Community Solar Project on Lopez Island School

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Padric ClancyBen ElkinMaryam MozafariHannah RayJake SadieAlbert Yuen

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Outline

What is “Community Solar”?Financial incentives for community solarModeling Results

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Community solar

Community owned 77.7 W solar array in El Jebel, Colorado

Community solar (WA SSB 6658): solar energy systems owned by local individuals, households, nonprofit organizations, or non-utility businesses that are placed on local government property

Potential Locations

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IncentivesInvestor-owned (LLC) Non-profit (school

bond?)

Federal

Investment tax credit 30% of system cost No

Accelerated depreciation 5-year No

State

WA Solar production incentive (SSB 6658)

$1.08/kWh for WA-made solar. $5000/yr max in OPALCO

$1.08/kWh for WA-made solar. $5000/yr max in OPALCO

Sales tax exemption Yes Yes

OPALCO

Member-owned renewable energy (MORE). 10,000 kWh/yr max per system

$0.20/kWh for 10 years + $0.10 for 3 years

$0.20/kWh for 10 years + $0.10 for 3 years

Modeling Input Parameters (fixed):

Annual energy output (i.e. capacity factor)Capital costAnnual operation and maintenance costResale value of the system

Variables:Washington vs. non-Washington Modules and InvertersFinancing: LLC vs. Non-profit vs. BondInstallation yearInstalled cost ($/W)System size (kW)

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ResultsROE vs. Installation Year, Finance Structure & Equipment:

2011 2012 2013-15

-10

-5

0

5

10

15

20

LLC All WA

LLC WA Module

LLC Non-WA

NP All WA

NP WA Module

NP Non-WA

Installation Year

RO

E (

%)

$/W: All WA = 7.5 WA Module = 6.2 Non-WA = 4.85

Term ends in 2020 System size = 4.95 kW All LLC Data shown reflects ITC Grant rather than Tax Credit

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ROE vs. Size, Finance Structure, and Equipment:

3 4 5 6 7 8 9 10 11 15-10

-5

0

5

10

15

20

All-WA Grant

All-WA

WA Module Grant

WA Module

Non-WA Grant

Non-Wa

System Size (kW)

RO

E (

%)

$/W: All WA = 7.5 WA Module = 6.2 Non-WA = 4.85

Installation date is 2011

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Federal IncentivesBusiness Energy Investment Tax Credit (ITC):

30% Tax Credit ITC in form of a Treasury Grant – Construction < 2011

Modified Accelerated Cost Recovery System (MACRS):

Only applicable to commercial entities

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WA State IncentivesWashington State SB6658:

Production Based FIT (Residential, Utility or Community)$ 0.30 /kWh – non-WA$ 0.72 /kWh – WA solar panels$ 1.08 /kWh – WA inverter & solar panels

Max Eligible Capacity = 75 kW On Government PropertyTotal available fund = 5% of (0.5% of the utility’s operational

revenue or $100,000, whichever is greater) = $5000/yrEnds June 2020

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WA State IncentivesWashington State Sales tax exemption:

Through June 30, 2013 no sales tax on the sale of solar electric equipment for systems 10 kW or less.

 Systems over 10 kW are sales tax exempt through June 30, 2011.  Between July 1, 2011 and June 30, 2013, solar PV systems that

exceed 10 kW are subject to sales tax, but qualify for a refund of 75% of their applicable sales tax.

Solar PV systems sold after June 30, 2013 are subject to full sales tax.

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Local Utility IncentivesOPALCO Member Owned Renewable Energy (MORE):

Voluntary contribution towards green energy

The interconnection year determines the rate for 10 years Additional $0.10/kWh bonus payment through June 30, 2014 Capped at 4,000 kWh/year (Residential) & 10,000 kWh/year

(Commercial)

Interconnection Year Established rate /kWh

Before July 2012 $0.20

2013 $0.17

2014 $0.14

2015 $0.11

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RecommendationsDue to time sensitivity, the project is viable only if started

before 2013 - ROE >10%

An LLC finance/legal structure is necessary to take advantage of the federal ITC grant

Installation is limited to 5kW or below, as return on equity decreases sharply with project sizes above this threshold

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Legislation Assessment Equity:

Discrimination against small utilities and cities as well as lower income entities (low tax appetite)

Economic Inefficiency:Favoring the monopolist low efficient manufacturer (Silicon

Energy) – Absence of competitive marketMarket Failure:

Investors being able to cut each other out of the ‘pie’

What needs to change:Available fund (Increase) Policy AmendmentPrice of WA modules (Decrease) Competitive Market

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Special Thanks to:

Chris Greacen

Profitable scenariosWA modules

Equity return: 17%WA modules + WA inverter

Equity return: 38%

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