In 2020, the Tennessee Valley Authority began allowing local power companies, like the Paris Board of Public Utilities (Paris BPU), the flexibility to generate up to 5% of our average electric demand from distributed resources. Paris BPU entered into our Long-Term Partnership Agreement with TVA in September 2019 and by July 2020, we signed our Power Supply Flexibility Agreement with TVA and began exploring flexibility options.
We have never done a solar project at our utility, so we chose Silicon Ranch Corporation as our solar developer after building trust with them over the years through exploratory talks about what a solar installation for us might look like. We are pleased to work with Silicon Ranch on our flexibility project and thankful to TVA for giving us this opportunity.
Why should LPCs pursue a flexibility project?
We are building a 6.9-megawatt solar system on 80 acres in the northern part of our system. The site is located right across the road from one of our 12 distribution substations, which we will be upgrading as part of the project.
For us, the driving factor behind pursuing a flexibility project was to find a way to lower our costs and keep our rates stable. Based on projections, we will save $280,000 a year in power costs alone over the life of our contract. For a small utility, this figure represents a significant rate increase we can now forgo thanks to lowered costs.
Additionally, we are conscious of our role in taking care of the environment, so having renewable energy included in a portion of our load shows our ratepayers that we are being a good steward of our community. We also had long considered a flexibility option to meet our local industry’s carbon reduction goals. Economic development is an important part of our mission, so flexible solutions add another tool to our toolbox in our conversations with industry partners.
What should LPCs know when considering a flexibility project?
Our project is not yet complete, but we have learned a few valuable lessons along the way. For LPCs considering leveraging TVA’s flexibility option and pursuing a project, here are five key thoughts to keep in mind.
1. Know your flexibility number
What does TVA’s 5% flexibility figure mean for Paris BPU and other LPCs? For us, the number initially came to 2.7 MW. The easiest thing you can do when you begin considering a project is to email or call your TVA Customer Service Manager (CSM) and ask what your allotment is. By applying the 0.4 technology factor to our project and taking into consideration that the project is all solar, we ended up getting our total project size up to 6.9MW. To get started, get your CSM on the phone or shoot off an email and talk through your options.
2. Have a solid legal team
From the purchase power agreement (PPA) to other documents you will encounter along the way, you want to have an appropriate legal team around you. This advice is not due to a lack of trust in a solar developer – we trust Silicon Ranch and value our partnership.
Instead, it is to ensure you thoroughly understand the legal terms and conditions associated with the project before taking the next step. We had our local council look at our PPA, but we also engaged an attorney with specific utility experience to make sure we understood what we were agreeing to.
3. Engage a rate consultant
We brought in a rate consultant to independently assess potential savings of the proposed project to make a decision on real, conservative numbers and savings for our ratepayers. Franky, this process is complicated because it involves factoring in the energy and demand components, fuel costs, a reduction in TVA partnership credits and more. There are so many moving parts and pieces that go into how much an LPC might save by purchasing power through a flexibility project, so it’s extremely helpful to make sure you’re sitting on the correct numbers.
4. Consider infrastructure upgrades and improvements
Based on our experience with Silicon Ranch, we found that a solar developer is generally open to sharing in a significant portion of the costs associated with needed infrastructure upgrades and improvements. When you are considering a flexibility project, target areas in your system where upgrades or improvements are needed the most.
In our case, we will be putting in a brand new 15 MVA transformer on the distribution substation site right across the street from our solar array. Currently, we have four single-phase units (1974 models), so we will upgrade that substation and have redundant transformation there that we do not have at any of our other substations. Out of all the many benefits of this project, the infrastructure upgrades were a huge win for a smaller utility like ours.
5. Understand challenges of land procurement
Going into a project, you must understand that land procurement can be difficult. Before reaching out to anyone, have a plan in place for telling potential sellers why your project is needed, such as how it will benefit the power company and every ratepayer in the community. Essentially, highlight the bigger picture and significance of your project.
For us, we found success putting a trusted staff member on the project who knew people in the area, including the property owner, and understood the community. An outside developer might be met with more resistance when approaching a local farmer about a solar array than a familiar face from the community and LPC pursuing the project.
Flexibility is a win for LPCs
One thing I want all LPCs to know is that we would do this all again in a heartbeat given the chance. I cannot speak enough about the good experience we have had with Silicon Ranch and TVA. When TVA first introduced the flexibility option, I wasn’t sure what that would look like, but TVA has shown time and time again that they want LPCs to take advantage of this flexibility option and partner with us on making that a reality. We’re not even done with this project and, given the chance, we’d pursue another flexibility project in the future.
Now, Paris BPU is working on the design phase of our project for the substation. We recently chose a contractor to handle the interconnection work and should begin construction soon on substation upgrades. Silicon Ranch is in the design phase for the solar installation and should begin construction in April 2022 with an expected service date of November that same year. We are excited about our flexible future at Paris BPU.
For more information about this project or how LPCs can leverage the flexibility program, don’t miss Advanced Energy 101 webinars, hosted by the Tennessee Advanced Energy Business Council. I recently shared about Paris BPU’s experience at the organization’s Nov. 2 event alongside representatives from Silicon Ranch and TVA.