There are many different ways of approaching solar in Texas and, specifically, in the Texas competitive energy market. Solar installations often involve many different entities, each of which has a different set of considerations, costs, and benefits. The community impact solar (CIS) model is novel because of its approach to the distribution of benefits (often cost savings and clean energy generation) to underserved communities.
In this model, a selected financial partner invests in the development of a solar array at the site of a large power user. This large power user might be something like a warehouse, school, community center, or other large area with a relatively high energy use and room to host a solar installation. Ideally, this power user also has goals for improving their carbon footprint, reducing electricity use, and providing community benefits through corporate social responsibility (CSR) efforts. In short, the goal of this model is to create a solar installation in a location where it may not have been otherwise thought to be possible, expand the distribution of renewable energy resources into low-moderate income (LMI) communities, and distribute the cost savings associated with the solar installation to LMI community members or organizations.
The first steps in the process are to determine how much energy is being consumed at the proposed site, what type of solar installation could be built, and what the potential cost savings from the solar installation might be. The goal is to create a solar installation that produces electricity at a cost that is competitive with the current electricity rates in the competitive energy market (CEM). After determining the viability of the project, the financial partner would fund the creation of the solar installation at the selected site. The large power user would then sign a power purchase agreement (PPA) with the financial partner to purchase power generated by the solar array. This arrangement helps the power user to avoid the financial risk and operations and maintenance costs associated with owning the asset. The PPA also helps to create a more clear cost structure for the power user.
The PPA between the financial provider and site host is intended to be competitive with electricity products available in the site host’s service area. Under the correct circumstances, the cost per kilowatt-hour (kWh) of solar energy generation would be less than the cost per kWh that the power user could obtain through the competitive market. This difference in electricity cost would create cost savings for the power user, reducing the amount they pay each month for electricity use. Any cost savings that the power user might gain through the PPA would then be passed along to selected LMI community members or organizations in the form of an energy stipend through an associated nonprofit partner. The exact way in which the stipend would be distributed is negotiated between the large power user and nonprofit partner. This innovative model promotes clean energy generation and provides a significant, measurable community benefit while remaining cost-neutral for the large commercial power users (i.e. host site). While a larger commercial power user is intended to be the site host for the solar installations, individual residential power users may still be able to benefit from this model through the receipt of the electricity stipend.
The purpose of this model is to:
a) create new solar resources in the Texas CEM;
b) create solar resources in communities with fewer renewable energy resources; and
c) create cost savings for a commercial power user that can be then invested in a target community.
This last point is extremely important in order to provide tangible community impact. The success of the model depends on there being a degree of cost savings that can be distributed to select community members or organizations, thus providing a positive financial impact on the lives of selected LMI community members. The site host would work closely with a local nonprofit entity to ensure that the cost savings from the model are being properly distributed to the proper designees. At scale, this model could help to provide important resources to communities that have been historically underserved and that have fewer tangible renewable energy resources.
While this model has not been implemented yet in the Texas Competitive Energy Market, it has been vetted with the technical assistance of the United States Department of Energy. If you are interested in learning more about this model, please reach out to the Texas Energy Poverty Research Institute at tepri@tepri.org
