Community-scale Projects

For more than 70 years, electric cooperatives have served a unique role in the lives of those they serve, not only in supplying the energy needed for rural communities to thrive, but also in helping attract jobs and investment. And across the west, where energy resources are abundant, Tri-State Generation and Transmission Association, a not-for-profit, wholesale power supplier, and its 44 member distribution cooperatives are emerging as leaders in rural renewable resource development.

In response to the interest of electric cooperatives and their communities, and after thorough analysis, in mid-2008 Tri-State’s board of directors crafted one of the most aggressive cooperative incentive programs in the country to help spur development of local, community-based renewable energy projects.

The response has been strong and by the end of 2009, many Tri-State members had developed or were developing projects in their service territories to utilize locally available wind, solar, biomass, landfill gas, micro-hydro, geothermal or recovered heat resources, or support net metering programs. It’s an approach that complements Tri-State’s ongoing utility-scale renewable energy projects, diversifies our resource mix and helps meet our members’ renewable portfolio standards obligations, which were adopted in Colorado and New Mexico in 2007.

As an incentive, the program provides performance payments, pegged above the market price for renewable energy credits, based on the qualifying renewable energy output or the attributes generated by local renewable energy projects. Performance payment amounts are the same for all members, although projects eligible for an RPS compliance multiplier under a state program (for example, the 3X credit for solar in Colorado and New Mexico) receive a similar multiple of the performance payment.

In fact, Tri-State provides local renewable development incentives to all of its members across four states, even though at this time neither Nebraska nor Wyoming has passed renewable energy mandates. The program takes a uniquely cooperative “bottom-up” approach that keeps decisions in rural communities. Individual co-ops develop the projects appropriate for their communities and projects are eligible for performance payments so long as they meet the definition of renewable energy under state RPS mandates.

To ensure compliance, member co-ops can pursue renewable energy projects individually or jointly. If a project delivers more RECs than needed to meet requirements, the co-op can sell its excess RECs to Tri-State or into the market, or retain the RECs for its own purposes. If member projects do not fulfill RPS requirements, Tri-State secures the appropriate amount of resources to guarantee compliance.

Given the diversity of rural resources and interests of Tri-State members, the program is structured to avoid a “one-size-fits-all” approach. The largest capacity projects operating under the program are 6 MW and 4 MW heat recovery plants operating within the service territories of La Plata Electric Association and Highline Electric Association, respectively. Several micro-hydro projects and solar projects are also in operation.

To meet the interests of individual rural consumers, members have adopted the Tri-State policy to provide net metering incentives for small wind and solar installations. These include small distributed wind turbine installations on the eastern plains of Colorado and southern New Mexico, and solar throughout the west.

These local, community-scale and net metering projects are being developed in concert with Tri-State’s larger utility-scale renewable energy projects. Construction will begin with First Solar this spring on the 30 MW Cimarron I solar photovoltaic plant in northeastern New Mexico, which will be among the largest projects of its kind in the world when it goes online later this year. Also scheduled for 2010 is the 51 MW Kit Carson wind facility with Duke Energy in eastern Colorado.

Taken together, Tri-State and our member co-ops are showing leadership in developing a range of renewable energy projects at a scale and pace that is appropriate. But our story doesn’t end there.

We’re moving forward with significant investments in transmission, which support reliability and growth for rural communities while expanding opportunities for renewable energy development. We’re also making investments in renewable energy technology research and development, including serving as the host for a major Electric Power Research Institute study on the use of concentrated solar power technology to augment the steam cycle in our New Mexico coal-based power plant.

There are no easy answers to our energy challenges and coal and gas resources, along with efficiency across the energy value chain and demand-side management, will continue to play an important role in a balanced portfolio. Our efforts in renewable energy, along with other investments in new technologies, including those that can provide options to manage greenhouse gas emissions, can help ensure cooperatives will continue to affordably, reliably and responsibly serve their communities.

Ken Anderson is Executive Vice President and General Manager with Tri-State Generation and Transmission Association Inc.

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