At its August 2 meeting, the Grand Marais Public Utilities Commission received four options listing pros and cons for the city to participate in a variety of community solar programs.
The PUC has spent more than a year discussing the possibility of developing solar power locally or joining with Southern Minnesota Municipal Power Agency (SMMPA) and share in the cost and electricity generated from its large southern Minnesota 5 megawatt solar garden.
The recommendations came from the Renewable Energy Working Group (REWG). REWG members include Don Grant, Chris O’Brien, George Wilkes, Mike Roth and Jay Arrowsmith-DeCoux.
REWG contacted the Rural Renewable Energy Alliance Analysis (RREAL) who studied the city’s potential to generate affordable solar power and came up with four alternatives.
1) Grand Marais could participate in Southern Minnesota’s Municipal Power Agency (SMMPA) solar choice it is offering to SMMPA customers who want to take part in developing the 3-megawatt community solar garden in Lemond, Minnesota.
2) The city could develop a PUC-owned community solar project.
3) The city could build a PUC-owned photovoltaic (PV) project within Grand Marais. Or the city could develop a 40 kW net-metered system.
4) RREAL concluded Grand Marais’ best option was to develop a 250 kW project that would be owned by the city and financed through a partnership with tax equity investors. Based on this model, this investment would yield an IRR of 23 percent for the third party investor and would produce a leveled cost of electricity for Grand Marais of $0.069/ kWh.
RREAL raised concerns about the city joining the SMMPA Community Solar program. RREAL noted the solar installation would be built in another part of the state and wouldn’t be visible in Grand Marais, and it would offer no local economic impact.
Also, RREAL advised against the city building a community solar program.
Its recommendation to REWG suggested a community solar program for Grand Marais was “impractical and expensive given the small size of the Grand Marais PUC customer base and the complexity of administering a new community solar program.”
George Wilkes, who serves on the Grand Marais PUC and the REWG, said after considering RREAL’s recommendations, REWG was recommending that the city take part in SMMPA’s Solar Choice Community Solar Program.
“The advantages of this approach are that it would allow Grand Marais PUC customers to subscribe to a solar PV system under very favorable terms. It would contribute to the ‘critical threshold’ of 25 percent subscriptions that SMMPA has laid out as a requirement to move ahead with the 3-megawatt solar choice project, and so would support additional solar PV development. And it would have a low administrative burden.”
After discussing this option, the renewable energy group will put together a marketing study to see how many people would be willing to sign up for the SMMPA solar garden community project.
A second alternative REWG offered was for the PUC to move ahead with a 30-60 kW project for the roof of the new city public works building. As Wilkes noted, the economic analysis “shows that such a project would not be particularly economically beneficial; neither would it be particularly economically harmful, and therefore the social and economic benefits of adding solar power generation support moving ahead with this project.”
REWG’s third alternative would be for the city to consider building a 250 kW PUC-owned solar PV system with the intention of shelving the idea for the near term but revisiting it for 2018 of 2019.
“While the RREAL analysis shows strong economic benefit for a 250 kW project, the complexity of the project (especially the tax equity financing) and the open question of SMMPA’s willingness to offer a suitable PPA rate for such a project, make this a heavy lift at this time. It may also be that solar PV prices continue to decrease over the next few years potentially improving the viability of this type of project over time,” noted Wilkes.
PUC board member Tim Kennedy asked about the chances for the PUC to have solar voltaic panels installed on the public works building.
Wilkes and REWG had put a lot of time and effort into studying this concept, so George was ready with an answer.
Half of the roof of the new public works building could hold enough solar panels to produce 60 kW, Wilkes said. Unfortunately, the engineers who planned the roof only designed it to hold solar panels on one side. If the roof could be re-engineered, it could support enough solar panels to generate 120 kW.
“We have asked if the roof could be redesigned to hold more solar panels but haven’t heard back yet,” Wilkes said.
One option would be for the PUC to plan for enough solar panels to generate 30kW. That would keep the cost down, and if the price is under $100,000, then the project wouldn’t have to go out on sealed bids and could be done locally, “so we know whom we are dealing with,” added Wilkes.
Whether or not PUC can develop the solar project on the public works building will be determined by the rate that SMMPA will reimburse PUC. If SMMPA offers 8.9 cents per kW, the project will pay for itself over 20 years. If they give PUC say, 3.5 cents per kW, PUC will have to put the project on hold.
Wilkes, who serves as a SMMPA member representative, said if SMMPA adds a 3-megawatt solar garden (in addition to its current community 5-megawatt solar garden it recently opened) then there may be less chance that Grand Marais PUC gets a more favorable rate. “I don’t know what their limit is for reimbursing solar power right now,” stated Wilkes.
For now, PUC board members Karl Hansen and Tim Kennedy said they were in favor of pursuing both the option for local PUC members to purchase solar panels from SMMPA’s solar garden in southern Minnesota. And they were in favor of pursuing adding solar panels to the public works building. But for now, the PUC tabled the matter until more information can be brought before it.
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