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St. George, Utah's SunSmart Program
Background: The City of St. George Energy Services Department, a municipal utility, and Dixie Escalante Electric, an electric cooperative serving Southern Utah, collaborate to offer the SunSmart program to their customers. Additionally, both utilities offer some version of green power and net metering to their customers. St. George Power customers have access to the Clean Green program, which supports City green power projects. Residents can participate with a monthly fee on their electric bill starting at $2.95. St. George also offers a $2 per watt rebate for individual net-metered PV installations (with a cap of $6000 for residential and $20,000 for commercial systems). Dixie Escalante offers the Greenway program to their customers, which supports renewable energy projects for a monthly fee beginning at $6.
Program Goals: These St. George utilities jointly launched the SunSmart Program to increase the use of renewable energy, to develop a local power source to mitigate peak demand spikes, and to promote sustainability for the growing community. Solar was an obvious choice, as the area enjoys about 310 days of sun per year. The utilities plan to install twenty, 100-kW projects.
Financing and Ownership: The utilities plan to construct the project in phases so that member funds from the first phase will provide the capital to build the second phase, and so on. When the last phase is complete, the utilities will recoup the funds spent for the first phase capital. The first phase of the installation is 100 kW, and began generating power in January of 2009. Both utilities provided the required initial capital from their general funds, and hope to recoup this investment as members sign up to participate.
Each share of the SunSmart project represents 1 kW of solar and is priced at $6,000. Half units are also available, and there is a limit of four units per resident. This pricing scheme is designed to cover both the cost of the equipment and the installation.
A unique benefit of this project is that St. George residents who purchase shares qualify for the State’s Renewable Energy Systems Tax Credit of 25%. In March 2008, the Utah Legislature modified the state tax credit to expand eligibility to those who own solar panels as part of a system on municipally owned property. On a related note, owners of PV shares in any community model are not currently eligible to take advantage of the Federal Tax Credits. The Federal Residential Renewable Energy Tax Credit requires that the PV system be located on the taxpayer’s dwelling, and the Federal Business Energy Tax Credit requires that the owner take legal title and control over the equipment.
After purchasing units from the SunSmart Solar Farm, members receive monthly kilowatt-hour credits on their utility bills based on the amount of energy produced by the system. A major benefit of this “virtual net-metering” model is that the power produced on behalf of each member is valued at the retail rate, while members still benefit from the economies of scale and convenience offered by a centralized Community Solar project. Moreover, should electric rates increase in the future, the value of the energy credit will also increase. A minimum output of 800kWhs per kW unit per year is guaranteed. However, the purchase agreement also assigns all RECs (environmental attributes) to the City/Utility.
Market Research: Though community participation in St. George’s green power program was quite limited in 2007, the City believed there would be significant interest in local renewable energy projects after witnessing significant public outcry over a proposed nearby coal-fired generator. St. George hired a marketing firm in 2008 to confirm the public interest and to determine the best way to market the SunSmart facility. The feedback from the focus group indicated that the community was, in fact, interested in locally produced renewable energy, but that citizens did not appreciate the capital costs involved. They expected that power from a renewable energy facility should be inexpensive, regardless of resource.
Marketing and Participation: As of May 2009, the utilities had sold 26% of the 100kW system to 24 subscribers. The utilities hope that 500 residents will participate, and believe that this target is achievable once the system is operating, visible, and better explained to potential customers. The project has a website: http://www.sgsunsmart.com and a brochure. The project construction has garnered attention by the press, and project organizers are planning additional publicity.
It should be noted that marketing messages include the claim that participants reduce their carbon footprint, yet the utilities claim ownership of all RECs associated with the power and do not commit to retiring these RECs on behalf of participants. The dangers of misleading project participants and double counting the RECs are real and should be addressed by project organizers.
