Defining Net Metering and Evaluating Changes in Legislature

New legislation and decreases in the cost of solar panel pricing in the past year have fundamentally changed the community-scale renewable energy landscape. Projects that in the past were too expensive to complete or too complicated to pursue are now possible with improved Vermont energy legislation and reduced construction and materials costs. As an example, the market for solar modules (more than a third of the total project cost) has seen an approximate 30% decrease every year since 2008.

Changes in Vermont’s Energy Legislation:
Several key changes over the past few years have streamlined and helped to fund renewable-energy development:
In May 2011, Governor Peter Shumlin signed into law H.56, the Vermont Energy Act of 2011, a bill designed to expand renewable energy and efficiency projects in Vermont. Recognizing the “peak shaving” value of solar PV projects for Vermont’s utilities, the law created an incentive to catalyze more net metered solar projects by requiring utilities to offer a “solar adder” to customers for the energy they produce through their own net metered solar PV systems.

  • In May, 2012, Governor Shumlin signed into law a number of energy-related bills which cumulatively provided significant improvements to the renewable energy landscape in Vermont.  Most notably for net metering, Act 170 created a pathway for large users of electricity to participate in the benefits associated with net metering projects by allowing these customers to see credits on their bills set at the residential rate for energy produced by customer-owned generation, effectively ending the “demand charge penalty” where the lower rates for demand charge customers (the rates seen after the larger one time demand charges are assessed) were the basis for the credits.  Legislation in 2012 was also successful in creating a more transparent and predictable means of property tax treatment for renewable energy systems.
  • While all of these changes aid the development and support of renewable energy sources, one of the most important changes for clean energy took place in 1998, when Vermont passed H.605 to allow net metering for customer generated electrical production.

The Benefits of Net Metering:
Net metering permits customers to store collected electricity and feed it back into the grid to offset utility bills. It allows the grid to act as the “battery” for storage of the electricity produced by intermittent resources such as solar and wind.  Solar net metering systems actually benefit utilities, due to the fact that the majority of the power produced by these systems is generated at times of peak demand on the utilities network, thus the electricity produced allows for less electricity to have to be purchased from expensive, spot-market sources.  Nearly every state permits net metering, but the State of Vermont has one of the more progressive net metering policies, in that both virtual and group net metering is allowed.  Virtual net metering means that the recipient of the credit for the electricity generated by the array does not have to be located at the array itself.  Group net metering allows for multiple meters to be credited by production from a single source, allowing multiple members to participate in the production associated with a centrally located array (a neighborhood association, for example).

Making Renewable Energy a Better Alternative:
As the price of solar panels continue to decrease and state incentives become more attractive, renewable energy projects become increasingly feasible. Creative financing options like PPAs and well-utilized tax credits for investors make it easier for site hosts to become involved, and net metering makes a solar project not just green, but lucrative.  Encore Redevelopment Principal Chad Farrell projects that many sources of green energy will be price competitive with fossil fuels in three years, further underscoring the role renewable energy has to play in the way we generate and use electricity.

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Creating a Business Model for Renewable Energy Projects

When a switch is thrown on an Encore-developed project, it represents the work of numerous collaborators. Some of these collaborators are obvious — in order for a project to be developed, potential sites must be leased from landowners, permits must be acquired, and the arrays or turbines must be built and maintained.  But in order to monetize the projects effectively, a more creative approach is required.

As a project developer, Encore manages and brokers the relationships between the entities that can best benefit from green, renewable energy. This results in a multi-layered business plan that often encompasses numerous public and private organizations working together to produce financially viable renewable energy projects that deliver social and environmental returns as well.

Initial Project Analysis and Due Diligence:
A successful project begins with a suitable site. Once a site has been assessed and permitted, clean up, construction and long-term monitoring begins. Since many sites are former brownfields, the EPA and/or state-level regulatory agencies often get involved to evaluate and oversee the stabilization of contaminated sites.  Key environmental and financial aspects (IRR and NPV analysis, for example) are evaluated, and Encore provides preliminary cost and system size estimates.

Project Financing:
A viable renewable energy project can provide jobs, additional tax revenue and intangible community and educational benefits. Many financial gains depend on creative public-private partnerships to capture financial incentives and maximize benefits that are available exclusively to private-sector businesses, such as tax credits and accelerated depreciation.  Encore also enrolls the site in state and federal incentive (grant) programs (where applicable) and negotiates power purchase agreements and net metering agreements.

Defining Power Purchase Agreements:
The EPA defines a PPA as “a financial arrangement in which a third-party developer owns, operates, and maintains a photovoltaic (PV) system, and a host customer agrees to site the system on its roof or elsewhere on its property and purchases the system’s electric output from the solar services provider for a predetermined period.” At least three entities are involved: a third-party developer/project owner (Encore), a host/landowner, and the electricity off-taker, who benefits from electricity produced.  The site owner and off-taker are not always the same.

Benefits of Renewable Energy Projects:
The PPA model benefits the site owner, electricity off-taker and utility company in numerous ways. The host is the direct beneficiary of clean, carbon-free renewable power; other advantages include:

Financial Benefits:

  • Lease benefits: For property owners hosting renewable energy systems, fixed revenue is possible through lease payments paid by the project owner.
  • Electrical savings benefits: An investment in a renewable energy system allows for a long-term levelized cost of electricity.  Since the cost of electricity generally increases over time, locking in a fixed rate for power provides price certainty and offers the opportunity for electrical cost savings in a highly volatile energy market.
  • Pathway toward system ownership: Third-party owned renewable energy projects typically allow for a system purchase option after tax credit and deprecation benefit recapture periods have expired.  This arrangement allows for the purchase of a fully functional system with many years of remaining design life at a significant discount relative to the installation cost of a new system.

Social Benefits:

  • Electricity is produced by solar arrays or wind turbines on local sites, creating an opportunity for local revenue through property taxes.
  • Locally generated electricity means fewer transmission lines and fewer losses (greater efficiencies).
  • Educational benefits can be derived through innovative array to classroom monitoring possibilities.
  • Demonstration of a commitment to participation in the community’s clean energy future.

Environmental Benefits:

  • Reduction in greenhouse gas emissions.
  • Elimination of hazardous resource extraction byproducts associated with fossil fuels.
  • Elimination of environmental impacts associated with additional transmission and distribution lines.

Making the Renewable Energy Model Work for Communities and Businesses of All Sizes:
Encore has been at the forefront of renewable energy developments in Vermont. Recent Encore projects have included solar arrays at the Burlington School District, a group net metered solar array at the Farm at South Village, a cooperative solar array at the Town of Middlebury, Vermont former wastewater treatment plant, a community scale wind turbine at the Northland Job Corps, and a roof-mounted, net metered solar array at Select Design, a branding agency in Burlington, Vermont.

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New Uses for Discarded Lands: Brownfields and Redevelopment

Vacant lots, old industrial sites and landfills rarely top the list of desirable places to visit in a community. But to Encore Redevelopment and other project management companies specializing in assessing, remediating and redeveloping environmentally challenged real estate, these areas are of top priority.

Termed “brownfields,” and defined by the Environmental Protection Agency as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant,” these pieces of property often turn into illegal dumping grounds or worse — and send nearby property values plunging.

To Encore Redevelopment, however, they present a perfect opportunity for redevelopment. The necessary zoning and access roads are typically in place for these sites, and they’re readily available — the EPA estimates 490,000 brownfields across America, and nearly 4,300 in Vermont — provided the appropriate assessment, clean up and construction strategy is deployed. Redevelopment has traditionally included improvement of the site by construction and/or renovation of a structure for commercial, industrial or residential purposes; in the past few years, the renewable energy marketplace has evolved to make solar, wind, and other renewable energy sources the highest and best use for many brownfield sites.

All of those features make brownfields attractive to environmentally conscious land redevelopers — but these sites represent a significant boon to community members, also.

Risk Management and Environmental Benefits:
Because brownfields are often contaminated sites, the EPA frequently gets involved to clean up and monitor hazardous waste. Project managers like Encore Redevelopment work with the EPA and other state and federal agencies to control hazardous wastes and maintain an ongoing evaluation of the site. In addition to the obvious benefits of producing green, renewable energy on land that was formerly unusable, the redevelopment of brownfields also restores blighted land to a productive and environmentally friendly state — and takes developmental pressure off of greenspaces as sites for renewable energy.

Economic Benefits:
Renewable energy projects built on brownfields frequently produce a viable source of revenue to a community in terms of tax breaks, new jobs, increased property value, and grid stability. A June 2012 study conducted by the EPA estimated $308,629,368 leveraged by assessment or cleanup activities conducted with EPA brownfields funding, and 1,789 cleanup and redevelopment jobs leveraged. Revolving loan funds and properly utilized town bonding also help fund local weatherization projects and energy improvements, distributing the benefits more broadly across the community.

Social/Community Benefits:
When an illegal dump, abandoned factory or landfill is redeveloped into an attractive, usable site, residential property values can increase an average of 2-3 percent. In addition to economic benefits, nontangible effects are felt in partnerships brokered between local public-private entities, an assurance that a brownfield is safe and uncontaminated, and through educational and social benefits.

With the correct treatment and rehabilitation, these otherwise damaged lands offer huge potential for agriculture, green building (such as the Chicago Center for Green Technology, built on a former illegal dump) and alternative energy. Local educational benefits also include ongoing monitoring of a town’s energy production via websites and other public forums. A recent project for the Burlington School District demonstrates the full range of educational benefits, as students at two local schools benefit from new curriculum developed around the roof-mounted panels.

Completed and Current Brownfield Redevelopment:
Since 2007, Encore Redevelopment has specialized in assessing, remediating and redeveloping environmentally challenged real estate, whether that site is contaminated or simply underutilized. As a project manager for brownfields sites, Encore has worked with a host of projects in New England and internationally, including:

  • St. Albans, Vermont: one of the first brownfields to be redeveloped for housing purposes in the state of Vermont
  • Burlington, Vermont: assessed, coordinated, and generated estimates for environmental liabilities at a brownfields site for a major local institution
  • Windsor, Vermont: area-wide brownfields investigation of former industrial sites within the downtown area
  • Williamstown, Massachusetts: project management services for an environmentally contaminated site for reuse as an assisted-living facility for the elderly
  • Post Mills, Vermont: coordinated removal of a mill structure with the intention of future redevelopment

Encore also provided expertise for an international environmental due diligence and liability evaluation at various international locations, and evaluated potential environmental damages to provide testimony as an expert witness in a recent court case. Current projects include working with the City of Burlington to provide project management services to facilitate redevelopment solutions for a large parcel in one of the city’s enterprise zones.

By turning a community’s least valuable acres into a highly productive asset, Encore Redevelopment seeks to provide solutions to complicated environmental and energy-related problems. In doing so — and by doing it in a smart, conscientious way — communities can likewise reap the benefits of previously useless and undesirable land.


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New DOE Report Details Financing Options for Solar PV on Schools

On October 20, 2011, The US Department of Energy released a report entitled “Solar Schools Assessment and Implementation Project: Financing Options for Solar Installations on K-12 Schools”.  The report details best practices for schools to utilize to take advantage of the opportunities provided by investing in or hosting solar PV systems on school buildings.  The report examines both:  1) direct ownership options, which take advantage of general funds, bonds, construction financing and grants; and 2) third party finance models, including power purchase agreements, lease to own models, and energy services performance contracts.   Encore is currently working with the City of Burlington, Vermont School Department on a solar on schools project.  The ~250kW project will be deployed on two separate school roofs with an additional 400kW to be deployed in 2012.  The project is being completed under the third party ownership model, with Encore maintaining ownership of the system and the Burlington School Department benefiting from lease payments related to the overall production capacity of the system and an opportunity to purchase the system at a significantly discounted price after five years of operation.

More information of the DOE’s solar on schools report can be found here:

http://apps1.eere.energy.gov/news/progress_alerts.cfm/pa_id=632

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State Energy Plan open for review until October 10…

In mid-September, the Department of Public Service released the draft Vermont Comprehensive Energy Plan. The public is invited to provide comments to the DPS until October 10 at 5PM. The Plan is available to download from the Vermont Comprehensive Energy Plan web site. In addition, public hearings are scheduled for the following dates:

  • Tonight, September 28, 7-9 PM, at Brattleboro High School.
  • September 29, 7-9 PM, at Rutland High School.
  • October 3, 7-9 PM, at Colchester High School.
  • October 6, 7-9 PM, at Danville School.

The final draft, which will include the public’s comments and address the public’s concerns, will be submitted to Governor Shumlin in mid-October. The final, published version of the Vermont Comprehensive Energy Plan will be released in November.

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Links to recent articles about the Derby Line Wind project

Here are links to the press coverage from last Tuesday’s Derby Select Board meeting:

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Green Mountain Power announces host site for new community wind program

Green Mountain Power announced today that Northlands Job Corps of Vergennes has been chosen to be the host of the first wind turbine installation of the Green Mountain Power & Northern Power Systems Community Wind Partnership. Green Mountain Power will own, operate, and maintain a Vermont-made Northern Power 100kW (the NPS 100) permanent magnet direct drive (PM/DD) community wind turbine on the Northland Job Corps campus. The NPS 100 turbine is ideal for integration in a community setting for local, distributed energy generation. To learn more about this project, visit Encore’s website and check out the full press release here.

Update: this project has also been featured on BrighterEnergy.org’s web site.

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September 24 is Moving Planet Day!

On Saturday, September 24, individuals around the world will be gathering in their towns and cities in defense of our planet. Moving Planet Day is a day for people to organize and participate in events in their area to rally interest and awareness around climate change and demand local and national government action. To find an event near you, go to the Find an Event section of Moving Planet’s web site. These are the events that will be happening in the Burlington area:

As Moving Planet’s website states, in order to preserve our planet, we need to break our addiction to fossil fuels and move toward a “sustainable, democratically controlled, and renewably-powered future as soon as possible.”¹ Moreover, in order to reach this sustainability, we have to reduce the amount of CO2 in the atmosphere from its current level of 392 parts per million to below 350 ppm.² We can reach this goal by supporting and implementing renewable energy, especially on a community-scale. Check out our web site for more information on how you can do your part to reduce fossil-fuel consumption.

¹Moving Planet’s FAQs

²350.org

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News about the Derby Line Wind project…

Derby Line Wind project in the news… check it out at the Orleans County Record’s website and the Caledonian Record’s website.

The Orleans County Record and the Caledonian Record also ran a piece in the end of August that was picked up by National Wind Watch. This piece highlights the results of a feasibility study conducted by Vermont Electric Cooperativen about the capacity of local power lines and substations.

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Renewable energy viewed as a farmer’s crop, tool, and mechanism to diversify revenue stream…

Will Raap recently wrote a great article about farm energy on his blog.  He writes, “Vermont farmers are learning that one of the best ways to generate on-farm profit is by ‘growing’ electricity.”  This statement is echoed in the 2009 On-Farm Energy Production Survey generated by the National Agricultural Statistics Service: “Producers on 8,569 farms in the United States reported producing renewable energy on their operations in 2009. Farmers whose operations produced on-farm energy saved an average of $2,406 on their utility bills in 2009.”  Click here to read more about this survey and renewable energy on farms.

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