Gahanna solar array proceeds despite fears that Ohio's new law will kill 'green' energy projects
September 25, 2014
A solar array is being built in Gahanna - a fact that surprises some who predicted a new state law will make solar projects much more difficult to develop.
The $1.8 million plan includes construction of a covered parking area with solar panels on top, located next to an existing office building at 690 Taylor Rd. The array will have 1,766 panels, with a combined capacity of 538 kilowatts.
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"It was fun getting a deal done in an environment where people think a deal can't get done," said Tad Ritter, president of Willow Cos. of Columbus, a real-estate consultant that helped put together the Gahanna plan.
Renewable-energy advocates say the project is a positive development, but they still worry that state policies are suppressing attempts to support "green" energy.
When completed later this year, the Gahanna project will be one of the 40 largest solar arrays in the state and one of the five largest in central Ohio, based on a review of filings at the Public Utilities Commission of Ohio.
It will produce enough electricity to meet about 30 percent of the needs of the office building, Ritter said. That is enough power to provide for the annual needs of about 60 houses.
This is happening in the aftermath of Senate Bill 310, which was signed by Gov. John Kasich in June and went into effect this month. The bill places a two-year freeze on annual increases in state benchmarks for renewable energy and energy efficiency. It also eliminates a requirement that utilities buy half of their renewable energy from in-state sources.
During a long, bitter debate over the bill, renewable-energy advocates said the measure would destroy the market for solar and wind energy in Ohio.
They argued that the new law would lead to a drop in the price of something called a "renewable energy certificate," which has been a key part of financing energy projects.
Some background: Under Ohio law, electricity utilities can meet renewable-energy benchmarks by building projects or by buying certificates that represent the renewable energy generated by
others. For solar power, every 1,000 kilowatt-hours is equal to one solar renewable-energy certificate, or SREC. The certificates are bought and sold on an open market, and prices rise or fall based on supply and demand.
As of last month, an SREC for a project in Ohio was selling for $33, according to SRECTrade.com, a broker based in San Francisco. This was down from $57 in May and from a high of about $400 in 2011.
When prices are high, developers can sign long-term deals to sell SRECs and use the proceeds to cover a large share of construction costs. At current prices, this model doesn't work. The income from selling certificates would take more than a decade, if not much longer, to cover costs, depending on the specifics of each plan.
Ohio's SREC price is low because the supply of solar power is much more than what utilities need to meet the state requirements. That is, supply far exceeds demand.
The situation is being exacerbated by the way the new law is helping to suppress demand, said Steven Eisenberg, CEO of SRECTrade.com.
"Although there will be some development that takes place, you wouldn't expect to see lots of solar installed," he said.
The Gahanna project was accomplished by taking a different route.
Ritter worked with contractor Settle Muter Electric of the Northeast Side to put together a plan that could justify the $1.8 million cost to the building's owner. The property is owned by Duff Industries, a family-owned partnership in the Lima area, and it is managed by Continental Real Estate of Columbus.
Ritter made the case that the solar array and covered parking would add to the property value and help attract and retain tenants. The owner, who already had an interest in renewable energy, was persuaded, Ritter said. The owner was not available for comment.
Ohio solar-power advocates say they are pleased to see the Gahanna project, but they wonder whether other owners will be willing to make similar investments.
"You're going to have people who are always going to be innovators who are going to be willing to take extra risks to deploy solar, and that's clearly what these guys are," said Mark Shanahan, a Columbus-based energy consultant who was an adviser to former Gov. Ted Strickland.
He thinks that others might be more likely to invest elsewhere, considering that other states have greater financial incentives.
The new law has not been in effect long enough to know what it means for the solar market, said Bill Spratley, executive director of Green Energy Ohio, a group that promotes renewable energy.
That said, he is pleased to see the Gahanna project. He notes that the Columbus suburb now has several of the largest solar arrays in central Ohio, with installations at three public schools and this new project at the office building. Together, that is as much as or more than any other city in the region.
"It's the solar capital of central Ohio," he said. "The people of Gahanna may not know that."
