Solar Blooms in Rural U.S, with Co-ops in the Driver’s Seat

A report released this summer by the National Rural Electric Cooperative Association (NRECA) documents the tremendous growth in solar energy driven by electric cooperatives. Electric cooperatives (co-ops) are utilities that are owned by their customers. They serve 56 percent of the land area of the U.S—mainly in rural regions—and are increasingly providing solar energy to their customers. In fact, by 2019, co-op solar capacity is expected to surpass 1 gigawatt (GW), enough to power more than 200,000 homes.

The growth in co-op solar is exciting, and it’s part of a larger story of solar expansion throughout the rural U.S. The costs of solar energy are declining, more customers want their homes powered by solar panels, and the rural energy economy is transforming.

NRECA’s recent report is the result of a multi-year project to identify and address the barriers and drivers of growth for co-op solar, a project funded by a $3.6 million grant from the U.S. Department of Energy (DOE). This good news story is in part a tribute to the value of the research, development, and deployment programs housed at DOE—and an important reminder that we need Congress to continue to fund the DOE programs that are building our clean energy future.

Bigger and broader: more solar for more people

Co-ops are scaling up the solar projects they develop and more frequently buying power from large solar plants. Historically, the solar energy in cooperative service regions has come from small projects and distributed generation. In 2014, co-ops provided about 113 megawatts (MW) of solar capacity, and the average size of a co-op installation was 25 kilowatts (kW). By 2017, the total capacity grew to over 850 MW, and, now, the average installation provides 1 MW—40 times the size just four years ago. This change stems in large part from partnerships between Distribution co-ops and their Generation & Transmission counterparts to develop or buy energy from larger solar power plants and serve more members.

Co-ops are not only investing in new large-scale solar, they also are expanding access through distributed, smaller projects through community solar. Community solar programs allow customers to buy a share of a solar project and then benefit from the electricity generated. These projects enable people to take advantage of solar energy even when they cannot install their own rooftop solar panels, whether because they can’t afford the large up-front costs, don’t own their home and can’t alter the roof, or have rooftops that are shaded or inconveniently oriented. More and more rural communities are subscribing to community solar programs, thanks in large part to the more than 190 co-ops that have community solar projects or are currently planning them.

These creative approaches can help co-ops bring new resources to their rural constituencies and transform solar energy into a more accessible resource. Accessibility is especially important for co-ops, which serve 93 percent of the nation’s “persistent poverty” counties—where the poverty rate has exceeded 20 percent of the population for the past 30 years. Rural households also spend much more of their income on energy bills than others, according to a report also released this summer. As the energy transition continues full swing, it’s important to work creatively to ensure that it happens equitably—and that all communities have access to clean, affordable energy (including energy efficiency) and the accompanying job opportunities. Co-ops are especially well-situated to do this work.

The rapid expansion of solar in rural areas is not limited to co-ops. Investor-owned utilities are also pushing for more solar generation in rural communities. Late last year, American Electric Power, which serves 11 states, filed a request for proposals (RFP) for 400 MW of solar energy in Ohio, adding to an energy portfolio that already includes several wind and solar farms. The RFP will prioritize sites in Appalachian Ohio, create permanent manufacturing jobs, and hire Ohioan military veterans.

Ohio’s announcement is part of promising growth throughout the rural Midwest, where clean energy jobs grew by 6 percent from 2015 to 2016, outpacing job growth in other sectors by a long shot. Together, cooperatives and other utilities are creating a new green economy throughout the rural U.S., creating jobs and expanding access to inexpensive, clean energy.

Rural communities are demanding clean energy

One of the remarkable features of this solar growth is that it’s driven by consumer demand. Co-ops, being member-owned, have a responsibility to meet the requests of their customers, and their customers are asking for solar energy. In a survey conducted by NRECA, 68 percent of co-ops were motivated to expand solar energy by a desire to increase consumer-member satisfaction, and 59 percent were motivated by consumer demand for solar offerings. These were the two greatest drivers identified in the survey, and they speak to the growing enthusiasm for clean energy in the rural U.S.

This growth is made possible thanks to the extraordinary decline in the cost of solar energy. The installed cost of large-scale solar energy declined by 71 percent from 2008 to 2016 across the country, thanks in part to federal funding for innovation at the Department of Energy. However, we cannot take it for granted that costs will continue to decline on their own. Earlier this year, the Trump Administration imposed tariffs on imports of solar tariffs, a shortsighted and counterproductive move that threatened to undermine the remarkable growth the solar industry has seen in recent years. Developers believe the tariffs have dampened growth this year—but not as significantly as initially expected. Increased funding for Department of Energy innovation programs, especially those focused on solar panel manufacturing, and continued action from policymakers at all levels will allow the remarkable growth to continue and bring clean and inexpensive power to more people.

Despite uncertainty in federal energy policy, solar projects keep breaking records for the lowest price, with the latest record power-purchase agreement coming in around 2.4 cents/kilowatt-hour (¢/kWh). That’s cheaper than the average wholesale electricity price in the region, which was 3.4 ¢/kWh in 2017—and far cheaper than average levelized cost of energy from a new gas plant, about 6 ¢/kWh.  

Costs are on the decline, demand is surging, and the future is bright for solar energy.

About the Authors

Arjun Krishnaswami

Policy Analyst, Climate & Clean Energy Program

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