October 28, 2013

New CT Law Gives Farms a Solar Opportunity

Connecticut farmers traditionally grow crops such as vegetables, fruit, and tobacco, accounting for just over half of the state's agricultural revenue. The other half comes from nurseries and greenhouses. But there is a new crop that may boost revenues for the industry — solar panels converting sunshine into electricity.

Earlier this year, the Connecticut legislature passed Public Act No. 13-298, An Act Concerning Implementation of Connecticut's Comprehensive Energy Strategy and Various Revisions to the Energy Statutes. This new law lets agricultural customers of Connecticut Light & Power and United Illuminating to own solar farms up to 3 megawatts and sell the solar power to serve the needs of up to 10 other farms, towns, cities, and even certain electric customers with critical facilities connected to a microgrid. This process is known as virtual net metering. An added benefit to these customers is a large, but declining, portion of the distribution and transmission charges on their utility bills will disappear.
Solar panels make an interesting crop. They are inert, contain no moving parts, and produce no noise. They sit on a field and convert sunlight into electricity. Roughly six acres of open and shade-free land is required for every megawatt of solar installed. Thus, a solar farmer would utilize 18 acres to install a 3 megawatt solar farm. The average farm size in the state is 87 acres and may have some unproductive land suitable for solar.
Unlike most crops, which must be harvested once a year and are subject to volatile weather and market price changes, solar produces electricity year-round at a predictable efficiency rate and at a fixed price. The revenue stream produced by a solar farm remains steady over its 25-plus year lifespan. More good news is that an agricultural landowner does not have to be an energy expert to be a solar farmer. There are many well-qualified solar companies that will install, finance, and even operate and maintain the solar farm for you.
Solar panels will produce more electricity in summer than winter, but Connecticut's net metering law allows excess electricity to be credited to the following month. One limitation is the solar farm must be placed at or near an existing electric distribution line to be economically feasible. The good news is CL&P or UI can usually tell right away if the proposed panels are close to the distribution line.
Even with panels installed, a farmer can grow crops on the same farmland. Conceived in Japan, this concept of co-existence is known as solar sharing. Solar sharing may work beautifully on Connecticut's tobacco fields. Tobacco crops typically require some shading. If designed properly, solar panels can provide the required shading while generating electricity revenue for the farmer.
Solar produces three revenue streams for the savvy solar farmer. First, the solar farmer can sell the electricity to other electricity customers — specifically 10 other farms, cities, towns, and critical microgrid facilities. This is achieved through an electric utility tariff and through a long-term contract between the solar farmer and the virtual customer called a Net Metering Credit Purchase Agreement.
Second, the solar farmer can sell renewable energy credits to the local electric utility under a 15-year contract if the farm is selected in a competitive Zero-emissions Renewable Energy Credit solicitation. If not, the solar farmer can sell the renewable energy credits in New England's credit market. This sounds complicated but is really a straight-forward process.
Third, although a bit complicated, the solar farmer may be eligible for the federal investment tax credits or sell the investment tax credits to a tax equity investor. This is nothing new, and there are legal and accounting consulting firms experienced with investment tax credits.
Taken together, the revenue streams created by the electricity, renewable energy credits, and tax credits creates a new crop to boost revenues for the agricultural industry.
The final and most important benefit is after the solar farm's useful life, the panels can be easily removed without a trace, thus preserving the agricultural land for future generations.

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