Welcome to Minster, Ohio. (Hat tip to Clean Technica.)
Check One: A 4.3 MW solar array.
Check Two: A history of being supportive to local residents, and a plan for making them more efficient and reducing their electrical energy needs.
Oops, but the Ohio state legislature creates a bump-in-the-road by passing SB 310 and with Governor and Presidential candidate John Kasich signing it:
SB 310 had the calculated effect of taking the value out of Ohio in-state SRECs [solar energy credits], removing investor confidence in the Ohio SREC market as a whole, and devaluing any projects in development and planning due to the RPS [renewable portfolio standard] cancellation threat …
Prior to SB 310, solar investors could, with confidence, factor the SREC production into their financial modeling. By the most conservative of pricing models, without [SB] 310, SRECs would have added nearly 1.5 million dollars in value to the 4.3 Mw Minster solar project in the first 10 years of operation.
(From PV Magazine.)
So, Check Three: A 7 MWh energy storage facility so attractive in combination with Minster’s solar array, that they’ve converted to a power purchasing agreement, meaning that there’s no upfront cost.
Solar: It’s unstoppable. Try to slow it down, Mr Public Utility (with governmental minions in tow), your demise takes a step closer and faster.
“Why energy experts are still shocked by the rise of solar & the fall in costs“, with a hat tip to Ashley Paulsworth at LinkedIn.
Update, 12th May 2016: More on Minster, OH
See more on Minster’s municipal solar utility project, built and run by Half Moon Ventures.
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There’s a related article in USA Today.
“Try to slow it down, Mr Public Utility (with governmental minions in tow), your demise takes a step closer and faster.”
Minster, OH is an example of a public utility. It just has a truly public mission and business model.
Not sure what to say about the power purchase agreement, as I am very chary about that sort of thing, if it means long-term obligation to paying higher rates than necessary. I am no financial maven, but it seems to me that if Minster, OH had simply capitalized the infrastructure with municipal bonds, they would be in better control of their energy future, and likely to pay a lot less in the long run.
Well, unlike fossil fuel energy, which is highly volatile in pricing, a feature of zero Carbon energy is the price is incredibly predictable over the long term.
Note, however, that the reason Minster was pushed into this situation was due to the ill-advised actions of their state legislature. As I understand it, their original plan was not to use a PPA or build storage. However, it seems to me, given the actions of Ohio, their choice was quite rational.
The cost of energy now in Minster is contractually constant for 30 years or more, and I’m not sure even the financial markets can deliver on that kind of promise.
“The cost of energy now in Minster is contractually constant for 30 years or more,”
As it would be if they outright owned the infrastructure, assuming the sun still rises in the East. There is not a lot of room for profiteering with PV solar. The panels get put up, and energy flows for many decades. If you own the panels, you make the most money. If Minster doesn’t own the panels, the power purchasing corporation is the needless middleman who is making money off of them. For what service that could not be replaced with some municipal bonds to buy the system and incorporating PV panel maintenance as a job for the City Electric Department?
I foresee a future where eventually electric power becomes so inexpensive it is actually cheaper to 86 the whole metering invoicing apparati costs, and just fund the whole power generation sector as a City, State, or Federal general service like a City Police Dept, or a State Dept. of Health, or the Federal Dept. of Agriculture.
I very much agree with you. But I think you missed the point of the post.
The Ohio government stripped SRECs and the Renewable Portfolio Standard (RPS) away, and killed net metering. Accordingly, the payback period for the original panels set, which did not have any plans for storage, was deemed too long to take the risk with capital, or even a bond. As most solar users, as I’m sure you realize, Minster was planning to essentially use the grid for storage of energy to power night electricity. Pulling net metering out, like the 40% hit that Massachusetts just put on commercial scale net metering, made the payback period very unattractive.
The point of the post was that this did not kill the project. Although Minster could not justify allocating capital to the project, the proposal from the developer was to add the storage, increase the solar, and capitalize it themselves, leasing the energy back to Minster with a PPA. Now Minster doesn’t need the grid, and in fact doesn’t want it. The point is if state governments, for whatever reason, pursue this approach, they will encourage the creation of these self-sufficient islands of energy who won’t care about the future of the common grid, and will, justifiably, hoard their electrons. If this keeps up, the grid will start on its death spiral, because grid defection will cause overhead costs to increase for everyone who remains. Except in Draconian states (like Flordia) you can’t force someone to be connected to the grid, and even if they are, they can do everything possible, by time shifting load, for instance, to minimize their draw. If government imposes minimum monthly fees, as some do and some plan to consider, all they are doing is increasing the incentive to cut the final ties. Eventually, technology will be there to enable anyone to do that for the price they can afford.
And, as in the case of Minster, if the deal is a good deal, even if they cannot afford it, companies will step up, even if they are “middlemen” as you call them, and they will do it for no capital cost to the lessors. You may disparage them as “middlemen” but they are, after all, bankrolling the project. They should earn something for that.
Indeed, I see net metering and SRECs as rewarding residential investors in solar and commercial solar starts for their willingness to put up that capital. Some ISOs, like ISO-NE (but not ISO Texas or ISO-NY) want to do that using their old fashioned, traditional model which rewards big generators. Of course it does: If there are tens of thousands of generators, that cannot be coordinated without extensive automation, or, in other words, a smart grid. Then ISO-NE is out of a job, because they don’t have to run the capacity markets any longer.
Either the grid we know of simply dies, or it recognizes how it has to change and changes. Given the track record of established organizations, at least in business, of seeing the future and changing themselves to match it, I think the former is more likely. Businesses usually file Chapter 11 before changing themselves over. Others never make it.
Ah – thank you for your thoughtful reply 🙂