Community Solar as an Alternative to Distributed Generation
Mid-South Synergy, an electric cooperative in Navasota, Texas, had already considered making the move into cooperative-owned solar when an outside provider stepped forward with a plan to offer residential panels directly to Mid-South’s members in a master-planned community within the cooperative’s service area. “After we heard about that, we came to our board and said, ‘I think it’s time we did our own solar project,’” says Kerry Kelton, Mid-South’s general manager and CEO.
After a thorough study of the challenges of distributed generation and considering all its options, Mid-South made the decision to build a community solar project for its members, dubbed Synergy Solar. “By staying on top of the research, we were able to get our community solar on the ground in a quick timeframe,” says Kelton. The co-op had previously installed a demonstration rooftop solar panel on its own headquarters to get a better idea of how it worked.
Mid-South was able to get the array built quickly and affordably with the help of a lease from CoBank Farm Credit Leasing. “Farm Credit Leasing was the dependable and easy way to do the project,” says Kelton. “Without that, the project would have been more costly and much more complex.”
The co-op had already established a for-profit subsidiary, which was necessary to take full advantage of the available investment tax credits. By using the subsidiary to lease the panels from Farm Credit Leasing for the solar array, the project received a 30 percent federal tax credit, making the project less expensive than if Mid-South had simply paid cash for it.
Work on the 1.2-megawatt community solar project—one of the first community solar offerings available to cooperative members in Texas—began in July 2015. The response from Mid-South’s members was strong and immediate; before Phase I was completed, all the energy from the project was presubscribed. As a result, Mid-South started building Phase II, which reached commercial operation in 2016. More than 300 Mid-South members are buying energy from the solar array. “We only had one or two members decide to do the planned-community rooftop solar application,” Kelton says.
One of the reasons so many members chose Mid-South’s Synergy Solar is the cost. The member cost for a 100-kilowatt-hour block is $11.50 per KWh with a one-time upfront fee of $25, while the outside provider charges $13.50 per KWh and from $500 to $750 for each individual rooftop solar panel. Besides being a more affordable solar option when compared to rooftop solar, community solar lets cooperative members make an environmentally conscious energy choice while hedging against longer-term cost of power from their electric cooperative.
Another key advantage to community solar is that it allows the cooperative to maintain full ownership of the project and circumvent potential challenges from a project developer in a purchased power agreement contract. Ownership and operational flexibility was a key consideration for Mid-South’s management team and directors.
Due to its many benefits, the popularity of community solar is expected to continue to grow in many locations throughout the country. Kelton says he’s pleased that Mid-South has become a leader in this field, and the co-op is now focused on Phase III of their project. It’s currently on the drawing board with expected completion in December 2018.
Synergy Solar is just one example of how electric cooperatives can partner with CoBank to integrate renewables as a part of their generation mix and mitigate the threat of distributed generation in their service territories. The bank understands that multiple options for financing a cooperative solar project are important and is continuously looking at new ways to work with its customer-owners.
KERRY KELTON is the general manager and CEO of Mid-South Synergy, an electric cooperative in Navasota, Texas.