Currently, many rural electric cooperatives and municipal utilities can save money through community-scale solar by avoiding generation and demand charges.
Community-Scale Solar for Co-ops
Kevin Brehm | Rocky Mountain Institute
Please describe the Otero County Electric Cooperative project and process that led to signing this PPA.
In February 2016 Rocky Mountain Institute released an RFP for a portfolio of community-scale projects on behalf of two New Mexico rural electric cooperatives: Kit Carson Electric Cooperative and Springer Electric Cooperative.
After RFP responses came in and they were significantly lower than previous benchmarks, the general manager of Springer Electric Cooperative invited rural electric cooperatives across the state to participate in a workshop run by RMI to better understand options for low-cost community-scale solar
Subsequent to the workshop, RMI supported Otero and other co-ops across the state in evaluating project options and economics through a series of webinars and meetings.
Otero decided to proceed with project and signed a PPA with SoCore
Why can community-scale solar be a good fit for co-ops and other buyers?
Most rural distribution electric cooperatives are served by both generation and transmission companies. The distribution co-op manages the distribution network and relationship with the end-use customer, and are generally allowed to self-generate up to 5% of their annual electricity demand through an all-in contract.
Rural electric cooperatives are generally unable to directly access central generation because: i) they are too small to contract with large projects; ii) Contractually they are only able to contract with generation connected directly to the distribution systems which they control.
As a result, the most appealing generation they can access comes from community-scale projects
Currently, many rural electric cooperatives and municipal utilities can save money through community-scale solar by avoiding generation and demand charges.
In addition, community-scale solar provides local economic development and if combined with islanding capabilities can increase system resiliency
What factors made achieving this $45/mwh price possible?
- New Mexico has a great solar resource
- Competitive procurement process promoted competition among vendors, forcing vendors to sharpen their pencils and provide highly competitive offerings
- Solar interest from co-ops across the state created some economies of scale for SoCore
- Otero has been an active partner in project development, reducing development costs and risk.
- Otero has covered the cost of land and interconnection. Since Otero has access to lower cost of capital then solar developers this effectively reduces total cost of ownership for the project.
Who are the primary players in a project like this and what role does the government need to play if any?
- Procurement consultant: RMI — Managed RFP, provided project analysis
- Developer (SoCore) — Project delivery partner. Work day-to-day with co-op on development (site identification, permitting, zoning, interconnection) and construction
- Co-op (Otero) — Sign and negotiate PPA. Coordinate with development on development and interconnection.
- G&T (Tri-State) — Create and implement policies which allow for distribution co-op self generation
- Government — in general the role of local government was relatively small. They needed to be involved in permitting and zoning.
Can this result be duplicated elsewhere?
Absolutely. RMI is supporting co-ops in Colorado (link to press release) and Texas (link). Here (link) are results from our Colorado RFP. Co-ops and municipal utilities nationwide are increasingly interested in community-scale solar. RMI is also working with communities in New York State to develop community-scale solar.
What role does the Rocky Mountain Institute see itself occupying in the market, and how does this work add value to the overall market equation?
We are working to accelerate the market in a variety of ways:
1. Acting as buyers representative for groups of rural electric cooperatives and municipal utilities. This allows co-ops who may have limited exposure to solar and limited staff availability to access solar at lowest price.
2. Creating tools and resources to help co-ops nationwide evaluate and access low-cost solar. These resources will allow a broader group of co-ops to access low-cost solar.
3. Helping to reduce soft-costs by creating a standard power purchase agreement and other documents. Contracting and other transaction costs are significant in community-scale solar. Our efforts seek to reduce those transaction costs and therefore the project's LCOE.
About Kevin Brehm
Kevin is the Co-Op and Municipal Utility lead for the Shine Initiative at Rocky Mountain Institute (RMI). In his time at RMI, Kevin has focused on opening up underserved niches of the renewable electricity market.
Before joining the Shine team, Kevin was an associate with RMI’s Business Renewables Center (BRC). Kevin helped build the BRC from its inception to its current role as a market driver with more than 100 members. Currently Kevin enables rural electric cooperatives to reduce the price of solar by 30-40% by helping them execute effective procurement.
In a previous life, Kevin taught skiing in Utah and middle-school science in Denver. Kevin holds degrees from Penn State and University of Colorado and lives with his family in Carbondale, Colorado.
RMI is working directly with electric cooperatives in Colorado, New Mexico, and Texas, as well as communities in New York State, to develop community-scale solar installations for local residents. RMI expects these developments will deliver clean, renewable solar power that is at least 30 percent less expensive than their current electricity costs.
Shine™ develops innovative community-scale solar projects—leveraging economies of scale, standardized system design, innovative business models, and other levers—to make solar energy more affordable and accessible to greater numbers of customers by better reaching underserved market segments like multifamily dwellings, commercial and industrial properties, and universities across the country.
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
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