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Faith communities, colleges, schools, local governments and non-profits will find it easier to “go solar” under a law that takes effect in Virginia on July 1. Eligible customers will be able to install solar panels or wind turbines with little or no upfront cost, paying only for the electricity the systems provide. This arrangement, known as a third-party power purchase agreement (PPA), has been the driver for most of the solar projects in the U.S. in recent years, but prior to this year utilities had blocked its use in most of Virginia.

The new law creates a two-year pilot program allowing customers of Dominion Virginia Power to install projects as large as 1 megawatt (1,000 kilowatts) using PPAs financed by private companies. Projects must have a minimum size of 50 kilowatts, so the program can be used by many commercial customers but excludes homeowners, whose solar PV systems more typically fall in the 4-to-8 kilowatt size.

Importantly, however, the 50-kilowatt minimum does not apply to tax-exempt entities. PPAs are one of the only ways available for tax-exempt entities to benefit from the federal 30% tax credit for renewable energy systems; a tax-paying investor actually owns the system and uses the credits, passing along the savings to the customer. Thus the program could open up a new solar market in Virginia focused on what might be considered a natural vanguard for renewable energy: houses of worship, colleges, schools and nonprofits.

PPAs also offer an advantage over buying solar panels outright: even though the solar system is on the customer’s roof, someone else actually installs, owns and maintains it. That means less hassle for the customer and no upfront capital cost. The customer only has to pay for the solar power that’s produced. With prices for solar systems having fallen dramatically in recent years, customers will generally be able to buy solar energy under a PPA for no more than they now pay for power from non-renewable sources.

In states with incentive programs, including Maryland and DC, customers actually save money on their utility bills with solar PPAs. Virginia customers may not save money at first. Depending on the contract terms, however, customers may save money in future years, and can end up owning the solar system outright eventually, which will allow them to save quite a bit of money on electricity in the long run.

PPAs are the most common financing method for rooftop solar systems across the country. Companies like Solar City and Sungevity have created a profitable business model around financing and owning solar systems on customers’ property. Given the lack of state incentives in Virginia, Solar City isn’t expected to enter the market here. Financing PPAs in Virginia can still be profitable, but it presents challenges. Still, for people with cash sitting in CDs and bank accounts earning less than 1% interest, financing a solar project at their neighborhood church or school can be rewarding financially as well as spiritually.

One of the few companies with experience in Virginia PPAs is Secure Futures, LLC of Staunton, Virginia. CEO Tony Smith says his company’s business model is to “work with tax exempt entities to met their environmental, educational and thought leadership goals through solar installations that we own and operate in ways that deliver immediate operational savings and solid long term returns.”

The new law will involve rulemaking by Virginia’s regulatory body, the State Corporation Commission, to settle the details--including how the pilot program is tracked and how a qualifying customer applies for the limited kilowatts available over the two-year period. The SCC should be issuing a docket for a public hearing in the near future.  Since many customers need months of lead-time, it’s not too soon to start the planning process.

Free workshops will offer information about solar PPAs beginning in June

On June 23 at 7 p.m., Greater Washington Interfaith Power and Light (GWIPL) and the Sierra Club will hold a free workshop for faith congregations at Mount Vernon Unitarian Church in Alexandria, one of the first Virginia churches to install solar panels. Representatives of solar companies including Secure Futures and Abakus Solar of Richmond, Virginia will be on hand to answer questions.

GWIPL has worked extensively with DC and Maryland congregations on similar solar projects and has compiled an informative booklet that can be downloaded from the gwipl.org website.

The Virginia Chapter of the Sierra Club supported the solar industry in its quest to open up the Virginia market for solar PPAs and believes churches and other faith communities can play a big role in making the benefits of renewable energy available to everyone.

Sierra Club and Virginia Interfaith Power and Light are also planning a June workshop for Richmond-area congregations. Similarly, Sierra Club and National Wildlife Federation, which has been working with community colleges on “green campus” projects, are planning a workshop designed especially for colleges and universities.

In addition to their target audiences, all workshops will be open to anyone who wants to learn more about the solar opportunity. For information, contact corrinabeall@sierraclub.org.

New law an imperfect compromise

The PPA legislation was a compromise between the solar industry and Dominion Power, which had sparred over the question of whether PPAs are legal in Virginia. When Secure Futures tried to install a system at Washington & Lee University in 2011 under a PPA, Dominion sent cease and desist letters claiming the arrangement was illegal. Eventually Secure Futures and the university used a different financing approach so the project could move forward.

Dominion also blocked a 2012 bill in the General Assembly that would have expressly allowed PPAs; that bill would have included private homes and smaller commercial systems. The issue was popular with legislators and the public and became a priority for many local governments during the 2013 legislative session.

Eventually this year Dominion agreed to a narrower bill as a temporary pilot project. In exchange, the bill gives Dominion legal certainty by prohibiting PPAs in its territory that fall outside the pilot project.

Other Virginia utilities refused to participate in the pilot program. As a result, the program and its rules apply only in Dominion Virginia Power’s service territory.

The pilot project will run for two years, after which Virginia regulators will evaluate it to determine whether it should be continued and expanded. The total size of all the systems installed under the legislation is capped at 50 megawatts. Although this is a tiny amount compared to states like New Jersey, which already has more than 1,000 megawatts of solar installed, it would mark a significant step forward for Virginia, which to date has installed less than 10 megawatts.

In addition to the 50 megawatts that can be installed under PPAs, another 30 megawatts of solar will be installed by Dominion itself under a program it refers to, somewhat confusingly, as “community solar.” Under that program, the utility plans to install and own solar systems on leased rooftops in select locations. The program includes no provision for selling the solar output to the building owners.

Wind systems also covered

The pilot project includes wind turbines as well as solar systems. Dominion’s service territory includes relatively few areas with wind resources good enough to make wind power economically attractive, but the Virginia Wind Center at James Madison University has been evaluating the possibilities under the pilot program and believes it may be useful for some customers interested in installing wind turbines.

Originally posted to Power for the People on Wed May 01, 2013 at 07:38 AM PDT.

Also republished by Virginia Kos.

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Comment Preferences

  •  A good start that will create jobs (3+ / 0-)
    Recommended by:
    oortdust, Odysseus, Words In Action

    This isn't big enough, but it's a good starting effort which will generate good long term jobs and will provide power without polluting Virginia's air.

    look for my eSci diary series Thursday evening.

    by FishOutofWater on Wed May 01, 2013 at 07:46:51 AM PDT

  •  Virginia passed another law about solar (5+ / 0-)

    a while ago that I found very interesting. This has to do with individual users and at the time the law was passed in 2011 applied to exactly ONE family.

    Dominion to charge fee to heavy users of solar power power

    Basically, this law says that even if you were to go almost completely solar, you have to pay the utility a "stand-by" fee for them to maintain the poles and lines and grid for any time when you might need to use their power. I think that sounds reasonable, but it's a matter of degree. How high a fee is equitable? If the standby fee is too high, naturally it will discourage and depress the installation of large solar systems since much of the economic advantage will be negated.

    “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

    by Phoebe Loosinhouse on Wed May 01, 2013 at 08:31:21 AM PDT

  •  This is designed with (2+ / 0-)
    Recommended by:
    FishOutofWater, Words In Action

    Wall Street in mind. The only ones really making out on this deal are the financiers.

    Yes non profits get a penny or two per kwh off their electric bill which is a good thing.

    Yes this will increase the renewables portfolio for VA (nowhere to go but up).

    Yes this will employ a few installers locally (very few)

    But the ones that get the lions share of the incentives here are...SURPRISE....well capitalized financiers.

    If you want to improve employment, install PV where it will do the most good (small site generation) and help out the middle and working class, institute a feed in tariff for small residential projects.

    -7.5 -7.28, A carrot is as close as a rabbit gets to a diamond.-Don Van Vliet

    by Blueslide on Wed May 01, 2013 at 09:32:18 AM PDT

    •  So get there first. (1+ / 0-)
      Recommended by:
      Words In Action
      But the ones that get the lions share of the incentives here are...SURPRISE....well capitalized financiers.
      Nothing is stopping you from starting your own venture capital fund and underwriting solar projects at lower rates.  Put your money where your mouth is.

      Will you be attending these information sessions, business card in hand?  Because you don't seem any too impressed with the people who are paid to do exactly that.  If you can do better, do it.

      -7.75 -4.67

      "Freedom's just another word for nothing left to lose."

      There are no Christians in foxholes.

      by Odysseus on Wed May 01, 2013 at 11:13:01 AM PDT

      [ Parent ]

    •  Well, it increases sustainability one small step (0+ / 0-)

      at a time.

      At least this way people who otherwise can't afford it have the OPTION.

      Now if they would do the same thing (financing and cost neutral swaps) with electric and hybrid cars, we'd really start getting somewhere.

      "institute a feed in tariff for small residential projects."
      Sorry, I don't understand.

      The singularity we are witnessing is the passing of the last wave of people who had the luxury to behave as if the past 30 years did not happen.

      by Words In Action on Wed May 01, 2013 at 01:55:41 PM PDT

      [ Parent ]

      •  A feed in tariff (0+ / 0-)

        is an amount above the cost of retail electric power that is paid to a renewable power producer.

        The state of Washington has a feed in tariff for residential solar power plants. The system owner is paid $.55 a kwh produced, well above what the utility charges for power. The amount is capped however so large solar projects would max out the tariff benefit quickly.

        All, I am a solar proponent. I work in the solar industry. I am just frustrated that the small amounts of incentives that are made available, are frequently made to benefit well capitalized investors and not created to hire the most people for the best wages and also benefit the middle and working class renewable energy investor.

        -7.5 -7.28, A carrot is as close as a rabbit gets to a diamond.-Don Van Vliet

        by Blueslide on Wed May 01, 2013 at 07:29:24 PM PDT

        [ Parent ]

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