Solar gardens are growing slowly out West
May 2, 2016
As soon as her electric cooperative started selling panels in a community solar garden, Doris Shennum of Bear Lake, Montana signed up. It will take 21 years for her to break even on her $900 panel, but 91-year-old Shennum doesn't mind. "My solar panel is now part of my legacy to my children and grandchildren," she says.
Both Shennum and the Kalispell-based Flathead Electric Cooperative are enthusiastic about "solar gardens," an arrangement in which customers share the cost as well as the electric output of a solar array. While the concept seems simple and appealing, solar gardens have been slow to sprout in the West due to a host of regulatory and economic challenges. That's changing as states like Oregon and California open new markets, and electric generators from tiny rural co-ops to investor-owned giants build community arrays.
The slow growth is surprising, given that solar gardens were pioneered in the West. In 2006, the first community-supported array went into operation in Ellensburg, Washington. It was small, expensive and developed by a not-for-profit municipal utility. Still, it showed that it could be done.
Entrepreneur Paul Spencer furthered the concept in Colorado by creating a business – the Clean Energy Collective – to build gardens and sell the panels to the public and the electricity to utilities. His first customer, in 2010, was Holy Cross Energy, based in Glenwood Springs, Colorado. Today, the company has 50 projects in 10 states, though none in the West outside of Colorado.
Spencer's approach allows households to buy a share in a solar array, which is 10 to 400 times larger than the average rooftop unit, at a cost of between a few hundred to a few thousand dollars. The electricity is fed into the grid, and the household either receives a credit for its portion of what the garden generates or gets its slice of the energy at a long-term, fixed rate as a cushion against utility rate increases.
The National Renewable Energy Laboratory in Golden, Colorado, estimates that nearly half of U.S. households cannot install solar on their roofs, often because they rent or have shaded roofs. Others are discouraged by the expense, since an array can cost as much as $30,000. Solar gardens represent as much as a $16 billion market by 2020, NREL says. Nevertheless the complexity involved in developing them, including calculating energy credits and setting tax rates, has slowed their spread in the West.
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"You need some legislative action to set the stage for solar garden development," said Rick Gilliam, a program director at Vote Solar, an advocacy group. "The Western states tend to be conservative, and there hasn't been that legislative support."
In 2010, Colorado passed the Community Gardens Solar Act and created the largest solar garden program in the West. Other Western states have been slow to follow. In 2015, Montana state Sen. Mike Phillips, D, sponsored legislation that would have enabled customers to get credits on their bills for solar gardens at for-profit utilities the same way a homeowner gets net metering credits for electricity put on the grid by a rooftop unit. It was opposed by industry and died in committee.
Still, some Western states are opening the way for community solar.
California's Green Tariff Shared Renewables Program, established in 2013, requires the state's three-investor-owned utilities – Pacific Gas and Electric (PG&E), San Diego Gas & Electric and Southern California Edison – to develop 600 megawatts of shared solar. It wasn't, however, until this past March that the California Public Utilities Commission issued initial rules for the program.
That same month, Oregon passed the Clean Electricity and Transition from Coal Act bill, which aims to end coal-fired generation in the state by 2035 and double renewable-energy generation to 50 percent by 2040. The law also establishes a community solar program.
"There are still some unanswered questions about California, but we expect both California and Oregon to become big markets," said the Clean Energy Collective's Spencer.
In the meantime, much of the development is in the hands of rural co-ops, like Flathead Electric, which are customer-owned and can build gardens and issue credits. "It has been promising to see the co-ops pursue community solar, but we'd like to see it expand more broadly," said Diana Maneta, executive director of the Montana Renewable Energy Association.
And Western for-profit utilities, which have fought solar on some fronts, including net metering, are developing their own form of community solar. Tucson Electric Power set up the nation's first such program in 2011. In Utah, Rocky Mountain Power is building a 20-megawatt solar array for a community solar program and San Francisco-based PG&E and other California utilities are rolling out their own programs. But instead of investing in the project, and getting some return, customers merely opt to buy its electricity – at a premium.
Tucson sells 150 kilowatt-hour blocks with a $3 monthly charge for each block. In PG&E's Solar Choice program, customers can get all or a portion of their electricity from solar, which could cost up to an extra $18 a month on an average bill, the utility estimates.
Yet even as solar gardens appear to be taking root, the future remains uncertain. The fate of a projected 60 megawatts of solar gardens in Colorado, a community solar garden leader, is in limbo after the state's Public Utilities Commission in March rejected an agreement between Xcel Energy, the state's biggest utility, and solar developers over what it considers overly generous renewable energy credits. Xcel is asking the commission to reconsider its decision.
And while Washington state adopted subsidies to support solar gardens, it capped their size at 75 kilowatts and limited the subsidies to locally made equipment. "They didn't really create a market for solar gardens," said Evan Ramsey, a senior renewable-energy project manager with the Bonneville Environmental Foundation, a Portland, Oregon-based nonprofit based.
In the end, economics may win the day, says Joseph Goodman, a manager in the Boulder-based Rocky Mountain Institute's electricity practice. The institute is working with New Mexico's Springer and Kit Carson electric co-ops to reduce costs and eventually make solar gardens cheaper than coal- or gas-fired generation.
"The key is the pricing. If we can get that down, there will be a lot of interest in solar gardens in the West from co-ops, utilities, even the native tribes and pueblos are interested," Goodman said. "Community solar as we see it today is just the starting point."