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In Omaha, critics say the public utility’s community solar offering doesn’t share enough benefits with participants.
Last month, Omaha’s public utility unveiled details for a program that will help customers buy solar power without having to install their own panels.
Omaha Public Power District’s community solar program follows a year of stakeholder meetings, but some critics say it’s a stretch to call it “community solar” because participants won’t share enough of the financial benefits.
“It’s not really community solar,” said Don Preister, a customer who recently put solar panels on his home. A true community solar program, in his view, would mean, “I own shares in the system, I get the offset, I get the tax advantages… I don’t just subscribe to a system by a utility. I’m an investor, an owner, and have a say in the process and get the direct benefits as they occur.”
The term “community solar” has been around more than a decade and generally refers to projects with shared ownership in which participants receive direct financial benefits, including reduced utility bills. But there isn’t universal agreement on the definition, which varies depending on whom you ask.
“You can own some kilowatts of the project, and you receive credit for the kilowatt hours that the project produced. Alternatively, you can subscribe through more of a lease,” says Jeff Cramer, executive director of the Coalition for Community Solar Access.
The National Renewable Energy Lab defines community or shared solar as models that “allocate the electricity of a jointly owned or leased system to offset individual consumers’ electricity bills, allowing multiple energy consumers to share the benefits of a single solar array.”
The Solar Energy Industries Association says community solar “enables multiple customers to participate in a single solar project located in their community, and receive credits on their utility bill for their portion of the power produced.”
What is Omaha Public Power proposing?
Under the Omaha program, a solar developer would build and own a system and sell the power to the utility through a power-purchase agreement. The utility would then sell the power to the Southwest Power Pool and buy back what it needs to meet customer demand for solar power. It would charge customers a rate based on wholesale cost and other factors using a formula that aims to avoid imposing any costs on the general customer base.
“We offer it to our customers as an option,” said Jeff Karloff, who manages renewables for the utility. “There’s a different way to do it, where customers buy panels. Many utilities have done it exactly the way we are doing it, creating a plan that everyone can buy into.”
Under the formula devised by the utility, a customer wishing to purchase power produced at a community solar array might end up paying an additional 3.9 cents per kWh generated from the solar project.
The utility is proposing to set a value based on the solar selling price charged by the Southwest Power Pool. A presentation to the utility’s board of directors in February indicated it might set the value of solar energy produced by community solar project at around 3.6 cents per kWh. The summer residential rate is about 10 cents per kWh; the winter rate is lower.
The Omaha Public Power District said its intention is to identify all costs and benefits of solar, and to apply those only to customers purchasing solar power. The utility said in an email that it’s focused on the solar credit value and did not attempt to quantify reduced line losses or maintenance costs.
Why critics say it’s not community solar
Critics of the proposal say it doesn’t meet the definition of community solar because customers won’t own the panels or accrue enough of the benefits.
“It’s a utility solar system,” said Michael Shonka, an activist with Nebraskans for Solar and the president of Solar Heat & Electric in Omaha, which has bid on this proposal. “They’re giving it a ‘community’ name and it’s not appropriate.”
The term “community solar” used to have more of a barn-raising connotation to it, said John Farrell, who directs the Energy Democracy Initiative at the Institute for Local Self-Reliance in Minneapolis.
In an early example in 2010, investors built a 23 kW system on the roof of a church in University Park, Maryland. The owners sold the power to the church and the renewable energy credits into the market and pocketed the proceeds.
Over time community solar has become more structured, and formalized by law in a few states, including Minnesota, and utilities have recently begun to recognize customers’ appetite for clean solar power.
“Most utilities, I think, are interested in this as a way to pre-empt people from putting solar on their own rooftops,” Farrell said, noting that net-metering rules generally require utilities pay retail rates to customer-generators at least for up to the amount of their monthly consumption.“Most utilities see that as a huge revenue drain. Community solar allows them to structure the compensation for participants in any way they want.”
A public-relations consultant hired by the utility industry two years ago advised companies rebrand “utility-scale solar” as community or “universal solar” and begin referring to rooftop solar as “private solar.” The Edison Electric Institute’s effort was known as the Lexicon Project.
“It can be used as a marketing tool, a way to get people to buy into it. It’s sort of a feel-good term,” said Jen Fuller, a PhD candidate at Arizona State University who has studied community solar. “You see utilities using this language, whether or not people have the opportunity to purchase part of the system.”
Fuller is also a policy fellow at Fresh Energy, which publishes Midwest Energy News.
Janece Mollhoff, a solar advocate with panels on her roof and a desire to subscribe to a community solar project, said the Omaha utility developed a very complicated model that bears no resemblance to some “really great models right in our backyard.”
The utility expects to sign a power purchase agreement with a developer in the next couple of months and anticipates that an array may be producing power within a year.