How ^ to bring Community Solar to Your Members

Mark VogtPresident & CEO

Wright-Hennepin Cooperative Electric AssociationRockford, Minnesota

Prepared forOregon Rural Electric Cooperative Association Annual Meeting

December 5, 2013Salem, Oregon

and w

hy

Background about WH

• One of 44 distribution co-ops in Minnesota

• 40,321 members• 61,540 meters• Residential customers = 60%• Renewable Energy Standard

in 2007 – 25x25• Small solar carve out in 2013

Total Days With Sun

WH Service Territory:196 Days

(177-199 Days)

Total Days With Sun

WH Service Territory:196 Days

(177-199 Days)

Salem: 157 DaysPortland: 142 DaysEugene: 157 DaysPendleton: 192 DaysBurns: 214 Days

(142-214 Days)

Total Days With Sun

WH Service Territory:196 Days

(177-199 Days)

Salem: 157 DaysPortland: 142 DaysEugene: 157 DaysPendleton: 192 DaysBurns: 214 Days

(142-214 Days)

Total Days With Sun

179-292Days

WH Service Territory:196 Days

(177-199 Days)

Salem: 157 DaysPortland: 142 DaysEugene: 157 DaysPendleton: 192 DaysBurns: 214 Days

(142-214 Days)

Total Days With Sun

179-292Days

264-313 Days

WH Service Territory:196 Days

(177-199 Days)

Salem: 157 DaysPortland: 142 DaysEugene: 157 DaysPendleton: 192 DaysBurns: 214 Days

(142-214 Days)

Total Days With Sun

179-292Days

264-313 Days

Solar intensity is not anIndicator of solar participation

Oregon vs. Minnesota

• Top Solar Installation States – 20121. California

2. Arizona

3. New Jersey

4. Hawaii

5. Colorado

6. New York

7. Texas

8. Oregon9. Pennsylvania

10. Maryland

Source: Solar Energy International Association Annual Report

Oregon vs. Minnesota

• Top Solar Installation States – 20121. California

2. Arizona

3. New Jersey

4. Hawaii

5. Colorado

6. New York

7. Texas

8. Oregon9. Pennsylvania

10. Maryland

Source: Solar Energy International Association Annual Report

• 5 US Solar Markets to Watch

1. Minnesota2. Georgia

3. DC

4. Louisiana

5. Virginia

Reason:

6. Regulatory landscape

7. State incentives

8. Marketplace acceptance/fundamentals

Source: PV Solar Report 10/23/13

“A clear and present danger”

For the first time ever, a third party

can insert themselves

between our infrastructure and our members

Does this scare you or excite you?

Does this scare you or excite you?

“(Solar) power would give America the potential to challenge the utility monopolies, democratize energy generation and transform millions of homes and small businesses into energy generators.”

Does this scare you or excite you?

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

50,000

100,000

150,000

200,000

250,000

300,000

The Rapid Growth of Rooftop Solar Power

Customers

Does this scare you or excite you?

New Rooftop Solar Systems By Year

Price of power

has increased significantly

in the last decade

• 48% “worry a great deal”• 31% “worry a fair deal”

How much do you worry about affordability of energy?

Source: 2012 Gallup Poll

Lyndon Rive, CEO of Solar City

“We are an energy company. We install solar systems for free,

and we sell the electricity at a lower price

than you can buy it from the utility. More people,

when given the option of paying more for dirty power

or less for clean power

will take paying less for clean power.”

The public is hearing this message

• 82% believe solar will decrease electric energy costs Sharp Electronics

• 83% “strongly favor” or “favor” government mandated solar incentives Gallup

• 87% want home builders to start offering solar power as an alternative

Roper

Sebastopol: 8,000 citizens

Lancaster: 150,000 citizens

• “Based on falling costs of solar and rising electric rates, PG&E, one of the largest utilities in the country…may not be able to compete with residential solar soon.”

• “Once customers go solar, PG&E loses the sales forever, exacerbating the smaller sales/higher price cycle.”

Source: industry think tank The Energy Collective

“WH has to renew our mission with a renewable offering”

• How do we specifically help bring renewable energy into the mainstream for our members?

• How do we do solar without bankrupting the cooperative?– We lose kWh sales– Can we find “substitute revenues/margins”

• How do we make solar work for non participating members?

• How do we make solar work in harmony with the WH grid?

We needed first hand experience

• 2007: 20 KW wind• 2009: 2 KW solar • 2012: 2 KW tenKsolar• 2012: Battery storage• Explored business

models to provide renewables WH gives away the energy each month

WH’s demonstration projects

Community Solar

Win - Win

The Member Wins With Community Solar

• Best economies of scale• Quality control• “Modular” purchasing choices• We will introduce low or no up front cost entry• Optimal placement of panels for best production• Hassle free with tax application/credits built into purchase

process• Ownership moves with you• Available to all• Maintenance free• Long term equipment warranty

The Co-op Can Winwith the Community Solar model

• Opens a way for “substitute revenues/margins”• Non participating members don’t subsidize• No financial risk for co-op – projects are built

only after member commitment• Creates a viable alternative solution to offer

legislators• Best opportunity to make sense of solar

Solar Paired with Battery Storage

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

House Load (KW) Solar PV (KW) Net Usage with Battery

Excess PV when house load is low charges batteries

Batteries discharged during peak reduces total system demand

The Co-op Can Winwith the Community Solar Model

• Opens a way to “substitute revenues/margins”• Non participating members don’t subsidize• No financial risk for co-op - build projects only

after member commitment• Best opportunity to incorporate battery storage• The members view us as the trusted energy

experts• Best defense against third party solar providers

W-H 2013Member Interest

31% “very likely” if offered $0 down Financing

W-H 2013Member Interest

31% “very likely” if offered $0 down Financing31% “very likely” if offered solar through a solar community

W-H 2013Member Interest

31% “very likely” if offered $0 down Financing31% “very likely” if offered solar through a solar community

41% “very likely” if both options were offered.

WH Solar Community Project #1

• 171 panels• 32.5 kW of solar panels• 36 kw of battery storage• Meets MN 40 kW net metering rules• Cost: $4.83/watt with battery• 25 Members participated (1 to 30 panels)• Net $900+/ panel – produces avg 33 kWh credit/mo• Members are credited on electric bill• Payback ~ 20 years (ROI 5-20%/yr based on amount of sunshine)• Worked with Clean Energy Collective of Colorado

Dedication – September 9

• Good will & high compliments from members, legislators, regulators, press– Minneapolis Star Tribune– USA Today– Christian Science Monitor– National Geographic– Widespread industry press

• Unit 2 ready to go – 70% subscribed

Lesson’s Learned• Members want to

participate in solar.• Members would prefer to

be involved in it through their co-op.

• If we don’t offer it, they will take their kWh’s to another provider.

• Solar paired with batteries makes it work for utilities.

• Witnessed first hand the “romance” customers have with solar energy

The Romance With Solar

• Price/payback is not the first consideration

• “Democratization of energy”

• Striking back against the utility

• The independence/pride of ownership with solar

• Controlling your destiny• Doing what’s right for the

environment

Lesson’s Learned• The energy industry is

changing rapidly by forces we don’t control.

• We must act – now --to be prepared for a much different future.

How ^ to bring Community Solar to Your Members

Mark VogtPresident & CEO

Wright-Hennepin Cooperative Electric AssociationRockford, Minnesota

Prepared forOregon Rural Electric Cooperative Association Annual Meeting

December 5, 2013Salem, Oregon

and w

hy