From PPAs to PLAs, Renewables are a Billion Dollar Idea
Wisconsin has roughly $10 Billion worth of estimated utility-scale renewable energy (RE) construction projects in the queue. That’s a big number, and it’s not just allocated to one mega project, but rather spread across sixty specific sites. That dollar figure goes up significantly if we add in projects of less than 50 megawatts (MW), think community solar.
This is an immense amount of work that’s confidently in the pipeline right now. And unlike the traditional power plant, where there’s a spike in man hours for a year or two, we know this work will be here over the next decade and beyond.
In 2019, Wisconsin’s statewide RE mix was only 7.7 million MW hours, or 11.1 percent of the total 69 million MWh in electricity sales. With the national average for RE at 21 percent and growing, and many Wisconsin municipalities setting immediate goals of 25 percent RE’s by 2025, well positioned contractors are poised to stay busy for years.
A closer look reveals that over half of the current RE MWh are actually imported from outside Wisconsin. As an overall percentage, RE production in Wisconsin is in the single digits. When it comes to market growth, we’re only in the first mile of this marathon.
PPAs – Opportunities and Challenges
A lot of noise has been made lately about the legality of Power Purchase Agreements (PPAs), a third-party financing arrangement allowing developers to directly rent solar arrays to homeowner and businesses (see TDR, Nate Beck, Feb. 25, 2021). Milwaukee area utilities have argued that these agreements are invalid under state law, as the developer would be deemed a third-party generator of electricity according to Wisconsin Statutes Chapter 196.
Would-be beneficiaries of these PPAs, however, are not entirely out of luck. Sauk County, Oneida Tribe of Indians, Deerfield, and other Wisconsin municipalities and school districts have penned these agreements to build their solar rooftop arrays. A wider recognition of these PPAs would open the RE market to needy customers who can’t afford to pay the upfront costs of the necessary equipment.
This would also open the market for contractors who have longstanding relationships with churches, religious organizations, high schools, higher ed, local municipalities… basically, any client with a roof.
Time to Update the Regs
PPAs represent only one piece of the complicated puzzle that is RE. The technology that enables RE to be financially approachable for utilities has also democratized its use in commercial and residential construction. And state and local governments are convening in earnest with stakeholders to ensure this opportunity is fully realized for the citizens of Wisconsin.
In December, the Governor’s Task Force on Climate Change released a report with 55 recommendations, seventeen of which pertain to advancing REs. Number 49, allow third party renewable financing for solar energy generation; in other words, PPAs. Other items of note include:
No. 6: Develop Electricity Storage and Microgrids For Critical Infrastructure
No. 10: Support Low-Cost Debt Financing of Customer Clean Energy Projects
No. 14: Support Community Solar
Separately, until we know which initiatives will survive the Governor’s Executive Budget Bill, we can at least look to it as establishing a positive culture around RE. Locally, the Milwaukee City-County Task Force on Climate and Economic Equity is looking at National best practices, including Utility Green Tariffs and Cooperative Agreements between the municipality, public utility and PSC.
Keep it Local!
Many of these smart financing pieces will meet consumer and community demands, while creating entry points for local and state contractors. And, to make sure it’s a Wisconsin-based workforce that’s building green, labor unions and apprenticeship programs are working together and with industry stakeholders to provide Wisconsinites with the technical trade skills and certifications needed to lead in the clean energy economy.
The tech is cheap, the demand is high and thoughtful regulation is being examined. This is literally a billion-dollar opportunity for our contractors and workforce. One way to help keep it local may be utilization of Project Labor Agreements (PLAs) on utility-scale projects. This would guarantee quality projects, delivered safely on schedule and on budget, and also ensure fair labor standards for Wisconsinites.
Another is to be in all places where decisions are made. That’s where Building Advantage and its Member Stakeholders come in. The opportunity is here, and union construction is ready to bring home.
Nathan Jurowski is the Executive Director of Building Advantage, an organization dedicated to advancing the interests of the men, women and companies in union commercial construction in the Greater Milwaukee Area. For more information about Building Advantage, visit buildingadvantage.org or call (414) 897-1146.