What Do You Think About a Solar Farm and Ashland’s Energy Future?

A 10×20 Steering Committee Recommendation to the Ashland City Council

Subject: The City Electric Dept., and indeed the City, requires at this time some Council direction in order to proceed with the City’s goal of fulfilling its 10×20 ordinance obligations. The City will request a study session for the purpose of informing the new Council with as much information regarding the ordinance’s status and future as possible.

To enable a stronger process from an informed Council, the steering committee offers (here):

[1] a few additional points to add to those which Staff has and will provide, and,

[2] the recommendation of a short (25 minute) 10×20 presentation by its actual planners, at the study session recommended by Staff. There has never been any such presentation in the 2.5 years since the ordinance was adopted by the City, in 2016.

The story of 10×20. Three years ago about 20 people met and created the ordinance as it reads, and a legal team put it into the form you see today. The committee went to work gathering signatures from townspeople, starting in about June with earnest. In a few short weeks we had about 2500 signatures, of which approx. 1650 were needed. In fairness, not all 2500 were valid, due mainly to the standard factors of registrations (and handwriting).

This was presented to the Council in August 2016. The Council was populated by several members who had dismissed what they regarded as a similar previous effort for the development of a solar farm. However, in Aug. 2016 the 10×20 petition was headed for a citizen’s vote in November — and consequently the unapproving Council decided to adopt the measure rather than see it go to the ballot. You can guess how 10×20 was to then be dealt with, time going on. Due to the real meaning of the ordinance however, that fate was not met. At least yet. Through this long period, the City staff – to its credit – has undertaken and completed several quality preparatory efforts to advance 10×20.

The real meaning of the ordinance. The physical intent of this project is 17.1 gwh/yr of locally produced renewable energy. The most promising and realistic path to meeting this requirement involves [a] a scaled-back solar farm at Imperatrice, [b] a small but very useful hydro-power upgrade of the existing City unit at Hosler Dam, and [c] a small peak shifting storage system at the solar farm. It is argued (with no protesters) that this configuration is the best renewable energy project any small city with our assets can achieve. It forms a superb contribution to the fulfillment of Ashland’s CEAP project, calling for greenhouse gas reductions.

The Economic Significance for Residents: While the primary economic facet of 10×20 is very long term through its small but real role in local climate action, there is another well-hidden result. Rooftop solar and other privately owned solar projects all acquire much of their financial payback due to net-metering and City incentives – – both of which are derived from City coffers — and which ultimately contribute (and have done so) to the need for the electric rates to climb for all residents and businesses. The City, in net-metering, loses cash in accordance with the name-plate power rating of each rooftop customer — even though the City must still maintain the full grid, including the net-metered connections.

Takeaway: private “rooftop type solar” causes rate increases for everyone. Imagine if everyone had net-metered solar: the City would receive very little retail on the power it must handle, and the system collapses. The Electric Dept. is not free!

Now, instead, when the City operates its own solar farm, it does more than offer significant climate action. First, it pays out no money for incentives for solar installs! Second, it sells its power at retail prices, losing no income. After 20 years, it then pays nothing for that power, and still sells it at retail prices, making a profit, which enables it to reduce rates if it so chooses. Note that 17.1 gwh/year right now at retail is approx. $1.75 million per year.

Currently, Ashland has about 2.1 Mw of ‘rooftop’, for which it paid out approx $900,000 in incentives to private owners — to people who can afford solar. 2.1 Mw nameplate solar results in a ‘loss’ to the City of approx. $75,000/year. These costs are subsidized by all residents.

There are two takeaways here: 10×20 is a fairly giant step in climate action, dwarfing any other action Ashland has considered. This is commensurate with who we are. Secondly, we will be putting our community effort into benefits for all residents and businesses — not just those who are able to install “rooftop”. [please note — the “ “ are placed to rooftop to include all installations that are financed like rooftop.]

Some Primer points:

The 10×20 Ordinance calls for the development of a facility to produce 10% of Ashland’s electric energy via new, clean, local processes. The then-Council unanimously adopted the ordinance, observing that approx. 25% of Ashland voters had signed the petitions for it.

The ordinance does not specify how the power is to be produced.

10% of Ashland’s electricity is approx. 17.1 gwh/year. That is 17 million kilowatt-hours/yr.

It turns out that a solar farm is the simplest route to achieve this goal. If it can be done in line with modern industry standards, it will cost Ashland nothing up front, a minor rate increase in the short run, a long term rate decrease, and a clear positive cash return in the longer run.

However, right now we focus on the factors influencing the short term rate increase. Any fiduciary discussion of 10×20 must, though, respect its full term value.

The City already owns a close-in, unused 876 acre property that could be used for a solar project requiring 65 acres. [Imperatrice].

The modern, preferred process for such a development is via a 3rd party power purchase (PPA) agreement where the City agrees to buy the renewable energy and then owns the facility after (generally) 20 years.

The price per kilowatt-hour for residents & businesses will be fractionally higher, since one tenth of it will carry a slightly higher cost than our current wholesale BPA power per kw-hr.

The rate increase is a determining factor in whether Ashland will indeed develop this project. Several issues must be resolved to determine what this blended rate increase will be. Hopefully, citizens (or their Council speaking for them) will make that decision.

The City has taken several prime steps toward reaching a point where it can issue a Request for Proposals (RFP) from third parties for the necessary PPA.

The factors affecting the blended solar+BPA rates will include:

  1. the RFP price per kilowatt-hour results,
  2. the amount of BPA energy the solar energy displaces from our contracted amounts,
  3. the price of spot market electricity in the NW that BPA can get for displaced power,
  4. the growth of electricity use in Ashland (the less gas we use for heating and the more charging of electric vehicles) the smaller the ‘BPA factor’ (point 2.).
  5. How well the City or others are able to determine the full 5-6 years of real consequence of displaced energy during this Take/Pay period.

A Critical Suggestion for the RFP Proposal. There is no reasonable purpose in issuing a Request for Proposals to 3rd parties for any project anywhere that is not tuned for success. If Ashland has a genuine interest in developing the 10×20 project (as known now), it will have to issue an RFP that is sufficiently attractive to [a] obtain respondents and [b] garner responses that could in fact be competitive. This broad requirement is clear: the RFP must be reasonable or there is no sense in issuing it.

There are several elements of the RFP that Staff produced last fall that probably fail to meet the criterion of “promoting reasonable success “. We can list them. There is also, however, a good opportunity for Ashland to review these elements, and remove one or more in order be able to offer an RFP that actually promotes our goal of meeting the 10×20 ordinance.

//inserted by Sharon