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UNK will purchase more than half of electricity with solar farm agreement

August 16, 2017

The Grand Island IndependentBy Cole Epley, BH News Service

Operators of the state’s largest solar farm have yet to publicly market shares of the community solar project being built at Kearney’s technology park.

But six months before Chicago-based SoCore Energy completes the project in Kearney, organizers have already landed a high-profile taker that will purchase more than half of the electricity generated by the $11 million project.

The University of Nebraska at Kearney expects to get about 12 gigawatts of electricity a year from the 5.8-megawatt solar farm through its purchase of about 3,600 “shares” in the project. The purchase means UNK has a new source of electricity — a carbon-free one — that will account for 25 percent of its annual consumption.

And even though the solar rate is 1.8 percent higher than the rate UNK currently pays for conventional electricity, the university and subsequent buyers of shares in the solar farm lock in a fixed rate for 25 years.

University officials said the purchase is a logical one in that it helps the institution achieve its stated sustainability goals while also providing a long-term hedge against future increases in energy costs.

“The beauty of that is that (electric) rates are predictable and generally rise over time,” said Jon Watts, UNK’s vice chancellor for business and finance.

In Nebraska, where the vast majority of electricity comes from increasingly expensive conventional generating sources like coal and nuclear, electricity rates for all types of customers have surged in the last decade.

Since 2008, the retail electricity rate in Nebraska has increased by more than 38 percent, compared with an increase of less than 6 percent across the U.S. over the same period.

In a worst-case scenario, Watts said the slightly higher per-kilowatt-hour rate UNK pays for solar would be surpassed by general electric rates in 10 years, after which point electricity from the solar array becomes the cheaper option. (He thinks that window is actually closer to four to six years.)

Over the lifetime of the 25-year contract, UNK anticipates more than $250,000 in cost savings. The university spends about $1.9 million a year on electricity.

As an added bonus, UNK avoided the significant upfront costs it would have incurred to build a solar array on its own.

But why solar instead of wind?

Despite Nebraska’s significant potential for wind energy, entities seeking local renewable electricity in the central part of the state must grapple with environmental considerations around wind farms. That’s due in part to a “central flyway” for migratory birds like the sandhill crane, which makes siting local wind farms a tough feat, said Kearney Mayor Stan Clouse.

Clouse, who is also a major account representative for Nebraska Public Power District, of which the City of Kearney is a customer, said there’s also hope that the new solar project will be another draw for the city’s economic development prospects — particularly when it comes to data centers.

By virtue of its Cooper nuclear plant in southeast Nebraska, NPPD already can boast a significant source of carbon-free electricity. But the state’s largest power plant — the coal-fired Gerald Gentleman Station near North Platte — is also part of NPPD’s generation mix, and the Columbus-based utility has a relatively minute amount of wind resources when compared with the Omaha Public Power District, for example.

In fact, social media titan Facebook steered a sprawling data center project worth more than $1 billion to central Iowa from Kearney in 2013 in no small part because of Nebraska’s relative lack of renewable energy resources.

Wind accounted for 10 percent of all in-state electric generation in Nebraska in 2016, according to the American Wind Energy Association. In neighboring Iowa and Kansas, wind accounted for 37 percent and 30 percent, respectively.

“When we were trying to recruit Facebook to Kearney a few years ago, I think that was really a wake-up call on renewables and the need in our area,” Clouse said. “There is a lot of appetite for this. I’ve told people this already, but I don’t think this one we’re building is big enough.”

Facebook more recently chose Sarpy County for a new data center, now under construction. The company will spend at least $307 million on a project that will draw 100 percent of its power from wind, thanks to an OPPD rate structure devised to attract such developments. OPPD has been rapidly expanding its wind portfolio, which by year-end 2019 will make up 40 percent of its retail sales, up from less than 20 percent last year.

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