The Backbone Campaign and King County have reached a tentative agreement about the location of the county’s first community solar project, a crucial step in the complex process of erecting a large, investor-funded solar array.
The $550,000 project, should it come to fruition, would be a ground-mounted system based at the county’s Transfer Station on Westside Highway. It would produce 65 kilowatts annually, or enough to fully power seven average-sized homes for an entire year.
The Backbone Campaign has been working for months to iron out the details of locating the project at the publicly owned site in what has become a race against time. The sooner the project gets built, the more opportunity there will be to take advantage of state incentive funds — and thus the more likely it is the organization will find investors willing to pony up $1,000 or more to fund the array.
But those behind Vashon Community Solar, as the project is called, acknowledge that it’s been a far tougher and more complex process than they realized when they first articulated the dream of creating a community-backed solar project on Vashon Island.
“This has been hugely more complicated than I think anyone ever anticipated,” said Bill Moyer, the executive director of the Backbone Campaign. “I’m not an easily frustrated person, but this has definitely pushed me.”
At first, he said, “It seemed so clear and easy. And it’s anything but clear and easy.”
Moyer brought in Carol Eggen, an Islander with a background in finance and a past career as an airline executive, to help with the process. She, too, has been struck by its complexities.
“It’s not been a cakewalk,” she said.
At the same time, both Moyer and Eggen are pleased that they’ve cleared a significant hurdle in getting a tentative agreement from the county to build the array at the county-owned Transfer Station. Officials in the county’s Department of Natural Resources and Parks (DNRP) have agreed to lease a portion of the site to the organization, pending approval by the King County Council.
County staff will forward the proposed lease agreement to the council for approval once the Backbone Campaign’s project has gotten the green light from the state Department of Financial Institutions, approval that could come any day, Eggen and Moyer said.
“This is a milestone,” Eggen said of the tentative agreement with the county.
She and Moyer hope the lease with the county could be a model, opening the door to other organizations interested in developing a community-backed solar project. Bob Burns, DNRP’s deputy director, said he also hopes others in the county will try to replicate the county-supported project.
“There aren’t many examples out there of these kinds of projects,” he said, adding, “We’ve built a blueprint with this project, so the second and third ones can go quickly.”
Community solar projects are taking place in communities across the state and around the country, most of them driven by tax and financial incentives offered by the government in an attempt to jump start the fledgling solar panel manufacturing industry and bring more green power into the grid.
Investors in the Backbone Campaign’s project can’t take advantage of a 30 percent federal tax credit because of the way the project is structured. But the project will be able to take advantage of a state law passed three years ago in an effort to stimulate a solar panel manufacturing industry in Washington: For every kilowatt hour produced by a system manufactured in the state and placed at a public building, the entity that created the project receives $1.08 — or 10 times the market value of the electricity — to be divvied up among its investors. A similar incentive exists for private homeowners who install solar arrays, though homeowners receive only 54-cents per kilowatt hour, not the $1.08 that investors in a community project can receive.
Because Backbone investors won’t be eligible for the federal tax break — this has to do with the organization’s decision to establish its project as a nonprofit rather than an LLC — Eggen said she and Moyer worked with the county to find other ways to sweeten the pot. Under the proposal, the county has agreed to offer a rent credit “that will result in an additional payment to the investor group,” Eggen said.
The return on the investment won’t be significant, both Eggen and Moyer said, but they hope it will be large enough to equal that of a commercial certificate of deposit. Time is of the essence, however, because state incentives end in 2020, limiting the number of years Islanders can receive payments for the power the project generates and thereby recoup their investment.
Last year, Eggen had said she hoped to see the project installed by this spring. Now, she said, the group is looking at a potential installation date of September or October.
Moyer said he’s frustrated by the complexities of the project. “Each month that we delay, we diminish the returns,” he said.
The latest hurdle has been with the state’s Department of Financial Institutions (DFI), which regulates investments offered by state-chartered organizations, similar to what the federal Securities and Exchange Commission does on a national level. DFI has to review the materials the Backbone Campaign plans to use to recruit investors, look at the project’s revenue and cost projections and examine other documents, Eggen said.
Gib Dammann, an Islander who is spearheading a much smaller, investment-backed solar array project, to be installed at The Harbor School, has also been delayed by DFI’s review. Dammann had hoped to have the entire project — to be built in two phases — installed by this spring. Now, he said, his group — called Vashon Solar LLC — will likely have the first phase, a 9-kilowatt array, constructed by mid-summer, with the second phase coming online by Oct. 1.
“It’s been a long and arduous process,” Dammann said.
There has been a silver lining to DFI’s scrutiny, he said; the state found some inconsistencies that Dammann was glad to address. But the delays have been frustrating, he said.
“We’ve benefitted from their scrutiny. Obviously, our timeline has not benefitted from it,” he said.
Those involved in the solar industry say they’re frustrated that the state is approaching community solar projects like investments deserving a high level of scrutiny.
“It seems like the community solar legislation was a great idea, but its execution has been hampered by the state’s decision to heavily scrutinize every single project,” said Evan Leonard, who works for Artisan Electric, a Vashon-based company that installs solar arrays.
The state’s securities review is to guard against Ponzi schemes and the like, he said. “It’s the wrong tool for scrutinizing community solar.”
Jason Williams, who owns Artisan Electric, said he’s concerned that the delays have made future community projects unlikely. The costs don’t pencil out, he said, unless a project gets launched this year.
“I think the door is closing on this model,” he said.
But he’s pleased that the Backbone Campaign has moved closer to bringing its project to fruition and said he’s particularly pleased the array will be sited at a former landfill.
“That symbol and that idea — being able to have renewables at a place like that — is fantastic,” he said.