In 2008, Utah’s Salt Lake County was faced with a challenge: how could it increase its solar capacity by more than tenfold in the face of scarce financial resources and already low energy prices?

The challenge came about after the county conducted a preliminary analysis of its renewable energy resources and determined that solar power provided the most promise. At this time, the county also was designated a Solar America City. With this recognition, the county gained access to some of the financial and technical support it needed to implement its vision of expanding solar power within Utah. 

As 2008 came to a close, solar power capacity installed in all of Utah amounted to less than 1 MW. The county was determined to dramatically increase that number, and set the ambitious goal of installing enough solar power projects to bump that total up to 10 MW throughout the county.

However, there were challenges that had to be overcome. Because state incentives for renewable technologies were negligible, and power prices in Utah tend to be extremely low – current rates are about $0.075/kWh – the county needed to determine how best to allocate limited financial resources to accomplish the 10 MW goal. To this end, the county first commissioned a financing study to understand the most cost-effective ownership structure and financing methods available to implement solar power projects.

The study evaluated a range of ownership and capital finance combinations such as Clean Renewable Energy Bonds (CREBs) and New Market Investment Tax Credits (NMTC). The study showed that construction cost per watt of solar capacity installed could vary from as high as $0.23 per watt for publicly owned systems financed through traditional tax-exempt financing, to as low as $0.10 per watt for an innovative public private partnership that could take advantage of the federal solar investment tax credit (ITC) and NMTC financing.

NOTE: Click here to view the presentation that was provided to the county on the various finance and structuring options for implementing a solar power project.

Based on the results of the study, the county decided to proceed with a public-private partnership. This allowed them to benefit from tax incentives available to privately owned projects as well as from low-cost financing that is available to public entities.

Surmounting the regulatory barriers to third-party ownership in the state and overcoming the high cost of implementing solar power took the county most of the next two years. Then, in the summer of 2010, Salt Lake County issued an RFP to select a private project owner. Eventually it executed a power purchase agreement for a 2.65 MW rooftop system to be placed on the roof of the Salt Palace Convention Center. When completed, the system is expected to be the largest rooftop solar installation in the nation, and it will dwarf the current installed solar capacity in the state.

By responding to the challenge of how to increase its solar power capacity, Salt Lake County is now well on its way toward achieving its renewable energy goals. Please provide comments on any challenges your state or local community has had to overcome in attaining its renewable energy plans.

Content for this Blog post courtesy of the Center for Climate Strategies