COMMUNITY SOLAR GARDEN
As I shared last week, the district has been involved in discussions about participation in the Community Solar Garden program. Although the process is somewhat complex and has many layers of regulatory steps, the essence of the program is that Xcel Energy is required to increase its use of renewable energy sources within the power grid.
In order to “grow” the resource, incentives are offered to community organizations to become subscribers to Community Solar Gardens. “Target” organizations include governmental entities such as cities and schools. I thought I would take some time to share additional information about the Community Solar Garden program we have been exploring.
I recently received some information from Xcel Energy about the Community Solar Garden program. I thought Xcel explained the program well, so I am using their basic explanation in the next three points:
A. WHAT ARE COMMUNITY SOLAR GARDENS?
Community solar gardens were approved by the Minnesota Legislature in 2013. They're defined to be no larger than 1MW. They're designed, financed, constructed, owned and operated by a developer or a "garden operator."
The developer submits an interconnection application to Xcel Energy and is responsible for all grid upgrades necessary to support the solar garden. The developer will seek subscribers and enter into agreements with them for a portion of the garden. A developer needs five or more subscribers per community solar garden.
The developer and Xcel Energy will enter into an agreement after the interconnection study is complete and the developer has agreed to pay for the electric grid interconnection facilities needed to deliver the solar garden generation output to the electric distribution grid.
B. WHAT'S XCEL ENERGY'S ROLE?
We credit each subscriber's electricity bill for the energy generated by their portion of the community solar garden. The credit is based on a set amount for each kilowatt-hour of energy generated. We also distribute the energy generated by the garden to any and all customers connected to the grid. All of these costs are paid for by all customers.
C. HOW DO CUSTOMERS SUBSCRIBE?
First of all, subscribers must be an Xcel Energy electric customer and the subscriber's electric premise must be located either within the Minnesota county where the garden is located or within an adjoining county. The subscriber can own no more than 40 percent of the garden's output and will pay the developer for their ownership portion of the garden's output.
As the information has been shared with us, it has become apparent that schools and cities could be important entities in the CSG program. The amount of energy consumed by schools and public entities allows these organizations to be significant subscribers to the solar gardens.
In the case of ROCORI, we use enough electrical energy to subscribe to five separate gardens. The legislation allows the district to contract (because of potential future energy growth) for up to 120% of our current energy use.
Our contract would be with a solar energy provider to help pay for the construction and maintenance of the solar garden. Although the district would not have any direct responsibility for the development, care and structure of the garden, our subscription provides the financial basis to implement and support the garden.
The contract, in essence, makes the ROCORI School District a provider (through the subscription) of solar energy into the power grid. Because Xcel has to integrate a certain amount of its power through renewable energy resources, Xcel purchases the electricity from the solar garden.
As explained in the Xcel information, the benefit to the district is that Xcel credits the district for whatever energy is produced and put into the energy grid. What makes the program attractive to schools is that the credit back to the school is greater than the cost of the subscription fees.
The subscription fee stays constant for the life of the garden project. It is expected, however, that the value of the energy credit will increase over time. The projections outlined in the energy proposals to the district indicate that the value of the project could provide up to $4.5 million over a 25 year project.
Those figures, of course, are estimates based on a number of assumptions. Officials who have studied the proposals have concluded that there is very minimal risk to schools in the process. If the district enters into an agreement, the costs as a subscriber to the solar garden are only incurred if and when the garden actually produces energy.
There is no energy credit, either, until the garden produces energy. If there is no energy, there is no cost and no credit. If energy is produced, the amount of energy determines the cost to the district as well as the corresponding credit back to the district—and both parts are established at specific base levels.
The greatest risk is if electrical energy costs drop significantly. If electrical energy values drop below the cost of the subscription fees, the fees would create a deficit condition.
The school district has heard a number of presentations and proposals for Community Solar Gardens. I was first able to sit in on a presentation for one of our neighboring schools.
We, then, scheduled a presentation in the ROCORI District from several providers. The providers each had different approaches, experience, and opportunities. They were in various levels of securing approval through Xcel. They had various types of solar construction projects, means of financing the projects, and control of the gardens.
All of the proposals and projections that we have seen would allow the district to receive more in credits than it would pay for the subscription. However, the district team reviewing information has a greater level of comfort and confidence in one of the formats than others. It is expected, at the June 22 school board meeting, that the district will enter an agreement with SunEdison for a solar community garden.
We will review a final proposal by June 22, but the ROCORI School District is seriously considering participation in the Community Solar Garden. Everything that we have seen indicates we have nothing really to lose and only benefits to gain from the arrangements.