Solar Power Micro-Grid Business Plan

Solar Power Micro-Grid Business Plan

Objectives:

  • Install and operate solar-powered electrical production systems and micro-grid technologies to reduce the costs of operating the Veterans and Artist Villages, Motor City Java House, local businesses, apartment buildings, and urban farms.
  • Create income stream from selling excess electrical power to the DTE grid.

Installations:

Phase One:  

  • Veterans Village: 20 kW  = $70,000; Requires 12 kW; Excess 8 kW

Phase Two:

  • Artist Village: 20 kW = $70,000; Requires 5 kW; Excess 15 kW
  • Motor City Java House: 100 kW = $400,000; Requires 10 kW; Excess 90 kW

Phase Three:  Local Residences and businesses

  • Income from the solar power grid will be used to pay for youth job training, cultural arts and entertainment programs at the Artist Village and Farm City Detroit.

Case Study:  Colorado Community Solar

Background: The Clean Energy Collective (CEC) provides a member-owned model that enables individuals to directly own panels in a community solar farm. The CEC works closely with local utilities to create community-scale solar projects that combine the on-bill credits of a utility-owned project with the equivalent tax benefits and rebates of an individually owned solar project.

While the 30% investment tax credit is not directly available to individuals who participate in the project, the cost to participate is adjusted to reflect the value of the tax credits. The CEC takes the 1603 Treasury Grant instead of the ITC as the initial owner of the array. Portions of the array are then sold to customers at discounted costs (reducing the cost by the proportioned Treasury Grant discount). Customers must be qualified taxpayers and cannot take a tax credit on their purchase as the grant has been taken by the CEC. Both parties are subject to recapture over the first five years if the resulting system is then sold to a disqualified or non-tax paying entity. Creating this proprietary project model, with ownership, tax and legal considerations, was quite challenging.

The first CEC project is a 77.74-kW array in the Holy Cross Energy service territory (western Colorado).  The CEC leased the land, sold the project to customers, and negotiated a PPA with Holy Cross Energy. The PPA rate paid by Holy Cross will escalate as regular utility rates increase. CEC’s RemoteMeter™ system automatically calculates monthly bill credits for customer accounts and integrates directly with the utility’s billing system to apply the credits. The CEC is breaking ground soon on its next community owned 1-MW solar array at the Garfield County Airport near Rifle, Colorado.

 

Project Financing: The first project was built with internal CEC private capital, which is paid back as individuals buy into the project. CEC takes the 1603 Treasury Grant federal tax credit and passes the savings to the customer. Rebates received are $1/watt plus $0.50/watt for rights to the RECs from Holy Cross Energy. The annual income from power sales is estimated at $15,444 ($198/kW), rising as regular rates rise, and the project has a simple payback of 12.8 years.

 

Costs: The installed cost to the CEC was $466,000 or $6/watt. After rebates, RECs and credits taken by the CEC, the cost to customers is $3.15/watt. Each participant agrees to pay a minimum $725 purchase (a single panel after rebates and incentives). Panel owners receive monthly credits for the value of the electricity produced for 50 years.

 

Billing: When individual owners purchase panels in the solar farm, the utility credits them for the power produced at or above the retail rate (net-metering economics) directly on their electric bill using the CEC’s RemoteMeter™ software system. The purchase price is as low as $725, depending on available rebates and RECs. For example, in the first project, CEC sold the rights to all future RECs up-front, on a per watt basis, enabling them to offset a portion of the installed cost. The benefits of ownership are transferable: if an owner moves within the service territory, the bill credits follow them; if they move out of the territory, an owner can resell their ownership to another utility customer or back to the CEC at fair market value or donate the property to a non-profit.

 

The owners must be customers of the electric utility within which the community array is located and their purchase is limited to the number of panels they need to offset 120% of their yearly electric use. These rules ensure that benefits directly accrue to the local utility customers rather than outside investors. The CEC is the management company representing the community owners and maintaining the solar arrays. In order to provide “utility-grade” long-term power to the utility, a percentage of the monthly power credit value and the initial sale price fund equipment insurance, operations and maintenance escrows.

 

Project Highlights

  • System Owner: Individuals in Holy Cross Energy utility territory
  • System Host: CEC leases site from the Mid Valley Metropolitan District
  • Installed Capacity: 78 kW
  • Participant Agreement: Minimum $725 purchase (a single panel after rebates and incentives). Panel owners receive monthly credits for the value of the electricity produced for 50 years.
  • Electricity: CEC, as agent for its customers, has a PPA with Holy Cross Energy to purchase the power produced. Customers receive the resulting monetary credit on their monthly electric bill.
  • RECs: Holy Cross Energy purchased rights to RECs for $500/kW (paid up-front).
  • Number of Participants: 18 customers

 

Financing Details

  • Installed Cost: $466,000 or $6/watt (Cost to customers: $3.15/watt, includes all rebates, RECs and credits taken by the CEC)
  • Capital Financing: Project built with internal CEC private capital, which is paid back as individuals buy into the project
  • Federal Tax Credit: CEC takes the 1603 Treasury Grant and passes the savings to the customer
  • Rebates: $1/watt plus $0.50/watt for rights to the RECs from Holy Cross Energy
  • Estimated Annual Income from Power Sales: $15,444 ($198/kW), rising as regular rates rise
  • Simple Payback: 12.8 years
  •  

For More Information: Lauren Martindale at (970) 319-3939, www.easycleanenergy.com

Case Study:  Colorado Community Solar

Background: The Clean Energy Collective (CEC) provides a member-owned model that enables individuals to directly own panels in a community solar farm. The CEC works closely with local utilities to create community-scale solar projects that combine the on-bill credits of a utility-owned project with the equivalent tax benefits and rebates of an individually owned solar project.

While the 30% investment tax credit is not directly available to individuals who participate in the project, the cost to participate is adjusted to reflect the value of the tax credits. The CEC takes the 1603 Treasury Grant instead of the ITC as the initial owner of the array. Portions of the array are then sold to customers at discounted costs (reducing the cost by the proportioned Treasury Grant discount). Customers must be qualified taxpayers and cannot take a tax credit on their purchase as the grant has been taken by the CEC. Both parties are subject to recapture over the first five years if the resulting system is then sold to a disqualified or non-tax paying entity. Creating this proprietary project model, with ownership, tax and legal considerations, was quite challenging.

The first CEC project is a 77.74-kW array in the Holy Cross Energy service territory (western Colorado).  The CEC leased the land, sold the project to customers, and negotiated a PPA with Holy Cross Energy. The PPA rate paid by Holy Cross will escalate as regular utility rates increase. CEC’s RemoteMeter™ system automatically calculates monthly bill credits for customer accounts and integrates directly with the utility’s billing system to apply the credits. The CEC is breaking ground soon on its next community owned 1-MW solar array at the Garfield County Airport near Rifle, Colorado.

Project Financing: The first project was built with internal CEC private capital, which is paid back as individuals buy into the project. CEC takes the 1603 Treasury Grant federal tax credit and passes the savings to the customer. Rebates received are $1/watt plus $0.50/watt for rights to the RECs from Holy Cross Energy. The annual income from power sales is estimated at $15,444 ($198/kW), rising as regular rates rise, and the project has a simple payback of 12.8 years.

Costs: The installed cost to the CEC was $466,000 or $6/watt. After rebates, RECs and credits taken by the CEC, the cost to customers is $3.15/watt. Each participant agrees to pay a minimum $725 purchase (a single panel after rebates and incentives). Panel owners receive monthly credits for the value of the electricity produced for 50 years.

Billing: When individual owners purchase panels in the solar farm, the utility credits them for the power produced at or above the retail rate (net-metering economics) directly on their electric bill using the CEC’s RemoteMeter™ software system. The purchase price is as low as $725, depending on available rebates and RECs. For example, in the first project, CEC sold the rights to all future RECs up-front, on a per watt basis, enabling them to offset a portion of the installed cost. The benefits of ownership are transferable: if an owner moves within the service territory, the bill credits follow them; if they move out of the territory, an owner can resell their ownership to another utility customer or back to the CEC at fair market value or donate the property to a non-profit.

The owners must be customers of the electric utility within which the community array is located and their purchase is limited to the number of panels they need to offset 120% of their yearly electric use. These rules ensure that benefits directly accrue to the local utility customers rather than outside investors. The CEC is the management company representing the community owners and maintaining the solar arrays. In order to provide “utility-grade” long-term power to the utility, a percentage of the monthly power credit value and the initial sale price fund equipment insurance, operations and maintenance escrows.

Project Highlights

  • System Owner: Individuals in Holy Cross Energy utility territory
  • System Host: CEC leases site from the Mid Valley Metropolitan District
  • Installed Capacity: 78 kW
  • Participant Agreement: Minimum $725 purchase (a single panel after rebates and incentives). Panel owners receive monthly credits for the value of the electricity produced for 50 years.
  • Electricity: CEC, as agent for its customers, has a PPA with Holy Cross Energy to purchase the power produced. Customers receive the resulting monetary credit on their monthly electric bill.
  • RECs: Holy Cross Energy purchased rights to RECs for $500/kW (paid up-front).
  • Number of Participants: 18 customers

Financing Details

  • Installed Cost: $466,000 or $6/watt (Cost to customers: $3.15/watt, includes all rebates, RECs and credits taken by the CEC)
  • Capital Financing: Project built with internal CEC private capital, which is paid back as individuals buy into the project
  • Federal Tax Credit: CEC takes the 1603 Treasury Grant and passes the savings to the customer
  • Rebates: $1/watt plus $0.50/watt for rights to the RECs from Holy Cross Energy
  • Estimated Annual Income from Power Sales: $15,444 ($198/kW), rising as regular rates rise
  • Simple Payback: 12.8 years
  •  

For More Information: Lauren Martindale at (970) 319-3939, www.easycleanenergy.com

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