The Dark Side of Solar

I've been away from this blog, intent on a hearing Tuesday afternoon before the Board of Zoning Appeals.  As Chair of the Land Use Committee of the Decatur Township Civic Council, I was focused on opposing a variance for a 130 acre parcel which would allow the construction of a solar farm, by Sunrise Energy Ventures (SEV).  We lost that endeavour by one vote.  My heart breaks for the new burden this imposes on my community; adding to the other burdens cast our way for the 'common good'.

In this blog entry I'll try to be succinct in our core issues with the use of this parcel for a solar power plant.  Then I'll move into the the broader implications of the lack of preparedness for solar in Indy's government, the carpet-baggers swooping into Decatur and Franklin Townships, and the very real chance that newly approved solar power plants will add to the tax base or the job market in any sustainable way.

The parcel in Decatur is right across the street from the Crossfield subdivision.  To the south there is mostly farm fields, with metes & bounds homes lining the few streets - Mann Road to the east, Ralston Road to the south, and Southport Road on the north.  The only sewer and water lines that can provide infrastructure for the future development of this area must come from extensions of those lines in Crossfield.  Without the solar power plant, this infrastructure, along with street flow, would go through this parcel, minimizing the expense of providing further extension to area.  With the solar power plant, the infrastructure will be more expensive, having to be placed around, not through, the parcel.

In fact, the farm that shares the eastern boarder of this parcel, is entirely land locked.  The grant of variance makes it highly unlikely this parcel will be developed, even after the market rebounds, given the expense.

The southeastern corner of our Township is valuable to our future because it has always been seen as the area most conducive to move-up housing.  While some areas of Indy bemoan lack of million dollar mansions with which to entice business executives, our vision is far more pedestrian; reaching for high end homes running maybe $150,000 - $200,000.  The southeast corner is home to Southwestway Park, the second largest regional park in Indianapolis, and the only Indy Park with horse trails.  Winding River Golf Course, a public golf course, also calls this corner home.  This area is also the only one with rolling terrain.

Decatur loses residents due to our lack of move-up housing.  Decatur has obstacles with enticing basic commercial to locate, due to lack of residents and the presence of the Airport and its ban of residential uses nearby its borders.  Its all chickens and eggs.  But, three successive Comprehensive Plans, reaching back to when we were conscripted into Unigov, have called for low density housing in the southeast corner of Decatur Township.

As our district Councillor, Jason Holliday, put it, "Any way you cut it, we are the experiment".  That is because there has been no task force put together by Indianapolis to set appropriate locations, appropriate development standards, and appropriate decommissioning guarantees for the benefit of Indianapolis taxpayers and residents.

I the last ten days I have learned a lot; a lot that has distressed me beyond the implications for Decatur.

It turns out that SEV, along with other solar energy concerns, spoke with City officials about construction of solar power plants beginning about three years ago.  But, the City did not invest in creating a task force to add to our zoning ordinances so that accessory and primary solar power uses could be tailored to Indy's needs and desires for solar.  To this day they have not.   A similar situation arose regarding cell tower construction near the end of the Century, and a task force of neighborhood people, industry representatives, planners and lawmakers was convened.  The result was the Wireless Communication Zoning Ordinance, adopted in 1999.  During the last few years, cities, counties and states all across the Country have been reviewing, debating, and crafting their own solar ordinances and laws.  But, not here.  Frankly, this left us sitting ducks. 

The method of financing the eventual decommissioning of the solar power plant would have been addressed with such a task force.  As of Tuesday, the City and the petitioner had not yet agreed on a way to guarantee that the plant would be decommissioned.  The City originally requested a bond, but the petitioner counter offered that the City could take possession of the property, if the then-owner failed to remove all panels, posts, and DC to AC inverters when the plant was no longer selling electricity to IPL.  (SEV and IPL have an agreement for 15 years of sales.)  I do not know where the current discussions are, nor what they are entertaining.  All I know is they had no agreement by the time of the BZA hearing.

Not only are there no fully vetted land use and development standards for solar in Indy, it is still unknown if the Department of Code Enforcement has the expertise to evaluate permits and monitor construction for solar power plants.  According to a 2011 Conference of Solar America Communities (a creation of the Department of Energy):

Code officials and inspectors need to understand what they are looking at in order to efficiently and completely evaluate solar installations. A solar knowledgeable inspector will be better equipped to identify system flaws which may endanger others, while not introducing unnecessary delays into the permitting process because they are not sure how to evaluate a system.

Solar trained code officials are in every one’s best interest, from the customer to the installer to the public as a whole.

The SAC group says specific training is a must.  Do we have that expertise?  I do not know.

I mentioned that three years ago there was a spurt of interest in solar conveyed to our City officials.  That was because of the institution of a three-year pilot program for IPL, known as Rate Renewable Energy Program (Rate REP), approved by the IURC on February 10, 2010.  It costs more to generate electricity from solar than coal processes.  Thus, the IURC approved passing on to all of IPL's customers, the additional cost for 100 megawatts of solar.  From testimony before the IURC, it would appear that the average residential customer will be paying an additional 2.97%, or $1.96 per month.  (It should be noted that if the program were enlarged, that additional cost to consumers would rise.)

The program was successful in attracting interest.  It attracted far more interest than the 100 MW limit of the pilot program would allow.  And, it attracted out of state players, who were attracted by the profit and who would not leave much permanent employment behind.  IPL went back to the IURC, asking that the Rate REP pilot program be limited to IPL customers.  IPL representative, John Haselden's comments are noted in the March 7, 2012, Order of the Commission (IURC).

Mr. Haselden explained that by February 1, 2011, IPL had received applications for interconnection for twenty-five stand-alone renewable energy projects which would produce annual output of approximately 240,000 MWh if all proposed capacity were constructed, or 160% of the cap on Rate REP energy purchases.  He said, that assuming all or most of the proposed capacity from stand-alone renewable energy projects were constructed, no additional capacity would be available for IPL's customers.  As a result, projects proposed by IPL's customers, like those being discussed by the Indianapolis Airport Authority, would not be eligible for the purchases under Rate REP because capacity would not be available.

Later he says:

He said that allowing non-customer developers of stand-alone projects to reap windfall profits at the expense of all IPL customers over the next decade is not in the interest of IPL's customers.

Mr. Haselden testified Rate REP offers several benefits to customers who elect to participate, including a payment stream. This helps to keep money flowing into operations located in Indianapolis that produce jobs long after construction of the facilities is complete.

The IURC chose to split the baby, agreeing to limit the majority of the 100 MW cap to IPL customers, but putting 30 MW into a reverse auction whereby a company would propose how much electricity would be generated and what price IPL would pay.  The auction attracted  21 companies, offering 70 bids.  SEV lowballed everyone, winning all 30 MW offered, at a price of 10 cents/kW hour.  8.6 MW would be generated from the Decatur site, and 20 MW from the Franklin Township site.

Testimony from SEV Managing Director, Dean Leischow, prepared for the Indiana Office of Utility Consumer Counselor (OUCC), is eyeopening.  Submitted February 22, 2013, Leischow says that the Decatur and Franklin Township projects "will receive local real and personal property tax exemptions".  All of our attempts to clarify this situation have led to the opinion by the County Assessors office, that this is not so.  At the hearing, attorney for SEV, Joe Calderon, stated that they expect the Assessor to increase the assessed value of the land over its current agricultural use, but
the owners of the solar power plant could still appeal that assessment.  So, it is quite possible that little to no extra tax revenue will actually be generated by these solar power plants.

Additionally, these two sites are expected to create 120 temporary construction jobs for 4 months and all of 3 full time, permanent, jobs.  Oh ! hallelujah !  the economic development potential of these deals is astounding !

Most troubling of all of Leischow's testimony is this:

We expect at some point in time during the construction, an investment group will become the owner...

IPL's warnings to the IURC have become Indianapolis' nightmare.  An out of state company will reap the value of the next 15 year's worth of IPL customer rate increases, which could total $105.84 from the average IPL residential customer ($1.96 per month adjusted for 15 years and adjusted for these two sites generating 30 MW of the 100 MW cap of the pilot Rate REP program).  The solar power plants may end up paying no extra property taxes to benefit the community.  And, they will create all of 3 jobs in the process.

The BZA decision will be hard on Decatur's future growth and will limit the range of commercial and residential stock that can be offered our current and future residents.

The lack of a solar zoning ordinance will continue to cause seat-of-your-pants decisions by the BZAs and the MDC until one is constructed.  The lack of a method for guaranteeing decommissioning of solar power plants can come back to bite the taxpayers big time. Likewise, residents living nearby one of these power plants can be bit if there are limits in the solar expertise of our code enforcement officers and permit reviewers.  The rate payers, some willing and some not, foot the bill and will pay handsomely those carpet-baggers who will line their pockets, move on, and leave little but the clean-up in their wake.

As Councillor Holliday put it, "Any way you cut it, we are the experiment".