The Tennessee Valley Authority (TVA) has set a goal of increasing its solar capacity to 10,000 megawatts by 2035. Due to issues in the solar industry resulting in project delays and price increases, we performed an audit of TVA’s solar power purchase agreements (PPAs). Our audit objectives were to determine (1) how supply chain disruptions, construction and in‑service delays, contract restructuring, and other factors have affected TVA’s solar PPAs and (2) if any restructured PPAs are still in TVA’s financial interest. Our audit scope included solar PPAs that were in place as of February 8, 2024, which included agreements for currently operating facilities and those contracted for future power generation.
We determined the COVID-19 pandemic, supply chain disruptions, construction and in-service delays, contract restructuring, and other factors resulted in TVA:
- Renegotiating 18 of its 31 solar PPAs, including 10 that have been completed and an additional 8 that were in the process of being renegotiated. Additionally, we determined 8 of the 10 renegotiated PPA contracts’ net present value decreased. The decline in project net present value was partially offset by anticipated revenue from renewable energy credits. The cost increases had no impact on TVA's financial interests because purchased power costs are recouped through TVA's fuel cost adjustment.
- Changing its business model philosophy on entering into solar PPAs.
- Making changes to improve the structure of its PPA contracts.
In addition, we identified opportunities for improvement related to (1) requiring economic analyses and (2) selecting new solar developers.
