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Solar panel company updates Quorum Court

New developments change initial estimates by Caitlan Butler | September 19, 2022 at 12:00 a.m.

Representatives from national energy services firm McKinstry returned to the Union County Quorum Court on Thursday to present an updated proposal on the cost to install a solar panel field that would provide energy to county properties.

In July, Jay Holstead, an account manager for McKinstry, presented a preliminary estimate on the cost of installing a solar array and explained the benefits such a project would have for Union County.

"This is a really, really good deal. I'm going to be a little biased here -- I think this is one of the best investments you can make, because it's generating money for the county," Holstead said in July.

The initial proposal outlined capital costs of $701,454 to $1,469,125 for two potential arrays that would provide 299 kilowatt hours per year and 730 kWh per year, respectively. The proposal also showed what the county could earn from the energy it put onto the grid -- $1-1.6 million after 20 years on a self-funded array or $6,148 after 20 years on a 299 kWh per year array financed at 3.8% interest.

In July, County Judge Mike Loftin asked Holstead to test out two sites -- one at Industrial Road and one on Commerce Drive -- to determine what the cost to install the solar fields would ultimately be, and on Thursday, Holstead returned to the courthouse with an updated proposal for Justices of the Peace to consider.

New information

Both of the sites tested have their pros and cons, Holstead told JPs Thursday.

The Industrial Road site is right next to an Entergy substation, so an array placed there wouldn't require that any new infrastructure be built to accommodate it, but it would be on top of a landfill, which would increase construction costs because the solar panels would have to be ballasted.

The Commerce Drive site, on the other hand, could possibly require new infrastructure be built to connect the array to the grid, but costs for installing the array would likely be lower.

"If (Entergy) determines that upgrades will be necessary (at the Commerce Drive site), who knows what that could be, as far as the infrastructure upgrades the utility company would have to do," Holstead said. "The downside to that (Industrial Road) site, obviously, is it's a landfill and it has a two-foot cap. We can locate solar there no problem, but what we can't do is dig... We can't go digging trenches and burying cable."

But a new law passed in August could help the county recoup some of the capital costs they'll incur if they choose to build a solar array.

Holstead said the Inflation Reduction Act, signed into law by President Joe Biden last month, includes provisions that would credit public entities that invest in green energy, like solar power. The credit will apply to systems energized on or after Jan. 1, 2023, he said.

"Now, the federal government is --at minimum -- going to give you 30% just to go build solar," Holstead said. "It will come in the form of a check to the county, and you can take that and apply it towards buying down that initial payment... Or, if (the array is) self-funding, that's money you can now re-allocate in your budget you can go spend however you see fit."

Holstead said the 30% direct payment from the federal government could possibly increase based on the materials used and where the solar array is built, as well.

However, McKinstry also learned through their study that the solar array will need to be larger than initially thought to provide power to all county properties. That extends the length of time it will take the county to break even on their investment, but the credit from the federal government could also help offset that, Holstead said.

"Turns out that to actually do 100% offset for the county, it's not actually 730 kW. Now that we've got 12 months worth of utility bills, it's nearly double that size. It's actually 1.31 megawatts D/C (direct current), which is a 1 megawatt A/C (alternating current)," Holstead said.

District 1 JP Mike Dumas suggested studying another area on Industrial Road so the solar array could remain close to the Entergy substation while moving off the landfill.

"I would encourage you to look at (the other potential site on Industrial Road). I just -- I'm reluctant to put anything on that landfill. I dealt with it in '91, and it's just unstable," Dumas said. "That area, that substation, works out there. That's where it ought to go."

Holstead told JPs in July that Entergy Arkansas' one-to-one net metering -- where kilowatt-hours (kWh) produced by a customer through renewable energy sources and supplied to the local power grid are credited to the customer's account against the kWh they use from the grid at a one-to one-ratio -- would end after 2021, thus putting a degree of urgency on their considerations.

However, he said on Thursday that the Arkansas Public Service Commission, which regulates the state's utilities, would be advocating for an extension of the program through 2040 at a meeting in October.

"That's another matter that's developing, and I think it's looking pretty good," Holstead said. "They're arguing for extending the grandfathering one-to-one beyond December 31 this year and making it all the way out to 2040. They've stated that that's what they want to happen. Of course, people can submit testimony -- you've got the co-ops and utilities that might come in and say why it can't be that way -- but as it stands right now, we are qualifying for one-for-one."

The 1.31 MW array at Industrial Road would have a capital cost of $3.8 million, and the county would start earning money back on it after 19 years. By the 35th year of the array's use, the county would have almost made back its initial investment, according to McKinstry's estimates.

The same array at the Commerce Drive site would cost an estimated $3.3 million up front, and the county would begin earning money back by year 17.

Smaller arrays would cost $1.9-$2.1 million and the county would begin getting money back for their contributions to the grid after 19 or 20 years, the company estimates.

JPs didn't take any action on the proposal on Thursday.

Loftin said Friday that McKinstry will continue ground testing the proposed sites for the solar array and researching other potential cost-savings for the county if they choose to go forward with the plan. Once all studies have been completed, company representatives will return to the Quorum Court with a final proposal that JPs will be able to vote on.

"I think we can handle it," Loftin said. "I just -- I don't know enough about it to really say, because we haven't decided where to put it so we're really not sure the costs yet."

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