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An unusual renewable energy deal in Rhode Island will group together nine public housing authorities under a single solar contract, enabling the entities to save an estimated $30 million over the next 20 years.
“We are all happy to promote the development of renewable energy, but for us, the No. 1 obligation is to provide housing as efficiently as possible,” said Robert Coupe, co-president of the Public Housing Association of Rhode Island, the umbrella organization that arranged the deal, and executive director of the Cranston Housing Authority, one of the participants. “This contract will free up money for other uses.”
The authorities are taking advantage of the state’s virtual net metering regulations to contract for power that will be generated at three off-site solar panel fields in Exeter and Smithfield. The projects, which will provide about 21 million kilowatt-hours per year, will be constructed and owned by Nautilus Solar Energy, based in Summit, New Jersey.
Coupe said the authorities decided to join together in a single request for net metering proposals for two reasons. First, by combining their buying power, they were able to negotiate a better deal than they would have individually. Nautilus will generate the electricity, receive credits for what they generate, and will sell those credits to the authorities at a 42% discount, he said.
Some of the smaller authorities will be using a smaller percentage of the overall credit purchase, but they will get the same rate nevertheless.
And second, because such a contract requires approval from the U.S. Department of Housing and Urban Development, “it was nice to have economies of scale and have nine of us all included in the same request,” Coupe said.
The other participating authorities are Providence, North Providence, Newport, Smithfield, Warwick, Warren, Bristol and Lincoln. Together, they manage roughly 5,300 subsidized housing units.
Each signed up for the equivalent of roughly 85% of their annual energy usage, anticipating that they might use less energy in the future as they plan for greater efficiency, Coupe said.
“We didn’t want to buy credits we couldn’t use,” he said.
And if the energy usage of participating authorities changes in coming years, the credits can be shifted as needed, he said.
The deal was two years in the making, said Alexey Cherniack, principal analyst with SourceOne, an energy consulting firm that is part of Veolia North America.
“It takes a while to get nine housing authorities aligned,” he said.
SourceOne has worked with the Public Housing Association of Rhode Island to help them manage their collective energy exposure for more than a decade. Up until now, the focus has primarily been on electricity and gas market volatilities, he said.
But “in New England especially, the focus has really shifted to looking at innovative ways to integrate renewable energy into procurement,” Cherniack said, “and remote net metering tends to be one of the more customer-friendly ways to do that.”
Rhode Island’s virtual net metering program is focused on public entities — eligible customers include state agencies, municipalities, housing authorities, hospitals and public and private schools.
Structuring the program in that way helps ensure that solar gets built, “but that the financial benefits don’t primarily accrue to the private sector and the development community,” Cherniack said.
The Public Housing Association’s contract doesn’t present any future risk to the authorities, “as long as they continue to have electricity consumption,” he said.
The aggregated approach put forward by the association in its proposal was one of the more challenging aspects, said Jason Su, structuring manager for Nautilus.
“It requires a partnership between so many different entities, and these are separate legal entities with separate management and separate boards,” Su said. “All have different rules for approvals. And then they’re wrapped under HUD rules as well.”
Nautilus has put together housing authorities in combination with other customers on community solar projects elsewhere, but this is the first time they’ve worked with an entity that aggregated the authorities ahead of time and put out one request for proposals, said Eric LaMora, community solar director.
All three solar projects are still working their way through the permitting process. Construction is expected to begin early next year.
The Cranston Housing Authority is anticipating $130,000 in savings during the contract’s first year. That money will come in handy, Coupe said, as the authority’s buildings, which date to the 1960s and ‘70s, are in constant need of renovation.