For decades, utility investments in power plants and transmission lines have been predicated on the concept of economies of scale. The theory behind it is beguilingly simple: the larger the installation sought by an electric utility, the lower the unit cost of the investment, which utility planners and regulators regard as a measure of economic efficiency. When loads are growing, the “bigger is better” paradigm is often an economically rational fit for electric utilities seeking to recover large-scale capital investments in fossil generation over the broadest possible cohort of current and future customers.
But solar power, the default resource option for electric providers today, is a somewhat different animal due to its scalability. Yes, economies of scale can certainly reduce the unit price of solar generating capacity, but other on-the-ground factors can influence the economics of this resource. These factors include but are not limited to the cost of acquiring site control of the host properties and obtaining all the necessary approvals to construct the project. Interconnection costs can be high as well, especially for larger projects requiring additional land and approvals to supply power to the grid.
These thoughts came to mind after visiting two smaller solar farms that started producing power this year. The first project, called Strobus Solar, was developed by OneEnergy Renewables and serves Jackson Electric Cooperative. The second installation, O’Brien Solar Fields, was one of the stops in this September’s Ride with RENEW bicycle tour. Developed by EDF Renewables and owned by Madison Gas and Electric (MGE), this 20 MW solar farm in Fitchburg supplies electricity to seven MGE customers under long-term contracts.
|At a Glance
Solar For the Distribution Grid – 2021
|County of location
|Capacity (in MWac)
||Madison Gas + Electric
||Madison Gas + Electric
||Northern Family Farms
||O’Brien Brothers Farm
Governor Evers and the Project Developer, Eric Udelhofen, from OneEnergy Renewables at the Ribbon Cutting Ceremony for the Strobus Solar project.
Strobus – A Mastodon Solar project
Occupying a mere 12 acres, Strobus Solar is located about six miles north of Black River Falls and is tucked into a compact parcel framed by evergreen trees and U.S. Highway 12. On a cloudy September day, more than 50 people attended a ribbon-cutting ceremony for the Strobus project, one of eight solar farms in southeast Minnesota and west-central Wisconsin that make up OneEnergy’s Mastodon Solar portfolio. With a combined 17 megawatts (MW) of AC-rated capacity, all eight Mastodon solar farms are located in the territory served by rural electric cooperatives.
As noted on OneEnergy’s website, “the electricity generated by each project will be purchased by the local participating electric cooperative, resulting in savings on energy supply and increased resiliency. These savings will be passed onto the cooperative’s members. The available Renewable Energy Credits will then be sold separately to visionary buyers committed to ensuring their renewable energy procurement dollars are devoted to new projects that serve local communities.”
Of the four Mastodon projects located in Wisconsin, Strobus is the second to be energized this year, following Blue Prairie, a 2.5 MW installation southwest of Black River Falls. The other two, Stromland and Shamrock, should be operating before the end of this year. Plymouth-based Arch Electric is the general contractor for all four Wisconsin projects.
Governor Evers spoke at the ribbon-cutting ceremony, along with representatives of Jackson Electric Cooperative, Arch Electric, and Northern Family Farms, the participating landowner. Based in nearby Merillan, Northern is Wisconsin’s largest Christmas tree grower, operating on more than 7,000 acres. After the prepared remarks, OneEnergy and Arch opened the gates to let Governor Evers and other guests circulate through the project and ask questions.
On one corner of the Strobus parcel is the substation that feeds the solar-generated electricity directly into the wires overhead. Though the equipment onsite is brand-new, low-growing grassy vegetation has already been established, covering the entire project footprint. After three years, the mix of deep-rooted, primarily native plants will provide a healthy habitat for birds, insects, and other species. At nearby Blue Prairie, sheep are already grazing around and under the 7,000 panels installed there.
Strobus is expected to generate about 3,000 megawatt-hours of electricity a year. But the Renewable Energy Credits associated with that output will not flow to Jackson Electric. They will instead be sold to Native, a Public Benefits Corporation, through its New Renewables Portfolio.
According to Native’s website, the purpose of the Portfolio “is to enable Renewable Energy Credit (REC) buyers to play a causal role in actualizing new renewable energy projects. Native has committed to a 10-year renewables purchase agreement with Strobus, LLC on behalf of Portfolio investors. Without this type of long-term REC purchasing agreement, this project would not be economically viable.”
O’Brien Solar Fields in the city of Fitchburg, Wisconsin.
O’Brien Solar – Clean Energy Produced Offsite for Larger Customers
Occupying 130 acres along the edge of urban Fitchburg, O’Brien Solar Fields is as large as a distributed solar project gets. However, while every kilowatt-hour produced at O’Brien flows directly into Madison Gas and Electric’s distribution grid, only seven customers see the impact of this project on their utility bills. Those customers are the State of Wisconsin, University of Wisconsin-Madison, City of Fitchburg, Promega, Placon, Tribe 9 Foods, and Willy St. Co-op.
Energized this summer, O’Brien Solar is the newest Renewable Energy Rider (RER) project serving MGE customers. Several years ago, MGE received approval from the Public Service Commission (PSC) to build solar farms to serve individual customers, including those with multiple facilities, through its RER program. Unique to MGE, this service allows customers to be served by one larger solar farm instead of building numerous solar systems to supply each of their facilities.
A voluntary program, MGE’s RER program does not affect base electric rates. Participating customers fully absorb the cost of MGE’s investment in the solar arrays, and these costs are spread over 30 years. The electricity generated at O’Brien offsets grid power that would otherwise flow to these customers at specified prices throughout the contract term. Should standard electric rates rise faster than the agreed-upon pricing for O’Brien’s electricity, the savings will flow directly to the participating customers.
This unique model combines elements of both behind-the-meter generation and community solar power. But in order to entice customers to access brand-new yet low-cost sources of power, the project owner must design and develop projects that are competitive with the utility’s own avoided cost of power.
The question arises, what did MGE do to keep O’Brien’s development costs in line with its investments in larger solar projects and make it an affordable option for customers?
First, the project occupies only one parcel of land, the former Stoner Prairie Dairy owned and operated by the O’Brien brothers over several generations. Though the parcel is adjacent to a rapidly growing neighborhood, the project’s configuration allows the O’Brien family to maintain its most profitable farming operations as well as live in their long-time residence. Negotiating with only one landowner gives a developer more room in tailoring the project to avoid potentially expensive workarounds.
Second, from an electrical perspective, the project is divided into three zones, each with a separate interconnection to MGE’s feeder lines. By spreading out the project’s output in this fashion, MGE could forgo the more significant expense of running a large tie-in line to the closest substation.
Third, much like a 30-year residential mortgage, the RER contract is a powerful tool for breaking down a significant capital outlay into a manageable expense for the customer. Just as utilities rely on extended depreciation schedules to help them digest the costs of building central station power plants, the RER service provides a similar benefit to participating customers.
In the end, the all-in cost of O’Brien Solar Fields amounted to $29.5 million, which, on a unit basis, comes to $1,475 per kilowatt (kW). To put that number in perspective, the unit price of six larger solar farms totaling 414 MW that Alliant Energy proposes to acquire is $1,449 per kW. In fact, O’Brien’s unit cost is within 10% of the estimated cost of acquiring a 20 MW share of a project ten times as large.
Moreover, it took only three years for EDF Renewables, O’Brien’s original developer, and MGE to advance this power plant from the concept stage to fruition, a relatively speedy turnaround compared with larger solar installations.
Conclusion: The Policy Case for Smaller Solar Farms
Indeed, small solar farms can deliver affordable electricity at a reasonable price by avoiding the increased complexities and additional permitting hurdles associated with larger solar farms that tie into the transmission system. Moreover, while larger solar farms make a great deal of sense in areas rich in transmission infrastructure, relying solely on those locations would exclude much of Wisconsin from being able to host solar power.
There are many parcels of land throughout Wisconsin that have the requisite attributes for hosting projects on the scale of Strobus and O’Brien. In addition, projects of that size are ideal vehicles for community solar offerings, designed to deliver zero-carbon electricity to subscribing customers who cannot access solar power at their residence or business.
Over time, with increases in system power costs looking very likely, the state should explore and adopt policies to promote smaller solar farms within its boundaries. As exemplified by the Strobus and O’Brien projects, development on that scale can yield faster results at comparable costs while potentially providing a reliable revenue stream to the many thousands of landowners who don’t live near high-capacity transmission lines and substations.
Wisconsin is in the beginning stages of an energy revolution. With a more forward-looking policy framework, Wisconsin could emerge as a national leader in solar power. Embracing distribution-level solar solutions now will help more Wisconsinites participate in the benefits of these projects and give every city, town, and village a solar project to call their own. Wisconsin’s population is distributed throughout the state–our renewable energy portfolio should be as well.
On October 13, RENEW Wisconsin and Wisconsin Conservative Energy Forum (WCEF) hosted their first-ever Renewable Energy Day at the Capitol in Madison. The event included issue briefings by industry experts on a variety of legislation that has been introduced this year related to the solar and electric vehicle industries. Attendees then went to the State Capitol to speak with their legislators to gain support for these important issues.
During a welcome reception, the evening before the Day at the Capitol, RENEW and WCEF held a panel discussion “Energy in Transition: Policy and Politics.”
From right to left were moderator, Scott Coenen (WCEF), Dan Ebert (former PSC Chairman), Senator Rob Cowles, Larry Ward (Conservative Energy Network), and Jim Boullion (RENEW Wisconsin).
The panel discussed the current uncertainty in world energy markets and the impact that energy shortages and spiking prices will have on the world. There was consensus from the conversation that panelists believe renewables can help stabilize much of this energy uncertainty, but that the industry needs to be realistic about its role in a world where supply is not meeting demand. Businesses, households, and communities in Wisconsin should be empowered to invest in their own energy generation.
Before attendees went to the Capitol to meet with their legislators, there was an issue briefing with a panel of industry experts moderated by Jim Boullion, Director of Government Affairs for RENEW Wisconsin. The panelists explained in detail what legislative proposals were currently before the legislature, how they will impact renewable energy in Wisconsin, and what arguments are being made on both sides of the issue.
Issue briefing panelists, Left to right: Jason Mugnaini (Chief of Staff, State Senator Rob Cowles), James Fenley (SJL Government Affairs & Communications), Peter Lund (Financial Structuring Associate, Nautilus Solar Energy), and Amy Heart (Senior Director, Public Policy, Sunrun).
The first panel discussed two solar-related issues:
- Expanded Development of Community Solar – (SB 490 / AB 527 – Sen. Stroebel and Rep. Ramthun) This bill would authorize the development of non-utility owned community solar projects and provide access to the economic and environmental benefits of solar for those who can’t afford the full cost of a system, live in multi-family housing, or own property that is not suitable for solar.
- 3rd Party Financing/Leasing – (LRB 1550/1 Sen. Cowles and Rep. Cabral-Guevara) This legislation would clarify that 3rd party financing/leasing of renewable energy equipment is legal in Wisconsin, providing affordable financing options for people, businesses, municipalities, or not-for-profit entities who don’t have the resources to pay for solar on their own property.
The second panel, moderated by RENEW’s Jeremy Orr, Emerging Technology Program Manager, discussed electric vehicle issues such as Wisconsin’s recent Direct Electric Vehicle Sales legislation, SB 462 / AB 439 (Sen. Kooyenga and Rep. Neylon). Albert Gore, Policy and Business Development at Tesla, discussed how allowing manufacturers to sell electric vehicles directly to consumers creates greater access to the electric vehicle market, resulting in growth in the traditional dealership model. Read Jeremy Orr’s previous testimony on this issue here.
Likewise, Justin Ackley, Public Policy Manager at ChargePoint, spoke to the business clarity and consumer transparency that AB 588 / SB 573 (Sen. Cowles and Rep. VanderMeer) would provide, as it would allow non-utility-owned charging stations to charge by the kWh. Similar to a gas pump, where the price per gallon is displayed, kWh charging tells electric owners how much energy they’re paying for, regardless of how long it takes to charge their vehicle. The panel pointed out that while the main goal of this legislation is good, another section of it would create problems by prohibiting charging a fee if any of the electricity going through the EV charger comes from a non-utility source such as a solar+storage system.
Emerging technology allows EV chargers to be installed in areas, especially rural areas, that have inadequate grid infrastructure and can help limit costly spikes in energy “demand charges” for charging station owners. EnTech, a division of Faith Technologies based in Menasha, Wisconsin brought one of their portable solar+storage units to Capitol Square to demonstrate how the technology works and how flexible it can be. A similar system was set up at Bergstrom Ford in Neenah to help reduce the energy bills at their dealership. John Bergstrom, the owner of the dealership, told the story of why he worked with Faith Technologies to install the system in this podcast.
The panel closed the session by discussing two other bills recently introduced by Sen. Rob Cowles:
- $10 million in VW Settlement Funds for EV Charging Station Grants – (LRB-0254/1 Sen. Cowles and Rep. VanderMeer) Grants from these funds would be used to install electric vehicle charging stations at key locations throughout Wisconsin.
- Energy Storage Sales Tax Exemption – (LRB-1513/1) – Sen. Cowles and Rep. Duchow) This legislation would clarify that battery storage devices installed as part of a renewable energy system should be included in the sales tax exemption that already exists for renewable energy system equipment.
The 75 registered attendees made an impact by taking time out of their busy lives and getting involved in the political process. None of these issues will be easy to pass. In fact, most of them face significant opposition from powerful forces. But working together and building coalitions with pro-renewable energy friends helps get important legislation like this adopted.
If you would like to learn what you can do to help as well, contact Jim Boullion, Director of Government Relations at firstname.lastname@example.org.
In 1991, Don Wichert saw a need for an organization to advocate for Wisconsin’s renewable energy future. As founder and first executive director of RENEW Wisconsin, Don set forth on his mission to promote the development and use of renewable energy resources in the state of Wisconsin. Thirty years later, RENEW is a thriving and growing nonprofit organization working towards clean energy powering a strong, healthy, and vibrant Wisconsin.
RENEW Wisconsin’s accomplishments over the past 30 years are part of Don’s legacy. But there is more work to be done, and Don knows RENEW needs a stable financial foundation to continue its work for another 30 years. He worked with Madison Community Foundation to create a RENEW Wisconsin Charitable Gift Annuity and the RENEW Endowment Fund to ensure a financial pipeline for our clean energy future.
CHARITABLE GIFT ANNUITY
For donors interested in taking a charitable deduction on their taxes in the current year while still receiving income from those assets, a charitable gift annuity (CGA) offers the opportunity to achieve both goals. CGAs allow you to make a current tax-deductible gift to benefit RENEW Wisconsin while still receiving a lifetime annual income.
The idea of a charitable gift annuity was very appealing. The guaranteed interest rate was high enough to make it a reasonable investment during my lifetime. And the CGA provides tax benefits too…RENEW, and the work that it does is my legacy.
Don Wichert, RENEW Wisconsin Founder
RENEW ENDOWMENT FUND
The RENEW Endowment Fund supports paid internships from the Energy Analysis and Policy Program at UW-Madison. This endowment allows RENEW to offer a hands-on, real-life job experience to future leaders in renewable energy.
The RENEW staff gave me the trust and mentorship I needed to become a strong clean energy policy advocate. I was able to grow my utility regulation knowledge, energy education skills, and Midwest clean energy network. Thank you, RENEW WI, for being my strong stepping stone into the clean energy industry.
Lauren Reeg – Energy Analysis and Policy Intern
You have the opportunity to help create a cleaner, stronger, more vibrant Wisconsin by setting up a Charitable Gift Annuity listing RENEW Wisconsin as the beneficiary and/or giving to the RENEW Endowment Fund. Madison Community Foundation makes giving incredibly easy.
I can help facilitate communications with Madison Community Foundation to start planning your legacy now. Contact me at: Elizabeth@renewwisconsin.org or call 608-255-4044 ext. 7
After simmering on the proverbial back burner for nearly two years, the third-party financing issue relating to customer-sited solar power has been thrust back into the public spotlight as pressure builds to resolve the legal questions surrounding it.
The reemergence of this issue can be traced to two parallel developments. The first is a Public Service Commission (PSC) proceeding moving toward a ruling settling the legality of third-party-owned solar systems serving individual retail customers. The second is a lawsuit recently filed by the Midwest Renewable Energy Association in Portage County Circuit Court, challenging the PSC’s authority to regulate the financing of behind-the-meter systems that serve host customers only.
The PSC proceeding began in March 2019 when Eagle Point Solar, a Dubuque-based solar contractor, filed a complaint against We Energies for blocking the installation of rooftop arrays serving the City of Milwaukee. In its complaint, Eagle Point contends that PSC Chapter 119, which regulates the interaction between small-scale electricity producers and the utility grid, does not give We Energies the right to deny interconnection to a customer based on how the generating equipment is financed. According to We Energies, however, a third party owner of the equipment that supplies electricity to one customer under contract should be regulated as a public utility.
Following an extended period of legal maneuvering, the PSC set in motion a process for investigating Eagle Point’s complaint (Docket 9300-DR-104). In so doing, it expanded the scope of the proceeding to consider the public utility question that led to the interconnection denial. When the parties finished entering evidence into the hearing record, the PSC opened a public comment window on the proceeding, which ended on February 23rd.
Supporters of third-party financing sprang into action, led by RENEW. To illustrate the breadth and depth of support for opening up the solar market in this fashion, RENEW circulated an action alert encouraging those who care about this issue to submit comments supporting Eagle Point’s position. Networks such as Wisconsin Climate Table, Wisconsin Health Practitioners for Climate Action, and our own solar contractor e-mail list helped circulate RENEW’s alert beyond our own activist base. At the same time, organizations such as 350 Madison and Environmental Law and Policy Center (ELPC) asked their activists and members to post comments on the PSC website.
As a result of our combined efforts, a total of 336 individuals and organizations weighed with their views on the Eagle Point matter. Of that, 327 comments expressed support for opening the market to allow third-party ownership of solar electric systems in Wisconsin. In that overwhelming display of support, several themes prevailed, including the following:
- Third-party financing is already expressly authorized in 28 states;
- Allowing third-party-owned solar systems is consistent with Wisconsin case law;
- The threat of being regulated as a public utility discourages businesses from providing solar power generated onsite to retail customers through leases and sale agreements;
- Third-party financing would make solar power affordable to low-to-moderate income households and nonprofit entities such as schools;
- Expanding solar financing options would help communities reduce their reliance on harmful fossil energy sources; and
- Expanding solar financing options would invigorate local economies.
These arguments track closely to those articulated by Wisconsin solar contractors and consultants in a March 2019 filing urging the Commission to approve Eagle Point’s petition. Similar to our efforts during the comment period, RENEW shaped the themes in that statement and pulled together a coalition of market actors to demonstrate support for third-party financed solar energy. In the intervening two years, Eagle Point Solar and the City of Milwaukee labored to amass a set of facts and legal arguments to support a finding that WEPCO’s action was unlawful.
The merits of this case are clear-cut, as are the regulatory remedies. Other states that regulate electric utilities have taken steps to affirm the legality of third-party-financed solar, most notably Iowa, which did so in 2014, the result of a long and expensive legal fight waged by Eagle Point. In contrast to Iowa, the State of Wisconsin has allowed this issue to languish for many years without resolution.
But with the filing of briefs from parties on March 10th, the Eagle Point proceeding has finally reached the home stretch. The strong outpouring of public support for third-party financed solar tells us that a policy call from the PSC is long overdue.
In a brief representing RENEW and other solar advocates, we urged the PSC to take the following actions:
- Order WEPCO to interconnect the City of Milwaukee solar projects, regardless of how those projects are financed;
- Clarify that a utility may not deny interconnection based on project ownership, and
- Clarify that third-party owners of customer-sited distributed generation are not “public utilities” under Wisconsin law.
RENEW would like to thank Eagle Point Solar and the City of Milwaukee for leading this crucially important regulatory battle, ELPC for drafting a particularly persuasive legal brief on behalf of clean energy advocates, and the 327 commenters who affirmed their desire for an expanded solar marketplace free of utility interference.