Jim Bausell, Executive Vice President of Business Development at Silicon Ranch, spent more than 20 years in leadership roles at the National Rural Electric Cooperative Association. In this blog post, Jim shares his unique perspective on why more and more electric cooperatives are procuring solar energy to benefit their members and the communities they serve. You can reach Jim at jim.bausell@siliconranch.com or at 629.202.4000, and you can learn more about Jim’s work with co-ops here.
Achieving impressive commitments of more than one gigawatt of new solar energy in the past twelve months, electric cooperatives across the nation are leading the charge in developing solar energy production. Electric cooperatives are committed to providing their member-owners with an affordable and reliable future for their energy supply. As solar energy continues to become the most cost-effective option, electric cooperatives are stepping in to provide communities with low-cost, clean, and reliable renewable energy.
The Dramatic Shift to Solar
Why is solar quickly becoming the fastest-growing energy source?
It’s certainly about the money. The economics of solar energy have been transformed over the past two years with panel prices declining by over 80%. Even with 25% tariffs on imported panels, the cost of solar energy infrastructure has declined to unprecedented levels. When compared to the price of “brown” power, solar energy is extremely competitive. In fact, in many areas, solar is the lowest priced power to be acquired today. In some cost estimates, solar energy is less expensive than operating fully-depreciated coal assets. And a recent Wood Mackenzie report predicts solar energy will be cheaper than gas almost everywhere in the world by 2023.
In addition, the length of utility-scale solar power purchase agreements has ranged from 20 to 30 years, frequently at a long-term fixed rate. This structure offers members the assurance that energy prices will remain at fixed, low rates for decades to come. Imagine, no power supply price increases for that length of time.
Meeting Consumer Expectations
“The American public expresses overwhelming majority support for the twin goals of greater reliance on cleaner and renewable energy sources,” says Shannon Baker-Branstetter, senior policy counsel for Consumers Union, the advocacy division of Consumer Reports. “But they don’t trust their utilities on pricing or investing in renewables, and want to be able to pick their utility provider.”
There’s increasing pressure on utilities from residential consumers, and commercial and industrial businesses, to both go green and achieve lower energy costs. Economic development, especially in rural communities, is fueled by the cost of energy both in generation and in associated transmission and distribution costs.
Furthermore, businesses want their brands to be perceived as green by the consumers to whom they’re selling their products and services. For new economic development, there’s a convergence of a need for lowest-cost energy with a corporate commitment to sustainability. In many rural areas, electric cooperatives have been asked to achieve those goals by businesses who intend to locate new facilities. There has also been tremendous pressure stemming from a substantial increase in the number of states that now have a renewable portfolio standard (RPS), or an announced renewable energy goal.
Advantages of Local and National Regulations
While there can be exceptions for electric cooperatives with respect to RPS obligations, it still puts pressure on the co-op to announce its own sustainability and renewable energy goals. States such as Colorado, New Mexico, Nevada, and Oregon have recently passed new RPSs that will impact the pace and extent of solar energy development. These standards have the potential to lower market rates and put increased pressure on utilities to make the switch.
2019 is the last year that the full 30% investment tax credit (ITC) can be taken toward the installation of solar and storage. Next year, the federal solar tax credit will step down from 30% to 26%. Beginning in 2021, it will drop to 22% before stepping down permanently to 10% in January of 2022. The solar ITC is essentially a discount on the price of solar, which is motivating electric cooperatives to commit to solar energy and achieve this significant cost reduction while it is still available.
Solar Energy’s Ever-Increasing Potential
Consumer acceptance of renewable energy has become increasingly popular over the years. Simply put, consumers believe that moving toward sustainable energy is the right thing to do. They are committed to influencing electric cooperatives to make the switch.
A commitment of more than one gigawatt of new solar energy is inspiring, but it can and will grow as more Americans realize its boundless potential. One day, a mix of solar, wind, and storage will define the very nature of the energy resources in this country.
Silicon Ranch is a recognized leader when it comes to serving America’s electric cooperatives with solar energy, and the company has established productive relationships with prominent co-ops across the country. Contact Silicon Ranch to learn more about our goal to provide communities across the country with clean energy, economic development, jobs, and dedicated, productive partnerships.