Agenda - Council Work Session - 04/11/2023

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Power purchase agreement (PPA) A PPA is a contract between the landfill owner and the developer or project owner where the agency purchases all the electricity produced by the array at a predetermined price. This price may have periodic steps or escalators throughout the term of the contract which is typically 25-30 years. This model provides a predictable price for the electricity for the agency. This model allows for an owner with limited capital resources to reap the benefits of solar without a capital investment, and it also allows for a third party to take advantage of the tax benefits of solar development further reducing the PPA price. It is important to note that the availability of utility incentives such as Solar Rewards in Xcel Energy territory would also help to lower the PPA price, though many CLP sites are served by utilities lacking such incentives. Incorporating a utility incentive reduces the cost of the solar but forfeits the Solar Renewable Energy Credits to the utility for a period of ten years, thus impacting which entity gets credit for GHG reductions during this time period. Taking advantage of the incentives allows for an agency with a limited budget to participate in solar and lower their energy bills but pushes out the timetable for meeting their GHG reduction goals for that 10-year period. Public ownership In this model, the State or local government landfill owner would pay the full market -value cost of purchasing, installing, maintaining, and operating a solar photovoltaic system without the benefit of utilizing tax incentives. The owner may then do one of two things: 1. Sell the power generated tax-free to the local electric utility. 2. Sell the power generated tax-free via a public -to -public transaction with another publicly -owned entity. Community Solar Gardens Community Solar Gardens are subscription -based, centrally located solar installations. Community solar subscribers participate in a solar energy system along with other subscribers. Each subscriber's share of the electricity generated by the project is credited on their utility bill. Most community solar projects in Minnesota are owned and operated by electric cooperative utilities, which offer subscriptions to their customers. The largest community solar program (Solar*Rewards Community) is administered by Xcel Energy and regulated by the state, but private solar developers —not the utility —own the projects and sell the subscriptions. The State or local governments could lease land for Community Solar Garden projects.