How Indianapolis (of All Places) Became a Solar Powerhouse; HINT: It’s the voluntary feed-in tariff or VFIT.

Posted by Laura Arnold  /   July 12, 2014  /   Posted in Feed-in Tariffs (FiT), Indianapolis Power and Light (IPL), IPL Rate REP, solar  /   No Comments

How Indianapolis (of All Places) Became a Solar Powerhouse

By PETE DANKO on July 10, 2014 at 12:00 PM

IMS-aerial

Photo Credit: SunWize Technologies

There’s an unlikely name among the usual suspects that populate a recently released list [PDF] of leading U.S. solar cities. There’s Los Angeles, San Diego, Phoenix, San Jose, Honolulu, San Antonio and then … Indianapolis?

Yep. And the city just got even more solar, with the official opening last week of a 9 megawatt array on a patch of land adjacent to the Indianapolis Motor Speedway. The speedway said it’s the “largest solar farm at any sporting facility in the world.”

A lot of factors can drive solar adoption. A state portfolio standard requiring utilities to source renewables is one of the most common. High electricity prices can help, too, by making relatively expensive renewables more attractive. And while Germany has proven that it’s not required, above average sunshine, which boosts capacity factors, can also play a role, as the list of leading cities suggests.

But Indianapolis has none of those things going for it. Not really. In 2011, Indiana did enact something called the Clean Energy Portfolio Standard, but its call for 10 percent renewables by 2025 is modest (California is targeting 33 percent by 2020). Besides, it’s voluntary. As for electricity prices, Indiana’s, at 11.91 cents per kilowatt-hour, are about a half-cent below the national average, according to the most recent data. And central Indiana is not particularly sunny, but you knew that.

So what brought Indianapolis into the solar big-time? Simple: A generous feed-in tariff offered by the local utility company, Indianapolis Power & Light, a subsidiary of AES Corporation that serves some 470,000 customers in and around Indiana’s capital city. And as Laura Arnold, president of the Indiana Distributed Energy Alliance pointed out in an interview, “The most remarkable thing is, IPL did it voluntarily.”

98th Indianapolis 500 Mile Race

IPL surfaced the program in December 2008, in the wake of President Obama’s first election win. In early 2010, a three-year pilot program offering 24 cents per kilowatt-hour to facilities between 20 and 100 kilowatts in size, and 20 cents/kWh for bigger installations, was approved by regulators. The queue for the approximately 100 megawatts of solar up for grabs – equal to about 1 percent of IPL’s retail electricity sales – filled up. But as often happens with proposed projects, actual construction was slower to follow. IPL and regulators also found themselves working through technical issues in implementing the program.

Arnold and other solar supporters last year expressed fear that, with the program closed to new projects, some of the unbuilt projects might fail to be built, leaving a long line of viable projects that didn’t make it into the queue out in the cold. But a tally recently provided to Arnold by IPL showed that as of the end of May, more 53.4 MW was operating under Rate REP, and another 12.3 was under construction. In an email, IPL spokeswoman  Brandi Davis-Handy said no projects had fallen through, and that “IPL still expects the remainder of the projects to be completed by the end of 2014.”

Along with the big Speedway project, the IPL feed-in tariff has yielded a couple of other landmark solar installations: the first utility-scale farm on a Superfund site, and the nation’s largest airport-located installation, at Indianapolis International.

Assuming the remaining 33 megawatts of solar on the Rate REP list get built, Indianapolis should maintain its spot among top solar cities for at least another year. But what happens thereafter is uncertain. Solar advocates would love to see IPL revive the feed-in tariff, and are hopeful that proposed federal carbon emissions reductions – though fairly modest for coal-friendly Indiana – might be an inducement.

For its part, IPL isn’t committing to anything. However, the company did make an interesting discovery as it worked through the bumpy process of implementing the feed-in tariff. For complicated reasons, it ended up holding a reverse auction for 30 megawatts in the program. That process revealed that developers, with the cost of solar falling, were willing to build at a far lower guaranteed price for their power – around 10 cents/kWh – than the program originally offered.

“The reverse auction demonstrated the pricing dynamics and would be a better vehicle than a standing offer,” Davis-Handy said. “Another option would be a self-build/ownership structure.”

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