City of Madison Commits Financing to Five Solar Energy Projects

City of Madison Commits Financing to Five Solar Energy Projects

A recently signed contract between the City of Madison and OneEnergy Renewables, LLC, a solar developer headquartered in Seattle, will result in the construction of five community solar arrays totaling 14 megawatts (MW) next year in western Wisconsin.  The City’s decision to provide financing to this project represents the largest commitment to date by a single Wisconsin customer to expanding solar capacity here.

Expected to begin operating in mid-2020, OneEnergy’s five arrays should produce about 20 million kilowatt-hours of clean electricity a year over its operating life. That output equates to more than one third of the City of Madison’s own consumption.

OneEnergy’s solar arrays will be built in the service territories of the municipal utilities serving Argyle, Cumberland, Elroy, Fennimore, and New Lisbon. These five utilities will receive the electricity at a price comparable to what they currently pay for wholesale power. However, under the city’s contract with OneEnergy, Madison will receive 25 years of renewable energy credits, or RECs, associated with the project’s output.

The $1.4 million contract will move Madison substantially closer to its goal of sourcing 100% of the electricity used for city operations from renewable energy sources.  Madison is one of three Wisconsin municipalities that adopted a 100% renewable energy goal. The others are Eau Claire and Middleton.

Approved by Madison’s Common Council in July, the city’s REC purchase is an essential element in the overall financing for OneEnergy’s solar project. Though the power from the arrays will flow to five different municipal utilities, the agreed-upon purchase price will not, by itself, pay for the project’s full cost. But with the additional revenue stream coming from the City’s REC purchase, the developer should have no difficulty in securing outside investors to participate in the project.

“Through this creative arrangement, new community solar projects totaling 14 MW will move from the drawing boards out into the western Wisconsin landscape,” said RENEW policy director Michael Vickerman. “At a remarkably low cost, the City will expand solar generating capacity in Wisconsin by 15%, and these new sources of zero-carbon power will provide tangible benefits to the City, the rural communities hosting these arrays, and our planet.”

Madison’s action is the second major REC purchase by a Wisconsin customer to support the construction of community-scale solar projects. Last November, LaFarge-based Organic Valley Cooperative, the nation’s largest cooperative of organic farmers, entered into a similar arrangement with OneEnergy to purchase RECs from 12 MW of solar capacity serving another group of small municipal electric utilities. Through that transaction Organic Valley expects to reach its goal of being 100% renewably powered by 2020.

Constructing both sets of arrays will involve only one mobilization of construction equipment and crews. According to OneEnergy, combining the Organic Valley and City of Madison projects  into one coordinated build-out will reduce construction costs, which helped make project participation more affordable for both the utility off-takers and the REC purchasers.

OneEnergy is also developing a 4 MW project next to Middleton’s airport with the aim of supplying the City of Middleton and a Madison-area business with solar electricity.