When the United States pulled itself out of its commitment to the Paris climate accord, corporations, non-profits, towns, and cities reminded everyone that their commitments to cleaner energy still stood. Many towns and cities have even signed on to go 100 percent renewable, including big names like San Francisco and Chicago, as well smaller towns like Moab, Utah. Smaller towns, especially those with municipal utilities like Greensburg, KS, are reaching these goals already. However, how are big cities with bold goals planning on getting there?
The Commodity Route
Although some cities are boasting large renewable achievements, and there’s sure been a lot of cheerleading from the press on these targets, it is unclear how most cities will reach these goals. For example, after the famed “Pittsburgh not Paris” rallying cry from President Trump, Pittsburgh pledged to pursue 100 percent renewable energy by 2035. Though certainly admirable, the state will need to fix its broken SREC market with an ambitious increase to its alternative energy portfolio standard to make any solar viable within Pennsylvania. Unfavorable state policy toward renewables could prevent Pittsburgh from meeting its goal. That is why some cities, such as Milwaukee, create their own programs. Though state level support is largely non-existent in Wisconsin, the Milwaukee Shines program helps push solar initiatives for the city through methods like teaming up with credit unions to offer low interest loans for solar projects.
A recent op-ed by former D.C. energy head Sam Brooks critiques much of the cheerleading. Cities, Brooks says, like Burlington, VT boast a 100 percent renewable portfolio, but much of that comes from them purchasing Renewable Energy Credits (RECs) to offset the power they are purchasing from the grid. By buying these credits, cities can claim these renewable benefits on their way to claiming 100 percent renewable power, which Brooks reminds us is not actually reducing greenhouse gases produced by the city.
In other words, while buying RECs is often the first, and most simple option for cities, the purchase of RECs does not offer electricity savings or a long-term hedge, and provides little in the way of additionality. So, although purchasing RECs is a way cities can claim “100 percent renewable energy”, those looking to make more of an environmental impact should consider other routes. In fact, 100 percent renewable targets may be achieved through direct investments in solar energy power plants that cities can feel, touch, and directly create.
Solar Offers a More Direct Route
Solar energy’s versatility makes it a wise choice for a city or municipality. Arrays can be utilized on rooftops, open land, or provide shade to cars in a parking lot. However, given challenges of building solar in an urban environment, sourcing clean energy electrons from a solar facility far from the city center in more open or rural areas is also an option.
The Onsite Solution
For municipalities with a lot of land, like a small town in the Midwest, or like our 6MW project in Danville, Virginia, onsite solar is an effective way to fill a renewable portfolio. For denser cities, this solution is not as simple, as land for greenfield development and eligible rooftops may be limited. These real estate constraints create inherent challenges in installing solar in cities. Tall buildings are tough to construct on, grid congestion can lead to interconnection issues, and smaller sized systems can have bad economics. Generally, most investors prefer one-off projects or aggregated portfolios of 1MW or less. This can be challenging in an urban environment with much smaller project sizes where “commercial” solar must be installed 30kW at a time.
However, cities can be creative. For example, Washington, D.C., where Sol Systems is headquartered, has a 50 percent by 2032 renewable portfolio standard, which has led to a robust SREC market. This helps to make projects as small as 100kW in some cases attractive to investors; projects are even more attractive when bundled into a portfolio. In fact, Sol Systems worked with DC’s Department of General Services to construct solar on 34 buildings across the city. By using high efficiency panels on schools, police departments, and hospitals (often offering more available real estate for solar deployment than other city buildings), the portfolio effectively brings over 11MW of renewable energy to the city. That’s enough to reduce peak summer demand by 15 percent.
Onsite solar generates power for a building, and solar customers can either own the installation, or a third-party may provide a financing solution through a power purchase agreement (PPA). PPAs require zero upfront costs and can provide consistent savings to customers from day one.
The Offsite Solution
Though onsite solar may be a solution for cities, real estate constraints and other urban conditions would make it challenging for a 100 percent renewables target to be meet with onsite solar alone. And, from a regulatory standpoint, though many markets offer the ability to do an onsite PPA, many do not (unless the municipality has its own utility). For these markets, offsite solar projects offer the opportunity to conduct virtual PPAs, in which a city could agree to purchase the electrons from a project feeding the grid. This also opens up the options for much larger arrays, as the array can be built on a large open piece of land outside of the city, providing more energy than could likely be provided by an onsite array anywhere inside the limits. Through a remote PPA, a company procures clean electricity through a solar array at an off-site location. Just like an on-site PPA or cash purchase, remote PPAs can provide electricity savings and stability – and a known, specific, “built to suit” system, but without the hassle of installing solar on a municipality’s own facilities. Through this option, a company is choosing to procure solar from a custom-built project sized based to meet their unique electricity needs.
As the buzz for 100 percent renewable goals grows, more questions will likely be asked about how these goals will be reached. For cities looking to reach their goals by purchasing RECs, it might be worth preparing to answer how that affects their greenhouse gas contribution. Onsite and offsite solar offer energy sources that directly contribute to cutting emissions on the way to a 100 percent portfolio. Sol Systems works with companies, cities and municipalities, and offers solutions for both onsite and offsite power. Contact our team at firstname.lastname@example.org to learn more.
This is an excerpt from the July 2017 edition of The SOL SOURCE, a monthly electronic newsletter analyzing the latest trends in renewable energy based on our unique position in the solar financing space. To view the full Journal, please subscribe or e-mail email@example.com.
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Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.
Over the last eight years, Sol Systems has delivered more than 600MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.
Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.