Utility regulators have approved construction of the first major solar-powered generating facility in Kentucky.
The state Public Service Commission authorized Kentucky Utilities and Louisville Gas & Electric to build a 10-megawatt solar array at the E.W. Brown Generating Station in Mercer County, where the utilities now burn coal and natural gas to generate electricity.
A megawatt of generating capacity produces enough electricity to supply about 800 houses.
Wallace McMullen of Louisville, energy chair for the Kentucky chapter of the Sierra Club, said the club supports development of more renewable-energy capacity in Kentucky, where coal has long dominated electricity production.
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"We are indeed quite happy with it," he said of the planned solar project by KU and LG&E.
McMullen said the U.S. Army has developed a solar-generating facility at Fort Knox and plans one at Fort Campbell, but the project by KU and LG&E will be the first utility-scale solar array in the state.
It will be made up of about 260 photovoltaic panels and related equipment installed on a 153-acre tract just south of the E.W. Brown plant, according to the PSC.
The commission approved the project Dec. 19.
Environmentalists hope the decision will lead to more renewable-energy projects by utilities.
"The approval of this solar project is a significant step in showing that the Commonwealth's ongoing prosperity can be linked to clean, renewable energy," the environmental group Earthjustice said in a statement. "The commission's decision acknowledges the benefit of offering a diversity of energy choices and using renewable energy to reduce the financial risk to ratepayers and their hard-earned money."
McMullen said the Sierra Club supported the solar project from the start, but intervened in the request out of a concern that the projected cost of the project was too high.
The utilities, the Sierra Club and the Kentucky Industrial Utilities Customers signed an agreement under which KU and LG&E will use competitive bidding on contracts to design and build the solar array.
McMullen said he thinks that will result in a price tag of less than $36 million, which is what the two utilities estimated and the PSC approved.
The solar facility may not be the lowest-cost option for KU and LG&E to obtain additional generating capacity, depending on what price they can get for selling renewable energy credits, the PSC's order indicates.
However, the PSC agreed the project is appropriate for a number of reasons, including that it will meet the need for more generating capacity while giving the two utilities a buffer against potential increases in the price of coal and natural gas.
The solar project also will help the utilities prepare for any future limits on carbon-dioxide emissions and could help reduce the cost of complying with such limits, the PSC said in a news release.
The U.S. Environmental Protection Agency has proposed rules that would require cuts in emissions of carbon-dioxide from existing power plants.
The greenhouse gas contributes to climate change that has damaging consequences such as drought and more intense storms, according to most scientists.
The PSC said it was appropriate for the utilities to diversify their generating portfolio.
The commission found that the solar project by KU and LG&E will have only a relatively minor impact on electricity rates, and that the cost of building it will be offset by tax credits and other factors, according to a news release.
The project will have to be done by the end of 2016 to qualify for the tax credit.