Nebraska town can’t get enough of community solar: Smart program design drives sold-out project

The text message popped up on Michelle Ozarowski’s phone at 6 a.m. in early July.

“What do you think about going to 1.5 or 1.6 MW?”

Ozarowski is Technical Project Manager at GenPro Energy Solutions, a solar developer and equipment provider with offices in South Dakota and Nebraska. The company has been working on a community solar project for the small town of Fremont, Nebraska, and Brian Newton, Fremont’s City Administrator and General Manager of Utilities, was asking if the size of the project could be expanded — again.

Although the original plan was for a relatively small, 500-kilowatt (kW) system, Fremont residents had lined up to register for the program in such numbers that the project had already been expanded to 1 megawatt (MW). And now — with ever more customers wanting to buy in — Newton was wondering just how much solar could be fit onto the project’s 12.55-acre site.

Turns out, Ozarowski said, the answer was 1.55 MW — or 4,928 panels — all of which 200 Fremont residents and businesses snapped up in a matter of six weeks.  With the fully subscribed project set to break ground in October, Newton is now planning Fremont’s second community solar installation — 5 MW this time — and he already has a waiting list of 50.

“When I found out that there was going to be a solar farm, it was perfect for me,” said Sue Reyzlik, a retiree, who was interested in solar but didn’t want rooftop panels on her house.

Fremont’s success with community solar reflects not only the ubiquitous popularity of these programs — which allow customers to buy into a larger project — but the increasing maturity and sophistication of program design and best practices in the field.

Trying to nail down the number of community solar projects in the U.S. is difficult, said Dan Chwastyk, Utility Strategy Manager at the Smart Electric Power Alliance (SEPA), because new projects are constantly being started, often in small towns such as Fremont. According to SEPA’s 2017 Utility Solar Market Snapshot, 171 utilities have active community solar programs; 311 MW are online and more than 300 MW are in the pipeline.

“A small municipal utility or electric co-op that is interested in community solar no longer has to reinvent the wheel,” Chwastyk said. “They can draw on an expanding knowledge base and expertise that has been developed specifically to help grow the sector.”

SEPA has been offering technical assistance to a range of small communities as part of a Department of Energy-funded initiative, Solar Market Pathways, aimed at developing design and marketing best practices for utility-led community solar projects. In Fremont’s case, Chwastyk worked with Newton on an initial market survey to gauge customer interest in a project.

“Our research on program design found that one of the key drivers for successful community solar projects is really knowing your market,” Chwastyk said. “Program design should be aligned with a community’s economic and social priorities. Fremont is a great example of a utility that listened closely and carefully to what its customers wanted, and the community’s priorities really shaped a very innovative program.”

Teasing out the tradeoffs

Founded in 1856, Fremont, Nebraska is a town of roughly 27,000 residents, about 35 miles northwest of Omaha. The local economy is rooted in agriculture and, today, agribusiness support services. A Hormel meat packing plant is the largest employer in town, and Costco recently broke ground for a poultry processing plant — but the town is also known for the small antique shops in its historic district.

A Nebraska native, Newton arrived in Fremont in October 2015 and took over the town’s 12,000-account municipal utility, which at the time produced 100 percent of its power from two coal-fired generation plants. To hedge against potential increases in fuels costs, he set about diversifying the generation mix. He contracted for wind power from a farm in southern Nebraska and began to think about a community solar project.

But he didn’t know if residents in this rural community would have much interest in community solar — which is where Chwastyk and SEPA came in with a survey that helped identify the customers’ priorities.

“What we try to tease out are the tradeoffs customers are willing to make,” Chwastyk said. “For example, customers will overwhelmingly indicate they don’t want any contract term or application fees. But how many would prefer a one-year term with no application fee versus no term with a nominal application fee.”

The survey results were eye-opening, Newton said.

Seventy-five percent of his customers were interested in solar, and some said “they’d pay $5 more per month for solar, which I doubted” Newton said, noting that the town’s residential wholesale rate is an inexpensive 5 cents per kWh.

To dig deeper, he held two public meetings to explain community solar design options and get feedback from his potential customers.

Overwhelmingly, the more than 500 people who attended the meetings wanted “community” to be central to the project. They wanted the electricity from the project to be sold only to those in the Fremont community. They also wanted it built by local developers, financed by local money and under community control. Additionally, some folks were looking to take advantage of the 30-percent federal investment tax credit for solar, while others were looking to fix their energy costs without a big upfront cost.

Newton took that feedback and designed a program to meet all those concerns. The program offers two options:

1. Purchase one or more 315-watt panels, that can cover up to 80 percent of a customer’s total consumption, and pay a 3-cent per kWh maintenance fee for 20 years. The customer owns the panel, but Fremont will handle the maintenance and operation. Each panel costs $180, and customers are able to receive the 30% investment tax credit.
2. Purchase a block of output. The blocks are 150 kWh and cost 6 cents per kWh, one cent higher than current rates, but the price is fixed for 20 years.

To ensure that community stayed central to the project, Newton picked GenPro, the only large-scale solar developer in Nebraska, for the engineering and construction of the project. Unable to work a local financing deal due to federal and state banking restrictions, Fremont self-financed the project from the utility’s own reserves. Utility staff will also get the training and education needed to maintain the project for its full 20-year life cycle.

Additionally, Fremont reduced the risk for its customers. For those who purchase a panel, but want to leave the program before the 20 years are completed, Fremont will buy back the panel according to an amortization scale. For those purchasing a block, they can leave the program with 30-days notice. No exit fees for either type of customer.

“We equated it to how we pay for recycling every week,” said Matt Zgoda, who went with the block-output option. “We are willing to do that because we feel like we are making a small difference. We are willing to pay for it because we think it is the right thing to do.”

The results speak for themselves.

On the first day that the initial community solar offering of 500 kW went live, customers lined up to purchase panels and blocks before the utility’s office opened.

“We may have one or two people in our office at any given time,” said Lottie Mitchell, an executive assistant at the utility. “But on the day we started the community solar enrollment, we had a line and had to call in extra staff to help our customers.”

“I filled out the form from one of the public meetings and brought it in,” said Richard Hirschman, a retired teacher. “Brian had it very detailed about the costs, and what we’d get out of it at the future.”

At that point, Newton decided to expand the project from 500 kW to 1 MW. At the end of four weeks, the first MW had sold out, and Newton sent off his text message to Ozarowski, to see how many more panels they could fit on the available parcel of land.

With the final size set at 1.55 MW — all sold and subscribed for — the race is on to get the project completed. GenPro’s Michelle Ozarowski, now lead engineer on the project, has a friendly bet with the Fremont utility’s engineering team to see if both teams can beat standard turnaround times to get the panels up and connected.

“We have dared ourselves to beat every expectation that’s out there,” she said. “We have this beautiful vision. At the end when we’re done and they’re done, we’ll just interconnect, and the panels will power up and 200 customers will turn on their lights with solar power.”