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Guest Blogs

Solar Blooms in the Rural U.S.

Customer-owned electric co-ops are in the driver’s seat

Driven by customer demand, electric cooperatives are leading the way in the development of community solar. Total capacity among co-ops has jumped from 113 megawatts in 2014 to 850 MW in 2017. (Photo: Brookhaven National Laboratory / CC BY-NC-ND / Flickr)

A released this summer by the National Rural Electric Cooperative Association (NRECA) documents the tremendous growth in solar energy driven by electric cooperatives. Electric cooperatives (co-ops) are utilities that are owned by their customers. They of the land area of the U.S — mainly in rural regions — and are increasingly providing solar energy to their customers. In fact, by 2019, co-op solar capacity is expected to surpass 1 gigawatt (GW), enough to power more than 200,000 homes.

The growth in co-op solar is exciting, and it’s part of a larger story of solar expansion throughout the rural U.S. The costs of solar energy are declining, more customers want their homes powered by solar panels, and the rural energy economy is transforming.

NRECA’s recent report is the result of a multi-year project to identify and address the barriers and drivers of growth for co-op solar, a project funded by a $3.6 million grant from the U.S. Department of Energy (DOE). This good news story is in part a tribute to the value of the research, development, and deployment programs housed at DOE — and an important reminder that we need Congress to continue to fund the DOE programs that are building our clean energy future.

Bigger and broader: more solar for more people

Co-ops are scaling up the solar projects they develop and more frequently buying power from large solar plants. Historically, the solar energy in cooperative service regions has come from small projects and distributed generation. In 2014, co-ops provided about 113 megawatts (MW) of solar capacity, and the average size of a co-op installation was 25 kilowatts (kW). By 2017, the total capacity grew to over 850 MW, and, now, the average installation provides 1 MW — 40 times the size just four years ago. This change stems in large part from partnerships between distribution co-ops and their generation and transmission counterparts to develop or buy energy from larger solar power plants and serve more members.

Co-ops are not only investing in new large-scale solar, they also are expanding access through distributed, smaller projects. Community solar programs allow customers to buy a share of a solar project and then benefit from the electricity generated. These projects enable people to take advantage of solar energy even when they cannot install their own rooftop solar panels. They may not be able to afford the large up-front costs, don’t own their home and can’t alter the roof, or have rooftops that are shaded or inconveniently oriented. More and more rural communities are subscribing to community solar programs, thanks in large part to the more than 190 co-ops that have community solar projects or are currently planning them.

These creative approaches can help co-ops bring new resources to their rural constituencies and transform solar energy into a more accessible resource. Accessibility is especially important for co-ops, which — where the poverty rate has exceeded 20% of the population for the past 30 years.

Rural households also than others, according to also released this summer. As the energy transition continues full swing, it’s important to work creatively to ensure that it happens equitably — and that all communities have access to clean, affordable energy (including energy efficiency) and the accompanying job opportunities. Co-ops are especially well-situated to do this work.

The rapid expansion of solar in rural areas is not limited to co-ops. Investor-owned utilities also are pushing for more solar generation in rural communities. Late last year, American Electric Power, which serves 11 states, for 400 MW of solar energy in Ohio, adding to an energy portfolio that already includes several wind and solar farms. The RFP will prioritize sites in Appalachian Ohio, create permanent manufacturing jobs, and hire Ohioan military veterans.

Ohio’s announcement is part of promising growth throughout the rural Midwest, where clean energy jobs from 2013 to 2016, outpacing job growth in other sectors by a long shot. Together, cooperatives and other utilities are creating a new green economy throughout the rural U.S., creating jobs and expanding access to inexpensive, clean energy.

Rural communities are demanding clean energy

One of the remarkable features of this solar growth is that it’s driven by consumer demand. Co-ops, being member-owned, have a responsibility to meet the requests of their customers, and their customers are asking for solar energy. In a survey conducted by NRECA, 68% of co-ops were motivated to expand solar energy by a desire to increase consumer-member satisfaction, and 59% were motivated by consumer demand for solar offerings. These were the two greatest drivers identified in the survey, and they speak to the growing enthusiasm for clean energy in the rural U.S.

This growth is made possible thanks to the extraordinary decline in the cost of solar energy. The installed cost of large-scale solar energy from 2008 to 2016 across the country, thanks in part to federal funding for innovation at the Department of Energy.

However, we cannot take it for granted that costs will continue to decline on their own. Earlier this year, the Trump administration on imports of solar tariffs, a shortsighted and counterproductive move that threatened to undermine the remarkable growth the solar industry has seen in recent years. Developers believe the tariffs growth this year — but not as significantly as initially expected. Increased funding for Department of Energy innovation programs, especially those focused on solar panel manufacturing, and continued action from policymakers at all levels will allow the remarkable growth to continue and bring clean and inexpensive power to more people.

Despite uncertainty in federal energy policy, solar projects for the lowest price, with the latest record power-purchase agreement coming in around 2.4 cents/kilowatt-hour (¢/kWh). That’s cheaper than the average wholesale electricity price in the region, which was 3.4¢/kWh in 2017 — and far cheaper than average levelized cost of energy from a new gas plant, .

Costs are on the decline, demand is surging, and the future is bright for solar energy.

 

Arjun Krishnaswami is a policy analyst in the climate and clean energy program of the National Resource Defense Council. This post originally appeared at the NRDC’s .

 

3 Comments

  1. Rick Evans | | #1

    My local electric co-op, the New Hampshire Electric Co-op, is heading in the opposite direction. They charge a $30 member fee every month regardless of KWH used. Net metering rates are far lower than the cost of electricity, per KWH. This system seems to benefit those that use MORE electricity rather than less. When I did the math on PV installation for my new Pretty Good House, the payback period was 25 - 30 years. Had the service of other utilities, it would have been more like 12 years or less.

    As a member-owner amongst 80,000 others, I will write letters to the administrators, but what else can I do?

  2. Brian Bailey | | #2

    I have a solar-powered household which is also on the grid of a small co-op, Northeastern REMC (in NE Indiana). When Indiana passed net-metering legislation, the co-ops lobbied for, an received, an exemption to the law.

    In the case of NREMC, the deal for grid-connected solar customers works like this: the customer's connection fee goes from about $20 (the rate for regular, non-solar customers) to almost $60 per month. In exchange for this, the customer gets two benefits: first, the customer both buys and sells power to the co-op at their wholesale rate. This means you get to buy power when you need it for about $0.08, instead of the $0.12 everyone else pays. The power you sell to the utility on sunny days is also bought for $0.08.

    Second, the co-op will pay customers for any annual net power production. That is, for a customer that produces more power than she consumes over the course of a calendar year, the co-op will cut a check for the overage at the same $0.08 rate.

    In short: NREMC treats privately-owned solar pretty much the same as any other power producer in its rate structure.

    As a solar installer, I am painfully aware that this is a less-good deal than traditional net metering, mostly because a solar system needs to make a lot of excess power to compensate for an extra $40/month in connection fees. For those who go solar anyway, this model incentivizes maximizing the number of panels installed, since a large system can generate annual income to the homeowner and defray other system costs (inverters, labor, wiring, etc).

    Maybe $40/month is too high; maybe it's set to discourage homeowners from going solar rather than simply compensating the co-op for the extra effort required to manage homeowner-owned solar installations. That said, the rest of the model set by NREMC seems pretty equitable. It is also mostly immune from the argument that "rich solar owners are being subsidized by poorer ratepayers" which is often leveled against traditional net metering arrangements.

    1. Jon R | | #3

      > rich solar owners are being subsidized by poorer ratepayers

      Anything that works out to paying much more than than utility scale solar rates (grid savings are typically minimal) is a subsidy.

      I'm all for renewable energy, but small scale solar is typically an inefficient use of green dollars. Push for more utility scale wind and solar and design your home for low usage and time of use optimizations.

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