Tag Archives: Secure Futures

First solar crowdfunding campaign launches in Virginia

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workers complete a rooftop solar array on a warehouse

A Secure Futures project on an InterChange warehouse. Photo courtesy of Secure Futures.

Unless you have a sunny roof or back yard, you probably haven’t found a way to put your money into building local solar facilities. This month, that changed.

Secure Futures, LLC has created a crowdfunding platform to sell solar bonds in support of five projects across Virginia, all for tax-exempt institutions. The financial details, including interest rates and terms, can be found on the crowdfunding website.

The five projects, totaling 1.3 megawatts of solar capacity, involve these customers:

  • The Caritas Center in Richmond, a non-profit that works to break the cycles of homelessness and addiction in the Metro Richmond area, will have a 426.6 kW system to serve a building under construction
  • Eastern Mennonite School, a private K-12 school in Harrisonburg; the 131 kW solar facility will meet 33% of the school’s total electric demand
  • Insurance Institute for Highway Safety, a nonprofit scientific and educational organization with a research center in Ruckersville, where the 200 kW facility will go
  • Shenandoah University, a private university in Winchester; the 467 kW project will provide 10% of the university’s electricity
  • Temple Rodef Shalom, the largest Jewish congregation in the Commonwealth, located in Falls Church; the 115 kW facility will provide 29% of the temple’s electricity

All of the projects will be installed using power purchase agreements or solar services agreements, and all are scheduled for completion in 2019 and 2020.

Although selling bonds to finance solar projects doesn’t sound revolutionary, I’ve found few precedents for the general public to buy into specific projects. Solar City sold corporate bonds directly to the public until the company was bought by Tesla; the bonds financed Solar City’s nationwide portfolio of projects. (Disclosure—I own stock in several renewable energy companies including Tesla, not always to my profit.)

Several years ago another company, Solar Mosaic, raised money from individual investors who could choose to link their investments to specific projects, but the company has since closed the investment side of its business. Other companies have offered investment opportunities only to accredited investors—i.e, people with high incomes or net worth.

Opportunities for regular folks to invest have been slow to emerge since Congress changed the law to allow people to invest through internet crowdfunding back in 2012. But it took the Securities and Exchange Commission until 2016 to implement rules, so it’s early yet. If Secure Futures finds success raising funds for these Virginia projects, perhaps solar bonds will turn out to be the next new thing in project financing.

Fairfax County plans a historic solar buy—if Dominion Energy doesn’t stand in the way

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Worker installing solar panels on a roof.

A worker installs solar panels at Washington & Lee University. Photo courtesy of Secure Futures LLC.

In June, Fairfax County announced it was seeking proposals from solar companies to install solar at up to 130 county-owned facilities and schools, with another 100 sites to be considered for a later round. The request for proposals (RFP) covers solar on building roofs, ground-mounted solar and solar canopies over parking lots.

This massive solar buy could add as much as 30-40 megawatts of solar, according to one industry member’s calculation. This would easily triple the amount of solar installed to date in the entire NoVa region. What’s more, Fairfax County’s contract will be “rideable” so that other Virginia localities can install solar using the same prices and terms.

“It’s hard to overstate how significant a move this is,” says Debra Jacobson, an energy lawyer who serves on the county’s Environmental Quality Advisory Council. “It’s not just the largest solar buy by a local government in Virginia. It also opens the door for other Virginia counties and cities to buy solar because it makes the process simple and straightforward.”

Jacobson says approximately 15 solar companies attended a bidder’s conference hosted by Fairfax County, indicating strong interest. The county intends to select a contractor by early fall.

One problem stands in the way: Virginia law currently places an overall limit of 50 MW on projects installed in Dominion territory using third-party power purchase agreements (PPAs), the primary financing mechanism for tax-exempt entities.

Even without Fairfax County’s projects, the solar industry warns the cap will likely be met by the end of this year, as schools, universities, churches and other customers across Virginia sign PPAs at an accelerating rate.

The solar industry is asking the State Corporation Commission for action to keep the market alive. Secure Futures LLC, a Staunton-based solar developer, submitted a letter to the SCC on June 24 asking the commission to raise the program cap from 50 MW to 500 MW in Dominion territory and 7 to 30 MW in Appalachian Power territory and to increase the size limit for individual projects from 1 MW to 3 MW.

PPAs allow customers to have on-site solar installed with no upfront cost; the customer pays only for the electricity the solar array produces, at a price that is typically below the price of electricity purchased from the utility. It’s an especially critical tool for cash-strapped local governments and school systems, letting them save taxpayer money while lowering their carbon footprint. Every kilowatt-hour they get from solar replaces electricity they would have to buy from the grid, which in Virginia still comes almost entirely from fossil fuels and nuclear.

For-profit monopoly utilities like Dominion Energy Virginia and Appalachian Power don’t like losing sales when customers generate their own electricity. Virginia’s customer-owned electric cooperatives negotiated legislation this year to remove PPA barriers for non-profits in their territories, but Dominion and APCo didn’t sign on. Both utilities fought Solar Freedom legislation and other bills that would have lifted the PPA cap, claiming there was still plenty of room for projects under the 50 MW cap.

But there may be a simple solution — if the utilities don’t fight it. The legislation that created the PPA program in 2013 directs the SCC to review it every two years beginning in 2015, and to “determine whether the limitations [on the program size and project sizes] should be expanded, reduced, or continued.”

The SCC has never opened a case docket or consulted stakeholders in any previous review of the program — but no one seems to have asked until now. Secure Futures’ letter requests that the SCC open a public docket for this year’s review and consult with stakeholders, including the solar industry and customers.

In his letter, Secure Futures’ CEO Tony Smith notes that Virginia remains well behind North Carolina and Maryland on solar installations, solely for reasons of state policy. Installations using PPAs also lagged until the past year, but are now expanding “at an exponential rate,” according to Secure Futures, with notifications filed for almost 20 MW of projects as of June 12. This number does not include the Fairfax County projects or many others that are still in the early stages of development.

Other solar developers have also asked the SCC to lift the PPA cap. Ruth Amundsen, manager of the Norfolk Solar Qualified Opportunity Zone Fund, told the SCC in a July 20 letter that her fund has identified $117 million of potential solar sites in the Norfolk and Virginia Beach area. The fund brings in investors and installs solar on businesses and non-profits in Virginia Qualified Opportunity Zones, which are low income census tracts that offer tax benefits for investors, at no upfront cost to the customer.  It also hires residents of the Opportunity Zones as solar installers, training them and providing employment.

But, Amundsen’s letter notes, “Without PPAs, none of this is possible. If the PPA cap remains at 50MW, we cannot in good conscience advise these investors to invest in solar in the Virginia QOZs, as there would be no feasible financing method once the cap is reached.”

Amundsen also wants the ability to use PPAs for installation on private homes, which is currently not allowed under the terms of the PPA program in Dominion territory. “The original intent of the Norfolk Solar QOZ Fund was to mitigate the energy burden of low-income home owners.  But because of the current limitation on Power Purchase Agreements (PPAs) in Virginia, we cannot install on private homes via a PPA.  Removal of that limitation, and clarification that PPAs are legal with all customers, would allow us to better serve the most affected residents as far as crushing utility bills.”

 

This article originally appeared in the Virginia Mercury on August 1, 2019. 

A 5-year plan for economic growth: 10% solar and 50,000 new jobs

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Source: The Solar Foundation

A new analysis from the non-profit Solar Foundation shows Virginia could create 50,400 jobs if it commits to building enough solar energy in the next five years to provide just 10% of our electricity supply.

The analysis takes the form of an “infographic” showing the implications of 10% solar. It would require building 15,000 megawatts of solar, divided among utility-scale solar farms, commercial installations, and the rooftops of houses. At the end of 2016, Virginia had a total of only 241 MW of solar installed, representing one-tenth of 1 percent of total electricity consumption. Getting to 10% by the end of 2023 would mean an annual growth rate of 61 percent. That would be impressive growth, but well below the 87 percent growth rate averaged by California and North Carolina over the past 6 years.

So 10% in five years should be doable. And indeed, viewed against the need to dramatically lower our carbon footprint, it seems like a very small step indeed. The McAuliffe administration wants to significantly cut statewide carbon emissions, and it is hard to see how we can do that without replacing the dirtiest fossil fuels with solar (and wind, and energy efficiency).

The good news is that the market is in our favor. Dominion Energy’s 2017 Integrated Resource Plan (IRP) identified utility-scale solar as the least-cost energy resource available in Virginia today. And participants in local cooperative buying programs for homeowners and businesses, known as “Solarize” programs, report payback times of under 10 years for rooftop solar, after which they will have nearly free electricity for 20 or 30 years.

Recent solar deals involving Amazon, Microsoft, and now Facebook show just how strong the demand is from customers. The very companies that our political leaders want so desperately to attract to Virginia are insisting on renewable electricity.

These deals demonstrate the direction of the market, and they will give an initial boost to solar employment, especially in the rural communities that are the best locations for solar farms. But restricting solar to a handful of new companies just coming into Virginia won’t get us to 15,000 MW and 10% solar. It’s also fundamentally unfair to the rest of us who are stuck with a dirty grid. Why should existing customers get left with polluting sources, while big tech companies get solar?

For us, Dominion’s IRP caps its solar plans at 240 MW per year, an amount it admits is arbitrary. In other words, Amazon got 260 MW, Facebook is getting 130 MW, but all the rest of Dominion’s customers put together will get just 240 MW per year.

As for customers who are determined to take matters into their own hands with rooftop solar, a host of unnecessary restrictions continue to limit growth. Virginia needs to put policies in place to push utilities to do more, to support local governments and schools that want solar, and to remove the barriers that limit private investment.

Solar companies around the state say if we can do that, they will do their part by hiring more Virginians. Here’s what some of them had to say about the 10% solar goal, and how to achieve it:

“We believe, as Virginians, that we can solve our energy challenges. Ours is a Virginia company founded and based in Charlottesville, and we are committed to building Virginia-based energy production facilities that benefit all Virginians. But the fact is that over the past few years our growth has come from business in other states. We have 26 employees in Virginia now, and we could increase that dramatically if Virginia promotes solar through policy changes that incentivize business owners to invest, allows competition, and supports the environmental message.” –Paul Risberg, President of Altenergy, Charlottesville

“The economics have never been better for solar in Virginia than they are right now. Prospect Solar has grown from two employees in 2010 to 16 full time employees today. Roles such as electricians, skilled labor, engineers, project managers, and sales people are integral to the success of each project. We hope Virginia will commit to a rapid, sustained buildout of all sectors of the solar industry, allowing us to continue adding local jobs.” –Andrew Skinner, Project Manager at Prospect Solar, Sterling

“Nationwide, the solar market was a 23 billion dollar industry in 2016. One out of every 50 new jobs in America was created by the solar industry last year. Sigora has been part of that. We have doubled in size in the past year and now employ 80 people in the Commonwealth.” –Karla Loeb, Vice President of Policy and Development for Sigora Solar, Charlottesville

“Local energy, local jobs, local investment. Our workforce is made up of local people—three of us went to Virginia Tech, one went to New River Community College, which has an Alternative Energy Program. An increase in demand of this scale would mean we’d hire more local people.” –Patrick Feucht, Manager of Baseline Solar, Blacksburg

“Residential and commercial rooftop solar has created most of the solar jobs in Virginia to date, and it has to be a part of the push to 10 percent. As we know, rooftop solar creates more jobs than utility solar, and these are good-paying, local jobs for local people. That’s one reason Virginia should lift the outdated 1 percent cap on net-metered solar, and leave the market open to anyone who wants to invest in their own home-grown energy supply.” –Sue Kanz, President of Solar Services, Virginia Beach

“Ten percent solar is a modest goal to shoot for given the strong economics of solar and the demand we are seeing from customers. Virginia has been held back by restrictive policies that have made it a ‘dark state.’ Reforming our policies would lead to a lot more economic development around solar.” –Tony Smith, President of Secure Futures LLC, Staunton

 

Virginia wind and solar companies say tax credit extensions cue up a happy new year

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Photo by Dennis Schroeder / NREL

Photo by Dennis Schroeder / NREL

Congress included a welcome gift to the wind and solar industries in last week’s package of goodies that made up the year-end spending bill. For the wind industry, the renewal of the expired production tax credit (PTC) with a five-year phase-out finally ends the guessing game that has driven repeated boom-and-bust cycles—and will help Virginia’s first-ever wind farm move forward.

For solar, the extension of the investment tax credit (ITC) beyond the end of next year ensures that one of the fastest-growing industries in the U.S. won’t face a major disruption that would have driven many small companies out of business. That’s critical in Virginia, where the lack of incentives has left the market mostly to small players able to get by on small profit margins. As the economics of solar continuously improve, these small companies see a bright future in the Commonwealth.

I asked several Virginia industry members how they were feeling after Congress’ year-end gift.

“The certainty the tax credit extension gives our business is critical,” answered Jeff Nicholson, Director of Development for Waynesboro-based Sigora Solar. “While there won’t be as much of a crunch to get systems installed next year, we can hire without being concerned that the market for solar will plummet in a year.”

Sigora has been one of Virginia’s most remarkable small business success stories, growing from 11 employees at the beginning of 2015 to 44 today. With the ITC extension, the company now foresees a “long-term, steady stream of business” through the rest of the decade, said Nicholson.

The 30% ITC had been set to expire at the end of 2016 for residential customers, while dropping to 10% for commercial and utility-scale projects. Under the bill passed by Congress and signed by President Obama on December 18, the tax credit will remain at 30% for all systems through 2018, and then taper off gradually until it reaches 10% in 2022. If current price trends continue, the extra few years may be enough to make solar competitive with other fuels without subsidies.

“We know solar is a solid energy production fuel, every bit as viable as coal, oil, nuclear and wind, and it is clear that the more we build, the more cost effective it becomes,” said Paul Risberg, President of Charlottesville-based Altenergy Incorporated. Altenergy grew by 40% in 2015, and Risberg told me he now expects that trend to continue in 2016.

Another Virginia success story is Staunton-based Secure Futures LLC, which has carved out a niche supplying solar energy to tax-exempt entities like universities and local government entities in Virginia, using third-party power purchase agreements. CEO Tony Smith told me, “The ITC extension means that our business can continue to offer at or below grid-parity solar electricity to our commercial scale customers beyond 2016.”

But, he added, “It still remains challenging to attract investment in Virginia due to the disparity in incentives to solar in our state as compared with our neighboring states, especially for behind-the-meter third party owned solar.  We remain hopeful that our industry will continue to build support in Richmond to reduce the barriers to solar investment in Virginia.”

The Virginia solar industry got an extra year-end gift on Monday when Governor Terry MacAuliffe announced plans for the state government to buy 110 megawatts of solar over the next three years, accounting for 8% of its electricity usage. While 75% of that will be utility-scale solar to be built by Virginia Dominion Power, 25% will consist of on-site projects of less than 2 megawatts in size, to be built by third-party developers using power purchase agreements.* The state will follow a competitive procurement process, but in response to a question at the press conference, MacAuliffe said it will not limit participation to Virginia-based companies.

Still, the Virginia industry members were optimistic the announcement would help boost the profile of solar energy in the Commonwealth. The industry trade group, MDV-SEIA, says it participated in the discussions leading to the announcement.

Virginia has a lot of catching-up to do, of course; neighboring states are so far ahead and have so much momentum that, as the Virginia Sierra Club’s Glen Besa observed, “If Dominion sticks to its commitment (of 400 megawatts of solar by 2020), we’ll be further behind on solar than we are now.”

Photo credit NREL

Photo credit NREL

Like the ITC for solar, the 2.3 cents per kilowatt-hour PTC has been a crucial support for the wind industry, making it the second-biggest source of new electric generation in the U.S. for many years now. But until last week, Congress had been reluctant to extend the PTC for more than a year at a time, sometimes retroactively, causing havoc for planners and developers and leading to boom-and-bust cycles deeply damaging to growth.

Now the PTC will be extended through 2016 before tapering off and expiring altogether at the end of 2019. Projects that “commence construction” by the end of a given year will qualify at that year’s level. (“Commence construction” language was also added to the solar ITC.) The predictability that comes with the five-year tapering-off period is expected to finally bring stability to project planning.

And like the solar industry, the wind industry now predicts bright days ahead. Bruce Burcat, Executive Director of the Mid-Atlantic Renewable Energy Coalition, told me, “Sound policies like the PTC have driven innovation which has helped reduce the cost of wind energy down by about 66 percent over the past six years, making it highly price competitive with traditional forms of energy resources. This trend bodes well for the opportunity for wind to take hold in Virginia.”

Burcat is undeterred by Virginia’s lack of success with wind farms to date. “While no wind farms have been developed in Virginia, we believe that with the right signals from the Commonwealth, Virginia could see its first wind farms developed sometime in the next few years,” he said. “Wind farms would bring investment and jobs and other economic development opportunities to Virginia.  Wind farms would also be a very important tool for cleanly and cost-effectively helping Virginia meet the requirements of the EPA’s Clean Power Plan.”

Virginia’s first wind farm is expected to be Apex Clean Energy’s 75-MW Rocky Forge project in Botetourt County, which the company projects to have operational in 2017. Tyson Utt, Apex’s Director of Development for the Mid-Atlantic, told me, “The extension of the PTC will enable the facility to charge less for the energy it produces, saving electricity consumers money.” And, he added, “The project will be built on private land with private investment and will help diversify Virginia’s energy mix while injecting millions into the local economy.”

Apex also has a second wind farm of up to 180 MW under development in Pulaski County, scheduled for completion in 2017 or 2018.

Utt agrees the wind industry won’t need incentives for long to compete with fossil fuels. “The PTC exists to help level the playing field for renewable energy, relative to legacy generation sources that have benefited from permanent subsidies for decades. That said, renewable energy is becoming so economically competitive on its own that the industry now feels comfortable accepting a phase out of the PTC over the next five years, and the tax extenders package that just passed through congress does exactly this. Of course, wind energy offers additional benefits that are not currently reflected in our incentive structure, including the ability to generate electricity without producing carbon dioxide or consuming water. We expect that as our nation moves towards the recognition that there should be a price placed on carbon, wind energy will become even more competitive with conventional generation sources.”

[UPDATE: on January 6, the Associated Press reported that Appalachian Power is seeking to buy up to 150 MW of wind power through direct ownership or long-term power purchase agreements.]

In addition to the tax credit extensions for wind and solar, Congress passed other clean energy incentives that have gotten less attention. Scott Sklar, President of the Arlington-based Stella Group, Ltd. and an adjunct professor at George Washington University, noted that other renewable technologies also qualified for tax credits, and a tax deduction for energy efficiency improvements in commercial buildings was renewed. He also pointed to provisions in the Highway Authorization Act passed into law this month that favor renewable energy. As a result, he told me, “The end-of-year passage by Congress of extensions for the entire portfolio of energy efficiency and renewable energy, coupled with the infrastructure incentives for renewable energy in the highway bill, will more than double private investment into these sectors over the next six years.”

Sklar is bullish on clean energy. “With expanding markets, allowing these technologies to-scale even further, will insure electric grid and fuel parity before 2020, and also insure that renewable energy and energy efficiency will become the dominant energy provider both in the US and the world.”

I should note, though, that not everyone was entirely happy with Congress last week. Though they lauded the tax credit extensions, environmental groups including the Sierra Club opposed the lifting of the oil export ban that Republicans demanded in return. Exporting American crude oil, they fear, will lead to more drilling in the U.S. and higher oil consumption worldwide, further driving climate change. And while wind and solar compete head-to-head with the biggest climate culprit, coal, currently they offer little competition for oil in the transportation sector.

But with a world-wide oil glut that shows no signs of easing, observers including Sklar think lifting the export ban won’t have much effect in the near term. The extension of the renewable energy tax credits, on the other hand, will help push clean energy pricing to a point where wind and solar dominate the market for new electricity generation. According to an analysis by the Council on Foreign Relations, “Extension of the tax credits will do far more to reduce carbon dioxide emissions over the next five years than lifting the export ban will do to increase them.”

So it’s easy to see coal as the biggest loser here, but Big Oil shouldn’t feel too smug. As battery storage becomes more affordable and electric cars gain market share, wind and solar will begin to displace oil, too. The future, my friends, belongs to clean energy.

Here’s to 2016!

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*The astute reader may wonder how the Governor persuaded Dominion to allow it to buy electricity from third-party providers in spite of Dominion’s tireless defense of its monopoly on electricity sales and its reluctance to allow other customers to use PPAs outside the narrow confines of a pilot program. Unlike most of us, the state purchases power from Dominion under a contract, rather than under a tariff overseen by the State Corporation Commission. So allowing the state to use PPAs required negotiating a change to the contract but does not have immediate ramifications for lesser folk. But still: at some point, doesn’t it become obvious that restrictions on PPAs are simply holding the market back?

And even all you astute readers may not have thought to ask: when the state buys solar electricity from Dominion or third parties, who will own the RECs? After all, it is not the guy with the solar system on his roof who can legally claim to be using solar energy, but the guy holding the renewable energy certificates (RECs) associated with that energy. If the state wants to brag about meeting its new goal of 8% of its electricity from solar, it had better hold the RECs to prove it—and not, for example, allow Dominion to sell the RECs to a Pennsylvania utility or to the voluntary participants of its Green Power Program. When I asked Deputy Secretary of Commerce Hayes Framme about this, however, he said the question of who will own the RECs “has yet to be determined.”

APCo tries to quell criticism on solar policies, and just makes matters worse

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Photo credit Matt Ruscio, Secure Futures LLC

Photo credit Matt Ruscio, Secure Futures LLC

Appalachian Power Company (APCo) has spent the past two years ducking its Virginia customers who want the ability to buy solar power from third-party providers. This spring it finally unveiled what it claims will be the answer to their prayers: a bizarre, convoluted “Experimental Rider R.G.P.,” available only to certain larger customers like colleges and universities.

Under this proposal, a customer can arrange to have solar panels installed and owned by a third party developer but won’t be allowed to use the electricity or take advantage of net metering, as it would if it owned the system itself. The customer will have to continue buying dirty electricity from APCo, while the solar electricity the customer is also paying for is sold onto the grid, and the customer credited for its value according to a complicated and unfriendly formula. Instead of breaking even or saving money on electricity bills by going solar, the customer will pay substantially more.

By contrast, normally a customer who installs solar uses the solar electricity “behind the meter,” reducing the use of dirty electricity from the grid and saving money, especially if it had been paying high demand charges to its utility, as many institutions do.*

The limitations and poor economics of APCo’s proposal has would-be customers and solar advocates crying foul. According to an analysis by Professor Mark “Buzz” Belleville of the Appalachian School of Law in Grundy, VA, the program is so expensive that it’s not likely to get any takers. Worse, he concludes, “The [State Corporation Commission’s] approval of the proposal would actually be counterproductive to solar deployment in Virginia.”

That’s because “APCo will be able to claim that they made a [Power Purchase Agreement] program available, and the fact no one signed up shows that there is simply not a demand for PPAs in SW Virginia. Moreover, the SCC’s approval may strengthen APCo’s argument that PPAs are not legally permissible in APCo territory unless they are entered into pursuant to its SCC-approved program, and it will lay the groundwork for utilities to argue that a customer who has a PPA is not eligible for net metering under Va. Code §56-594.”

Understanding what’s at stake here requires a short history lesson. Back in 2011, a solar developer out of Staunton, Virginia, called Secure Futures LLC installed a solar array on a rooftop at Washington & Lee University. The parties used a popular financing approach known as a third-party power purchase agreement (PPA), which can let a customer go solar with no money down by having the developer keep ownership of the solar panels and sell the electricity they produce to the customer.

Federal tax rules make PPAs especially important for tax-exempt entities like colleges that can’t use the 30% federal tax credit for renewable energy facilities. When a for-profit solar developer owns a facility, however, it can take the tax credit and pass on the savings to the customer.

PPAs appeared to be explicitly authorized under Virginia law, but when Dominion Virginia Power got wind of the arrangement at Washington & Lee it moved quickly to block it, claiming a violation of its monopoly on the sale of electricity within its territory. Dominion’s weak legal position didn’t matter; the mere threat that the utility giant would unleash its army of lawyers was enough to stop the PPA in its tracks. The university completed its solar installation using an alternative, non-PPA approach.

Dominion had won the skirmish, but at a price. The utility took such a drubbing in the court of public opinion that it eventually acceded to legislation in 2013 establishing a limited “pilot program” under which not-for-profit entities and some commercial businesses can use PPAs, at least through the end of 2015. Secure Futures has gone on to develop additional solar projects in Virginia under the legislation, including at the University of Richmond and, under a just-announced deal, at six Albermarle County schools.

APCo, however, didn’t participate in the pilot program, and it has steadfastly resisted efforts to bring it into the fold, even in the face of mounting criticism. As Belleville pointed out in a Roanoke Times op-ed in March of 2014, the failure to extend the PPA law to residents of APCo territory put southwest Virginia at an economic disadvantage, closing it off to business opportunities that are available elsewhere in the state. Yet utility lobbying successfully defeated legislation this year that would have made PPAs explicitly legal statewide.

So southwest Virginia’s state of limbo persists, with many legal experts advising that PPAs are legal there under Virginia law, but most developers and customers unwilling to expose themselves to prolonged and expensive litigation to find out for sure. This state of affairs suits APCo very well. No doubt it calculates that the worst that can happen now is that the SCC rejects its rider and prolongs the state of limbo. Then the utility’s lobbyists will tell legislators it did its best to help customers but was prevented from doing so by that darned SCC.

APCo’s actions are those of a rational monopolist facing the threat of competition; it is easier to keep a competitor out of your market than it is to improve your product. But its efforts to throw roadblocks in the way of solar also reflect the suspicion, shared by many American utilities, that distributed solar generation benefits only the customer who installs it, at the expense of the utility and other customers. They believe this justifies them in making solar more expensive, even if it means preventing projects from being developed altogether.

This is a textbook example of cutting off your nose to spite your face, given the need for a rapid build-out of distributed solar generation to fight climate change and strengthen grid security. These are not considerations that hold much sway with Virginia’s SCC, however, so let’s confine ourselves to the cost argument.

The problem for APCo is that the notion that distributed solar increases costs for other ratepayers is mere conjecture, and neither APCo nor Dominion has offered any hard data to support it. Indeed, the only evidence from Virginia points the other way, according to Secure Futures CEO Tony Smith.

Since his company’s skirmish with Dominion, Smith has worked with a municipal utility, Harrisonburg Electric Commission (HEC), to study the financial impacts to the utility of Secure Futures’ first Virginia PPA project, a 104-kilowatt array installed in 2010 at Eastern Mennonite University in Harrisonburg (outside of Dominion territory).

The case study measured only the energy and capacity-related impacts of the solar array on the utility, ignoring the wide range of other benefits often considered in “value of solar” analyses. Analyzing three years’ worth of data, Smith found that the EMU array provided an average net benefit to the utility of $22.78 per kilowatt per year. The full technical analysis is available here. In an article soon to be published in the May/June issue of Solar Today, Smith writes:

Using a net benefit model developed in consultation with HEC management, we find that in the case of the EMU solar installation, the benefits to HEC outweigh the costs . . . Our net benefit results suggest that within HEC territory, solar installed for a commercial customer with demand exceeding 1,000 kW benefits all municipal utility stakeholders, including non-participants.

Certainly it would be interesting to repeat the analysis with data from more Virginia projects, including ones in APCo’s territory. But first, those projects have to get built. Right now that isn’t happening due to the PPA limbo. If APCo’s Experimental Rider gets approved—well, the projects still won’t get built, because no one will sign up.

Flip a coin: heads APCo wins, tails customers lose.

The SCC case is No. PUE-2015-00040. An evidentiary hearing is scheduled for September 29 at the SCC offices in Richmond, Virginia.

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*Residential customers don’t pay demand charges, making this an unfamiliar concept to many people. Demand charges (KW) are fees over and above the cost of energy usage (kWh) that are assessed according to a customer’s peak power requirements, measured as the highest peak demand in a given 30-minute period during the month. For many institutions, demand charges can exceed the cost of energy usage, and using solar electricity to reduce peak demand is often a compelling reason to look at solar in the first place.

Virginia schools taking giant steps into solar, and saving money for taxpayers

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Visitors tour the solar installation on the roof of Wakefield HS in Arlington. Photo credit Phil Duncan

Visitors tour the solar installation on the roof of Wakefield HS in Arlington. Photo credit Phil Duncan

Amory Fischer was a high school sophomore in Albermarle County in central Virginia four years ago when he got interested in the idea of using solar panels to provide some of the power used by the local schools. He found a lot of people shared his enthusiasm, but economic and policy hurdles stood in the way.

In 2012, a local middle school used federal stimulus money to install solar PV and solar hot water. Unfortunately, schools without grant funding couldn’t afford to follow suit. Although the cost of solar panels had fallen to record low levels, buying and installing them still required a significant upfront capital investment. And as tax-exempt entities, public schools couldn’t take advantage of the 30% federal tax credit available to residents and businesses.

Then, in 2013, the Virginia General Assembly passed a law allowing nonprofits and local governments, among others, to buy solar power using a tax-advantaged financing method known as a third party power purchase agreement (PPA).* PPAs can be structured to require no upfront capital from the customer, just payment for the electricity the solar panels produce. Suddenly, for the first time, the economics favored solar for Virginia schools.

Amory and fellow students collaborated with Lindsay Snoddy, the school division’s Environmental Compliance Manager, and spent the next year educating teachers, staff, parents and the community about the benefits of solar and the opportunities presented by the new law. Partnering with environmental groups 350 Central Virginia and the Piedmont Group of the Sierra Club, they formed the Solar Schools Initiative and circulated a petition that garnered nearly a thousand signatures in support of putting solar on Albermarle schools.

It worked. Once school board members understood that a PPA would let the schools install solar panels at no additional cost premium over regular “brown” power—and indeed, would even save them money—their support was unanimous. The school board issued a Request for Proposals and chose Staunton-based solar developer Secure Futures, LLC to develop the projects.

Students and community members gather at Sutherland Middle School in Albemarle County on May 28 to celebrate the student engagement that led to the signing of a contract to put solar on Sutherland and five other schools.

Students and community members gather at Sutherland Middle School in Albemarle County on May 28 to celebrate the student engagement that led to the signing of a contract to put solar on Sutherland and five other schools.

Six area schools will have solar panels installed by the end of this year: two high schools, a middle school, and three elementary schools. Together, the installations will total 3,000 solar panels for a combined 1 megawatt (1,000 kW) of capacity, producing about 14% of the electricity used by the schools.

Amory Fischer is now a junior at Virginia Tech, where he studies Environmental Policy and Planning. This summer he will be working for Secure Futures and trying to encourage more schools across the Commonwealth to go solar.

He will find a promising market, so far largely untapped. A small number of schools elsewhere in Virginia already boast solar panels, but most of them are small systems designed more for their educational value than to make a significant contribution to the school’s power demand. One significant exception is the Center for Energy Efficient Design, an educationally-focused building in Franklin County that “enables students and community members to explore various energy devices and techniques to make intelligent decisions about energy and housing.” It was completed in 2010 and designed to PassivHaus and LEED Platinum standards. In addition to solar panels, two wind turbines help meet the electric demand, and the building includes other energy and water-saving features like a geothermal system, solar hot water and a green roof. The project reflects an impressive commitment from the Franklin County School Board going back to 2004.

More recently, Arlington County has made a commitment to sustainable design in its schools as well as other county-owned buildings. Its LEED Gold-certified Wakefield High School, completed in 2013, includes a 90-kW solar PV installation. The county’s next school building will be even more ambitious. Discovery Elementary School, under construction on the grounds of Williamsburg Middle School, will include 496 kW of solar to allow the super-efficient building to produce as much electricity as it consumes. Buildings that achieve that feat are referred to as “net zero energy.”

Net zero is also the goal of advocates in Harrisonburg, who are pushing the city to include solar and other green features on a school building that is currently in the design phase. Bishop Dansby, a member of the Harrisonburg-Rockingham Green Network, says residents collected more than 800 signatures in support of a net zero energy school, but the school board has not told them yet whether it will adopt the recommendation. One encouraging sign: the board has hired Charlottesville-based VMDO Architects, the firm behind Arlington’s Discovery school.

Other Virginia localities are decidedly lagging, including ones you’d expect to see in the lead. Affluent, tech-savvy Fairfax County is missing in action on solar schools; advocates point to an insular and uninterested school bureaucracy as the primary barrier. A group of students at Thomas Jefferson High School for Science and Technology hopes to change that with a petition drive aimed at getting the county to act.

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*Unfortunately, the 2013 PPA law applies only to customers of Dominion Virginia Power as part of a two year “pilot program.” The legality of PPAs elsewhere in Virginia is unclear. However, Secure Futures offers a PPA alternative called a Customer Self-Generation Agreement that offers similar benefits. The company believes is legal in all parts of Virginia.

A new business model for non-profits brings solar into hostile territory

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Solar panels over the entrance to the First Congregational Christian United Church of Christ. Photo credit: Matt Ruscio

Solar panels over the entrance to the First Congregational Christian United Church of Christ. Photo credit: Matt Ruscio

Fourteen solar panels crown the entrance to the First Congregational Christian United Church of Christ in Chesterfield, Virginia. The small array generates 10% or so of the church’s electricity, but the project is notable for a different reason: it was the first solar system installed anywhere under a new kind of contract called a Customer Self-Generation Agreement. The agreement allowed the church go solar with no money down, and without increasing its electricity costs.

The Customer Self-Generation Agreement (CSGA) is the brainchild of Tony Smith, founder and CEO of Secure Futures LLC, a solar developer based in Staunton, Virginia. Under its agreement with the church, Secure Futures owns the solar panels and reaps the federal tax benefits that make solar affordable. The church gets the electrical output of the system over the twenty-year life of the contract. Neither a lease (which would bar the church from getting the tax benefits) nor a third-party power purchase agreement (which the incumbent utility would have opposed), the CSGA occupies a financing niche all of its own.

For Secure Futures, the CSGA was born of necessity. In 2011, the company was blocked from completing a solar array at Washington and Lee University when Dominion Virginia Power sent “cease and desist” letters claiming the parties’ use of a third-party power purchase agreement (PPA) violated the utility’s monopoly on the sale of electricity. Although convinced it had the law on its side, Secure Futures backed down in the face of expensive litigation. The solar installation was only completed by turning the PPA into a lease and losing some of the tax benefits.

Tony Smith. Courtesy of Secure Futures.

Tony Smith. Courtesy of Secure Futures.

Secure Futures had been building a place for itself in the nonprofit world, appealing especially to colleges and universities that want solar power as part of their sustainability goals. The company’s 104-kW solar array at Eastern Mennonite University in Harrisonburg, Virginia, completed in 2010, was the first PPA in Virginia and, at the time, the largest solar array in the state. But that project was not in Dominion’s territory.

For a state like Virginia with few policies to support solar, accessing the federal tax credits is critical to financing a solar project. Tax-exempt entities like municipalities, schools and churches are a natural customer base for solar, but because they cannot use the federal tax credits themselves, they must partner with a tax-paying company that can own the project. Third-party PPAs have been the answer in states that allow them. PPAs also frequently offer a no-money-down option, which has proven a huge market driver in recent years for homes and businesses as well as non-profits.

Solar array installed by Secure Futures for the Harrisonburg Redevelopment and Housing Authority using a CSGA. Photo courtesy of Secure Futures.

Solar array installed by Secure Futures for the Harrisonburg Redevelopment and Housing Authority using a CSGA. Photo courtesy of Secure Futures.

But after the Washington and Lee experience demonstrated both Dominion’s hostility to PPAs and its willingness to use its legal firepower, Tony Smith decided to seek another way through the legal thicket. Working with regulatory lawyer Eric Hurlocker and tax specialists at Hunton and Williams, Secure Futures developed an innovative contract model that could provide the tax benefits of a PPA without running afoul of utility monopoly claims. CSGAs are contracts for solar services but, crucially, don’t involve the sale of electricity.

Although Dominion Power eventually relented enough to cooperate on a bill passed in 2013 that allows a small number of PPAs within its territory on a “pilot project” basis, Secure Futures has continued to use the CSGA model in subsequent projects because it offers features that a standard PPA does not.

Perhaps more importantly, neither Dominion nor any other utility has signaled opposition to CSGAs. Suddenly, Secure Futures’ niche looks huge. The ability to use CSGAs wherever PPAs would make financial sense opens up new opportunities among non-profits not just in Virginia, but in all of the 28 states where PPAs are currently either illegal or of uncertain status. As Smith notes, no state bars customers from generating electricity for their own use.

While Smith is eager to see his company grow, he says his larger goal has always been to open the floodgates for solar projects across the country where they are held back now only by outdated laws and flawed policies. He hopes to license the CSGA approach, ideally to a non-profit that could work with developers across the South to make this contract model widely available.

Virginia has always been a hard place to do business for solar companies, so much so that Smith refers to it as a ”dark state.” Knocking down the PPA barrier won’t bring the sunshine in all by itself, but it does create an opening.