“Growth Opportunity” for Colorado Solar Gardens

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Solar gardens are becoming a big deal in Colorado, one of just a few states to have enacted solar garden legislation. Companies like Clean Energy Collective lead the way, with many projects in the works — and that’s probably just the tip of the iceberg. 

Colorado is one of just a few states to have enacted solar garden legislation, and now solar gardens are a big deal there. Companies like Clean Energy Collective are leading the way. 

Clean Energy Collective (CEC) is partnering with utilities across Colorado, building and maintaining community solar gardens. CEC has contracts with Xcel Energy, Yampa Valley Electric Association, Holy Cross Energy, Colorado Springs Utilities, and the Poudre Valley Rural Electric Association, with more on the way. The solar gardens allow essentially anyone in the community to purchase and own several panels, then receive credit directly on their electric bill for the panels’ production.

There is a large potential market. A mere 25% of rooftops are suitable for on-site solar. Community solar allows renters, those with shaded roofs, and historic properties to participate in the programs, since no panels are installed on the customer’s home. Just about anyone with an electric meter can take part.

This new business model is promoted in Colorado by 2010 state legislation that required utilities to enter into limited numbers of 20-year power purchase contracts with community solar gardens. The law requires only 6 MW per year per utility for the first three years. But in 2014 the limits will be reevaluated. And, the utilities themselves might be the biggest proponents of expanding community solar programs.

“The model works well for everyone and avoids many of the concerns inherent with traditional net metering solutions,” said CEC Director of Marketing Todd Davidson of the pilot program, adding, “Utilities benefit from the arrangement, as the developing company builds, sells, and maintains the array, seamlessly delivering power to the utility’s grid and the end user. This approach preserves the utilities’ ability to offer variable rates based on usage levels.” Typically, utilities can charge higher rates during peak energy usage, but they credit program participants a regulated, flat rate per kWh.

Savings on electric bills will recoup customers’ investments in a few years – faster, if energy prices rise. And solar gardens qualify for a 30% federal tax credit, allowing all the parties to benefit. Companies like CEC make a return on the original sale of the panels.

With a large potential market and a win-win-win situation, it’s likely that utilities in Colorado will themselves back more solar garden contracts. Davidson calls it a “tremendous growth opportunity.”

The utilities’ favorable stance toward community solar diverges from recent efforts of theirs to drastically reduce net metering rates and gut other programs, in a bid to undercut residential rooftop solar. Utilities probably view distributed solar, under current net metering policy, as a real threat to their operating costs. With community solar, power fed into the grid may be more predictable, and maintainence will be paid for by the developer. 

Sympathetic to the challenges in the distributed residential market, Davidson says CEC does not view rooftop solar as its competition. In many cases, for example, rooftop installers can identify homeowners who want solar but don’t have the right roof characteristics. The two business models cater essentially to different customers.

Clean Energy Collective operates or has under development 23 solar gardens across several states, with at least 10 more to come online in the next year. The gardens vary in size but average about 500 KW.