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Not so fast there, sunny

Utilities, City Council celebrate a south-end solar array too soon



Three weeks ago, City Council and Colorado Springs Utilities Board members Jan Martin and Jill Gaebler appeared with Utilities representatives to celebrate a 25-year contract on a new 10-megawatt solar array — nearly double the size of the Air Force Academy's formation — to be constructed by June 30, 2015, on Clear Spring Ranch, adjacent to Fountain's Ray Nixon Power Plant.

"It's a great way for us to meet all the state and federal requirements for renewable energy" at a low cost, said Martin. Colorado energy policy dictates that by 2020, municipalities serving more than 40,000 customers must hold at least 10 percent renewable energy sources in their portfolios.

Although city-owned Utilities already does meet that requirement, in 2012, as part of its "energy vision" (see tiny.cc/lbnarx), it opted to up its ante by providing 20 percent of its total electric energy through renewable sources.

Hence the ongoing push for renewables such as this new array, plus an also-approved purchase of 10 megawatts of solar renewable energy certificates from smaller solar initiatives inside its service area, on a 20-year agreement.

"We often talk about the cost to the ratepayers now," Gaebler said, "but this is really going to help smooth out costs in the future, and it's the long-term power generation that the Board is really looking for here."

All sounds good to green ears — except as of the Indy's Tuesday deadline, nobody had yet told the public that the Clear Spring Ranch project is dead in the water, or that the certificate purchases remain tentative.

Gaebler says she was informed just before Christmas that the "very tight timeline" Utilities had warned board members about indeed had become a stranglehold. Backing up, here's why.

Solar installer Pristine Sun won the bid to build the array and sell power to Utilities, coming in between $60 and $70 per megawatt hour with an annual 2 percent escalator. Boulder-based vice president of sales Cary Hayes says that typically, a project of this scale would take 18 to 24 months to complete; Pristine Sun would be trying to do it in only seven, having only received the bid award in early December.

The reason for the June 30 deadline: the expiration of the Colorado Renewable Energy Standard, which states that the first 1.5 kilowatts of a system receives three times the number of energy certificates for which it would regularly be eligible. For example, on those 10 megawatts of certificates Utilities hopes to purchase, 20,148 megawatt hours of energy would actually be generated yearly, but credited toward Utilities' renewables goal as 60,444 megawatts.

Without that three-times multiplier, no deal — so no room for missing deadlines.

In late summer, Council issued a request for information, but not a request for bids, when Utilities first appeared before it with the Clear Spring Ranch pitch. That cost a critical couple of months' time.

"Several board members dragged their feet," says Gaebler, who along with Martin voted for an RFP process to begin. "There are two camps on Council as far as wanting to diversify energy and wanting coal because it's the cheapest. ... This board is tasked with finding the best price over the long term. If we aren't investing in that future, then we aren't doing our jobs."

Utilities then met with El Paso County in September, says county spokesman Dave Rose, to talk about permitting for the project. Rose says Utilities was advised that if paperwork came in by October, the county believed it could turn it around to meet the timeline. But Council approval didn't come until December. So fees to expedite the paperwork process typical for any major utility installation would double, to $50,000.

An even larger issue: the several hundred thousand dollars of its own money that Pristine Sun would place at risk if all stages of the tight timeline didn't go exactly according to plan.

Utilities "was saying its appetite was nonexistent if we couldn't finish by June 30," Hayes says, noting that full development plans would have been required by last week to enable permits by March 1. "I think ultimately it was just too tight of a timeline to pull it off. Everyone tried. ... I don't believe it's completely dead, though. Just dead for now."

Talks are supposedly underway with legislative officials to push the state's three-times multiplier incentive back to as late as 2016, enabling the likes of rural electric co-ops (outfits like Intermountain Rural Electric Association, which serves 10 counties around Denver and Colorado Springs) to benefit as well, according to Utilities spokesperson Dave Grossman.

"We don't see this as a total end for solar at Clear Spring Ranch," Grossman says. "We still have five years to get to where we need to be for 20 percent by 2020. There will be lots of other opportunities between now and then to get to where we need to be ... This doesn't set us back to zero."

But it would require a new round of bids, as market costs on items such as solar panels are constantly shifting, and even Pristine Sun would want to amend its bid before placing its capital at risk again.

Clear Spring Ranch had also been a focal point for Utilities earlier in 2014, when it and Colorado College failed to come to an agreement on a proposal for CC to build its own 2-megawatt array on the site (see "Powerless," News, April 23, 2014), sparking student protest. The campus has its own goal of becoming carbon-neutral by 2020, meaning it, too, is scrounging for renewable credits.

Utilities and CC are continuing discussions, and CC sustainability manager Ian Johnson says it's preliminary to rule out some sort of deal. Utilities can perhaps exchange with CC energy certificates it purchases, he says, to satisfy CC's needs.

The way the certificates work is convoluted, but they equate to third-party verifications of energy produced and used, explains Johnson. "It's a tracking mechanism," he says, "but without ownership of a [certificate], you can't claim a percentage."

One megawatt hour produced equals one renewable energy certificate, with the certificate sold separately from the electricity and value determined by supply and demand.

"These projects wouldn't be built without the RECs being invested in," says Grossman. "They add value to a project, making them possible financially for solar developers."

Grossman says Utilities is waiting until its Electric Integrated Resource Plan is completed, ideally by September, to see a bigger picture of how else to move forward on renewable goals and what to do with the contentious Martin Drake Power Plant downtown.

Meanwhile, customers can support Utilities' green portfolio now by purchasing wind power — a "premium product" for customers who opt into paying extra on their bills to symbolically offset their regular usage. In November, City Council approved a new, two-year wind purchase contract beginning this month, though a tariff change from $1.24 to $2.14 per 100 kilowatt-hour block must still be approved at a Jan. 14 meeting.

Meanwhile, as much as one might assume that all things green would be a shoo-in in future days, especially since state and federal rebates encourage renewables, the Clear Springs Ranch snafu suggests nothing will be easy.

In fact, a recent NPR story partly based in Colorado argues that a battle is brewing between customers generating their own solar power and utilities that are losing revenue because of it. The report calls solar a "disruptive technology" in the marketplace, forcing a "death spiral" onto utilities' business models, whereby they raise rates to compensate for lost revenue and to maintain power grids, goading even more customers to seek solar.

Not so sunny after all.

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