SOLAR FOR COAL SWAPS

This briefing explores "solar for coal swaps," a private-sector financial model where third parties purchase and retire uneconomic coal assets from utilities in exchange for providing new solar generation. The document argues that this approach can accelerate the clean energy transition, particularly for municipal and cooperative utilities, by leveraging private capital to bypass utility inertia and reduce consumer costs.

• Solar for coal swaps are a private-sector mechanism where third parties—including energy marketers, renewable developers, and investors—buy and retire a utility's coal assets while contracting to provide new solar power. The deal typically involves the third party underwriting the financing, paying to buy out coal investments, and decommissioning the plants, while the utility's consumers repay the investment through rates that are lower than previous coal costs.
• There is a significant market opportunity for these swaps among municipal and publicly owned utilities. In 2018, 11.2 GW of these utilities' coal plants were uneconomic compared to local solar; 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 exit an "all requirements" contract with Tri State Generation and Transmission Cooperative. Kit Carson paid a $37 million exit fee and expects to save member-owners between $50 million and $70 million, with rates projected to drop to $47 per MWh by 2026 from a 2016 high of $79.17 per MWh.
• Holy Cross Energy, a Colorado cooperative, entered a swap with Guzman Energy to sell its ownership share of energy from the Comanche 3 coal plant. In return, Guzman Energy provided a new 100 MW wind plant and wholesale market energy supplies to help the cooperative meet a 70 percent renewable energy goal while maintaining stable rates.
• The Delta Montrose Electric Association (DMEA) pursued a similar transition model to Kit Carson Cooperative to increase its ability to add local renewable energy beyond the 5 percent limit imposed by Tri State. DMEA eventually reached an undisclosed agreement on an exit fee with Tri State, ending challenges at the Federal Energy Regulatory Commission (FERC) and the Colorado Public Utilities Commission (COPUC).
• Guzman Energy proposed a $500 million offer to Tri State to accelerate the retirement of approximately 50 percent of its remaining coal fleet, replacing it with a portfolio of over 70 percent renewable energy. Although Tri State initially postponed consideration of the offer, it 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} }