Electric co-ops power up a solar surge

 By Bob Gibson

Iowa farmer Keith Troyer stood in the open doorway of one of his barns, a flock of white turkeys crowding up to the mesh fence behind him.  The big birds would soon be loaded on a truck, to eventually end up in the meat department of Whole Foods Markets in Chicago.

But on this early October day, Troyer wasn’t talking turkeys, but solar, gesturing down the hill to the latest addition to his farm:  a row of solar panels quietly pumping out electrons in the morning sun.

“You drive the roads around here now, why it’s becoming solar country,” he said.

Iowa turkey farmer Keith Troyer (left) discusses his solar system with Warren McKenna, general manager of Farmers Electric Cooperative. (Photo by Bob Gibson)

Over the past few years, about two dozen of Troyer’s neighbors, including a local Mennonite high school, have added solar systems to the rolling landscape of Washington County, southwest of Iowa City.  They are all member-owners of Farmers Electric Cooperative, a tiny, rural utility that made a conscious decision to diversify its energy resource base by adding a healthy dose of solar.

Troyer and other solar owners sell the total output of of their farm and residential systems to the co-op through a feed-in tariff.  Combined with a community solar program and a contract to buy all the output of an 800-kW commercial array built in the center of Farmers’ service area, solar now makes up 10 percent of the co-op’s generation mix, with more to come.

Read a case study of the Farmers Electric Cooperative here.

Among electric co-ops – in fact among all electric utilities — Farmers Electric is a recognized pioneer.  Its embrace of solar has been entirely voluntary, a business decision made by its five-member co-op board, all local farmers and agri-business people with a clear focus on bottom line returns.

Across the country, scores of electric cooperatives are following Farmers’ lead, turning to solar power, for largely pragmatic reasons — economics and customer choice.

The trend is significant not only for the growth of solar across the United States but for the role  electric utilities can and will play going forward as the policies and incentives that have driven the market so far either lose force or sunset.

Electric cooperatives date back to the 1930s when groups of farmers banded together to provide electricity to areas ignored by private power companies, and this commitment to local needs persists today. Electric co-ops only serve about 12 percent of the U.S. population but their distribution lines cross 70 percent of the nation’s land area, according to the National Rural Electric Cooperative Association (NRECA).

Similarly, the aggregate of the solar power owned or procured by co-ops to date – 95 megawatts (MW) – is a sliver of the more than 13 gigawatts (GW) of solar connected to the U.S. grid.

The reason behind this unbalanced distribution was initially geographic. Electric cooperatives are strong in number and influence in regions such as the Great Plains, Midwest and Southeast, but thin on the ground in states where solar first took off, such as California and New Jersey. In addition, co-ops in most areas were largely excused from some of the early legislative and regulatory drivers of solar growth, such as state renewable energy mandates and retail net metering regulations.

Third-party solar providers have also tended to bypass co-ops due to their less-than-ideal demographics, lack of incentives and low customer densities, but that is starting to change.  With prices falling, solar installations by individual co-op members are rising in all of the 46 states where these utilities operate.

See the NRECA map of cooperatives’ solar footprint here.

This growth has also triggered the emergence of Solarize-type “buying clubs” — which take advantage of economies of scale to help groups of residents install panels — appearing in the service areas of  co-ops as far-flung as the Shenandoah Valley Electric Co-op of Virginia and the La Plata Electric Association of Colorado.

Recognizing the momentum, co-op leaders are seeking and beginning to find active ways for their utilities to support and shape the growth of solar in their communities, with three key factors driving the transformation.

1. Electric cooperatives and community solar are a natural fit.

Community solar is a natural fit with the electrical cooperatives’ traditional focus on service to their communities, allowing co-ops to establish an early leadership role in the rise of community solar.  The Solar Electric Power Association has been tracking the growth of community solar for several years, and co-ops manage the majority of the utility-led programs.

Check out the SEPA-IREC Community Solar Program Catalog here.

Community solar gives co-ops the opportunity to gain comfort with solar installations and performance, while providing an electric power option to the portion of their membership that chooses to invest.

“One of the best features of community solar is that it’s local,” said Brian Krambeer, CEO of two co-ops, Tri-County Electric in Rushford, Minn., and Hawkeye REC in Cresco, Iowa. “In the past, we asked members to contribute a little more on their electric bills to support a wind turbine 400 miles away, and that wasn’t successful.

“Our first community solar project sold out almost overnight. When members stop by to pay their electric bills, they see their renewable project right outside our building, and that’s very positive,”

he said.

Tri-County Electric’s community solar project. (Photo by Bob Gibson)

As of July, NRECA counted 38 co-ops in 21 states developing or offering community solar programs, and the successes of the early adopters is inspiring co-ops in every region of the country.  At NRECA’s Innovative Power Summit held in Indianapolis in October, solar was the hottest topic at the meeting. Many of the 180 attendees said that their co-ops were at least seriously considering if not already offering community solar.

2.  Changes in wholesale power contracts will open the door to more co-op solar.

The expansion of co-op solar has been constrained by the “all requirements contracts” between generation and transmission (G&T) co-ops that supply wholesale power and a large majority of the nation’s 840 distribution co-ops that buy from them.  In general, the contracts preclude the distribution co-ops from owning or procuring power from other sources.  These contracts have been enforced by the G&Ts as well as the lenders that provide financing to them.

The rise of increasingly affordable solar and the growing desire of co-op consumers to access solar directly for part of their electricity needs have led to some tension between distribution co-ops and their G&Ts. But a new level of flexibility is emerging. Several G&Ts are now helping distribution co-ops to build and operate local solar by financing the solar projects and then reselling them to the distribution co-ops at no mark-up.

Other innovative business models are being tested.  Earlier this year, three distribution co-ops in Minnesota became wholesale solar power suppliers to their G&T.  Brian Krambeer’s Tri-County Electric partnered with neighboring co-ops Freeborn-Mower Co-op Services and People’s Cooperative Services to form Minnesota-Three, LLC.  Its bid to build a 517 kW solar power plant was selected in January under a competitive RFP issued by the Dairyland Power G&T of Wisconsin.

3.  Electric cooperatives are looking beyond community solar to solar as a customer service.

Like other utilities across the country, electric co-ops did not fall in love with solar at first sight. Still, many are now accepting – and even embracing – the reality that solar is here to stay, and they are searching for the most effective ways to make it a part of their business.

This includes extending their vision beyond the relative success of community solar.

“I’ve just started my 35th year in the industry, and I’ve never, never seen anything like the reaction from our membership to our community solar,” says Mark Vogt, CEO of Wright-Hennepin Cooperative Electric Association, a 45,000 member co-op serving an ex-urban area west of Minneapolis.  The co-op is known as an innovator, with successful load management and home security offerings.

“But the acceptance of both of those pales in comparison to the response and the good will and the good feeling that we’ve gotten from the membership by introducing solar,” he said.

While Vogt sees community solar as “our workhorse solar product,”, he is not stopping there.

“One brand doesn’t reach all. We recognize that we’ll have to get into rooftop and pedestal-mounted solar, residential and commercial,” he said. “If the members of Wright-Hennepin want it, we better be in the driver’s seat because if we aren’t, they’ll take it from somebody else.”

Driven by such changing circumstances, electric cooperative have developed a tradition of technology innovation. They were pioneers in automated meter reading and the deployment of supervisory control and data acquisition (SCADA) technologies as ways of better managing reliable service in sparsely settled areas. Co-ops have met unfilled demand in their areas over the years for everything from home appliances and electrician services to satellite TV and internet service.

“Solar appealed to us because it’s an energy product,” Krambeer said. “As an electric co-op, that’s our business, to sell energy to our members.”

“I look at electricity as electricity,” Vogt agreed. “If the member wants it made from the sun, I’m going to provide that. If he wants it made from wind, I’m going to do that. Solar is a part of the natural progression of what we’re going to have to add to stay a viable and trusted energy provider.”

Bob Gibson is SEPA’s vice president of education and outreach. He can be reached at [email protected].