Crowd Sourced: Details on a plan for drastic cost reductions, wide deployment of community-scale solar

community scale solar

Community solar to this point has been more of a riddle than a segment. Generally referring to shared solar development that accepts capital from and provides output credit to subscribers and other investors, the potential of the community solar segment is massive. Removing roof and space constraints from the equation, the Smart Electric Power Alliance (SEPA) puts the potential market for community solar from a floor of around 3 million households to more than 12 million, depending on program design and marketing.

Ah, program design. Here comes the riddle. How do you design a solution that taps into that potential when often no single stakeholder sees enough benefit to drive project development? Barriers surrounding cost, access and demand continue to drag on the community solar sector’s overall growth when simpler, proven PV models are already established.

More and more answers to the riddle are emerging though, and community solar is moving on a steeper upward trajectory. In 2017, a year in which both utility-scale and residential segments decreased, for the first time since 2010, community solar boomed.

“Minnesota headlined a banner year for community solar, with more megawatts installed in that state than total U.S. community solar installations in all of 2016,” said Austin Perea, GTM Research solar analyst and co-author of the U.S. Solar Market Insights Report for 2017. “We expect community solar to diversify geographically in 2018, with Maryland and New York to be key growth markets for the sub-segment beginning this year.”

Zooming out to the broader community-scale solar (CSS) segment, defined as 0.5- to 10-MW projects that include co-op, municipal and IOU rate-based projects along with large C&I and shared solar gardens, reveals even more potential. In fact, we might be on the verge of an Occam’s razor model for CSS that has a five-year roadmap to 50 cents per watt total installed cost — a cost level that could drive the potential for community solar and other mid-sized solar installations to 30 GW installed by 2020.

RELATED: Solving C&I Solar: How boutique financing is growing this underserved solar segment

What the what?

This concept starts with the Rocky Mountain Institute (RMI), a renewable energy think tank located in Boulder, Colo. RMI believes CSS sits in a sweet spot in the market and represents an economic opportunity of as much as $30 billion. CSS systems are large enough to access low costs through economies of scale and small enough to efficiently interconnect into distribution systems. The potential is in projects between 500 kW and 10 MW in size.
“We believe the medium-size market is poised to accelerate very rapidly,” says Jules Kortenhorst, CEO of RMI. “It has significant advantages in that it can be placed close to electricity load, doesn’t need as much space, can go on top of parking lots or be more in the middle of communities. So, therefore the opportunity is very significant.”

In a new report, The Progress and Potential for Community-Scale Solar, RMI offers new approaches to help drive additional development and buyer adoption of this locally sourced resource. The report relays data and insights from RMI’s work supporting co-op solar procurement in Colorado, New Mexico and Texas, and focuses particularly on the CSS opportunity for rural electric cooperatives. The eyebrow raiser inside the report is RMI’s research that shows a path to reduce CSS costs by 40 percent and enable a 30-GW CSS market — the equivalent of about 50 average-sized coal plants — by 2020.

It’s not all theory, either. In November 2017, RMI gathered 35 diverse stakeholders from across the solar industry to devise a collaborative concept that would realize this vision.

“In demonstrating the ability today to already deliver clean energy at or below 5 cents per kWh on the distribution grid, CSS can be the killer app for cooperatives, supplying a cost-competitive, locally sourced, clean energy resource that also provides resilience benefits to their members,” says Thomas Koch Blank, a principal at RMI. “Seizing on the additional cost-reduction pathways that we identify will help ensure buyers have access to the best CSS offerings.”

The outcome of that November summit was a clear understanding and identification of one path to reduce CSS costs. In full, the plan involves working with manufacturers, communities, utilities and solar developers to build a more transparent, standardized approach that expands market access for CSS installations — functioning, in a sense, as its own community. Here’s how it will happen.

Supply side streamline

The plan starts with the rollout of one or more regionalized assembly plants of modular mounting systems. The goal here would be standardization and factory-assembled units that can be delivered and installed quickly.

“What we really needed to get people to rethink is how solar currently gets solar installed in the field, where all of the components from a diverse set of sources arrive on the site and then everything gets assembled, often at height, which makes it difficult to assemble,” Kortenhorst says. “We needed to get people to think of completely different ways of doing this — a whole system design effort to industrialize the process of assembly, and the big idea that came out is creating a standardized unit that fits on the bed of a flat-bed truck and is easily transported into the field.”

Taken together, RMI estimates a reduction of 20 cents per watt from these regionalized factories. RMI issued a request for information (RFI) to get one or more of them built, and while they are in motion and close to announcing, as of presstime, no specifics were official. Kortenhorst is 100 percent confident one will be in place and deployable by the end of 2018.

“Our concern is to make sure that this solution becomes commercially available at scale and cost effective as quickly as possible,” he says.

RELATED: Solar wealth gap: New reports show size of low-income solar market, solutions to boost installs

Demand side driver

While the supply side is crucial, many of these system cost reductions might have happened organically from the manufacturer side, and those innovations aren’t quite as impactful without the second piece of the puzzle: a reduction in soft costs. Easier said than done, especially with complex community solar deals.
To achieve this, RMI is collaborating with co-ops, municipal utilities and buyer aggregations to build more buyer-side efficiencies.

“The biggest opportunity, in our view, is to help co-ops and municipal utilities realize if you put an RFP out and bring together the site, interconnection, the permitting, the financing and then you go to tender, you are likely to get a much more competitive offer from the developer because you have significantly reduced the risk,” Kortenhorst says.

Putting it that way makes it sound so simple, and it’s not a stretch to expect a municipality to do such legwork at the outset. The more traditional way is kind of silly, really, with the RFP process requiring the developer to take responsibility for permitting and land acquisition pieces that the municipality is in a better position to organize.

“As a municipality, you may know of the appropriate site, you may be able to work with the utility to get a clear commitment on the interconnect, you may be able to deliver the permits upfront and thereby reduce the time and risk for the developer,” Kortenhorst says. “As a collective, as a co-op, you can drive the price down very aggressively.”

These organizations are also best suited for driving awareness and buy-in. Based on market research involving 2,001 residential utility customers and 252 small business customers across the country, a SEPA initiative funded by the U.S. Department of Energy found that while 59 percent of customers were interested in solar in general, only 20 percent were familiar with community solar. In some states, policy dictates that community solar is for the most part a non-utility offer, but in most states, utilities play a leadership role in acquiring the solar resource and offering it as a customer program. According to SEPA, some 170 utilities nationwide currently offer or are planning to offer community solar.

RMI estimates that municipal partners following this blueprint will drive another 30 cents per watt installed out of the cost. Add that to the supply side and voila, a 50 percent per watt install cost reduction.

Current status

Lastly, the concept needs champions at the development, EPC level. Seeds are already being planted.

“We’ve invested roughly $1.5 billion in solar in the last 18 months. If there are cost reduction opportunities that come up, we are willing and able to be there as an interested customer,” says Jenya Meydbray, VP of solar technology, Cypress Creek. “Whatever gets us the lowest cost trajectory while maintaining reliability is the way to go. The product can be pulled through very quickly if the value proposition is compelling enough and the validation is there.”

RMI has been working on this for more than a year, but the timing looks fortuitous in the wake of the #TrumpTariffs news. At worst, just one piece of that two-step cost reduction would more than counter the artificial inflation in module prices.

“This administration has put tariffs on solar panels that amount to 12 cents per watt installed in the first year, and this therefore elegantly aims to overcome that step back in cost effectiveness of community solar,” Kortenhorst says.

A new 3-MW solar project in New Mexico will soon be selling its output below 4.5 cents per kilowatt-hour, a price RMI believes is the lowest reported contract for distributed PV in the United States. RMI provided project analysis and supported the competitive procurement process for Otero County Electric Cooperative Inc.

“This is a solar size that does not exist at competitive rates currently and could really be a breakthrough for all types of energy buyers, for grid resilience and for the opportunity to explore different ownership models at a scale that has real impact,” says Kassie Rohrbach, associate director, Ready for 100 Campaign, Sierra Club. “The applicability of being able to find a small acreage area in any urban or rural place, the siting possibilities, open up the opportunity to bring solar to scale in places we haven’t been able to before.”

— Solar Builder magazine

RMI: Solar saves carbon faster, more effectively than nuclear power

solar saves more than nuclear

Renewable electricity, chiefly from wind and solar power, adds electricity generation and saves carbon faster than nuclear power does or ever has, according to a data-rich new study by Amory Lovins and three colleagues at Rocky Mountain Institute (RMI).

The peer-reviewed scientific paper, “Relative deployment rates of renewable and nu-clear power: A cautionary tale of two metrics,” rebuts prior analyses claiming that nuclear power deploys faster than renewable power, and that nuclear growth would be a vital way to protect the climate but renewable growth is inadequate.

The RMI study details how such conclusions result from incorrect methodology and numerous analytic mistakes. The study reveals the need for care in making or interpreting claims about which technologies can and do deploy most quickly, and urges responsible scientists to stop repeating published errors.

RMI report shows path for a 30-GW community solar market by 2020

“Some past literature has asserted that nuclear energy can more quickly displace fossil-fueled electricity generation than modern renewables, but this has been based on a peculiar per-capita metric, perhaps useful for comparing countries but not technologies,” explains Amory Lovins, cofounder and Chief Scientist of Rocky Mountain Institute. His team found that “modern” renewable power (that is, excluding big hydroelectric dams) passed global nuclear output in 2016—and then, say preliminary 2017 data, further accelerated last year, as shown in the graphic above.

 

“Relative deployment rates of renewable and nuclear power: A cautionary tale of two metrics” was published in Energy Research and Social Science, Volume 38, pp. 819–822, April 2018.

Here’s the full article if you’d like to deep dive into this. A separate peer-reviewed 2017 RMI study showed that closing distressed US nuclear plants and replacing them with efficient use would generally save more carbon than continuing to run them, because their operating cost is so high.

— Solar Builder magazine

RMI report shows path for a 30-GW community solar market by 2020

sunlink iowa community solar 2

Community solar project in Iowa, courtesy of SunLink.

While recent CSS market growth has exceeded that of both behind-the-meter solar like rooftop photovoltaic systems and that of utility-scale solar between 2015 and 2017, barriers surrounding cost, access and demand continue to drag on the CSS sector’s overall growth. The Progress and Potential for Community-Scale Solar report offers new approaches to help drive additional development and buyer adoption of this clean, reliable, locally sourced resource.

The report relays data and insights from RMI’s work supporting co-op solar procurement in Colorado, New Mexico and Texas, and focuses particularly on the CSS opportunity for rural electric cooperatives. It follows RMI’s research highlighting levers to reduce CSS costs by 40 percent and enable a 30-GW community scale-solar market—the equivalent of about 50 average-sized coal plants—by 2020.

How do we get there?

RMI believes the CSS segment sits in an economic sweet spot in the market and represents an economic opportunity of as much as $30 billion. Community-scale systems are large enough to access low costs through economies of scale and small enough to efficiently interconnect into distribution systems. Via these solar arrays — between 0.5 megawatt (MW) and 5 MW per installation, interconnected to distribution networks and sited directly within the neighborhoods they serve —cooperatives can leverage local connections to facilitate the development process, further reducing costs.

“In demonstrating the ability to already today deliver clean energy at or below 5 cents per kilowatt-hour on the distribution grid, CSS can be the ‘killer app’ for cooperatives, supplying a cost-competitive, locally sourced, clean energy resource that also provides resilience benefits to their members,” Thomas Koch Blank, a principal at RMI, said. “Seizing on the additional cost-reduction pathways we identify will help ensure buyers access to the best CSS offerings and their range of benefits.”

Here’s a plan to cut solar costs to offset impact of new tariffs on panel prices

RMI in December announced the start of construction on a new 3 MW solar project in New Mexico that will sell its output below 4.5 cents per kilowatt-hour, a price RMI believes is the lowest reported contract for distributed photovoltaic solar energy in the U.S. RMI provided project analysis and supported the competitive procurement process for Otero County Electric Cooperative, Inc.

RMI is working with communities, utilities, and solar developers to build a more transparent, standardized approach to help expand market access for community-scale solar installations. The organization also is continually expanding its network to both raise awareness of the benefits of this technology, and simplify the process to help stakeholders determine how CSS can help lower electricity costs and bring more clean energy onto the grid.

— Solar Builder magazine

New Mexico solar project to sell output at lowest PV per kWh price in U.S.

new mexico solar project

Construction has commenced on a 3 MW solar project in New Mexico that will sell its output below 4.5 cents per kilowatt-hour, a price Rocky Mountain Institute (RMI) believes is the lowest reported contract for distributed photovoltaic solar energy in the U.S.

Otero County Electric Cooperative, Inc. (OCEC) will receive output from the Carrizozo project, which will be developed and owned by Chicago-based SoCore Energy, LLC, one of the nation’s leading developers and operators of commercial and distributed solar generation and energy storage. RMI provided project analysis and supported the competitive procurement process.

The project, which has a 25-year power purchase agreement at a fixed price, is expected to come online in March 2018. OCEC covered the cost of the land and the interconnection and will receive the renewable energy credits from the project as part of the power purchase agreement. The project, located in Lincoln County, does not receive state tax credits or subsidies.

Carrizozo is not Otero’s first solar project—Otero’s first co-op solar project was a 76 kW array built in 2014, which was later expanded to 150 kW. Having gained experience and comfort with distributed solar, Otero was ready to explore larger “community-scale” arrays such as the Carrizozo project.

Community-scale size

Community-scale solar refers to solar arrays that generate between 0.5 MW and 10 MW per installation, are interconnected to distribution networks and are sited directly within the communities they serve. They sit in an economic sweet spot in the market and can deliver significant savings to electric cooperatives and municipal utilities across the country. Community-scale systems are large enough to access low costs through economies of scale and small enough to efficiently interconnect into distribution systems.

In addition to co-op member savings, the project is expected to provide approximately $550,000 in property tax revenue over its lifetime and will provide local jobs during site development and construction. More than 25 contractors and other professionals will be involved in construction activities at the site.

Solar for All: How to incentivize community solar projects to benefit low-, middle-income customers

“The Carrizozo project points to the compelling customer savings, grid benefits, and clean energy resources that energy providers can deliver via community-scale solar,” Stephen Doig, a managing director at RMI who coleads the institute’s work to radically increase the adoption of distributed renewable energy, said. “We hope what OCEC has accomplished here can serve as a model to scale similar distributed solar projects across the country.”

This project is one of many solar projects that are expected to be built with rural electric cooperatives across New Mexico as more members recognize the opportunity to access affordable, reliable clean power generated within their communities.

In addition to its community-scale projects, OCEC also receives solar power from its power supplier, Tri-State Generation and Transmission Association, including two utility-scale solar power projects near Deming and Springer, New Mexico. Tri-State is the largest solar cooperative in the U.S., with 85 MW of solar energy resources.

— Solar Builder magazine

New platform from Rocky Mountain Institute to better educate solar energy buyers

rocky mountain institute

Rocky Mountain Institute’s (RMI’s) Business Renewables Center (BRC) just launched a new software-based educational platform to help buyers of renewable energy better understand the transaction process for procuring wind and solar power — The Buyers Roadmap.

“We set out to create an online learning experience for those who want to take action on their sustainability efforts, but don’t know where to begin,” said Miranda Ballentine, managing director at RMI and lead at the Business Renewables Center. “With this tool, procurement managers, sustainability directors, and even CFOs can all log in and learn about aspects of a renewable energy transaction that are most important to them. As more companies and organizations double down on sustainability, quality education can be the difference between a smart renewable energy deal or a poorly informed deal.”

How it works

The Buyers Roadmap educates nonutility energy buyers through a standardized process to plan and execute a power purchase agreement (PPA) for renewable power. The Buyers Roadmap includes detailed instruction and advice to fit a range of buyer needs, including determining energy load and company goals, running a request for proposal (RFP) process, and ensuring follow up after the commercial operation date.

“Working through the BRC Buyers Roadmap has really helped provide clarity for the renewable energy PPA transaction process,” said Richard Profit at PepsiCo. “Renewable energy can play a key role in meeting PepsiCo’s goal of reducing absolute greenhouse gas emissions across our value chain by at least 20 percent by 2030, and encouraging new wind and solar capacity will help us collectively move to a lower carbon economy.”

The BRC’s Buyers Roadmap also includes a number of deep-dive guides on topics such as accounting, risks associated with long-term PPAs, and an RFP template to streamline the request for proposal process with proven best practices.

The Buyers Roadmap was developed as part of BRC’s digital Learn|Analyze|Opportunities product suite that includes the Market Analysis Platform (MAP) for identifying project value and the BRC Marketplace, which connects corporate buyers and service providers with available renewable energy projects and project developers. The BRC’s product suite is available to a growing membership of over 200 corporate buyers, renewable energy project developers, and intermediary service providers.

— Solar Builder magazine