A small municipal utility in Texas is taking advantage of the falling cost of solar power to serve low-income customers, with benefits shared by local non-profits and public agencies.
The Kerrville Public Utility Board, or KPUB, is partnering with Schreiner University and the MO-Ranch to develop a community solar project that will provide power to 185 low-income renters in Kerrville. The project will lease land from a local non-profit, providing long term revenues to support their mission.
Kerrville Area Solar Partners is among 170 teams nationwide that are competing in the US Department of Energy’s Solar In Your Community Challenge, a $5 million contest that supports “innovative and replicable community-based solar business models and programs that will bring solar to underserved communities.”
While KPUB has been increasingly interested in solar, General Manager and CEO Mike Wittler credits the DOE Challenge for getting them to use solar for more than just electric generation, but to deliver benefits for their community.
Declining Cost of Solar
KPUB’s interest in solar is a result of the radical drop in solar costs over the last few years. According to the DOE, electricity prices from large solar projects fell 80 percent since 2010. In 2017, DOE announced that its 2020 price goals for utility-scale solar, set in 2011, had been achieved three years early.
And prices continue to plummet. Last year, Colorado utility Xcel Energy received bids for 75 solar projects with a median price of only $29.50 per megawatt-hour, comparable to existing coal and gas power plants.
While Texas has long been a leader in wind power, solar is just starting to take off. Texas grid operator ERCOT reports that the state has 1100 megawatts of solar capacity from systems larger than 1 megawatt, another 1952 megawatts with completed interconnection agreements, and another 12,899 megawatts in process. Wind and solar account for 80 percent of the new projects under development in the state.
Public utilities are responsible for most of the new solar, with growing interest from large commercial and industrial customers. Ramsey Cripe, a consultant with Schneider Engineering, calls Austin Energy and San Antonio’s CPS Energy “the poster children for solar in Texas.”
Austin Energy plans to get 65 percent of its power from renewables by 2027. In 2017, the City Council approved contracts for power from a 150 megawatt solar project for as low as $21 per megawatt-hour. CPS Energy has almost 500 megawatts of solar under contract with another 88 megawatts owned by its customers. It recently set a goal of getting half of its power from renewables by 2040.
Smaller public utilities are also jumping on the solar bandwagon. Pedernales Electric is building 15 megawatts of solar projects to serve community solar subscribers, while Denton Municipal Electric has committed to a 100% renewable supply by 2020, up from 44% today.
Big customers like Amazon and WalMart are buying solar for their stores and distribution centers to help meet their corporate sustainability commitments. “Their green initiatives make it an easy decision for them,” Cripe says.
KPUB Shares the Wealth
KPUB’s Solar In Your Community Challenge project plan is to develop a 999-kilowatt solar system – just under the one megawatt dividing line between distributed and wholesale generators in Texas. The project will be sited on property owned by Schreiner University in Kerrville and MO-Ranch in West Kerr County. MO-Ranch is a Christian conference center and summer camp, that hosts spiritual retreats, weddings, and other events.
While one would expect plenty of room for solar in KPUB’s 160 square mile service territory, the rugged terrain of the Hill Country of Texas made finding a site tricky.
The power from the project will be split between the non-profit hosts and the tenants of dedicated low-income apartment complexes in Kerrville. Dedicating the power to low-income housing makes it easy to identify and reach needy customers. An alternative approach, “virtual net metering,” credits the output of a community solar project to the bills of participating customers. But for low-income customers this would bring additional complications in verifying incomes, tracking customers who move, and billing.
By focusing on dedicated low-income housing, those problems disappear. “The building manager does the income qualification, so KPUB can just serve the apartment building,” says Wittler. “It’s the most efficient way to reach low-income customers.”
While KPUB doesn’t offer discount rates for income eligible customers, the solar rate will be competitive with the current residential retail rate of 7.3 cents per kilowatt-hour. The economic benefit to low-income households will come over time as the solar price is fixed and non-solar rates are expected to rise.
The community solar project will be KPUB’s first product tailored to low-income renters.
KPUB helps low income and elderly customers apply for energy bill assistance and building improvements funded by the federal Low Income Home Energy Assistance Program (LIHEAP) and Weatherization Assistance Program (WAP), both administered by the Alamo Area Council of Governments.
The catch is that weatherization programs work best for homeowners, and most low-income customers in Kerrville are renters. Landlords can access the programs on behalf of their tenants, but need to commit their property to low-income tenants for the long term, which rarely happens, according to Wittler.
Using solar has an added benefit for KPUB – helping it keep its customers.
“Some of the non-profits in Kerrville are already looking at putting solar on their campuses,” says Wittler. “With this approach KPUB can keep them as customers and keep the revenue base. Solar is a nice fit.”
KPUB has one large customer with 1.2 megawatts of solar to supply its facilities, and an additional 200 kilowatts of small customer-owned solar. KPUB does not have a net metering tariff, so any power exported to the grid by a behind-the-meter solar system is paid at the lower wholesale rate.
Not Likely To Stop with Low-Income
Community solar also delivers financial benefits to KPUB as a whole by cutting power needs during summer peak periods. It reduces the transmission fees KPUB is charged by the grid operator ERCOT based on summer peak demand, and cuts the need to buy high-priced power on the wholesale market. State grid rules allow energy prices to rise to as much as $9,000 per megawatt-hour, compared to a typical price range of $20 to $40.
“We would do the solar project to cut summer peak anyway,” says Wittler. He thinks KPUB could add up to 15 megawatts of local solar, about 10 percent of their summer peak. After that the new peak would be in the early evening hours, after solar output starts to drop, reducing the value of adding more solar.
Participating in the DOE Challenge is what encouraged the utility to focus on using the solar for low-income and non-profit customers.
“If it doesn’t work out with the low-income project, staff will come back to the Board for a standalone solar project” that would be supply all KPUB customers, he says.
Either way, he says, “we want to develop a solar project which would benefit all participating as well as their community at large.”
Bentham Paulos is a consultant working with the U.S. Department of Energy’s Solar Energy Technologies Office. This article was written with DOE funding as part of the Solar In Your Community Challenge.