community Solar executives outline potential impacts of Auxin inquiry on development pipeline

The consequences of circumvention tariff inquiry opened up Auxin Solar will hit community solar as much as it will utility scale solar developers over time, but impacts do diverge in a couple of major areas, according to multiple industry executives interviewed by NPM.

Community solar developers, even before Auxin and facing a supply chain crisis, have had to be nimble when sourcing for solar cells as bigger manufacturers prioritized utility scale projects in the supply chain. At the same time, community solar developers have a much shorter timeframe to getting projects built given its reduced acreage needs.

The end result is the confidence that the 2022 pipeline is vulnerable, yet slightly more insulated then utility scale projects, but 2023 is going to very difficult if it results in soaring panel costs. This comes as newer states, such as New Mexico, open the spigots up to community solar, while other states like Pennsylvania are urgently trying to add it to their future renewable energy procurements.

“Community solar project orders have to compete with utility-scale panel orders for manufacturer priority,” said Scott Risley, executive director of public policy at Nautilus Solar, adding that utility-scale orders are larger and quickly fill up a manufacturer’s sales goals for a given year. Because of this, community solar projects find capacity where they can. “This means working with a larger number of suppliers and being as flexible as we can to accommodate last-minute changes due to having to substitute panels from different manufacturers.”

A source familiar with the situation told NPM that community solar portfolios are small enough that they do not often need to order parts from China and can find other sources of supply. Other sources of supply, for example, could be South Korea.

Separately, Nautilus has even had to use different brands and wattages of panels on individual projects.

The project pipeline can also be modified more given the size of these projects.

If there is a shortage in panels “we can usually drop or postpone one or two projects due to panel shortages. Utility-scale does not have that flexibility because they have fewer and larger projects,” added Risley.

The good news here is that as community solar becomes a larger share of the market, more panel manufacturers become attuned to what its market segment needs.

“Whereas a lot of the utility-scale projects are fighting an uphill battle because all imports of panels have basically stopped,” he said. “Until they can get those panels domestic, it will be difficult to develop from the utility scale side.”

Flexibility

Community solar developers also benefit off the ability to be flexible in its project pipeline, with less acreage to deal with and greater variety of off takers.

Ground-mounted community solar projects use around 10 to 40 acres, meaning they often disappear into the landscape, while large rooftop community solar projects use no additional land.

“Utility-scale projects also rely on the transmission system for interconnection, which is increasingly full of renewable projects,” Risley said. “Community solar projects interconnecting at the distribution level do not impact the transmission system, except beneficially. The smaller footprint also opens the door to using more closed landfills, small reclaimed industrial sites, and other brownfields too small for utility-scale projects.”

Colorado-based solar developer Bear Peak Power has made strides in diversifying its portfolio based on the scale of a project. This helps stagger development timelines. Michael Marcotte, managing partner at Bear Peak Power said this means the rise of cost for solar panels will not be too difficult for now.

“We have a mix of smaller projects in the commercial industrial space, utility scale, and a handful of community solar projects,” he said. “We’re hoping it is short-term, so it doesn’t affect the longevity of our projects.”

He said that Bear Peak has done a good job sourcing smaller projects, as well as larger ones, where panels have already been secured stateside.

Bear Peak expressed interest in being involved in the upcoming New Mexico community solar procurement, which is expected to begin this summer. Marcotte said that he believes a solution to the Auxin investigation will be found before projects from the New Mexico procurement enter construction in 2023 and 2024.

“I think, by that time, a solution will be in place to keep the economics of the project levelized,” he said.

He expects community solar projects in the northeast to be affected short term because projects are already being built. But for the emerging community solar market in New Mexico and Ohio, he believes these places will be less affected due to construction being farther down the road.

“I hope there is a solution short term because if panel prices double like what they’re thinking, you’ll see a lot of these projects not get off the ground,” he said. “We are already dealing with inflation. There is a lot of things working against us right now.”

Benefits

Risley underlined community solar project benefits, which also stand to be impacted by a slowdown of the solar market. He broke down what these benefits are, first stating how community solar is able to mitigate impacts compared to utility-scale, which can use anywhere from hundreds to thousands of acres of land.

When asked about revenue streams beyond power and capacity, Risley said community solar projects provide benefits to the grid – some compensated and some not. Community solar projects are usually 1 MW to 5 MW, meaning they are always interconnected at the distribution level.

When asked about revenue streams beyond power and capacity, Risley said community solar projects provide benefits to the grid – some compensated and some not.

“Because power is put into the local distribution grid, it doesn’t need to be carried from a large central generating plant to the user,” Risley said. “This results in a savings to the grid owner in terms of reduced demand and stress on the transmission grid.”

Additionally, solar projects generate Renewable Energy Certificates (RECs) that have monetary value. He explained that in a “well-designed” community solar program, the bill credit paid to a project compensates for each category of value and that the bill credit is often comprised of energy and capacity value of the power generated.

“An important benefit is grid resiliency,” he said. “Small, distributed generation facilities can support grid stability and mitigate the impact of blackouts.”

*This story was originally published exclusively for NPM subscribers in April.


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