The West Virginia Public Service Commission delivered a ruling last week that could delay in-state utility-scale solar development.
The agency ordered FirstEnergy subsidiaries to get commitments from customers for 85% of the solar energy produced by any of five facilities before they can be built and declined to approve a company-requested surcharge support the project until the companies determine how much power is subscribed and at what rate.
But the outlook for solar in West Virginia amid the nation’s transition to renewable energy depends on far more than just utility-scale deployment.
Designed to brighten that outlook is a nascent program for public and private entities pursuing solar projects in coal communities across central Appalachia.
The Appalachian Solar Finance Fund is providing subgrant awards and facilitating assistance contracts to offset project costs and replace the value of a federal investment tax credit for tax-exempt institutions. The goal is to spark solar projects in communities devastated by the coal industry’s decline.
“We’re doing that by deploying a targeted set of financial tools that are designed to unlock these solar projects that are facing barriers that are unique to our region,” said Autumn Long, the fund’s project manager.
Launched in November, the fund is designed to offset costs for pre-development and early-stage projects and is available for public and private entities in all 55 West Virginia counties and counties in Kentucky, Ohio, Virginia, Tennessee and North Carolina designated as Appalachian by the Appalachian Regional Commission.
The fund is supported by a recent $1.5 million Appalachian Regional Commission POWER Initiative award, the Appalachian Investment Ecosystem Initiative, the Claude Worthington Benedum Foundation, New York Community Trust, the Educational Foundation of America, Virginia Coalfield Development and other pending sources.
Long and other solar project development and regional investment officials touted the fund’s potential to help power Appalachia’s solar market during a webinar hosted by environmental nonprofit and project leader Appalachian Voices last week.
“We want to get dollars into the ground, or on the roof, so to speak, as soon as possible to help accelerate the industry development,” Hannah Vargason, associate director of strategic initiatives at Partner Community Capital, a Charles Town-based nonprofit community lender behind the project, said.
That acceleration has already begun.
Entities approved for Solar Finance Fund support include Lifeline Princeton Church of God in Mercer County (450-kilowatt rooftop array), the Southern Appalachian Labor School in Fayette County (70-kilowatt rooftop system), the Marion County Humane Society (65-kilowatt array), Whitley County, Kentucky community event venue Moonbow at Second & Main (30-kilowatt array) and Athens County, Ohio nature-based nonprofit Solid Ground School (just under 10 kilowatts).
“[W]e want to support projects that create impact that’s felt locally,” Vargason said.
The review process for projects with a clear path to construction takes two to four months from when the application is submitted, Vargason said.
The Appalachian Regional Coalition POWER award lasts for three years, and the fund developers have said they intend to use all the program funding in that span while expanding the funding pool.
There’s a need for the fund, Long and other solar proponents said, given that some Appalachian states and utility service areas lack policies, such as net metering, that let residents access financial benefits of solar energy. Net metering is a billing mechanism that credits customers who generate their own electricity from solar power for returning the electricity they don’t use back into the grid.
In West Virginia, an electric utility may offer net metering to retail customers who own or lease and operate a customer-sited renewable energy resource on a first-come, first-served basis, as long as total generation capacity installed by all participating customers doesn’t exceed 3% of the electric utility aggregate customer peak demand in the state during the previous year. At least 0.5% is reserved for residential customers.
Long cited a dearth of policies in the region that support equitable solar access, including power purchase agreements, that have slowed solar deployment. Under a power purchase agreement, a developer arranges designing, permitting, financing and installing a solar energy system on a customer’s property at little or no cost. The customer buys the system’s electric output from the solar services provider for a predetermined period at a fixed rate, usually lower than the local utility’s retail rate, while the solar services provider gains tax credits and income from electricity sales.
After years of advocacy from solar supporters, West Virginia eliminated ambiguity regarding the legality of power purchase agreements under state law in the 2021 regular legislative session with House Bill 3310.
That measure, which became law without Gov. Jim Justice’s signature, specifies that solar energy facilities located on and designed to meet only the electrical needs of the premises of a retail electric customer do not constitute a public service, nor is the output subject to a power purchase agreement with the retail electric customer.
Tax-exempt entities, such as schools, municipal utilities or charities, generally can’t claim the solar Investment Tax Credit, which Long said has added to a need for the Solar Finance Fund.
Long said types of projects that fund developers hope to support include K-12 schools, colleges and universities, local government buildings, water treatment plants, homeless shelters and faith institutions, as well as subsidized housing developments, child care centers, medical facilities and manufacturers.
An online application and more information are at www.solarfinancefund.org. The application can be completed by property owners or institution leaders, as well as solar developers working with the owners to complete the projects.
Vargason said the fund can facilitate connections between project owners and developers with lenders and third-party investors.
Program developers have a goal of funding roughly 64 projects and are providing up to 26% of project costs in alignment with the federal Investment Tax Credit for solar.
“The Solar Finance Fund wants to see investment flowing to solar in the region and wants to see more deals getting done,” said Andrew Crosson, CEO of Invest Appalachia, a regional investment fund behind the project.
Joining Appalachian Voices, Partner Community Capital and Invest Appalachia as stewards of the project are the Central Appalachian Network, a network of economic development-focused nonprofits, and New Resource Solutions, an Ohio-based clean energy project finance group.
“Really, our goal here is not just to help lower costs for these institutions to go solar, but to ensure that the benefits of solar impact the community and the populations that these entities serve,” Long said.