Also on the rise: Engineering and construction costs across all sectors continued to rise in May with expectations of no easing through the fourth quarter, IHS Markit says.
A New Mexico utility told state regulators that the developer of a 100 MW solar facility that includes 30 MW of battery energy storage missed critical deadlines and may not be able to meet contract requirements to bring the project into service by June 2022.
Public Service Company of New Mexico submitted a notice of default for part of the San Juan Generating Station replacement plan. The utility warned that it faces potential resource shortfalls and issued a request for proposals for 200 MW of generating capacity to be available by June 2022.
The utility said that its resource outlook is further clouded by market conditions impacted by the California energy crisis in 2020 and illustrated by Texas’ winter storm in February. Those events threw into doubt assumptions that as much as 200 MW of outside resources would be available to meet any shortfall in New Mexico.
PNM VP of generation Tom Fallgren reportedly told a local news outlet, “We needed to raise a red flag that the Rockmont project won’t make the target date.” California-based 8minute Solar is behind the Rockmont project, which the utility reported was in default.
A spokeperson for 8minute Solar told pv magazine USA, “Though the operational date of Rockmont has been pushed out, we remain committed to working alongside our trusted partners at PNM to help New Mexico reach its 100% clean electricity goals.”
The Rockmont project makes up about 14% of the 950 MW of total San Juan replacement power that regulators approved last year.
The utility issued an RFP on May 24 that aims to acquire up to 200 MW of firm, long-term or short-term capacity that can be available on or before June 1, 2022. It issued a second RFP seeking an additional 500 MW of new firm, long-term or short-term capacity to meet load growth needs by June 1, 2023.
Price pressures continue upward trend
IHS Markit and the Procurement Executives Group said that engineering and construction costs rose for a seventh consecutive month in May. The headline Engineering and Construction Cost Index read 78.8 in May. That was 6.3 index points higher than in April. A materials and equipment sub-index recorded a sixth consecutive monthly increase, rising 4.6 points to reach 83.1. A separate subcontractor labor index read 68.6, up 10.3 index points from April.
Within the materials and equipment sub-index, all categories showed price increase. A statement said that index levels fell for two categories, ocean freight costs and fabricated structural steel, remained in expansion territory but fell compared to April. The movement indicated pricing pressures for those categories were less widespread in May.
Image: NREL/Dennis Schroeder
All other categories experienced increases in index totals from April to May. Copper prices continued to rise, recording the eleventh straight month of price increases with an index figure of 87.5. That was the highest reading for this sub-index since January. Costs of ocean freight from both Europe and Asia to the United States rose for a ninth month in a row, reaching an index figure of 83.3.
“The China containerized freight index has been sitting at a level greater than 1,000 since the fourth quarter of 2020, having last breached the four-digit mark more than five years ago,” said Tal Dickstein, senior economist at IHS Markit.
Continued high volumes along this route indicate that demand remains strong. Dickstein said that markets are entering a seasonally high demand period as well, “meaning tightness will continue over the summer and prices will remain elevated.”
The sub-index for current subcontractor labor costs rose for a fourth straight month, recording an index level of 68.6 in May, a “significant increase” from April’s index figure of 58.3. According to survey responses, labor costs rose for sub-indices representing each region of the United States and Canada.
Six-month headline expectations for future construction costs index totaled 70.4 in May, showing respondents’ expectations of continued price increases into the fourth quarter. The six-month expectations index for the materials and equipment component equaled 69.3 this month; the six-month expectations index for sub-contractor labor recorded a reading of 73.0, as labor costs are expected to continue increasing in all regions of the United States and Canada.
This article was updated May 28 to include a comment from 8minute Solar.
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Source: https://pv-magazine-usa.com/2021/05/28/sunrise-brief-a-solar-storage-project-stumbles-and-a-utility-scrambles-for-capacity/
