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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