Dive Brief:

• California's Modesto Irrigation District signed a 20-year, $131 million contract with the Riverside solar farm to provide up to 2.5 million MWh of power — roughly enough to power 18,000 homes, the Desert Sun reports. 
• That deal averages to $34.22/MWh, significantly below similar contract prices for new natural gas generation at $48-$78/MWh. 
• The contract aims to help Modesto meet its mandated target of 40 percent renewable energy by 2024, and help NextEra Energy complete its 235 MW Blythe solar project, already one of the largest in the country. 

Dive Insight:

California cities and towns continue to push for ambitious clean energy projects. The City of Modesto is no exception, as its irrigation district inked a contract for some of the cheapest solar energy in the state thus far. California is attempting to hit its goal of 50% renewables by 2030.

At $34.22/MWh, this deal is already cheaper than natural gas prices, the news outlet noted. According to Desert Sun, the cheapest natural gas prices can run anywhere from $48 to $78/MWh. But the news comes at an interesting time for the solar industry. Last month, the Department of Energy announced it would expand the popular SunShot Initaitive after it hit its cost goals three years early. 

Meanwhile, the solar sector at large has been entrenched in a rancorous battle over proposed tariffs for crystalline silicon photovoltaic modules. Two U.S. solar manufacturers, Suniva and SolarWorld, proposed a tariff and floor price for imported solar modules to combat the influx of cheaper Chinese modules. Other solar interests, including the Solar Energy Industries Association, condemned the petition, saying it imperiled roughly 88,000 new solar jobs. If enacted, opponents say it could damage as much as two-thirds of utility-scale solar projects set to come online in the next five years. 

So far, commercial and industrial and residential market segments are the most vulnerable, sector experts told Utility Dive. Utility-scale projects driven by state mandates and favorable policies are the least at risk. However, the tariff proposals have injected uncertainty into the sector and regardless of outcome, could harm projects under development in 2018 and 2919, experts told Utility Dive.

It remains to be seen how this contract price will ripple into other markets, and whether it hedges against potential price spikes from the proposed tariffs.