Renewable energy is being adopted by municipalities across America and is a way for smart cities and communities to maintain resilience and independence for the future. There’s an inevitable move away from dependence on carbon-heavy single sources of energy, and toward energy independence and diversity of renewable energy sources. Renewables, like solar, are especially getting easier to adopt as they are now offered with financial models that are as simple as a financial transaction, providing a swift transition to Solar Energy. The enormous potential for a reduced carbon footprint is a big win for communities in the Mid-Atlantic Region.
Some municipalities are showing their dedication to reducing carbon emissions by investing in fleet transitions to electric vehicles. While this move is a step in the right direction, without powering those fleets from a renewable source, it only moves the source of emissions from the tailpipe of fleet vehicles to the coal or gas-fired power plant that power charging stations. The calculations for carbon emissions would remain in play until the source of the energy was changed.
In this article, we highlight some of the most significant benefits from municipalities that have already adopted solar projects for their communities, as well as the key financial models that have proven successful.
Top reasons why municipalities need solar energy:
Municipalities can achieve Energy Management goals.
Reduce carbon footprint.
Improve local air quality & health.
Economic stimulus and job creation.
Mitigate fuel price volatility.
Significant long term post savings.
Serve as a model to residents, businesses, and neighboring towns.
Increase efficiency in municipal operating resources.
Top reasons why municipalities need solar energy:
Establishing a need to move toward renewables (primarily solar here) within the community gives a powerful base of support. Being open about the overall energy management goals and sharing realistic baselines smooths the development process within the city’s management, engineers, and the population in general. Solar energy offers a route to accomplish goals such as:
Reduction in GHG (greenhouse gas) emissions by a certain percent over X years
Reduction in energy costs
Increasing sustainable energy sources
Climate change is feeding stronger weather patterns and producing increased hurricanes across the eastern seaboard. To reduce the emissions contributing to climate change, solar energy offers Mid-Atlantic communicates a way to turn the lights on without turning the heat up, globally.
Improve local air quality and health
The World Health Organization has officially ranked ambient air pollution the world’s number cause of death and accounts for 4.2 million lives lost every year. Community leaders can look at reduced fossil fuel burning and benefits like cleaner skies and waterways. The toxins from fossil fuel burning hit the cities’ hospitals with various respiratory issues, heart attacks, heart diseases, and not to mention the devastation of cancer. You might even be surprised to learn that air pollution has a significant impact on acquiring type 2 diabetes. You could also follow the trail of absenteeism right back to health ailments associated with air pollution, all the more reason for municipalities to improve quality of life and health by converting to solar.
Economic stimulus and job creation
According to the U.S. Department of Energy, solar power employed 43% of the electric power sector’s workforce while all fossil fuels combined accounted for just 22%. Jobs are another advantage that solar projects bring to the municipalities of the Mid-Atlantic Region. Solar employs more people in electrical generation than oil, coal, and gas combined. The latest numbers recorded from 2015-2016 show 374,00 were employed in Solar energy while traditional fossil fuels employed 187,117 people. In particular, this means more jobs per megawatt (MW) of power installed, per unit of energy produced, and per dollar invested.
Adding Solar infrastructure to municipalities means added jobs. Added jobs mean monies available for restaurants, rents, and buyers of all kinds. It is a boost to community, city, state, and even federal coffers.
Mitigate fuel price volatility
Fuel and gas prices are in constant fluctuation. That means tax revenues and the ability to manage fuel costs are tied to that high volatility. The many positives of fossil fuels ignore the many negatives, and those negatives are external costs that wage a substantial impact on communities, the state, the federal level, and the world. Solar energy stabilizes energy expenses. Solar is a technology that, once put in place, will pay back to all owners involved.
Energy security is a growing requirement for local governments. Storms from North Carolina to Puerto Rico demonstrated that while solar farms experienced minor damages, these renewable energy facilities came back online faster than those powered by fossil fuels.
Imagine 328 days without electricity. Hurricane Maria was finally fixed for 1.5 million of its residents. That’s 11 months. While it is true that these might be extreme circumstances, repairing damaged refineries and supply lines take longer than installing or repairing solar panels.
Significant long term savings
Comparing price per kWh, solar energy costs $0.029/kWh, and fossil fuels cost $0.05/kWh. Solar energy offers significant long term savings, and it not only produces more energy on investment dollars, but it also is now officially cheaper than the energy produced by the fossil fuel industry.
Comparing prices can be tricky, but the above is based on a major commercial solar installation bid via Energy Sage. Remember Solar PV is a technology and its costs will continue to fall every year it is in use. Plus as research continues to develop and the technology improves its benefits and costs will decrease.
Serve as a model to residents, businesses, and neighboring towns
Success breeds success. When communities come together to embark on solar energy projects, and they educate members of their residential and business communities, it increases visibility and renewable energy buy-in. This is where the implementation of C-PACE programs can easily follow by example and building owners can take advantage of lessons learned, applying them to their own solar projects.
Increase efficiency in municipal operating resources
Solar projects, especially those executed through a third-party PPA can take advantage of operations and maintenance handled externally. Streamlining a solar project places many gains on the side of operations efficiency and helps reduce demand on municipal resources.
While there are many routes to financing a municipal solar project, none are more easily adopted than 3rd party financing. Here are the most common third-party financing models for municipalities, followed by a heavy focus on power purchase agreements (PPAs).
Hybrid financing structure
Power Purchase Agreement
One of the most attractive options for municipal solar projects are Power Purchase Agreements (PPAs). The main components of a PPA include:
Builder-owned, operates and maintains a Solar PV system so little to no upfront costs.
Receive Federal Tax Incentives indirectly through lower electricity prices.
Agreements that give a predictable cost of electricity over some 15–25 years.
Allows for outsourcing of the designing and permitting which can become complicated.
Freedom from operating and maintenance responsibilities.
Municipalities are not known for being flush with funds that allow for upfront capital investment projects like solar upgrades. PPA’s main attraction is that they help cash-strapped communities hurdle the renewable energy fence. The third party ownership (a developer, investor group and others) keeps the costs off of a municipality’s balance sheet. All the details of putting the project together, developing it and then operating it will remain with the third party.
Predictable, stable and often low-cost electricity can start as soon as the system is commissioned. Right away your municipality reduces its carbon footprint and will, no doubt, start adding power back to the grid.
No upfront capital required, and another beneficial element is that the developer is responsible for performance, operations, maintenance, and the risks associated with the O&M of the system.
Municipal Solar Financial Incentives
This program is geared to helping rural communities exceeding 275% of the national average to allow for implementation of new energy generation, transmission or distribution equipment. It will also cover the maintenance of existing equipment, including on-grid and off-grid renewable projects.
Both grants and guaranteed loans are covered under this program. Commercial and agricultural entities in rural areas can receive up to 25% of eligible project costs, with 75% for loans. These can range from $2500 to $500,000. DSIRE indicates REAP grants may also apply to Schools, Local, and State Governments. These grants may also apply to Tribal Governments, Rural Electric Cooperatives, Agriculture, Institutional and Public Power Entities.
Renewable Energy Certificates (RECs) come under a variety of names but essentially are tradable commodities that prove 1 megawatt of energy was produced by an eligible energy resource. Solar goes under the acronym SREC and, of course, has a similar function as RECs with energy going in and out of the grid. These are meant to support renewable energy generation through supply and demand type economic incentives.
This incentive is in the pilot stage in a few locations across the U.S. Feed-In Tariffs have been successful in Europe and other parts of the world. The concept has allowed for rapid solar development. The idea is that a host site develops a solar P.V. system and sells power at an attractive rate directly into the utility grid. The host may get payments from RECs, the energy they produced and establishes a stream of payments encouraging investment for the project; offsetting financing costs over an agreed contract period. Sustaining feed-in tariffs on a large scale has been difficult for utilities and state governments. Not as wide-spread here in the U.S. as they are in Europe, as this is a pilot.
Rebates are available with many states and utilities. Rebates can help with the purchase of solar P.V. equipment. Of course, availability will vary, as well as varying rules, eligibility, and guidelines. Observe rebates local to you, as they may be different even within specific utility jurisdictions.
Other helpful programs and community based solar models to know about
C-Pace or Commercial Property Assessed Clean Energy Program. Share this program with your local businesses. They gain. The community gains. The Municipality and the County gain.
The US Department of Energy has a helpful guide for local governments to establish Solar PV as part of their SunShot Initiative.
Next steps for municipalities planning solar pv projects
Municipalities ready to make the solar switch will want a tailored assessment to move the project through proper planning. Experienced specialists can build a structure that will make for a balance of energy production for your community, and include multiple renewable sources in addition to solar energy production.
The municipality will need vetted, trusted vendors supporting the solar project, reliable equipment manufacturers, and an EPC contractor. Then you will want an installer and an O&M provider. Getting the right project partners will reduce risks in your contracts. Carefully interview and rate vendors. Be sure to keep an experienced solar PV consultant or such close by to help in the selection process. You want to look for the years in business, their financial strength, as well as their internal processes like safety plans and ISO certifications (9001/14001). Essentially watch for risk and a commitment to quality. Finances might be a helpful gauge of whether your consultant will be able to deliver and support their services or products over an extended period of time. Are applications for and obtaining required permits keeping construction on track? How about the equipment supply? Watch these milestones plus the interconnection application and approvals from the utility.
Set your municipality or community solar project on the right course. Follow some examples from across the country by taking a look at projects completely and currently in progress now via the EPA Local Government Solar Project Portal.