A reality based independent journal of observation & analysis, serving the Flathead Valley & Montana since 2006. © James Conner.

1 August 2015

Flathead Electric community solar’s gloomy economics

Update, 3 August. Flathead Electric now has a web page devoted to its SUN project. The downloadable FAQ (PDF) has more information, but does not answer all of my questions. The purchase agreement also is available. I’ll post more on FEC’s coming of the SUN this evening or tomorrow.

Begin original post. On 11 June, Flathead Memo published a preliminary analysis of FEC’s community solar project. Construction has begun, and FEC just released more information on the project. The August, 2015, issue of Light Reading (PDF), the cooperative’s monthly newsletter, in a question and answer format with project manager Ross Holter, reports that customers now can invest in the project:

It will consist of 356 solar panels, and each 285 watt panel is expected to generate approximately 360 kWh per year. Each panel will cost $900 and initially, FEC members will be limited to purchasing one panel for the 25-year life of the program.

Less than one kilowatt hour per panel per day, on average.

In a nutshell, how does community solar work? It’s really quite simple. We build a large solar array, thereby achieving some economies of scale. We then sell those panels to individual participants for the 25-year life of the panels. We track the monthly kilowatt output of the whole system and then credit each owner their allocated share against their monthly electric bill.

At what price per kWhr will that generation be credited? Flathead Electric’s residential rate structure (PDF) combines a $22.71 per month base charge with an ascending block rate structure:

fec_rates_2009_2015

In July, I used 517 kWhrs, which by my math will cost $54.20. My true cost per kWhr is $0.10483, but the per kWhr rate for the 0–600 kWhrs/mth block is $0.0609. If I had a share of the project, would I be credited at my true cost per kWhr, or at the 0–600 block’s rate? If FEC uses the block rate for the panel owner’s consumption, the biggest energy hogs will have the shortest payback period. In fact, under that scheme, only the hogs will have a simple payback period shorter than the life of the project:

payback

FEC needs to release a lot more information on the Stillwater Community Solar project. Given what I know right now, and my level of energy use, I could not expect to break even were I to invest in the project. It doesn’t strike me as an economically viable alternative to net metering. And like net metering without a crossover switch, it would leave me in the dark if the grid went down.