Iowa City is working on a sustainability plan. If done well this could be a big plus for the local community. Is the solution to require that every new project install solar as Rockne Cole suggests? Or, are there more subtle and effective ways to foster sustainability without creating pushback from the people that build our homes?
As an investor in three solar arrays ranging from 20KWh to 43KWh I’ve learned that solar energy is good business if you own the roof and have a use for the generous State and Federal tax benefits. This doesn’t work for everyone. About half the businesses and a similar percentage of households making less than 80% of the median income may never benefit from the solar revolution. Put simple they don’t own the roof and they don’t make enough to think about investment tax credits.
The sustainability plan should do two things:
- Streamline the process
- Develop strategies that address the needs of the low income people and the agencies that serve them. For those lucky enough to have their own roof and a tax problem, the incentives to adapt are adequate. Let the market do its work
We know that solar development benefits from economies of scale. For example; the average cost for a residential project is $3.00 per KW. For large commercial projects it drops to $1.60 and for utility scale projects is drops to $1.10. (Solar Energy Industries Association). The biggest challenge is to reduce soft costs. Soft costs comprise about 65% of a residential project. This includes permits fees, sales taxes, customer acquisition and supply chain costs. These soft costs haven’t dropped like the cost of the solar panels and related hardware over the past five years.
Any initiatives that shorten the time from installation to production would be valuable. It starts with asking the solar providers and the Utilities in the area about their experience with interconnect agreements, inspections, financing applications and applying for the investment tax credit certificates. Are there any of these soft costs that the City can influence? Can the City help reduce customer acquisition costs or, more immediately, sales taxes? Can the City perform a role in providing space and experts to help educate potential users? Is there a role for a subsidy since the State credits were reduced from 60% to 50% of the Federal level and the $5 million in credits runs out pretty quickly as the qualified projects carry over from one year to the next?
Is there anything we can do to reduce the impacts of restrictions on how solar is sited and screened? Can we broaden the allowed places where we can put solar – dry bottom water detention basins for example. Can solar panels be placed in a flood plain assuming they are appropriately elevated? Are there restrictions within the zoning laws for accessory uses that are poorly applied to solar installations? Does the City have underutilized brown field land that could be adapted for solar arrays?
A second strategy is to focus sustainability efforts on the low income residents and the agencies that serve them. Virtual metering has the potential to replace a physical meter and the interconnections and inspections that go with it. Net Virtual metering opens up opportunities for shared solar also known as community solar. The virtual metering enables shareholders to receive credit on their electrical bills from a solar array that is somewhere other than on their property. This shared arrangement on a remote array has manifold advantages. It is cheaper because there aren’t as many interconnect agreements, there aren’t as many inspections, and the installation costs are considerably less. Moreover, they are less expensive to monitor and maintain. Finally, it can be an effective use of underutilized land. Those shareholders can be low income residents in rental units. They can also be non-profit agencies that serve that population. In other words, you don’t need to worry about roofs and who owns them. You don’t have to worry about whether or not the recipients can take advantage of the tax credits either.
Having said that, there is a role for corporate and individual investors that can use those credits and these same people/companies could potentially be the source of financing. These sources compliment the funding resources of the Iowa Energy Center. In general, it is critical to find collaborative opportunities between local governments, and between public and private entities. For example, the University of Iowa has an environmental engineering department and I wonder if those students could use a hands on project?