How To Avoid Regulatory Pitfalls In Solar Energy Projects
News stories about companies converting to solar energy are becoming more and more prevalent. You see photos of solar arrays glistening in the sun, providing the clean energy that everyone covets. However, what you donât see in the thirty second sound bite is all the work that went into getting those solar arrays sited, installed and operating.
Most people assume there are significant regulatory requirements for large utility scale projects to supply power to the grid. But even when a company is contemplating a smaller solar energy project to help power its facilities, there are many regulatory and permitting requirements that must not be overlooked in the planning of the project. Those requirements can create tremendous obstacles depending on the projectâs complexity, size and location. Below are some tips on how to avoid regulatory roadblocks when implementing a solar energy system.
Tip 1: Know The Project Requirements
When planning a solar project, it is crucial to know the facilityâs energy loads to determine the appropriate technology to utilize, as well as the applicable permitting requirements that might be triggered by that technology. A key initial step in any solar energy project that is often overlooked is an energy audit. Conducting an energy audit of the facility will establish a baseline for the energy needs the solar project must meet.
The audit also provides an opportunity to utilize conservation measures, which in almost every case are cheaper to implement than paying energy costs. After the energy saving measures are added to the equation, the solar provider can suggest a solar configuration properly sized for the facility.
Once the technology is chosen, this is an opportune time to conduct an analysis on the environmental permits that may be required, such as air quality and water permits. Due to the length in time to obtain some permits, this upfront analysis can save time and money down the road. Although photovoltaic panels typically use less water than other solar technologies such as concentrated solar, there are still water needs involved with washing the panels periodically to ensure peak performance.
Many companies will usually provide water already available at the facility for maintenance of the panels, but this can be a considerable cost that should be factored into the negotiation of the price of the energy provided by the solar system. In cases where the facilityâs access to water is inadequate, additional water may have to be procured through water rights or other sources.
Additionally, some areas of the country have strict air quality regulations that require unpaved access roads to the solar array to be subject to a dust control permit. It is important to know whether such a permit is necessary, because either the host customer or the solar provider will need to obtain the permit and remain in compliance with the regulatory agency during the term of the project.
Tip 2: Choose the Proper Team
In their haste to âgo green,â many companies overlook the intricacies involved with implementing a solar project. Whether the technology involves photovoltaic panels or concentrated solar towers, there is much engineering that goes into the solar energy project. If the facility will be installing solar panels on a building component, such as a building roof or parking structure, there will be engineering required to satisfy the required building permits. Thus, the company should ensure that a licensed engineer is involved early in the planning process to flag any such issues.
Additionally, the contracts involved in these projects between the solar provider, the host customer and the utility are very complex and require a particular skill to ensure that the deal is fair and the risks are properly allocated. It is important to understand that the power purchase agreement between the solar provider and the host customer is not just another contract.
Specialized knowledge in the environmental, legal, tax, energy procurement, real estate and finance areas is needed to fully understand all of the implications of the contract. Companies should assess their in-house capabilities in each of these areas, and make sure they are getting the proper advice from outside consultants and legal experts in areas that may be lacking.
Tip 3: Know the Utilityâs Requirements
As previously noted, there are several agreements that must be negotiated to implement a solar project. In many jurisdictions, the utility provides incentive payments to customers who utilize solar energy, often in exchange for purchasing renewable energy credits to offset the utilityâs use of traditional fossil fuels.
One particular agreement that the utilities require is an interconnection agreement, which covers the technical requirements of connecting to the electrical grid. It is key that companies understand the technical requirements, or get assistance from the proper consultants, to ensure that the solar provider builds the system in strict conformance with the interconnection agreement.
In most cases there are energy components which must be installed on the companyâs side of the electrical connection, which in some cases can cost millions of dollars. Therefore, it is important to know what the components are so their cost can be factored into the price of the energy provided from the system.
In sum, these are just a few of the key issues related to implementing a solar project. It should be noted that these obstacles are relatively easy to navigate with proper planning. As the technology improves and the cost of implementing these projects decreases, the growth in their utilization is expected to be exponential. With some careful planning and the right expertise, many companies will be able to utilize this technology with successful results for years to come.
Michelle De Blasi is a Partner in the Environmental and Energy practices of Quarles & Brady LLP. De Blasi is also the Chair of the firmâs Solar Energy Industry Team.
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