I joined a community solar program, now what?

So you have signed a contract to receive power from a community solar program. Congratulations! This is a decision that comes with great benefits to both the environment and your wallet. Now it is time to take a closer look at your monthly electric bill to make sure that you are maximizing your benefits.

Fully understand your program and your bill

Your solar energy credit will show up differently depending on who your utility provider is and what type of project you have subscribed to.

In Colorado, there are three types of incentive models for community solar: a utility bill credit, a Renewable Energy Credit, and a one-time lump sum. In the utility bill credit model, your bill will show a credit correlated to the dollar value of your share of solar production. This model is the most typical and will be the focus of this blog.

There are also two models for payment with community solar: purchasing your panels outright or paying-as-you-go for energy produced. The pay-as-you-go model is similar to your monthly cell phone plan---you will never own the panels, you will pay for their energy like a service.

If you are partaking in a pay-as-you-go plan, in addition to your monthly electric bill, you should also receive a monthly bill from your solar developer. Generally, this bill should be for a lesser sum than your utility bill credit, leading to a net savings.  If you paid for your solar array up front, you will not receive a bill from the developer.  

Ask the right questions when looking at your bill

It is important that you thoroughly examine your energy bill after you sign up for community solar. You will want to make sure your panels are producing as expected, check that you are being compensated for production, keep an eye on utility rates, and confirm that you are making the most of all incentives (both financial and environmental) offered to you. Some specific questions you will want to ask:

1.       Do my bill credits look right?

Your electricity savings will be influenced by a variety of factors (e.g. solar panel production, electricity use, base rate, and utility rates) and your utility bill costs may not be offset 100% by your solar program. Bill credits will cover a portion of your utility rate. In other words, if solar energy offsets 100% of consumption, bill credits could offset costs by 50% to 80%. While in the short term your savings will vary, over time a majority of your costs could be offset. With this in mind, it is important to keep tabs on whether your panels are under- or over-producing.

2.       Are my panels under-producing?

If your bill credits look too low you should call your utility and solar developer (your utility can help with billing issues, but the solar developer is better for production questions). If the panels are indeed under-producing, you will need to problem solve together. Most are very happy to help!

Your first step will be to figure out why the array is under-producing. Weather, panel degradation, and broken parts are all possible explanations. Once you have identified the issue, ask your solar developer what they can do to fix it. They can’t do anything about the weather but ongoing monitoring, maintenance, and repair are their responsibility. They have a budget for this that is set aside from funds used to initially build the project and/or revenue from the array.

Comprehensive insurance is also typically covered by what you have paid for your panels to cover events like theft, hail damage, or low production due to weather. Further, some contracts specifically state that the developer guarantees that they will catch any abnormalities very quickly (typically within 24 to 48 hours) and ensure that arrays are performing as expected. 

3.       Am I over-producing? If I am over-producing, am I receiving roll over credits?

When you signed up for your solar program, you were likely given the option to purchase a maximum of 120% of your average energy consumption. Thus, it is possible that your panels will produce more energy than you use in a particular month. With community solar, when you don’t use that extra 20%, you are still generating bill credits.

Your contract may guarantee that excess production “rolls over” to cloudier months when you under produce. If your contract has this clause and it doesn’t look like your production has rolled over, call your utility provider or solar developer.

Any bill credits accumulated at the end of the contract period may also simply go away. It is best to appropriately size the system so that you are not left with an excess of bill credits after the contract period is over.

If you find that you are consistently over-producing due to efficiency or a move to a new home, it is sometimes possible to resize your subscription with your solar developer or apply your subscription to an alternate location.

4.       How are utility rates changing?

The pace at which your utility rate increases from year to year can be very important in determining your savings from community solar. For most people, a high increase in electricity prices is unfavorable. For a community solar participant, an increase in electricity prices may be favorable. This is because one of the major financial incentives of community solar is that bill credits follow the rate of increase or decrease of utility rates. The higher your electricity rate is, the more bill credits you will receive and, over time, more bill credits means more savings. If your electricity rate is low, you will pay less for your electricity consumption, but you will also realize fewer bill credits and less long-term cost savings.

If you want to take a big picture look at your projected savings over time, the Clean Energy Resource Teams provides a calculator that allows you to compare price scenarios.

5.       Are there tax incentives available to me?

Federal tax credits generally go to the company that developed your community solar project, however, it is worth checking with your solar developer to be sure.

6.       Are there other financial incentives available to me?

It is also worth talking to your solar developer to ensure that you’re making use of all available financial incentives in your state, the Database of State Incentives for Renewables & Efficiency or your local utility can help guide your conversation.

7.       What is happening to my Renewable Energy Credits?

You may have heard of Renewable Energy Credits (RECs). A REC is the legal representation of the environmental benefits of producing one Megawatt-hour of renewable energy. Typically the utility company will own the RECs (and therefore the environmental benefits) associated with community solar.

Community solar offers unique financial and environmental benefits and is simpler and more flexible than rooftop solar in many ways. Depending on the future of electricity prices and the length of the contract term, the long-term value of community solar can amount to thousands to hundreds of thousands of dollars. We hope this list of questions to ask while examining your energy bills under a community solar program helps you make the most of your solar program.

We are always available to help you wade through the world of community solar and RECs. Feel free to reach out anytime to our team at emily@lotussustainability.com, hillary@lotussustainabilitiy.com, or lauren@lotussustainbility.com 

An Overview of Solar Power Procurement Options

By Hillary Dobos and Emily Artale

Many of our clients have shown interest in pursuing solar energy but are quickly overwhelmed by the myriad of solar power procurement options available to them.

This blog provides a brief overview of some of the options for procuring solar power. As different organizations may have diverse goals for solar procurement, finding the “right” option(s) will also vary. We do not specifically endorse any one method over the other, but rather provide some basic information to answer some of the most common questions.  

Solar Procurement Options

Renewable Energy Credits (also known as RECs, Renewable Energy Certificates or greentags)

A grid-tied renewable electricity generator, such as a solar array, produces two distinct products: 1) electricity and 2) a package of environmental benefits resulting from not generating the same electricity and emissions from a conventional natural gas or coal-fired power plant. These environmental benefits are collectively known as Renewable Energy Credits, or RECs. RECs are sold, traded, or bartered on a market or through bilateral transaction.  RECs are used by entities as a way to reduce their environmental footprint and help fund renewable energy development.  They allow organizations to claim that the electric power they are using comes from renewable sources and apply the renewable attributes to any facility.

• Unique benefits: Simple transactions, flexible market in that you can select the location, resource type, and vintage of RECs, you can claim environmental benefits if RECs are retired, and one time purchases are possible, unlike other options where long-term contracts are usually required.

• Things to consider: RECs do not hedge against increasing energy costs, they do not always come from a local project, and the environmental attributes can be hard to explain to constituents.

For more on RECs see the following blog “Renewable Energy Credits (RECs): A Review of the Basics and Questions to Ask before Utilizing RECs as a Way to Meet Renewable Energy Goals.”

Participate in a Community Solar Garden

Solar gardens consist of a large photovoltaic array on a large parcel of land. Individuals or businesses can buy a number of solar panels from a solar garden array or purchase electricity generated by a specified number of solar panels and receive credit, as utility incentives, on their electricity bills for the energy production that they own.  Solar gardens make sense for entities that are unable or not prepared to host or own a system on their building’s roof or adjacent to their property and do not want to be responsible for the maintenance of a system.

• Unique benefits: Operation and maintenance is administered by a third party, solar is ideally located for maximum production output and is usually from a local resource, and the owner usually has the ability to transfer renewable energy to different premise locations. In addition, potentially save money compared to regular electricity costs and provides a fixed cost of electricity over the life of the system helping hedge against increased energy costs.

• Things to consider: Community solar gardens are not widely available, participating entity might not be able to claim environmental if RECs are not retained, and participating in a solar garden can be a complex transaction.

For more information on Solar Gardens see the following blog “Increasing Transparency of the solar Garden Process: The Top 4 Questions You Should Ask When Considering Participation in a Solar Garden.”

On-site Generation  

An organization that is able to install solar on their own facilities can take advantage of several unique financing options including (but not limited to): leasing solar panels, Power Purchase Agreements, and buying the system outright.

• Unique benefits: On-site solar is visible and tangible and therefore easily communicated to constituents, supports local jobs, usually reduces demand charges, sometimes increases property value, and typically provides a fixed price for electricity over the life of the system hedging against increased energy costs.

• Things to consider: On-site solar can require more upfront planning and project management then other solar options. Other considerations include on-site maintenance of equipment; energy production is limited by location and shape of building(s); and many times substantial upfront capital is needed.

Own the system

Many entities decide to purchase their systems outright through self or third-party financing.  

• Some additional unique benefits: Some host entities can benefit from the cash rebates, Federal Investment Tax credits, State Tax Credits and other incentives (including balance sheet benefits such as depreciable asset on the books) available for installing solar (see DSIRE website for a list of incentives, rebates, etc.).

• Additional considerations: Maintenance requirements will fall on the host entity. Please note that owning a system outright can be very legally exhausting for many public and private sector entities that must consider indemnification laws, insurance requirements, and for some public entities TABOR laws before interconnecting to the grid.

Power Purchase Agreements (PPAs)

In a PPA a third party project developer (usually called a solar services provider) coordinates the building and maintenance of an entities on-site system. The entity, in return, purchases only the power that is produced from the system. This model greatly simplifies the process of solar by having the experienced solar service provider deal with complex design and permitting processes, benefit from tax credits (something the public sector and some private entities do not benefit from) and take on some of the system performance risks. In addition, little or no upfront capital costs is needed because the entity pays only for a stable, and sometimes lower cost of electricity, then would be paid to their utility.  Power purchase agreements are typically for large centralized solar generation stations that provide energy directly to a utility.

• Some additional unique benefits: No upfront capital costs are needed, projects are sometimes cash flow positive on day one, long-term energy costs are known, and solar service providers are incentivized to maintain panels.

• Additional considerations: Long term contracts are usually required and if you sell your property before the lease is up you might have to pay a fine or removal fee.

Solar Lease

A solar lease is very similar to a PPA except for a very important difference that with a solar lease you rent the equipment, while with a PPA you are buying electricity.  Therefore, even when the array is producing less due to weather or maintenance issues the entity pays the same (or predictably increasing) amount for the equipment.

• Some additional unique benefits: Very predictable cost structure.

• Additional considerations: The host might be required to do some of the maintenance of the equipment. Long term contracts are usually required and if you sell your property before the lease is up you might have to pay out the remaining lease payments.

Next Steps

Before moving forward we recommend that you do the following before further pursuing solar:

• Understand your motivations for wanting to pursue solar energy. This will directly affect which option you pursue.

• Understand your budget and whether or not financing is an option.

• Take a look at your buildings solar potential. The National Renewable Energy Laboratory provides several free calculators (PVWatts Calculator and System Advisor Model) that allow you to estimate the energy production and cost of energy for installing a PV system.

• Research solar power procurement options available to your location. See EPAs Green Power Locator and/or the Solar Energy Industries Association database for a list of providers.

• Contact us at emily.artale@lotussustainability.com or hillary@merrillgroupllc.com for a more thorough review of each option and the resulting costs/savings to your community/company.

Authors

Emily Artale is Principal and Owner at Lotus Engineering and Sustainability, LLC. She has been working in the industry for nearly a decade and she has a background in energy management, sustainability planning, and water quality. Emily helps teams develop action-oriented solutions that will improve efficiency and integrate sustainability into current processes. She received her undergraduate and graduate degrees in environmental engineering from the University of Colorado at Boulder. She is a Colorado native and spends most of her time outdoors with her family.

Hillary Dobos is Principal and Owner of Merrill Group, LLC. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization (Colorado State Government). Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, son, and moderately trained canine, Mr. Smiles.

Disclaimer: The information presented above is based on the opinions and experience of the authors. The authors are not liable for any errors or omissions in this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

Renewable Energy Credits (RECS): A Review of the Basics and Questions to Ask Before Utilizing RECs as a Way to Meet Renewable Energy Goals

By Hillary Dobos and Emily Artale

The Basics

A grid-tied renewable electricity generator, such as a solar array, produces two distinct products: 1) electricity and 2) a package of environmental benefits resulting from not generating the same electricity and emissions from a conventional natural gas or coal-fired power plant. This package of environmental benefits is known as Renewable Energy Credits (also known as RECs, Renewable Energy Certificates or greentags). A REC represents the collective environmental benefits, such as avoided carbon dioxide and mercury, as a result of generating one MWh or 1000 kWh of renewable energy. RECs are then sold, traded, or bartered on a market or through bilateral transaction.

There are two distinct markets for RECs: compliance and voluntary.

Compliance Market

The compliance market is made up almost entirely of energy companies that are mandated through a Renewable Portfolio Standard to own or purchase a certain percentage of renewable energy. Many utilities rely on RECs to help achieve these renewable energy percentages. Compliance RECs are usually more expensive and required to be purchased from within a specific region. For example, Xcel Energy is mandated through the State of Colorado’s Renewable Energy Standard to generate or cause to be generated at least 30 percent of its electric sales from “eligible energy resources”, one of which is renewable energy sources.[1] One way that Xcel Energy meets its mandate is by purchasing RECs from solar arrays that are interconnected into Xcel Energy’s grid. When RECs are purchased from the solar array, the owner or subscriber of that array can no longer claim the environmental benefits of the system.

Voluntary Market

The voluntary market is made up of individuals, households, and organizations that chose to buy RECs as a way to reduce their environmental footprint and help fund renewable energy development.  RECs allow organizations to claim that the electric power they are using comes from renewable sources and apply the renewable attributes to any facility. Additional benefits include hedging against future electricity price increases and numerous public relations benefits such as brand differentiation, generating customer loyalty and employee pride, and leading by example.

In general, voluntary RECs are cheaper than compliance RECs. Between 2010 and mid-2013, wholesale REC sales in voluntary markets have generally traded at less than $1/MWh (J. Heeter and T. Nichols, NREL Report, 2013)  In general, the cost of RECs can depend on many factors such as type of renewable energy (e.g. solar RECs are generally much more expensive than wind), the vintage (year in which REC was generated), where the REC was generated, the volume purchased, and if the RECs are 3rd party certified (e.g. Green-e Energy). Low prices often make the purchase of RECs a very cost effective option for supporting renewable energy.  

RECs can be purchased through utilities, REC marketers, and other third party entities who may sell RECs alone or bundled with electricity. For a current list of companies offering voluntary RECs click here.

What You Can Do

There are several questions that you can ask to better inform yourself before purchasing RECs

• Clearly understand your motivation for purchasing RECs and make sure it aligns with your sustainability and energy goals.

• Consider all of your options for procuring renewable energy such as community solar or entering into a power purchase agreement before committing to the purchase of RECs.

• There are many ways to purchase RECs (wholesale, long-term contracts, through your local utility). It is worthwhile to consider a few of the options to find the best fit.

• Make sure your RECs are third party certified (i.e. Green-e Certified) to guarantee that they are not double-counted (only one buyer can claim the RECs) and meet national standards for resource content and environmental impact. You can also buy RECs that have been issued by a regional certificate tracking system.

• If supporting local renewable energy generation is important to you, make sure to ask where the RECs were generated.

• Ask what vintage your RECs are (the date when the RECs were created), as well as the renewable generators vintage (the year the renewable generator was built). Older RECs might be cheaper but it is harder to make the argument that your purchase is leading to the creation of new renewable energy if the RECs were created in past years.

• Discuss the role of additionality with your REC vendor. Additionality means that the purchase of RECs introduces new renewable energy into the electricity grid beyond what would have happened in a “business as usual” scenario. In other words, your purchase of RECs is not simply subsidizing renewable energy that has already been added to the grid but instead helping an electricity supplier generate electricity from a renewable energy source that would otherwise be too costly.

• Consider long-term purchase agreements. Many companies are entering long-term REC purchase contracts (10-20 years). These contracts help stimulate renewable energy production by providing predictable cash flow to a developer and usually provide cheaper RECs due to the bulk purchase.

• If your company or organization owns a renewable energy system, research the utility connection agreement to see if you have retained your RECs. If so, then you can claim the environmental benefits. If you have sold your RECs, your organization cannot make certain environmental claims such as “we are reducing our greenhouse gas emissions” or “we are using or generating a certain percentage of renewable energy to offset electricity use.”

We are available to help you wade through the complicated world of RECs, carbon offsets, and financing renewable energy purchases. For more information please contact us at hillary@merrillgroupllc.com or emily.artale@lotussustainability.com.

[1]“2014 Renewable Energy Standard Plan”. Public Service Company of Colorado. July 2013. http://www.xcelenergy.com/staticfiles/xe/Regulatory/Regulatory%20PDFs/CO-RES-Plan-2014-Vol-1.pdf

Join us for our webinar series that discusses emerging topics in the sustainability and energy fields. Our next webinar titled, “How to Set Effective and Measurable Sustainability Goals” on July 30th, 2014 at 12:00 p.m. MDT. To register please visit: http://www.anymeeting.com/PIID=EA57D680844A3B

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AUTHORS

Emily Artale, PE, CEM, LEED AP is Principal and Owner at Lotus Engineering and Sustainability, LLC, www.lotussustainability.com. She has been working in the industry for nearly a decade and she has a background in energy management, sustainability planning, and water quality. Emily helps teams develop action-oriented solutions that will improve efficiency and integrate sustainability into current processes. She received her undergraduate and graduate degrees in environmental engineering from the University of Colorado at Boulder. She is a Colorado native and spends most of her time outdoors with her family.

Hillary Dobos is Principal and Owner of Merrill Group, LLC, www.merrillgroupllc.com. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization (Colorado State Government). Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, son, and moderately trained canine, Mr. Smiles.

 

Disclaimer: The information presented above is based on the opinions and experience of the authors. The authors are not liable for any errors or omissions in this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.