Reality of Community Solar

Can Community Solar Programs Bring Solar Ownership to the Masses?

Americans For Energy Leadership On 01.24.11, 

In Opinion, By McKenna Morrigan

Americans For Energy Leadership

http://leadenergy.org/

Community solar is a concept that has lots of cheerleaders. And what’s not to love? At it’s best, this market-based deployment strategy can expand access to clean energy, create jobs, spur local investment, and help drive down the cost of solar panels.
But while the concept of community solar has had strong support from policymakers and clean energy advocates for several years, actual community solar projects have been slow to materialize. Now, two statewide community solar programs and a host of other new state and local policies to encourage community solar may be catalyzing a wave of new projects. Will the reality of community solar live up to the ideal?

Community Solar Spreads the Benefits and Rewards of Clean Energy Investment
Community energy carries all the environmental, economic, and national security benefits of clean energy in any form, but with a distinct advantage. A review of research by Northwest SEED suggests that community energy projects deliver 2-5 times the economic benefits of projects built by out-of-state investors. And, in places that import electricity from outside the area, community energy can also keep utility dollars in the community, with multiplier benefits for the local economy. Community energy provides distributed generation, with associated benefits such as increased system reliability and resilience, lower peak power requirements, minimal transmission requirements and reduced line losses.


Examples of community energy began in rural areas of the Midwest, where farmers joined together to capture some of the benefits of the commercial wind development boom underway at the time. These projects blazed the “community energy” trail, developing novel legal structures and forms of financing, and proving that community energy could be a source of job creation and economic development.
But community wind has limited applicability, given the requirements of a strong wind resource, access to transmission capacity, and lots of open space to make a project financially viable. In contrast, solar photovoltaics (PVs) are well suited for modular applications of varying scales and can be placed on existing structures, making them a great fit for urban areas where retail electricity rates and demand loads are often highest.

Community solar is appealing in part because, despite broad interest among the public in solar energy, most people don’t have the ability to install solar PV on their own property. A 2008 study by the National Renewable Energy Laboratory found that only 22 to 27% of residential rooftop area is suitable for hosting an on-site PV system after adjusting for structural, shading, or ownership issues. And in places like New York City, where home ownership rates are especially low, only a small number of people have incentives to invest in solar PV.

Community solar projects address this barrier by decoupling solar PV investment from on-site generation. Owners of community solar contribute funds to pay for a portion of a project, and reap benefits proportional to their investment. Community solar projects can be installed on the property of one of the project owners, on a separate private site, or on a shared location, such as local or state government property. Owners can include renters, homeowners, local businesses, even utilities.

Early Projects Suggest Two Different Approaches
Only a handful of community solar projects are complete, with another handful in development, so no definitive model exists. But so far, projects fall into two approaches.
The first and more common is the utility-sponsored approach. These projects are legally owned by a utility, and individuals voluntarily contribute funds to help finance them, either up front or on a monthly basis. In exchange, contributors receive credit on their utility bill equal to the output of electricity from their portion of the investment. Early examples of this approach include the Sacramento Municipal Utility District (SMUD) SolarShares program and the Ellensburg, WA Community Solar Park. These public utilities have been very successful in using this approach to finance solar installation and the concept is spreading quickly.

Despite its popularity, the utility-sponsored approach has some significant limitations. According to an analysis by the New Rules Project at the Institute for Local Self-Reliance (ILSR), utility-sponsored projects can compare unfavorably to the economics of individual ownership. In some cases, contributors never even achieve full payback of their initial investment, making this approach much like other “green power” programs where utility customers simply pay a premium for clean energy. Only where there is a production incentive that generously rewards community projects (such as in Washington State) does this model seem cost-effective for contributors.

Still, for those who cannot invest in solar themselves, the utility-sponsored approach is often the only option. The second approach might be called a true community ownership model, where the risks and benefits of ownership are shared among individual participants, often through an ownership structure such as a cooperative or an LLC. This model is much stronger in concept, but it has proven very challenging to get off the ground, despite strong interest in many communities.

As David Brosch, lead developer of University Park Solar Community in Maryland, one of the first community solar projects in the country, said, “It took us over two years to develop our project structure and only two months to find our members.” The Clean Energy Collective’s Mid-Valley Solar Array in Colorado, a 77.7 kW community solar project, is another early and widely touted example of the ownership approach, which its founders hope to replicate around the country. Compared to the utility-developed approach, these projects have shown to be more attractive investments, with paybacks faster than would be possible through individual solar PV ownership.

Click here to continue reading the full article.

Tribal Clean Energy

Department of Energy to Award Over $6 Million for Clean Energy Projects on Tribal Lands

July 21, 2011

U.S. Energy Secretary Steven Chu today announced 31 tribal energy projects to receive $6.3 million over two years as part of the U.S. Department of Energy's ongoing efforts to support tribal energy development and continue strengthening the partnership with Tribal Nations. These competitively selected projects will allow Native American Tribes to advance clean energy within their communities by developing strategic energy plans, expanding the skills and knowledge of tribal members, and improving the energy efficiency of their buildings. These investments will help tribal communities to save money and reduce energy waste, expand the use of clean energy technologies, and promote economic development.

"Tribal Nations are well-positioned to take advantage of the benefits of clean energy and energy efficient technologies," said Secretary Chu. "Projects such as these will save energy and money, create long-term clean energy jobs, and spur economic development in tribal communities nationwide."
The more than $6 million in DOE funding will go toward 31 projects selected for negotiation of award in three project areas including over $2.1 million for energy efficiency feasibility studies, over $2.1 million for first-steps projects, and over $2 million for energy efficiency installation projects on tribal lands. DOE announced the availability of funding for these tribal energy projects in January. Another group of projects to receive funding for development and deployment of tribal renewable energy projects will be announced later this summer.

The awards cover the following areas:

$2.17 Million for Feasibility Studies – Nine Tribal projects will receive $2.17 million to improve the energy efficiency of their buildings. By conducting energy assessments to identify cost-effective building upgrades, recipients can develop plans to realize significant savings on their energy bills. When completed, the upgrades identified in the energy assessments could reduce energy use by at least 30 percent in each building.

$2.14 Million for First Steps Planning – Seventeen Tribal energy projects will receive $2.14 million for strategic planning, energy options analysis, energy organization development, and workforce development as the first steps toward a clean energy future. Several of the awardees will develop tribal strategic energy plans, enabling them to evaluate their current energy use and indigenous energy resources. Some of the projects also support the development of tribal energy organizations like utilities, energy offices, tribal committees, or other organizations to implement the selected Tribe's long-term energy plans and create opportunities for the deployment of clean energy projects. Others projects will help Tribes to explore development and deployment options for energy efficient and renewable technologies. Workforce development projects will provide clean energy training and workshops to tribal staff, leaders, and members, and train and certify tribal members to conduct energy assessments.

$2 Million for Installation Projects – Five projects on tribal lands will receive $2 million for the installation of energy efficient upgrades in their buildings that will help Tribes reduce electricity or heating and cooling costs by 30% or more.

Download detailed descriptions of all 31 tribal energy projects.
These grants are administered by DOE's Office of Energy Efficiency and Renewable Energy (EERE), which in coordination with the Office of Indian Energy Policy and Programs (IE) under the Energy Policy Act of 2005 Title V authorizations, provides financial and technical assistance to Indian Tribes for the evaluation and development of their energy resources, implementation of energy efficiency to reduce energy use, and provides education and training to help build the knowledge and skills essential for sustainable energy projects. Learn more about EERE's support of tribal energy projects and DOE's Office of Indian Energy Policy and Programs.

---

Join the clean energy conversation on Facebook at DOE's Energy Efficiency and Renewable Energy, Energy Savers, and Solar Decathlon pages.

DOE/HUD Announcement

DOE and HUD Announce Lenders to Participate in New Pilot Program to Help Homeowners Pay for Energy Improvements to their Homes

FHA PowerSaver Program to offer low-cost financing to credit-worthy
borrowers

April 21, 2011

Eighteen national, regional and local lenders will participate in a new two-year pilot program that will
offer qualified borrowers living in certain parts of the country low-cost loans to make energy-saving
improvements to their homes. Backed by the Federal Housing Administration (FHA), these new
PowerSaver loans will offer homeowners up to $25,000 to make energy-efficient improvements of
their choice, including the installation of insulation, duct sealing, replacement doors and windows,
HVAC systems, water heaters, solar panels, and geothermal systems.

U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan and U.S. Department of
Energy Secretary Steven Chu announced the participating lenders (see attached list) during a tour of
a family-run company that offers home energy audits and upgrades in Long Island, New York.
"We believe the market is right for a low-cost financing option for families who want energy-saving
technologies in their home," said Secretary Donovan. "PowerSaver hits on all cylinders by helping
credit-worthy homeowners finance these upgrades, cut their energy bills and boost the local job
market in the process. While FHA and these lenders are jumpstarting this pilot, we hope its success
will lead to a growing private sector interest in making these types of loans."

Secretary Chu said, "Today, we are breaking down barriers and making energy efficiency more
accessible and more affordable. It’s the right thing to do for our environment, for our economy, and
for the pocketbooks of American families."

The remodeling industry cites surveys that point to a growing demand among homeowners interested
in making their homes energy efficient. Yet options are still limited for financing home energy
improvements, especially for the many homeowners who are unable to take out a home equity loan
or access an affordable consumer loan. Initially, the PowerSaver pilot program is estimated to assist
approximately 30,000 homeowners to finance energy-efficient upgrades though higher market demand
may increase this impact. According to HUD projections, more than 3,000 jobs will be created through
this pilot program and the impact may be larger if market demand for the loan program increases
over time.

Participating lenders are largely selected based on their commitment to work in partnership with
established home energy retrofit programs provided by states, cities, utilities, and home performance
contractors. These markets include, but are not limited to, areas of the country participating in the
Energy Department’s Better Buildings Program.

PowerSaver loans will be backed by the FHA but require these lenders to have significant "skin in the
game." FHA mortgage insurance will cover up to 90 % of the loan amount in the event of default.
Lenders will retain the remaining risk on each loan, incentivizing responsible underwriting and lending
standards.

PowerSaver has been carefully designed to meet a need in the marketplace for borrowers who have
the ability and motivation to take on modest additional debt to realize the savings over time from
home energy improvements. PowerSaver loans are only available to borrowers with good credit,
manageable debt and at least some equity in their home (maximum 100 % combined loan-to-value).
HUD developed PowerSaver as part of the Recovery Through Retrofit initiative launched in May 2009
by Vice President Biden’s Middle Class Task Force to develop federal actions that would expand
green job opportunities in the United States and boost energy savings by improving home energy
efficiency. The announcement is part of an interagency effort including 11 departments and agencies
and 6 White House offices.

FHA PowerSaver Approved Lenders
1. Admirals Bank
2. AFC First Financial Corporation
3. Bank of Colorado
4. City of Boise, Idaho
5. Energy Finance Solutions
6. Enterprise Cascadia
7. HomeStreet Bank
8. Neighbor's Financial Corporation
9. Paramount Equity Mortgage, Inc.
10. Quicken Loans
11. SOFCU Community Credit Union
12. Stonegate Mortgage Corporation
13. Sun West Mortgage Company, Inc.
14. The Bank at Broadmoor
15. University of Virginia Community Credit Union, Inc.
16. Viewtech Financial Services, Inc.
17. WinTrust Mortgage
18. W. J. Bradley Mortgage Capital Corporation

Community Solar

Ellensburg Community Solar Project
Ellensburg, Washington

In 2006, the City of Ellensburg municipal utility installed a 36 KW community Photovoltaic (PV) system, the first of its kind in the nation, in an effort to harness the 300 days of sunshine the region experiences to power their local homes and businesses.  As Gary Nystedt, Resource Manager for the City of Ellensburg and organizer of the Solar Community Project puts it, “Produce the power where you use the power.”  An important aspect of this story is that everyone in Ellensburg  has the opportunity to invest in this locally produced clean electricity.  The project uses an innovative and unique financing approach—families, individuals, and businesses in the community have been asked to partner with the city to help fund the project. 

In exchange for their financial support, the city gives the contributors a financial credit on their electric bill for the value of the electricity produced by the solar system. For instance, if a customer contributes 3% of the total funds contributed by local residents and businesses, that contributor will receive the dollar value of 3% of the power produced by the solar project.  The Ellensburg Community Solar Project began generating power in November of 2006, and has since produced more than 170,000 kilowatt-hours, averaging 58,000 kilowatt-hours, annually.

 In May 2009, Washington passed SB 6170, effective July 1, 2009. With the passage of this legislation, community solar projects will be able to receive the production incentive after an official rulemaking procedure in the fall. Community solar projects are defined as solar energy systems owned by local entities and placed on local government property or owned by utilities and funded voluntarily by utility ratepayers.

The base rate for community solar projects is $0.30/kWh and the multipliers are the same as those used for other renewable energy technologies. The actual production incentives range from $0.30/kWh to $1.08/kWh, as the incentive rate is higher for modules and inverters manufactured in Washington.  Each participant in the community solar project can apply to receive this incentive and may receive up to $5,000 per year. 

The Washington Department of Revenue (DOR) is responsible for submitting a report measuring the impacts of this legislation, including any change in the number of solar energy system manufacturing companies in Washington, and the effects on job creation, such as the number of jobs created for Washington residents.

25 by 25

Renewables in Rural Washington

Another force in the move towards more solar and renewable energy in the State of Washington is the “25x25” project, the goal of which is to produce 25 percent of our country’s energy from renewable resources like wind, solar, and biofuels by the year 2025.

A group of volunteer farm leaders first envisioned the goal of 25x25, and it quickly gained the support of a broad cross-section of the agriculture and forestry communities. Now leaders from business, labor, conservation and religious groups are joining this alliance as well. 25x25 is supported financially by the Energy Future Coalition, a non-partisan public policy initiative funded by foundations, and is endorsed by Washington politicians Sen. Cantwell, Rep. Inslee, and Rep. McMorris-Rodgers. The vision includes:

    * Bring new technologies to market and save consumers money.   
    * Reduce our dependence on oil from the Middle East.  
    * Create good new jobs in rural America.  
    * Clean up the air and help reduce urban smog and greenhouse gas emissions.

A national study undertaken by the University of Tennessee Department of Agricultural Economics (December 15, 2008) shows that if America’s farms, ranches and forestlands are empowered with the policies and incentives needed to meet 25 percent of the nation’s energy needs with renewable resources – biofuels, biomass, wind energy, solar power, geothermal energy and hydropower – an estimated $700 billion in new, annual economic activity would be generated, and 4 million to 5 million new jobs would be created.

The USDA, with their REAP (Rural Energy for America Program) Grants, is offering direct funding for energy efficient and renewable power projects, feasibility studies, and loan guarantees.  The BIA (Bureau of Indian Affairs) also has grants and loan programs in place specifically to develop renewable power on Native reservations throughout Washington and the rest of the U.S.

When one looks at the enormous support that renewables such as solar power have gained over the years in Washington State, from individual homeowners to government agencies and policy makers, along with the immense increase in the overall solar PV market in the U.S. and around the world, one can see that the climate is right for Efficient Life Technologies, llc. to join an industry where in Washington, like the world, the demand continues to grow.