Solar Energy on Campus: Key considerations for solar developers working with higher education institutions

Solar developers and renewable energy marketers are increasingly interacting directly with end-use customers interested in purchasing solar energy or supporting the development of solar PV projects. Developers engaged in these deals have to be prepared to address a range of concerns and goals that differ from those of their traditional customers, mainly utilities and electricity providers. Importantly, there can be reputational and legal risk for both developer and customer if the deal isn’t properly understood in terms of renewable energy benefits by all involved entities. Representatives from Center for Resource Solutions (CRS) and the National Renewable Energy Laboratory (NREL) discussed:

• The role of renewable energy certificates (RECs) in renewable energy claims
• Regulations and restrictions on marketing solar energy products
• Examples of deceptive marketing statements and marketing
• Key disclosure considerations under various solar purchasing options including onsite generation, PPAs, and REC purchases
• Best practices in partnering with universities for solar deployment
• Additional deal considerations, including REC arbitrage, state incentives, operating within cap-and-trade programs, and state laws

This webinar is aimed at developers and renewable energy marketers engaging directly with end-use customers, including higher education institutions.

SPEAKERS
Maya Kelty, Green-e Associate, CRS
Jenny Heeter, Senior Energy Analyst, NREL

Transcript

2. Housekeeping •Enter questions within control panel •Questions will be answered at the end
3. SunShot 2020 Goal SunShot Program Structure
4. With funding from the Department of Energy’s SunShot Initiative, NREL is providing technical support to Higher Education Institutions NREL is Assisting Universities to Deploy PV
5. 1. Educational Materials • Using Power Purchase Agreements for Solar Deployment at Universities, http://www.nrel.gov/docs/gen/fy16/65567.pdf • Writing Solar Requests for Proposals (RFPs): Lessons from NREL’s University PV Implementation Assistance Program, http://www.nrel.gov/docs/gen/fy16/66369.pdf 2. Technical Assistance http://www.nrel.gov/technical-assistance/universities.html • Implementation Assistance; application period just closed, will be open again in Winter 2016 • PV Screenings using NREL’s REopt model, application period closing October 15 3. Publications • Bird, L., Gagnon, P., and J. Heeter (2016). Expanding Midscale Solar: Examining the Economic Potential, Barriers, and Opportunities at Offices, Hotels, Warehouses, and Universities. Golden, CO: National Renewable Energy Laboratory. NREL/TP-6A20-65938. http://www.nrel.gov/docs/fy16osti/65938.pdf • Fact Sheet: Financing Options When PPAs are not Feasible (forthcoming) • Webinar next week: October 4, 2016 1:00 p.m. – 2:00 p.m. EDT https://attendee.gotowebinar.com/register/1492187189832906756 • Case Study: PV at Colorado State University (forthcoming) • Midscale Solar Market Policies (forthcoming) NREL Resources
6. Source: Data from AASHE >160 MW installed to date >110 Campuses with Solar Installations Campus PV Installations: Key Numbers
7. 7 Polling Question Results Does your university own the Renewable Energy Certificates (RECs) from the system? 25 Answers YES 6 32% NO 18 68% FOR SOME YEARS 1 4% YES NO FOR SOME YEARS
8. •Renewable Energy Certificates 101 •Renewable energy marketing best practices •Renewable energy deal structures & marketing claims •Partnering with universities on solar deployment
9. Renewable Energy Certificates
10. What is a Renewable Energy Certificate (REC)? • the full suite of attributes of 1 megawatt-hour of renewable energy generation on the electricity grid • the sole means to claim usage of grid-connected renewable electricity in the United States
11. Renewable energy is consumed and delivered via renewable energy certificates (REC).
12. Renewable Energy Certificate Markets Source: NREL, Status and Trends in the U.S. Voluntary Green Power Market (2014 Data)
13. Common REC Misconceptions • False: A REC is merely a financial instrument • False: A REC is a financial incentive for developers • False: A REC is only required for renewable energy claims in certain states • False: RECs only exist in certain regions and/or markets True: A REC conveys the generation attributes of 1 MWh of renewable energy generation and can only be used / owned by one entity.
14. Renewable Energy Usage Marketing
15. Marketing Renewable Energy Usage • Power your school with clean energy. • Go solar. • Install solar panels and reduce your carbon footprint. • Purchase electricity from a solar facility. • Green your electricity.
17. “A claim is deceptive if it likely misleads reasonable consumers. Therefore, the Green Guides are based on how consumers reasonably interpret claims, not on technical or scientific definitions.” “If a marketer generates renewable electricity but sells renewable energy certificates for all of that electricity, it would be deceptive for the marketer to represent, directly or by implication, that it uses renewable energy.” Federal Trade Commission
18. Letter specifies: • All claims should be qualified and accurate • Burden to inform customers of REC ownership • Ownership misrepresentations or changes require prominent and accurate clarification Federal Trade Commission February 2015 Letter to Green Mountain Power Corporation
19. “[P]ower providers that sell null electricity to their customers, but sell RECs based on that electricity to another party, should keep in mind that their customers may mistakenly believe the electricity they purchase is renewable. Accordingly, the Commission advises such generators to exercise caution and qualify claims about their generation by disclosing that their electricity is not renewable.” Federal Trade Commission February 2015 Letter to Green Mountain Power Corporation
20. • Companies must educate customers about RECs • Where a company retains RECs, company: • Must explain who owns the right to the clean energy • May state that the consumer is helping to advance renewable energy, or similar SEIA Solar Business Code Sections 5.11-5.15
21. State Attorney General Offices Vermont: Guidance for Third-Party Solar Projects • Guidance on the statements that can be made when RECs are sold • Examples of deceptive versus acceptable statements • Directives on how to accurately market to customers “In those projects where the RECs are sold, consumers who enter into agreements with the provider are paying money to help generate solar energy, but from a legal perspective, the consumers are not using solar energy from that project.”
22. Consequences of Misleading Marketing • Legal risk: Federal Trade Commission CIDs & enforcement action • Legal risk: state consumer protection laws & AG offices • Reputational risk: industry reputation & Better Business Bureau • Financial risk: breach of contract for RECs • Financial risk: voluntary market (Green-e) eligibility
23. Renewable Energy Marketing Best Practices
24. 1. Clearly define renewable energy certificates Renewable Energy Marketing Best Practices
25. Renewable energy certificates (RECs) are used to track ownership of clean energy generation from renewable resources such as wind, solar, hydropower, and biomass. A REC is created whenever renewable energy is generated. The definition should state: • RECs are essential to renewable energy ownership & usage • RECs are always created with renewable energy generation Clearly define RECs within marketing
26. Renewable energy certificates exist in some states and can be sold off to help lower the cost of your system. By doing this, you may give up your right to claim renewable energy use. Renewable energy certificates are generated with each mWh the solar facility produces; in some states, by selling these RECs you can make several hundred dollars. Renewable energy certificates are credits that can be earned by homeowners and commercial businesses with solar systems that are then sold for cash. Example inaccurate REC definitions
27. 1. Clearly define renewable energy certificates 2. Accurately represent ownership of RECs Renewable Energy Marketing Claims
28. Accurately convey REC ownership within marketing & accurately represent what it means to own or not own RECs Accurately represent REC Ownership customer receives REC developer or utility retains REC “You will receive renewable energy through your purchase. As part of this deal you will receive renewable energy certificates, which give you sole ownership and usage of the renewable energy produced with this electricity.” “The renewable energy certificates of this electricity will be sold off to others. As such, you will not receive renewable energy through this deal. Only the entity that owns renewable energy certificates can claim to be using renewable energy. ”
29. If customers will be given the choice on whether to retain RECs, convey in general terms what REC ownership means. “Renewable Energy Certificates can be sold separately from the electricity produced by a facility, and whoever owns the REC can claim to be using renewable energy. If you do not receive renewable energy certificates as part of the deal, then you will not receive renewable energy and cannot claim to be using renewable energy as a result of this purchase.” RECs and Renewable Energy Marketing
30. 1. Clearly define renewable energy certificates 2. Accurately represent ownership of RECs 3. Align messaging across all marketing Renewable Energy Marketing Claims
31. • All marketing should accurately represent the offering (brochures, flyers, websites, newsletters, in-person, and call centers) • On larger materials, include REC details Align messaging across different marketing mediums • If customers have to request to receive RECs, do not state “Power your institution with solar energy!” Marketing should align with the default offering • Website should provide comprehensive information on RECs and ownership Provide thorough information online
32. If a customer does not receive the RECs, do not market the product to customers as ‘renewable energy’, ‘clean energy’, or similar. If a customer does not receive RECs and marketing states that the purchase will lead to the generation of new renewable energy, include information that the customer is not receiving renewable energy through their purchase. RECs and Renewable Energy Marketing
33. 1. Clearly define renewable energy certificates 2. Accurately represent ownership of RECs 3. Align messaging across all marketing 4. Align marketing with contractual representation of RECs Renewable Energy Marketing Claims
34. Align marketing and contract Power Purchase Agreements and RECs Contracts should: • align with marketing and verbal representations. • be clear and understandable. • include all Material Terms. • SEIA: REC ownership is a Material Term in a solar contract • clearly and consistently represent who will receive RECs. • provide a comprehensive definition of renewable energy certificates.
35. Exhibit 1 Basic Terms and Conditions 1. Term: Twenty (20) years, beginning on the Commercial Operation Date. 2. Additional Terms: Up to two (2) Additional Terms of five (5) years each. 3. Environmental Incentives and Environment Attributes: Accrue to Seller. 4. Contract Price: Contract Year $/kWh 1 $0.0000 Example PPA Language on Environmental Claims Clearly indicate ownership of ‘Renewable Energy Certificates,’ ‘Environmental Attributes,’ or similar
36. Example PPA Language on Environmental Claims Clearly indicate ownership of ‘Renewable Energy Certificates’ ‘Environmental Attributes,’ or similar …and provide an inclusive and comprehensive definition
37. … and cearly articulate that RECs are required for public claims Example PPA Language on Environmental Claims
38. PPA / contract states customer receives RECs Go solar and reduce your carbon footprint! PPA / contract states developer retains RECs for utility Support solar energy! All renewable energy generated will be used to help the state meet its goal of 20% renewables by 2020! PPA / contract states another entity retains RECs Support solar energy! All renewable energy generated will be sold to others to keep your electricity rates low! Align marketing and contract Power Purchase Agreements and RECs
39. Additional Deal Features & Considerations
40. Additional Considerations: Incentives Incentives: Some state incentives require that the RECs be conveyed to the utility or state to help RPS requirements. Example: Xcel’s Solar*Rewards program • Transfers RECs to Xcel under contract What this means for your customer: if the customer wants renewable energy, they will need to procure RECs elsewhere. Claim 1: “By installing solar panels, you will help the utility meet its renewable energy goals.” Claim 2: “Use renewable energy.”
41. REC Arbitrage • Necessary where customer wants to make a RE usage claim and is not receiving RECs from a system • Consider REC arbitrage to maintain RE usage and carbon reduction claims • Arbitrage involves purchasing RECs from a different renewable energy generating facility • Marketing claim must be associated with the REC provided to customer
42. Partnering with universities on solar deployment
43. Community Solar & Universities Solarize • Group purchasing • Community members partner with local nonprofit who acts as project manager • Community-based education and RFP process Shared Solar • Multiple individuals and companies subscribe to a larger solar farm • Variety in deal structures in terms of financial and non- financial benefits Crowdsourcing • Individuals invest in an offsite solar farm • Variety in deal structures in terms of financial and non- financial benefits Typical university role: works with local nonprofit to establish a solarize campaign Typical university role: anchor tenant in a shared solar farm Typical university role: engage in a crowdsourcing campaign to fund onsite solar
44. University-led Solarize Campaigns Project organizer & community outreach: university • University performs community outreach Solarize expert: local nonprofit • Organizes negotiations with contracts Solar installer: solar developer • Design and installation of solar
45. University-led Solarize Campaigns REC Ownership Options 1. University receives RECs • Customers are given the choice to keep RECs or provide RECs to the university and choose latter • Customer does not receive solar energy through the deal 2. Customers receive RECs • Customers are given the choice to keep RECs or provide RECs to the university and choose former • Customer receives solar energy 3. Utility receives RECs • Utility receives RECs (for example, through an incentive) • Neither customer or university receives solar energy through the deal
46. • Define renewable energy certificates for customers • Accurately identify who will receive RECs and what this means for the benefits of customer’s purchase • If program goal is for university to receive RECs, market the program accordingly • Coordinate with university to standardize accurate marketing University-led Solarize Campaigns
47. University-led Solarize Campaigns Marketing to customers Customer receives RECs University receives RECs Utility receives RECs Accurate marketing claims to customers “Go solar!” “Reduce your carbon footprint!” “Support the university’s goal of going solar! All renewable energy from your solar panels will go to the university.” “Support the state in meeting its renewable energy goals! All renewable energy from your solar panels will go to the utility.” Deceptive marketing claims to customers “Help the university meet its goal of going solar!” “Help the state meet its renewable energy goals!” “Go solar!” “Reduce your carbon footprint!” “Go solar!” “Reduce your carbon footprint!” “Help the university meet its goal of going solar!”
48. Key takeaways • Renewable energy certificates (RECs) are the contractual instrument for renewable energy ownership • RECs are required for renewable energy usage • Accurately and clearly convey REC ownership & meaning to customers • Align marketing and contractual language regarding REC ownership • Pay attention to REC ownership under new models of solar deployment
49. See Center for Resource Solutions’ webpage for a full list of additional resources pertaining to RECs and renewable energy usage claims: http://resource-solutions.org/learn/rec-claims-and-ownership/ Additional Resources
50. Maya Kelty, Green-e Associate Center for Resource Solutions 415-561-2133 maya.kelty@resource-solutions.org Jenny Heeter, Senior Energy Analyst National Renewable Energy Laboratory 303-275-4366 Jenny.heeter@nrel.gov Questions? This presentation was developed based upon funding from the Alliance for Sustainable Energy, LLC, Managing and Operating Contractor for the National Renewable Energy Laboratory for the U.S. Department of Energy.