Universities Lead the Way in the Switch to Solar
By Russell B. Cohen, Esq.
America’s colleges and universities, as technology and social change pioneers, are no strangers to solar energy, whether affixing solar photovoltaic (PV) panels to campus rooftops for research experiments or generating low levels of on-site electricity. But today, these institutions are partnering with off-site providers to cut their carbon footprints and tap into solar PV farms located hundreds of miles away to power entire campuses. Solar power harvested at these new off-site arrays will be delivered directly to existing electrical grids, providing reliable, cost-effective, emission-free energy.
College campuses are often described as cities unto themselves, with the power usage to match. According to the U.S. Energy Information Administration, a typical 50,000-square-foot university building in the U.S. uses more than $100,000 worth of energy each year. Compared to the average American household at just $1,000, it’s no surprise universities are at the forefront of exploring new ways to cut costs while remaining models of environmental stewardship.
Moreover, solar is finally reaching cost parity with electricity produced by traditional sources like natural gas and coal. In fact, according to Deutsche Bank’s 2015 Annual Energy Report, solar has already reached parity in 10 states that are responsible for 90 percent of U.S. solar electricity production. And electricity generated by solar already is, or soon will be, cheaper than average prices of natural gas and coal in 47 U.S. states, according to Bloomberg News.
Reduced costs in solar PV panel production, greater financing options, and increased industry competition have significantly improved the economics of solar, according to the Deutsche Bank report. Maria van Der Hoeven, Executive Director of the International Energy Agency, who predicts solar energy could be the world’s top electricity source by 2050, says, “The rapid cost decrease of photovoltaic modules and systems in the last few years has opened new perspectives for using solar energy as a major source of electricity.”
Stephen Abbott, senior associate with the Rocky Mountain Institute, told EUCI that while activity in renewable energy procurement up to this point has been limited to deregulated or partially deregulated markets, such as California, and to areas with high concentrations of solar or wind activity, universities still have a variety of options at their disposal to take advantage of green energy resources. Synthetic power purchase agreements (PPAs), where an offsite buyer purchases power from a solar or wind farm and receives revenue from selling that power into the market, is one option that schools can utilize and can be done regardless of whether the campus is located in deregulated markets and regulated utility territories, according to Abbott.
“It’s purely a financial transaction, and it simplifies things significantly,” he said. “The university doesn’t have to manage the power; they purely write a check and receive revenues on a monthly basis.”
In June, 2014, George Washington University (GW), American University (AU), and George Washington University Hospital led the charge, inking an historic 20-year power purchase agreement (PPA) with Duke Energy Renewables (Duke) to purchase 52 megawatts (MW) of solar electricity from the Duke-owned Capital Partners Solar Project PV field located in eastern North Carolina. By mid-2016, the field will supply GW and AU campuses in Washington, DC, with 50 percent of their electricity needs. Duke is paying for the construction and maintenance of the solar farms in return for the university partners’ agreement to buy power at a fixed rate for 20 years at prices less than the current electric rate for each institution. Last year, GW spent nearly $13 million on electricity, and American University spent about $5 million. Both universities have made carbon neutrality a priority, with AU setting a target date of 2020, and GW planning to be carbon neutral by 2040.
“The impact of that is pretty huge. We’re not just buying certificates for renewable energy. We’re actually directly sourcing from renewable energy,” said Steven Knapp, GW President. According to Chris O’Brien, AU Director of Sustainability, “directly sourcing solar power for half of the campus electricity is equivalent to taking 3,000 cars off the road annually.”
The University of California (UC) also made headlines when it announced in September, 2014, that it was making the largest solar energy purchase by any U.S. higher education institution. UC signed two PPAs with Frontier Renewables for a 25-year term and a commitment to procure 80 MW of off-site solar PV electricity for its 10 campus system, enough electricity to power the equivalent of nearly 13,000 homes. The solar fields will be located in Fresno County and are scheduled to come online by the end of 2016. UC has pledged to become carbon neutral by 2025.
And in January, 2015, MP2 Energy and Rice University announced a one-year deal to deliver 3MW of solar power, or roughly 7 percent of the Houston-based university’s electricity needs, from First Solar’s existing 22MW Barilla solar farm located 500 miles away in Pecos County, Texas. The university, which is seeking carbon neutrality by 2038, will be paying a price comparable to coal or natural gas. “We were able to specifically procure renewable energy — in this case, electricity generated from solar arrays in West Texas — with no increase in cost,” said Richard Johnson, Director of Rice’s Administrative Center for Sustainability and Energy Management. According to MP2 Energy, this is the first time off-site solar power is being delivered to a commercial entity on a short-term contract, without state or utility incentives in a deregulated market. “This is a game changer for solar energy,” said Jeff Starcher, CEO of MP2 Energy. “It’s a lot easier for a business to commit to true renewable energy if we can provide a reasonable offtake term and a competitive price.”
With innovative solar deals like these, the forecast for America’s colleges and universities meeting their carbon neutrality goals is looking quite sunny.
Russell B. Cohen is an associate attorney with Lear & Lear. His practice area includes natural resources and public lands law with emphasis on mineral law, oil and gas law and litigation; complex title examinations; administrative hearings and appeals; public land law. You can contact Russell at [email protected].