Solar Energy is Rising Star in Ohio

Solar energy is rising star in Ohio

July 18, 2010
By: Dan Gearino
The Columbus Dispatch

John Witte, president of Advanced Distributed Generation, checks an Ohio Air National Guard array holding more than 8,000 solar panels near Toledo Express Airport.

A 2008 bill says that by 2025, 0.5percent of electricity must be solar. From the ground, the 80 acres of solar panels seem to go on forever, arranged in rows like the cornfield that used to be here. The project was completed last month in Wyandot County. At 12 megawatts, it is by far the largest of its kind in Ohio history. Now imagine an even bigger plan - 25 times bigger. That is what American Municipal Power of Columbus announced last month.

Observers greeted the proposal with a mix of wonder and skepticism. The AMP project would be one of the largest in the country. But the company has no experience with utility-scale solar projects, and few details have been released since the initial announcement. One thing is certain, regardless of whether the plan happens: Solar power is on the rise in Ohio, as utilities work to meet the benchmarks of a 2008 state energy law. "We're starting to hit a growth spurt," said Eric Zimmer, CEO of Tipping Point Renewable Energy in Dublin, an energy consultancy involved with solar projects. "I think we're all figuring it out day to day."


Long-term perspective

AMP's plan is the wild card. The nonprofit utility said it will build capacity of 300 megawatts in a series of projects across several states and over several years, with plans to break ground on the first segment this year. Marc Gerken, AMP's chief executive, argues that the plan makes sense for the municipal utilities that his company serves. "We're under a different business model," he said last week. "We look at things from a long-term perspective for a long-term return." He sees solar power as "peak" capacity, which means it would be relied upon for the hottest months of summer, when power demand is at its highest and the sun is shining brightest. That would cover electricity needs that otherwise would be met by peaking plants, which are typically gas-fired power plants that are used for only brief periods each year.

"We looked at this and said, 'How can we drive the cost down and provide peaking resources?'" he said. Another consideration is the possibility of federal environmental rules that would increase the costs of traditional power sources such as coal. If the older sources become more expensive, renewable sources become more attractive, he said.

A Maryland company, Standard Energy, would oversee the construction and own the solar assets. The financing would be made possible by AMP's commitment to buy the electricity for its customers. At some point, AMP's customers will need to sign on to the plan. The clients are 128 municipal utilities in six states, 87 of them in Ohio. The largest central Ohio customer is Westerville's city-owned utility. Solar arrays would be built near the member communities. That would provide several types of cost savings: First, many of the solar modules would be manufactured in the state, so there would be little freight cost to get them to the project sites. Second, the short distance between the projects and the end users would save on the cost of transmitting the power.

An impressive number

For some perspective, the country had 429 megawatts of solar power installed last year, according to preliminary figures from the Solar Energy Industries Association, a trade group. Of that total, 85percent was from small systems installed on homes and businesses. Only 15 percent, or 66 megawatts, was from utility companies. In that context, some observers wondered whether AMP's plans for a 300-megawatt project was a misprint. It wasn't. "I've seen an announcement with a very impressive number, but I don't know the details," said Mark Shanahan, Gov. Ted Strickland's top adviser on energy issues. "So it's very hard to assess what the timing is going to be. And obviously, we don't know how much of that is going to be in Ohio." One solar-energy expert noted that a project's plan, on its own, has little meaning. "A lot of announcements don't actually turn out," said Ken Zweibel, director of the George Washington University Solar Institute. He estimates that 300 megawatts of solar power would cost more than $1 billion to build. Gerken, who declined to give a cost estimate, isn't shying away from the 300 figure. In response to skeptics, he pointed to AMP's track record on renewable energy, including several major hydroelectric projects and a wind farm. Norm Johnston is not one of the skeptics. The Toledo-area businessman is chairman of Ohio Advanced Energy, a coalition of renewable-energy businesses. Based on his experience developing solar projects, he thinks 300 megawatts is feasible. "I wish them good luck," he said. "If they would build even a part of that in Ohio, I would love to see our Ohio supply chain supply it."

The industry has had a series of big projects announced, scheduled to be built in the next five years. The largest is a 550-megawatt project being developed in California for use by Pacific Gas and Electric Co. Known as the Topaz Solar Farm, the array will cover about 10 square miles in a part of the country that has some of the country's most- abundant sunlight. The developers hope to be done by 2014.

Three other projects would be 300megawatts each: two in California and one in New Mexico. Each is scheduled to be complete by 2015, according to the Solar Electric Power Association, another trade group.
They are all photovoltaic projects, meaning they use solar panels to generate electricity. There are other kinds of solar power, including using solar plates to generate heat, that are not included in this list. One of the most important variables is the cost of solar panels. Lately, those costs have dropped because of an oversupply. Prices might rise in the short term, but developers of solar projects expect costs to fall in the long term as the components become more common.

While Ohio is just beginning to develop solar power, the state is already a leader in manufacturing the components. Companies such as First Solar and Xunlight, both in the Toledo area, produce thin-film photovoltaic panels, a light and flexible material that is helping drive down the cost. The presence of component manufacturers is what inspired a state law that led to the Wyandot County project. Two years ago, Strickland signed Senate Bill 221, a measure that requires utilities to produce 25 percent of their electricity from so-called advanced sources by 2025. At the time of passage, Ohio had virtually no utility-scale solar installations. "Ohio had this core industry growing in northwest Ohio around solar, and it was important to specifically create a requirement for local deployment," Shanahan said. Solar power was the only energy source that got its own piece of the pie in the law. Solar must compose 0.5percent of overall electricity by 2025, which translates to roughly 400 megawatts.

Greg Alexander of Dovetail Solar & Wind installed panels in July in Westerville.


Notably, the law applies only to investor-owned utilities, a group that includes American Electric Power, FirstEnergy, Duke Energy and Dayton Power and Light. Rural electric cooperatives and municipal utilities, such as AMP's clients, are exempt.

So far, AEP has made the largest investment in meeting the requirement. The Columbus-based utility helped develop the Wyandot project and has a contract to buy all the power produced there. AEP now has enough solar capacity to meet the benchmarks for 2010 through 2012. (AEP and AMP are not affiliated, despite their similar names and the fact that both are based in Columbus.)

To meet subsequent goals, AEP plans to commission a series of solar arrays that would produce about 12megawatts each. The next one likely will be announced next year. As a rate-regulated utility, AEP passes its costs directly to its 1.5million Ohio customers. But the law is unclear about whether the company can charge customers for the full cost of developing solar projects. Without clarity on that point, the company will do just enough to meet the solar requirement and little more. "It's prudent to piecemeal this," said Mark Gundelfinger, who oversees renewable energy programs for AEP in Ohio.

That's more than other utilities are doing. The other three investor-owned power companies have yet to break ground on anything approaching the size of the Wyandot array. Instead, they have asked for, and received, exemptions from state regulators. If that process continues for several years, advocates for solar energy are worried that the benchmarks will be essentially meaningless.

Advocates for solar energy were disappointed last year when none of the companies met the first-year benchmark, which was 0.004percent of overall electricity produced. Shanahan, Strickland's adviser, urges patience. The failure to meet the first-year goal was a matter of scheduling, he said, because the law had just gone into effect, and major utility projects require years of lead time. "It's a speed bump," he said.


Ohio sunshine

The top reason for the inaction is cost. On a per-megawatt basis, a solar array costs up to six times as much as a coal-fired power plant to develop, according to AEP. And then, once the plants are built, solar-power output varies based on season and weather, while coal is constant.

There is also an issue of scale. AEP's smallest coal-fired plant, located in Pickaway County, has more than 10 times the capacity of the Wyandot solar array. And the largest coal plants have more than a hundred times the capacity. Ohio's weather is not an asset for solar power. According to the government's National Renewable Energy Lab, the sun shines more than 50 percent brighter in the southwestern United States than in the Great Lakes region and the Northeast. Solar advocates like to rebut that with one word: Germany. That country has the most solar development in the world, even though it gets less sunlight than Ohio. "We get over 130 percent of the amount of solar that you get in Germany," said Johnston, the Toledo-area businessman. "Anywhere in Ohio. Even in Cleveland."