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An electric cooperative in rural Arkansas is finding that solar power is not only benefiting its members, it’s helped to keep a major employer in the community.
Ouachita Electric Cooperative may have broken new ground by how it helped arrange a dual power purchase agreement with its wholesale power supplier in order to help a defense contractor build its presence near the co-op’s hometown of Camden.
Aerojet Rocketdyne is Ouachita’s largest customer so it was incumbent on General Manager Mark Cayce to do everything in its power to retain its business and explore ways to improve its service to the company. Camden had recently lost another large manufacturer – Arquest, Inc. – which saw its local operations moved to Texas after being acquired.
“We knew if we didn’t do something different, we would see continued unemployment, widespread, low-income, problems and a shrinking population,” Cayce said.
As Aerojet needed to boost its prospects for winning future contracts from the Defense Department, the company sought to boost the diversity of its energy sources under Executive Orders signed by then President George W. Bush and updated by then President Obama. When Aerojet sought plausible solar solutions through its solar project developer Silicon Ranch Corp., Cayce was ready to engage.
“Arkansas had been a closed market for solar. It had never been done before on this scale,” Cayce said.
Ouachita and Cayce were honored last night in Washington, D.C. as the Smart Electric Power Alliance’s Cooperative Utility of the Year.
‘This could work for everybody’
Through its office in Nashville, Silicon Ranch in 2015 proposed a solar system which Cayce thought might make sense given solar’s ever-declining costs. But it required the financial acumen and political skills that Cayce brought to the negotiations. “It was through those discussions that we realized this could work for everybody,” Cayce said.
Among the realizations was that under Arkansas law and Ouachita’s transmission limitations, it could only integrate a 12.5 MW solar farm and it couldn’t be done by Ouachita; it had to be situated “behind” Aerojet’s meter. That meant Ouachita could not bill the company for the power.
The only entity that could sell them the power was Arkansas Electric, Ouachita’s wholesale supplier. “They had to agree to buy the excess power” to serve Ouachita and other retail co-ops in Arkansas, Cayce said.
With Cayce’s help and approvals from regulators, Silicon Ranch negotiated one of two power purchase agreements (PPAs) whereby Aerojet purchased all the solar-generated electricity it could take and Arkansas Electric would purchase any excess through the other PPA, Case explained.
Cayce “had to work through a lot of politics to get the buy-in from all the right players to make this happen,” said Matt Beasley, marketing director for Silicon Ranch, which has experience throughout the country on solar project applications.
Even with retaining a valued customer, how did it make sense for Ouachita to lose that revenue?
“We realized by having this behind their meter, we would gain by reducing our summer peak demand” – by as much as 30% recently amid this summer’s heat, Cayce said. And that enabled Ouachita to reduce the rates it charges all of its customers because its total power costs decline proportionately, he added.
With the purchase of solar-generated power, Aerojet boosted its energy diversity and fixed its costs for the next 25 years. Camden would remain the base for its regional missile manufacturing operations.
Since the contracts were ratified, Cayce said Aerojet has added 250 employees, many of which moved into the area, adding to Ouachita’s residential load.
But that got Cayce and officials from throughout the region thinking: if Ouachita could do this with solar, how else might it boost the marketability of Ouachita’s service territory to large employers? “This led us to see that we could do solar in south Arkansas and that could further differentiate the region from other parts of the state and the South and become more attractive to other industries,” Cayce said.
To help make the future case for solar, Ouachita built a solar farm to power most of its own operations. “If we’re going to do this, we want to be a good example for all of our members,” Cayce said.
Just last month, Ouachita went a step further by turning on a 1 MW community solar project it built. This fall, members will be able to buy into a portion of its output to lower their total power bill.
“When you start working on one good thing for the right reasons, other good things happen,” Cayce said.
Efficiency and broadband
On a roughly parallel path, the co-op was considering how to drive members’ bills down by other means. With approval from the Arkansas Public Service Commission, last year it launched a new tariff to improve the energy efficiency of members’ homes, whether they owned them or not.
The tariff authorizes Ouachita to purchase and install energy-saving appliances and improve residences’ insulation with savings tied to that account. At first, members see one-fifth of the savings reflected in their monthly bills. When Ouachita recovers the rest of those expenses, members are to see all those savings reflected in their bills. Local contractors get the installation work.
“It’s self-funding. Everybody pays their own way,” Cayce said. “If someone moves, the new owner has to agree to be on the tariff specific to that meter.”
Throughout the public process of securing the solar farm and announcing the PPAs, installing solar for its operations and then rolling out the efficiency program, Southern Arkansas Telephone Co. in nearby East Hampton is working with Ouachita on a new solar farm as well as an initiative to bring broadband to nearby communities. The first 900 of Ouachita’s members will have fiber with up to 1 gigabyte speeds available August 1.
“It’s yet another extension of the way solar, and fiber and energy efficiency are working together. They kind of all fed off of each other,” Cayce said.
“Mark has done a lot of novel things to put Ouachita in a position to deliver values beyond just electricity,” said Silicon Ranch’s Beasley.
“It’s a lasting investment in and economic development multiplier for South Arkansas,” agreed Katie Niebaum, executive director of the Arkansas Advanced Energy Association. “The project’s success has generated significant momentum for the multiple advanced energy initiatives that have followed.”