Electric Coops Vet Community Solar Plan

Subscribers to a community solar program in the works by five Virginia electrical cooperatives would pay a rate premium of 42% to 45% to use clean, renewable energy, according to data released by the electric coops.

The five rural cooperatives, who may be joined by others in a State Corporation Commission (SCC) filing late October or November, have developed the plan for customers unable to install their own solar capacity to purchase solar through the coops. The rates primarily reflect the cost of building the solar capacity. They do not include any cost for administering the program, but they do cover transmission and line losses to the cooperatives.

The five electric coops include A&N Electric Cooperative, Central Virginia Electric Cooperative, Mecklenburg Electric Cooperative, Northern Neck Electric Cooperative, and Rappahannock Electric Cooperative.

Unlike like investor-owned utilities, such as Dominion Energy and Appalachian Power, Virginia’s electrical cooperatives are owned by their customers. Because they pay no dividends to shareholders and don’t answer to Wall Street analysts, they have more flexibility in the programs they offer, said Sam Brumberg, association counsel for the Virginia, Maryland & Delaware Association of Electric Cooperatives, in a conference call Thursday to solicit feedback from solar developers and other stakeholders.

Legislation enacted in the 2017 General Assembly session allows electric companies to create “community solar” programs in which power companies market and re-sell solar power built by independent solar developers. The programs must be approved by the SCC.

Numerous electric coop customers have expressed an interest in purchasing solar energy through the cooperatives, said Brumberg, and the community solar program will provide them with a choice they don’t have now. The voluntary program will provide customers “easy on, easy off,” one-year subscriptions, which will allow them to avoid the long-term financial commitment of installing their own solar.  However, the voluntary program is designed to recover its costs from its subscribers.

The program will guaranteed flat rates for at least three years. While the solar portion of the rate will remain fixed for longer periods, the distribution charge may rise. 

A major sticking point addressed in the conference call was affordability of the program for low- and middle-income (LMI) customers. Brumberg discussed the potential for subsidizing the rates for certain customers, perhaps through government grants, foundation grants, or involvement of a large commercial “anchor tenant” who could absorb a disproportionate share of the cost.

Bacon’s bottom line: These are the first figures I’ve found that indicate the  cost of community solar in the current economic environment. The 40% to 45% premium represents a significant hurdle to widespread market penetration. In effect, community solar represents a luxury good in the energy marketplace, a fact that the electric cooperatives indirectly acknowledge by their concern that LMI customers may be difficult to recruit.

Admittedly, the economics of solar are changing. The per-kW cost of solar is steadily declining. So is the cost of battery storage, which makes it feasible to store surplus solar-generated electricity and release it when needed. Moreover, the “fuel” cost of solar — essentially zero — will not increase, while the cost of fossil fuel alternatives, especially natural gas, most likely will rise over time. But as long as programs are voluntary, and as long as most customers value money in their hand today more than savings years from now, it will be a challenge to persuade them to pay the premium.

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7 responses to “Electric Coops Vet Community Solar Plan

  1. I notice that REC is doubling it’s access charge in 2018…. this is a pretty hefty hike but according to them .. it still will not cover their actual costs:

    ” Access Charge

    The calculated fixed cost of providing access to the electrical grid and other expenses related to delivering electricity is $37.10 per member each month. These costs per member are fixed, or do not change, regardless of how many kilowatt-hours (kWh) a member uses.

    Currently, the Access Charge for a residential service is $10, which is far less than the actual cost of more than $37. Under the proposed rates, REC will recover $20 through the Access Charge, or a little more than half of the actual cost. This change will help bring our charges more in line with our costs, and also help ensure that costs are more fairly paid by those who create the expense.”

    http://www.myrec.coop/res/account/access_charge.cfm

    might be interesting to compare access charges for investor utilities like DOM. In theory – it should work out similar to REC if done on a per customer basis, right?

    But there is a bigger issue here and that is if utilities charge fully for the delivery and access infrastructure – and everyone pays it – including those who use solar ..then should the solar folks pay more and if so.. what would they be paying for more than their share of the delivery and access infrastructure?

    • I doubt a big investor-owned utility’s customer access charges would be as expensive as those of a smaller REC. Think of the economy of scale and the ability to afford cost-saving systems that smaller companies cannot.

      The rate premium for solar proves the fact the environmentalists should not be seen to speak for ratepayers. They are an important part of the public policy debate, but certainly are not advocates for cheap and reliable energy to meet consumer needs and aid in economic growth.

  2. re: ” but certainly are not advocates for cheap and reliable energy to meet consumer needs and aid in economic growth.”

    that’s an odd view.. Enviro’s see pollution as “costly” …. pollution kills people .. kids, elderly, those with compromised immune systems.. mercury in fish – harms people….. coal ash contaminates the water table… has to be cleaned up.. and that’s costly.

    their advocacy for renewables is that they are not only cheap but less polluting and certainly cheaper longer term.

    The problem is – that those who are opposed to enviro’s see them as one monolithic group – that represents the extremes.

    Do you consider Amazon to be an “environmentalist” that does not want cheap or reliable power? A LOT Of people want solar who you’d never consider “environmentalists”… they just believe that solar is less polluting and cheaper in the longer run… the same way they’d buy a car that gets good gas mileage… or a fridge that is super efficient…

    how about those that say Alexandria should clean up it’s CSOs or Fairfax it’s storm runoff problems? Are they “environmentalists”?

    Our politics today often drives us to simplistic knee jerk views and positions where we can’t even support common-sense ideas.. because it’s “political”.

    • “Their advocacy for renewables is that they are not only cheap but less polluting and certainly cheaper longer term.”

      “Subscribers to a community solar program in the works by five Virginia electrical cooperatives would pay a rate premium of 42% to 45% to use clean, renewable energy, according to data released by the electric coops.”

      These two statements are inconsistent. Both should be probed deeply.

      If the costs incurred by the RECs are legitimate and the cost studies supporting the rate premium reasonable, solar energy in this case is not cheap and, for many people, likely not affordable. If environmentalists argue that, even with these (assumed) facts, the REC should offer solar power as a choice, I think they are very reasonable. If, on the other hand, they argue purchase should be mandatory or current generation sources eliminated in favor of this solar source, I think they are radical and dangerous.

      Public policy decisions in these areas have traditionally been made with the help of cost-benefit studies. All existing and reasonably foreseeable costs and benefits should be considered in the study.

  3. “Facebook will invest $1 billion in Virginia as part of its plans to build a 970,000-square-foot data center at White Oak Technology Park in Henrico County.

    As part of a new renewable energy tariff designed by Facebook and Dominion Energy Virginia, hundreds of millions will go toward the construction of solar facilities to help make the data center powered with 100 percent renewable energy.”

  4. There is no fundamental difference between a “grid access” charge, or a surcharge on self generating customers like those with rooftop solar and net metering rates, or a non-volume-based distribution charge. They all have the same purpose: recover the fixed costs of the local grid facilities that have to be there to provide backup electricity to customers with intermittent alternatives, whose grid purchase volumes are too low to pay for the grid through volume alone.

    I would be very suspicious of those coop access charges. The concept is legitimate, but what assumptions underlying the calculations? Normally, REC recovers its local grid costs through its volumetric energy charge or volumetric wires charge; just how much reduction in volume do they impute to homeowner solar? If you buy solar through the grid, there is no reduction in volume — so, what grid costs — or other costs — are being recovered through that ‘access charge’ that aren’t recovered in the volumetric charge already? Is this solar power from the grid simply a purchase from the PJM renewables energy market, in which case there are NO other costs than the wholesale price in that market? What is the “community” aspect of this that warrants any surcharge or markup above the market price available to any wholesale buyer from PJM, such as REC or ODEC?

  5. These rates do not make any sense at all. Strictly from a cost of energy point of view, even Dominion has shown that new solar has a lower cost of energy than new gas-fired combined cycle plants, so there should be no “premium” if this is for new construction. Community solar is usually smaller in scale than utility scale plants and is integrated into the distribution system and does not require the added cost of transmission (although I understand the addition for lines losses between co-ops, but that is usually quite small).

    A new solar installation provides a fixed cost of energy for at least 35 years, so it is very suspicious that they would only have fixed rates for three years, then have regular increases.

    Normally, transmission and distribution charges are assessed according to how much energy is used. Acbar has it right, if the solar is purchased and delivered through the meter, then there would be no reason to assess an additional “access charge” because they are already being billed for T&D access according to how much energy they use. In that scenario, as opposed to net metering, they are paying their fair share of the “wires” charge.

    This is a very suspicious deal. It sounds like the type of arrangement that utilities have established in other areas to discourage solar. But it doesn’t make sense in this case because it won’t reduce the utilities revenues in the way that self generation can. Somebody didn’t do the math right. There is too much actual history now in Virginia showing the equal or lower price of solar compared to conventional generation. It is hard to imagine anything other than a slanted calculation that would support a 40+% premium being applied. I don’t understand the motivation for this strange result.

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