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HomeMy WebLinkAboutA002 - Staff Report dated October 9, 2015 Staff Report AMES COMMUNITY SOLAR INITIATIVE October 9, 2015 BACKGROUND: At the September 8th City Council meeting a letter from Bob Haug addressed to the City Council, dated August 31, 2015, was forwarded to staff. The letter requested the following: "We ask for two actions by the City Council. First, that the City submit a simple, no- obligation application to the Iowa Utilities Board that will put the City in the queue for possible use of a limited block of state tax credits that have been set aside for community solar projects sponsored by municipal utilities. Second, affirm support for the concept of a community solar project and for a timely initial investigation and recommendation regarding feasibility." TAX CREDITS: The Iowa Utilities Board (IUB) has initiated a rule that proposes amendments to the Board's facility ownership eligibility following the adoption of House File 645, which modified Iowa Code chapter 476C. This modification allows municipal utilities, and others to be eligible for the tax credits. Iowa Code Chapter 476C creates a state production tax credit of 1.50 per kWh available for energy sold by eligible wind energy facilities and certain other non-wind renewable energy facilities, such as solar panels. For other non-wind renewable facilities, the maximum total eligibility is 53 MW. For non- wind facilities seeking eligibility on or after July 1, 2011, applications are limited to facilities with a nameplate capacity of 60 MW or less, and total eligibility for each non- wind facility is limited to 10 MW. The tax credit certificates are transferrable and may be applied toward the state's personal income tax, business income tax, financial institutions tax, or sales and use tax. To qualify for the tax credits, wind and other renewable energy facilities must be approved as eligible by the IUB. IUB rule 199 IAC 15.19 describes the 476C eligibility application process. Applications in excess of maximum capacity limits are placed on waiting lists in the order received. If there is a reduction in capacity for eligible facilities, or if facilities are not operational within the time specified, released capacity will become available to those on the waiting list who either did not receive a full allocation of their requested capacity, or filed an application after capacity limits were fully subscribed. If any capacity is released, applications will be processed in the order received. At the present time the IUB is working on incorporating changes to add municipal electric utilities as an eligible owner under Iowa Code chapter 476C. In anticipation of this addition, several municipal electric utilities have already made application for these tax credits. The program has set aside 10 MW and at present between 10 and 12 MW have already filed an application. This is not to say that it is too late to file an application. It is quite possible that not all projects will be built nor will all be built at the size requested. The application itself is simple to complete. The information requested includes: - Type of facility - Location - Expected in service date It is the staff's understanding that these tax credits will expire at the end of 2016 and will be eligible only to projects that are in service by the end of 2016 as well. Given the number of issues that must be resolved before such a project can be completed, it is doubtful that these deadlines can be met be met by the City for this round. INITIATING A COMMUNITY SOLAR PROJECT: The Ames Community Solar Initiative also is requesting the City Council declare its support for the concept of a community solar project and for a timely initial investigation. It is staff contention that initially an analysis should be performed by the staff. Issues such as determining community interest in a solar project, the size of the project, the possible locations for the project, the numerous ownership models, and the funding options should be explored. STAFF COMMENTS: The City staff is supportive of increasing our renewable energy portfolio to include a solar component. However, as you know, the Electric Services engineering staff is engaged in a historic project to transform our Power Plant from a coal burning facility to natural gas, thereby reducing our carbon footprint by 40%. Needless to say this is a very complex project that must be accomplished within a federally mandated deadline. We had hoped that our staff could devote their full attention to finalizing this critical project by February 2016 before engaging in another initiative. However, in order not to lose the opportunity to take advantage of the tax credits, the City staff could commit to complete and submit the application seeking tax credits within the next few weeks. However, in order respond in a timely manner, several assumptions would need to be made to complete the application, since we are at the beginning stages of discussing this project and have no defined plan. In regards to the request for a timely analysis of a community solar project, staff would ask that you allow us wait until April 2016 to begin this task. EUORAB'S INTEREST It is interesting to note that at their last meeting, the EUORAB members expressed a desire to devote their next meeting to hearing suggestions from the public regarding possible renewable energy projects. This interest stems from the fact that members had received inquiries not only about a community solar project, but also about the possibilities for electric charging stations in the community. The Board has tentatively set aside their November 2015 meeting to discuss these projects, and any others that are suggested by the public. NEXT STEPS: If the Council would want to give any direction regarding this matter, at Council Comments on October 13th a request should be made to place the issue on an upcoming agenda.