Solar Case Study - Tri-County Electric Cooperative - Management Assignment Help

Assignment Task

1. Company Profile Tri-County Electric Cooperative (Tri-County) serves approximately 13,000 meters in the southeastern corner of Minnesota. Tri-County is an all-requirements member of Dairyland Power Cooperative, its power supplier. Dairyland’s policy allows an exception to its All Power Requirements Contract that affords its member cooperatives the opportunity to own or contract for a set capacity of utility-scale distributed generation. Tri-County’s service territory has a challenging topography and is heavily wooded. The member composition is mainly residential and farmland, averaging about four members per mile of line, and agriculture is the primary economic driver in the area. About 20 percent of Tri-County’s load is for resale to municipal utilities under contract.

2. Renewable Profile The cooperative has constructed a community solar array of 73.8 kw. Tri-County selected tenKsolar’s RAIS XT28 photovoltaic system (www.tenKsolar.com), an integrated system whose components are designed to work together. The reputation and Minnesota roots of tenKsolar played a large role in its selection. This array consists of 180 modules of 410 watts each, and 10 6 kw RAIS inverter buses. They were ground mounted using Hubbell Helical Coil foundations on a tenKsolar-rail mount-system. The system is projected to produce 107,651 kwh annually. The footprint of the array is about 107 feet by 78 feet. The co-op had been considering a solar project for three years prior to the project’s commissioning on July 22, 2014, and it took approximately one year from Board approval to final construction of the project.

3. Financing and Rate Design Local control and ownership was a primary goal of the co-op. Tri-County considered various financing and ownership models before deciding on the tax equity flip model, facilitated by the National Renewables Cooperative Organization (NRCO). Federated Rural Insurance Exchange served as the tax equity investor. Under the tax equity flip model, the cooperative forms a taxable subsidiary, and this subsidiary and the tax equity investor form a special purpose entity (SPE). The SPE constructs, owns and operates the array, and has a purchase power agreement with the cooperative for the output. In the first stage of five or more years, all distributions and tax benefits (investment tax credits, accelerated depreciation, etc.) from the SPE are distributed to the owners in a 99 to 1 split: 99 percent to the tax equity investor and 1 percent to the cooperative subsidiary. After the initial term, the split ratio “flips”: 95 percent to the cooperative subsidiary and 5 percent to the tax equity investor. At that point, the cooperative subsidiary can buy out the tax equity investor at fair market value. For more detail on this model, please see the NRECA SUNDA Business and Financing Field Manual. Tri-County, through the SPE, owns, maintains, operates and insures the array. Units are sold to members for $1,400 each. Members do not own a specific module of 410 watts, but rather a 180th interest in the output of the total array. Members who purchase a unit receive a 1-to-1 kwh credit for their share of kwhs produced by the array against those kwhs consumed by the member. This credit will be applied monthly to the members’ electric bill over the next 20 years. This is accomplished through software provided by the National Information Solutions Cooperative (NISC), which also provides the billing software to Tri-County. The member does not receive rebates or tax benefits for participating. Any Renewable Energy Credits stay with the cooperative to offset future costs associated with the array.

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