CEC Offers Rate-Based Community Solar for IOUs
Clean Energy Collective (CEC), a Carbondale, Colorado-based provider of roofless community solar, announced the launch on October 12 of a program that provides investor-owned utilities (IOUs) with the ability to rate base a community solar program while offering their solar customers an immediate economic benefit – without non-participant subsidization.
The inflection point is driven, CEC stated, by the current intersection of low solar installation costs, high customer demand for community solar options, rising energy rates, and the current availability of the federal solar Investment Tax Credit (ITC). The opportunity for the best returns, however, has a limited lifespan as the ITC is set to expire at the end of 2016. The ITC is a 30 percent tax credit for solar systems on residential (under Section 25D of the Internal Revenue Code) and commercial (under Section 48) properties.
To address the distinct needs of IOUs, CEC’s new community solar program provides a utility with the ability to own the solar system so that the asset can be included in its rate base. Meanwhile, the federal ITC is monetized and cash proceeds are returned to the utility on a schedule that tracks the associated revenue requirement. CEC continues to provide the expertise and services necessary to make the community solar program a success. The result is a program that offers utilities a competitive return and positive NPV (net present value) from their solar investment without requiring a cost-shift to non-participants, thus creating no upward pressure on rates.
CEC’s new IOU-owned solar model bucks conventional wisdom that utilities cannot justify ratepayer solar participation without creating a subsidy. “After several years of pursuing this goal, CEC is finally able to offer community solar to our IOU partners as a profitable investment as well as a preferred offering for their customers,” explained company Founder and CEO Paul Spencer.
Not only does the utility benefit from this structure, CEC contends; but it also translates to a better customer experience in the form of lower participation costs, favorable program-term lengths, and a faster payback period. As a result, utilities are able to meet market demands for renewables, regulatory requirements and achieve respectable margins.
With more than 130 MW of roofless community solar projects built or under development with 25 utility partners, CEC said it is positioned to help IOUs capitalize on this limited opportunity. “With the ITC expiration on the horizon, we are getting these projects moving throughout the country and across the finish line as quickly as possible,” Spencer commented.
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