What does cheap solar mean for electric cooperatives?

By Joe Smyth | joe@cleancooperative.com | @joesmyth

A look at two Colorado electric cooperatives navigating the implications of solar power’s declining costs

Emily Bowie at San Juan Citizens Alliance writes about how the La Plata Electric Association (LPEA) board of directors is discussing the implications of the declining costs of solar energy. Bowie describes how the “board’s touchiest topic is how the declining costs of renewable energy (and rising costs of coal) should impact LPEA’s future.”

Some board directors are concerned about how declining solar power costs could encourage more customers to install their own rooftop solar arrays, and what that might mean for the electric cooperative.

Other board members are more focused on the opportunity for LPEA to take advantage of falling solar power prices, by pursuing its own solar projects. As LPEA director Bob Lynch put it, “I want to be part of a plan that figures out how to use solar to help all our members.”

San Juan Citizens Alliance graphic outlining distributed and centralized power generation

​Bowie outlines the differences between centralized power like coal-fired plants, “behind the meter” systems that homeowners can install like rooftop solar arrays, and distributed power like community solar gardens and small hydro.

“The problem is that half the LPEA board is stuck debating behind-the-meter solar when the other half wants to explore our options for distributed renewable power,” says Bowie.

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​The board of directors of my own electric cooperative, Mountain Parks Electric, has also discussed the implications of cheap solar power at its recent meetings. During our July board meeting, Mountain Parks Electric General Manager Tom Sifers presented three recent developments showing why the cooperative needed to pay attention to the declining costs of solar power. One was growing interest in rooftop solar arrays from Mountain Parks Electric members. Another was that two towns that the cooperative serves are considering larger solar arrays at their water treatment plants, as a way to lower costs.

Third, Mountain Parks Electric had also recently seen prices for bids to build a solar project that the cooperative itself was considering, in collaboration with Rocky Mountain Institute’s Shine Program. Mountain Parks Electric General Manager Tom Sifers noted that those bids “got our eyes open that solar is here and you can buy it for 5 cents, and that’s cheaper than our wholesale rate, let alone our retail rate - it’s half of that.”

As Kevin Brehm with Rocky Mountain Institute describes, those bids for distributed solar projects “confirm that we have crossed a significant tipping point where distributed solar is not only a means to supply green energy and to promote regional economic development, but also an opportunity to decrease energy costs and to drive down bills for price-sensitive energy consumers.”

The solar projects will also deliver energy at a price that will stay flat, while power provided by coal plants is expected to continue rising.

Rocky Mountain Institute graphic showing bids for new distributed solar projects that would deliver power at a lower price than the cost of electricity and transmission from coal plants the co-ops currently purchase

Following the presentation by our general manager at the July meeting, Mountain Parks Electric board members discussed the opportunities and challenges presented by cheap solar power. Some directors discussed steps the cooperative could take to limit its members’ abilities to pursue their own solar projects, such as discouraging the towns from moving forward with solar projects, and reducing the size of solar arrays that could qualify for net metering.

At the same time, Member Relations Manager Rob Taylor highlighted the opportunity: “We’re going to have to make some choices, and one of those could be getting into the solar industry.”

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Four months later, Mountain Parks Electric hasn’t moved to restrict its members from pursuing solar projects. There didn’t seem to be agreement on the board, and it also became clear that rolling back net metering policies would be controversial. The customers that electric cooperatives serve are also members and collectively own the co-op, and this dynamic seems to have informed the board’s approach.

But the board has been able to agree to continue pursuing its own solar projects. At its September meeting, the board unanimously agreed to sign a letter of intent to proceed with a solar project in Jackson County. It has also discussed pursuing other solar projects in Grand County.

There is a key difference that helps explain why the Mountain Parks Electric Board has been able to more easily agree to pursue new distributed solar projects. Unlike La Plata Electric, Mountain Parks Electric has not reached the 5% limit on local generation imposed by its contract with Tri-State Generation and Transmission. So for now, Mountain Parks Electric can pursue distributed renewable energy projects without navigating that additional hurdle.

In contrast, as Bowie describes:

LPEA could actually obtain a majority local, renewable energy through locally controlled, distributed power. Doing so would not only boost our local economy and protect the planet – but also, because LPEA would control the facilities, it would lower electricity rates for everyone.

But Tri-State’s 5% cap on local generation paralyzes our ability to make this vision a reality. Until we find a way around the limit, we’re married to Tri-State’s increasingly high cost, coal-intensive rates.