Energy, to finance a $37 million exit fee from its 'all requirements' contract with Tri State Generation and Transmission Cooperative. This transition is expected to save member-owners between $50 million and $70 million, with rates projected to drop to $47 per MWh by 2026 from a previous high of $79.17 in 2016.
• Holy Cross Energy in Colorado entered a swap with Guzman Energy, selling its ownership share of energy from the Comanche 3 coal plant in exchange for a new 100 MW wind plant and wholesale market supplies. This arrangement allows the utility to maintain stable rates while pursuing a 70 percent renewable energy goal.
• Private sector intervention can pressure utilities to change their long-term strategies. For example, Guzman Energy made a $500 million offer to Tri State to retire approximately 50 percent of its remaining coal fleet. While Tri State initially postponed consideration, the company later announced a plan to eliminate coal by 2050 and retire its New Mexico and Colorado coal fleets by 2020 and 2030, respectively.

APA

LEHR, R., & O’BOYLE, M. (2020). SOLAR FOR COAL SWAPS. Energy Innovation. https://energyinnovation.org/wp-content/uploads/Solar-for-Coal-Swaps-Brief_July-2020-1.pdf

Chicago

LEHR, RON, and MIKE O’BOYLE. SOLAR FOR COAL SWAPS. Energy Innovation, 2020. https://energyinnovation.org/wp-content/uploads/Solar-for-Coal-Swaps-Brief_July-2020-1.pdf.

Wikipedia

{{cite report |last1=LEHR |first1=RON |last2=O’BOYLE |first2=MIKE |title=SOLAR FOR COAL SWAPS |publisher=Energy Innovation |date=July 2020 |url=https://energyinnovation.org/wp-content/uploads/Solar-for-Coal-Swaps-Brief_July-2020-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lehr2020solar, author = {LEHR, RON and O’BOYLE, MIKE}, title = {{SOLAR FOR COAL SWAPS}}, institution = {Energy Innovation}, year = {2020}, month = jul, url = {https://energyinnovation.org/wp-content/uploads/Solar-for-Coal-Swaps-Brief_July-2020-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }