Richard E. Waitt, Jr., Contributor
March 29, 2013 | 4 Comments
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.