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Permitting and Construction Are Issues for US Solar Industry

Across the U.S., large and small-scale solar power development is booming, yet many projects still face the threat of permitting and construction obstacles.

Indeed, the solar industry as a whole is evolving to favor the growth of land-based systems over building mounted installations. To address the problem of unequal electricity rates among solar-powered homeowners and others, policy-makers are turning to larger projects. Land-based systems positively impact communities by creating more jobs, income, and greater flow of electricity to the grid. Rebate structures for smaller systems are replaced by incentives for larger projects that take advantage of the economy of scale.

Definitions of the scale of solar installations vary between region and state. In their Solar Incentive Program, the city of Los Angeles defines “small” systems as projects that produce between 30 kW and 150 kW, and “large-scale” projects as producers of between 151 kW and 999 kW. According to the solar permitting standards of the Commonwealth of Massachusetts, large-scale ground-mounted solar refers to any system of 250 kW or more. Renewable Energy Certificate prices are based on the size of the installed system - small systems create 10 kW or less; large systems, between 10 kW and 1 MW. Most commercial facilities require less than 1 MW of power. Most small businesses and homes can run on 1 to 5 kW systems, according to the U.S. Department of Energy.

Solar developments for municipal use or distribution that are built on privately owned land rely on PPAs to enable a third-party developer to own, maintain, and operate the system. The landowner or another off taker of the electricity receives a lower, stabilized electric rate. The solar power developer benefits from the rebates or incentives allowed to the host landowner. The property owner assumes no operating risk in their visible support of the environment. The company purchasing the energy is able to reduce their carbon emissions and attain Solar Renewable Energy Certificates (SRECs) in states that have Renewable Portfolio Standards.

Risks and Challenges for Landowners

Despite the advantages of a PPA agreement, the host property owner faces some challenges. Solar systems may cause a potential increase in property value, which can also lead to an increase in property taxes. PPAs may cost more than simple purchases of solar power systems due to potentially higher transaction costs. Net metered PPAs may sometimes result in two electric bills if the PV system does not provide all of the host's necessary electricity.

Feed-in tariffs, on the other hand, function differently than renewable portfolio standards by  providing the electricity-generating installer with a free source of energy as well as payment from a utility company. The property owner, therefore, no longer needs to import electricity from the grid unless in need of additional power. When they transfer their excess energy, they are paid an export tariff.

Residential (2kW) projects cost $0.34 per kilowatt hour to operate, while industrial (500 kW) only cost about $0.19. Installation costs also reveal the advantages of large-scale solar. A small-scale system installation totals $8.20 per watt of power produced, but a large system nearly halves that price, costing $4.77 per watt of power produced. Last year alone, the power produced by large-scale installations rose to 758 MW installed and 297 MW installed in small-scale operations. Larger systems have grown at a faster rate historically than small-scale operations. In 2009, the power produced by residential installations in the U.S. totaled around 400 MW and grew to 15,000 MW by 2012 – an increase of 14600 MW. Residential installations only grew from 100MW to 400MW in this time period.

Larger scale solar PV operations can qualify as energy generators and also receive REC's in RPS eligible states. They provide energy through a wholesale power sales transaction, usually to a utility. Energy generators fall under Federal Energy Regulatory Commission (FERC) rules for interconnection. The FERC regulates system safety and reliability. The Solar Energy Industries Association hopes to quicken and lower the costs of grid interconnection, which would create countless opportunities for many new solar projects to connect to the grid.

Development of large scale renewable energy projects, including solar PV, assists municipalities by reducing their annual energy expenses and serving as a hedge against volatility in the energy sector. Many small to mid-size PV installations are also emerging across America, providing new jobs, financing, and electricity to countless communities. A report by the NPD Solarbuzz United States Deal Tracker reveals that 40% of all PV projects in the US are 500 kW or less. With the addition of tax incentives and rebates, projects at this size pay for themselves.

Growth in solar development, spurred by the government’s “All of the Above” program, promises to power almost 7 million homes in the next ten years. The first of its kind, the plan reserves public land for solar projects with only minimal impact on wildlife and waters. This blueprint sets aside 285,000 acres of public land in 17 key areas in the nation’s sunbelt – California, Arizona, Utah, Colorado, Nevada and New Mexico. Many groups including the Audubon Society and Southern California Edison were quick to endorse the deal.

Land Use and Permitting

Despite the new popularity of Solar PV projects, implementing a project at any scale presents a number of challenges. Before a PPA may be finalized or construction may begin, regulatory permits must be secured and the design finalized. The importance of these steps is often under-estimated or in some cases, completely overlooked. Construction planning must account for solar-specific considerations. Many regional planning commissions are receiving inquiries from member communities and have started analyzing the benefits and optimization of an aggregated approach.

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Solar developers are finding that land use considerations add a level of complexity unrelated to their experience with installations of building mounted solar PV systems. In the crucial time span of construction, any added delay poses a serious concern. Delays may result from a lack of understanding of land use considerations that can cost the project proponent unanticipated time and money.

Permitting a commercial scale system requires the expertise of land use professionals. Land use restrictions require research and experience to determine potential impacts on the development and grid connection of a solar array. Such restrictions include easements, deed restrictions, hidden subsurface utilities, storm-water surface runoff, flood plains, land use restrictions, grid interconnection/access, title ownership, zoning restrictions and other regulatory controls.

Rooftop solar systems face different permitting processes than ground-mounted. A rooftop system requires a minimum of structural evaluation, building and electrical permits, while land-based systems require design to incorporate physical, environmental and land use constraints. Wildlife impact evaluation and mitigation may take months or longer to complete if endangered wildlife habitat is involved.

Title and ownership issues must be vetted prior to design to ensure that there is clear title to the land, and that the parcel is not subject to prohibitively restrictive easements or other encumbrances that may interfere with construction or long term operation. Potential land use restrictions should be evaluated to insure compliance with regulating limitations and to avoid conflicts with ownership or deed restrictions.

Every state has different land use restrictions and policies. In addition, stakeholders may attempt to restrict the placement or use of solar panels. Their concerns are mainly for visual reasons – color, size, and visibility. The public review process is often more productive when advanced outreach and education about the project is initiated at an early stage. Developers and consultants must properly explain the visual and environmental impacts to stakeholders in order to avoid costly redesigns, time delays and potential appeals.

Environmental regulations require protection of natural resources such as wetlands and endangered species habitats, which may preclude any development on the site. Flood Zones, drainage design, and access to the site including roadways and utility infrastructure, require design calculations to ensure that the removal of vegetation and the introduction of impervious surfaces will not create a burden from stormwater runoff to abutting or downstream properties. Securing regulatory permits may be as challenging as other residential or commercial land developments.

Many ground based projects never reach the construction phase because of inadequate due-diligence, design or the permitting process. Maintenance, insurance and risk must be factored into the project pro-forma, prior to submission, to ensure a PPA that will work for both parties.

Delays due to poor planning and restrictions potentially slow the growth of the solar industry that is otherwise flourishing in large and small scale operations within communities throughout the U.S.

Lead image: Red tape via Shutterstock

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