In U.S., mid-size project momentum "puts solar where the sun doesn't shine"

In Rockford, Minnesota – a typical U.S. Midwestern town – you won’t find sunshine nearly as often as you would in California, Colorado, Arizona, or Florida. But that hasn’t stopped the 26-square-mile municipality with a population of 4,330 from starting the first community-based solar project in the state.

Sponsored by Wright-Hennepin Cooperative Electric Association, the solar farm comprises 171 panels on the utility’s property – which sold out at an inexpensive US$869 each in just four months after the initiative was announced last July. Customers purchased anywhere from one to 30 panels, with most buying between 12 and 15. The more panels buyers own, the more credits they will receive off their monthly electricity bills (although they cannot get credits beyond the amount of energy they use annually).

"The response was much better than I anticipated because we really didn’t promote it all that much," Rod Nikula, the utility’s vice president of Power Supply, told "Finance & Commerce," a digital publication. "I think the people that are buying them wanted to get solar but couldn’t install it on their own properties," he said. "Around 80% of homes in the United States are not suitable for solar."

Cumulatively, the grid-tied solar plant will provide 53,000 kW of power, or enough to supply energy to four homes. Completed last month, the solar farm sourced its photovoltaic solar panels from Bloomington-based TenKSolar. What’s more, it will be the first community solar project in the nation to incorporate battery storage, which will be provided by Baxter-based Silent Power Inc.

Cheaper by the dozen

Momentum for municipal/mid-size solar installations is growing in the United States, according to data collected by the United States Deal Tracker, a service of the Port Washington, New York-based research firm, NPD Solarbuzz. In a blog posted this week, the analysts announced that solar PV projects in the range from 100 kW to 2 MW account for over 60% of the current U.S. project pipelines.

Among the most popular models, but far from the only one, is community-based solar (such as the initiative in Rockford), which enables residents to purchase "shares" of a photovoltaic project to offset their own electricity use, although they are not able to act as hosts. As more areas begin to allow this type of ownership, there is a significant potential for further growth in the mid-size project pipeline. In many ways, this is a brand new growth opportunity for the downstream photovoltaic market, the analysts said, as customers who might be interested in solar, but are unable to install it due to their lifestyle (for example, as apartment dwellers), will be able to invest and in larger-scale systems.

In some of the more ambitious projects, master plans now embrace the needs of an entire town, county, or school district. Typically, contracts cover everything from development to operations and maintenance of the system for up to 25 years – often with no cost to the host for installation. Also, while previously there contingency plans were a popular means of extending projects in later years, this is rarely discussed now, unless part of a larger plan already in development. Once an installer is on-site, the aim is to get as much power as possible, to complete the project quickly, and to reap the benefits with a steady return on investment.

Enthusiasm for mid-size range photovoltaic installations developed and owned by a third party is particularly strong for municipalities and educational institutions. Because many cities, government entities, and schools are unable to take advantage of tax breaks, developers have been quick to step in with third-party ownership in states where such ownership models are allowed. In this type of model, the host leases space to the developer and pays no upfront cost for the solar installation. Electricity is received through a power purchase order at a fixed or fluctuating rate as determined by the contract. The developer then owns and maintains the system, and claims the tax incentives.

"The new ownership models and increasing scope for photovoltaic projects have developed in parallel," states Christine Beadle of Solarbuzz. "Now, rather than a city/municipality looking at each site as an individual project, such as a library on one side of town and a fire station on the other, these projects are being looked at as one master project, meaning bigger overall projects/contracts, even though each photovoltaic array is similarly sized and located at different sites."

She adds, "This type of project can help bring down soft costs as multiple arrays can be bid out as one project and installers can capitalize somewhat on economies of scale when purchasing components."

Edited by Vera von Kreutzbruck.