Utilities around the state are turning to solar energy-generation projects as the cost of wrangling the sun’s rays becomes more economical.
Driven by the declining cost of installation and construction, three projects in the state aim to be online in the next few years.
Other installations could also follow with environmental regulations moving forward that are aimed at reducing carbon emissions and a 30 percent federal tax credit that will be reduced at the end of 2016.
In February, Arkansas Electric Cooperative Corp. announced plans for a 12-megawatt solar generation facility in east Camden. The project was set to be the largest in the state until Entergy released the details of its 81-megawatt Arkansas County facility in April. Ozarks Electric Cooperative added its own project to the fold in an announcement last month.
John Bethel, the executive director of the Arkansas Public Service Commission, said a decision is expected in Entergy’s case by the end of September after a hearing last month. He said any utility seeking to recoup costs from a solar project through rate increases must obtain regulatory approval from the commission. The approval process in turn requires economical generation projects.
“It’s my understanding the cost of solar facilities is declining and utilities are evaluating those projects along with others in order to serve the needs of their customers in a reliable and cost-efficient manner. I think each project, each utility’s analysis is utility-specific, so as they identify opportunities they’ll bring those forward,” Bethel said.
According to the Solar Energy Industries Association, an industry trade group, 2 megawatts of solar energy — 440 kilowatts of residential and 1,760 kilowatts of commercial — were installed in the state in 2014, a tenfold increase over the previous year. That brought the total installed capacity to 4 megawatts, which is about enough to power 400 homes, ranking the state 40th in total capacity.
Across the country, more utilities are installing, or planning to install, more solar generation projects. According to a solar industry report produced by SEIA and GTM Research for the first quarter of 2015, utilities installed 644 megawatts across the country, the eighth quarter in a row during which utilities installed 500 megawatts or more. The report also noted that a “flurry of activity” was expected over the next 18 months leading up to the reduction of the federal investment tax credit.
At the same time, the cost of solar installations is on the decline. The total cost of installing utility-scale solar projects has trended down from 21.4 cents per kilowatt-hour in 2010 to 11.2 cents in 2013, according to the U.S. Department of Energy.
The SEIA noted in its first-quarter report that some recent contracts came in at under 5 cents per kilowatt-hour.
Mark Cayce, the general manager of Ouachita Electric Cooperative, said workers are already laying out racks for the solar panels to be installed at the facility in east Camden. Ouachita Electric gets its power from AECC and distributes power to the industrial park where the solar project will be located.
Cayce said he expects to see more projects like the one in east Camden in the future.
“I think more people are attracted to solar because the cost of solar is coming down and has been trending down for the last eight or nine years, and it looks like that trend will continue,” Cayce said. “The cost of traditional power is trending upwards, and especially at a large scale, you’re seeing those lines cross.”
Ouachita Electric is also studying community solar projects, which would group interested members with a shared solar installation.
NWA Also Shows Interest
That interest in solar has also been seen across the state in northwest Arkansas.
Ozarks Electric Cooperative is building a 1-megawatt solar-generation facility in east Springdale, which the utility touts as the “first utility-scale, member-owned” project of its kind in the state. The facility will feature 3,927 panels on 5 acres.
Alyssa Roberts, vice president of marketing and member relations at Ozarks Electric, said the utility hopes to begin construction in September and be online by next spring. She said the facility was the result of a survey conducted last year that showed the utility’s members were “very interested in renewable energy, especially solar-generated power.”
“Building a facility such as this is also further proof of our commitment to innovation. We believe that solar-generated power helps diversify our offering in addition to providing environmental benefits,” Roberts said.
In the first year of operations, Ozarks estimates that the facility will reduce the utility’s carbon dioxide footprint by 1,654 tons and by 40,379 tons over 25 years.
Bethel said the announcement earlier this month of the U.S. Environmental Protection Agency’s targets to reduce carbon emissions could also play a role in future generation projects. He said utilities will likely keep those regulations in mind when planning for the future.
“I think they’re evaluating and generating resources as they need energy and capacity and the best way to provide those. And with the environmental regulations, they’re considering resources that may not produce emissions. And that’s a factor in making that decision, but it’s the same resource-planning process they’ve gone through. It’s just those options are available and in some instances proving to be economical and beneficial and being brought forward for consideration,” Bethel said.
‘It Adds Diversity’
Kurt Castleberry, Entergy Arkansas’ director of resource planning and market operations, said the utility’s solar project came out of a request for proposals from May 2014, which included requests for renewable sources. He said that the solar project would provide a “hedge” against potential future regulatory costs for emissions.
“I like to describe it as this is an economically attractive, emissions-free resource that offers a lot of benefits for customers. It adds diversity to [Entergy Arkansas’] portfolio — we don’t have any generators in our fleet that run on sunshine,” Castleberry said.
Castleberry said he expects other requests for proposals in the future to focus on renewable energy, including the chance of more solar projects.
“Our plans for the future haven’t been really nailed down yet, but we do have a high level of interest in adding more of this resource to our portfolio,” Castleberry said.