Local Energy Rules

There aren’t many solar success stories from the Southeast, making Raleigh, NC, stand out in a region with low-cost electricity and modest sunshine. With just over 2 megawatts of solar on public property––providing close to 7% of municipal building peak demand––Raleigh’s solar success comes despite state rules preventing city from buying electricity from any non-utility entity.

In April 2015, John Farrell talked to Robert Hinson, renewable energy coordinator with the City of Raleigh, NC. In lieu of third-party power purchase agreements, Raleigh has pursued solar in three ways: by leasing space on public property to solar developers; owning solar and selling power to Duke Energy; and net metering a city-owned solar array.

Read more about Raleigh and other cities putting solar on their own property in Public Rooftop Revolution

A Twist on a Traditional Lease

The lease arrangement for Raleigh is a bit different than used elsewhere. Instead of the city leasing the solar array from a third party, the city leases the land for the solar array, and the solar developer sells power directly to the utility. The city’s economic benefit is from the lease payments.

Hinson says that the lease agreements allow the city the option to purchase the solar project at a reduced price after seven years, in which time the solar developer will have realized tax credits and depreciation. The city would assume the power purchase agreements and continue selling electricity to Duke Energy. The purchase price is favorable, as the contracts were signed in the early stages of Duke’s solar program.

However, Hinson says the city doesn’t yet know the purchase price and so it’s unclear how profitable it would be to buy the solar arrays on leased property.

The city has also purchased solar arrays to offset on-site energy use, using power purchase agreements or net metering. The city’s first foray into solar was a 53 kW solar array on its operations facility in 2009 to see “what were the issues” with going solar. In this case, the city sold the power to the utility via a power purchase agreement.

Another solar installation used net metering, but Hinson notes that net metering only works for relatively small systems. North Carolina’s net metering law only protects projects 100 kilowatts and smaller from utility standby charges. The city’s 75 kW array on its solid waste facility falls into that safe harbor. The project wasn’t necessarily done for the economics, but in part because the city wanted to achieve a LEED Platinum rating.

Expansion plans for solar on Raleigh municipal property will likely focus on small, net metered systems. The upside is better economics, but it also requires buildings with fairly significant on-site energy consumption. City staff will look carefully at “what the return on investment is.”

They have one interesting concept for expanding solar at their wastewater treatment facility. In addition to a ground-mounted array, they are considering floating solar panels on the treatment reservoirs. This “float-o-voltaic” system could produce electricity and, by blocking sunlight from the water, reduce algae growth.

Solar growth for the city has since slowed. When the North Carolina renewable portfolio standard was approved in 2007, the utilities (Progress and Duke Energy, before the latter took over the former) paid favorable rates to distributed solar generators. These incentives had investment groups and developers coming to Raleigh to site solar on city-owned land and rooftops. As “economy-of-scale” has taken over, the investment community has taken their dollars to larger solar installations and not municipal projects, says Hinson.

Overcoming Barriers

What barriers are there for city solar investment? Hinson says the biggest thing is the upfront cost and a failure to consider the retu...

Jason Caudle, city manager with the City of Lancaster, talked with John Farrell in April 2015 about his city’s solar boom. With more than 118 MW of solar, both private and public, operating within city limits, Lancaster is well on its way to producing or procuring 530 MW of clean energy by 2020. Hitting that target would make Lancaster one of the world’s first net-zero towns, producing more energy on an average day than the city consumes.

https://ilsr.org/articles/lancaster-the-leading-solar-city-episode-23-of-local-energy-rules/

Jason Caudle, city manager with the City of Lancaster, talked with John Farrell in April 2015 about his city’s solar boom. With more than 118 MW of solar, both private and public, operating within city limits, Lancaster is well on its way to producing or procuring 530 MW of clean energy by 2020. Hitting that target would make Lancaster one of the world’s first net-zero towns, producing more energy on an average day than the city consumes.

Read more about Lancaster and other cities putting solar on their own property in Public Rooftop Revolution

It started with installing solar projects on city-owned buildings such as the baseball stadium and city hall. The lowest upfront cost option for Lancaster was a power purchase agreement, allowing private company SolarCity to build and own solar arrays on city property and sell the energy to the city. Because electricity rates from Southern California Edison (SCE) are so high and the solar resources in the desert outside of Los Angeles are so good, Lancaster paid less for solar energy from SolarCity owned arrays on its property than electricity from SCE.

Although solar will work anywhere, Caudle says—and is particularly economical in the Antelope Valley— Lancaster made it work because city leadership was willing to say this is important. With all their solar ventures, city officials found that it just wasn’t that hard. “It was a story more of financing than it was a story of engineering or construction,” says Caudle.

Lancaster identified unconventional strategies to get more bang-for-the-buck. In the case of the getting solar energy for city schools, the city formed a power authority, using tax-exempt municipal financing to bulk purchase the solar arrays, and then selling the energy to the schools at a cheaper price than grid electricity.

Although the Power Authority was set up to provide the same service to other cities, none have yet taken up Lancaster up on the offer. “We found a lot of other cities were risk averse to going solar,” says Caudle. A lot of city councils want to avoid that to avoid the possibility of making a mistake, he adds, but Lancaster’s solar deals have saved them money while protecting the planet.

Caudle says it’s as simple as signing a power purchase document. Other cities will get so caught up in putting out a request-for-proposals (RFPs), doing analyses, looking at warranties, that they end up getting distracted by bureaucratic processes. They should really only be looking at whether Company X (e.g. SolarCity) gives them a better price than Company Y (Southern California Edison). (Fortunately, Caudle says, Lancaster and other Californian cities are exempted from having to put out RFPs in this instance.)

John wanted to know whether there are any substantial barriers to continuing the expansion of solar energy production in Lancaster.

The challenge with getting to a net-zero goal, Caudle says, is that they’re only so many people who want solar on their roofs, and only a certain amount of solar possible at city facilities. The next step for Lancaster to achieve net-zero status is community choice aggregation, where the city will procure energy on behalf of its residents and small businesses.

In other words, the city continues to roll over barriers that have stymied other cities.

Lancaster’s aggregation, called Lancaster Choice Energy, is going to start with a standard 35% renewable mix of electricity generation that will go to all electricity customers in Lancaster. There will also be a 100% clean energy option for an extra $10 a month. They hope to add more renewable content in the standard product in coming years, through negotiating for more utility-scale solar within city limits, as well as expanding on current city rooftops.

Not only is Lancaster’s electricity going to contain more renewable energy, it will also cost less.

There are a lot of stories on residential rooftop solar but few if any on what cities are doing to make themselves energy self-reliant by using their own buildings and lands to generate power. In Public Rooftop Revolution, ILSR estimates … Read More

“San Diego and its community choice energy district would be able to offer a diverse energy mix with all of the solar, biodiesel, biogas, and energy storage resources that we have in San Diego.  A product that is price competitive and yet at the same time would strive for and achieve a higher level of renewable content.”

See how this southern California city is striving for more clean energy and more local control in this interview with Lane Sharman, co-founder and chair of the San Diego Energy District Foundation. This podcast was recorded via Skype on May 21, 2014.

https://ilsr.org/articles/price-renewables-san-diegos-fight-community-choice-episode-23-local-energy-rules/

“Utility regulation and rates is a contact sport,” says Karl Rabago, and that makes the implementation of a new “value of solar” policy complex. Will distributed solar grow better with a transparent, value-based contract price? How does it differ from net metering? Is Minnesota’s law a precedent to follow?

Prepare yourself for a deep dive in this extended interview with Karl Rabago, former Vice President at Austin Energy and soon-to-be Executive Director of the Pace Energy and Climate Center at the Pace Law School in White Plains, NY. This podcast was recorded via Skype on May 1, 2014.

https://ilsr.org/articles/deep-dive-solar-future-solar-energy-episode-22-local-energy-rules/

It’s one thing to own your utility and have a commitment to renewable energy, but it’s another thing to deliver. The municipal utility in Palo Alto, CA, set an ambitious target of 33% renewable energy by 2015 and to ultimately deliver a carbon neutral electricity supply. They will reach 48% renewable power in 2017 and met the carbon neutral goal starting last year.

Learn more about the strategies one municipal utility pursued to drive down its carbon emissions and acquire solar energy in this interview with Jim Stack, Senior Resource Planner of the Palo Alto Utilities, recorded via Skype on Feb. 27, 2014.

https://ilsr.org/articles/city-utility-carbon-neutral-today-episode-21-local-energy-rules/

“We can’t do it as an individual, But four hundred communities aggregating and asking for local wind power and solar power – that’s really powerful.”

Oak Park, IL, is one of hundreds of Illinois towns using their authority to buy electricity in bulk on behalf of its residential and small business customers. So far, most communities have used the policy – known as community choice aggregation – to negotiate for less expensive electricity compared to the default electric utility, Commonwealth Edison. Many have also purchased renewable energy credits with their power, but it’s not clear if the practice is greening or green-washing the power supply.

Learn more about the incremental steps forward with community choice aggregation in Illinois and the potential for much greater collaboration between cities in this interview with outgoing Sustainability Manager K.C. Doyle of Oak Park, recorded via Skype on Mar. 28, 2014.

https://ilsr.org/articles/power-of-collective-energy-purchasing-episode-20-local-energy-rules/

Community choice aggregation describes a situation where a town can become the bulk buyer of electricity on behalf of its residential and small business customers. Such local aggregations serve about 5% of utility customers in Illinois, Ohio, Massachusetts, Rhode Island, and California, but it’s Marin Clean Energy in California that stands above the crowd for their commitment to renewable energy and their nearly decade-long fight to offer service.

Learn more about the struggle for local control of the energy system and its numerous advantages in this interview with Marin Clean Energy Executive Director Dawn Wiesz, recorded via Skype on Feb. 13, 2014.

https://ilsr.org/articles/leading-community-energy-aggregator-episode-19-local-energy-rules/

“We have a perfect storm for renewables,” says Jan TenBruggencate, second-term board member of the Kauai Island Utility Cooperative. The Hawaiian utility, made local when the investor-owned utility left the business a decade ago, is surging toward 40% renewable energy in the next year, with a third of that total from customer-generated solar. Half its daytime energy will come from solar arrays by the end of 2015.

Learn more about how a cooperative utility has blown past purported technical barriers to renewable energy and pioneered energy storage to make solar a prominent part of their energy mix in this interview with Jan, recorded via Skype on Feb 25, 2014.

https://ilsr.org/articles/perfect-storm-renewables-episode-18-local-energy-rules/