Peter Walks for Democracy

I want the lessons of the Centre County solar power purchase agreement (SPPA) working group (WG) to be as accessible as possible. As readers know, 10 of central Pennsylvania’s local governments are finalizing the largest-by-member SPPA in the Commonwealth and maybe the country. This entry is my first deliberate crack at it. Here, I will use the World Resources Institute’s (WRI) “Five Key Questions” framework.

Every government has the fiduciary responsibility to contain costs. How many times have you wondered how your state, city, or school district can reduce your tax burden, provide the same or better service, and provide those additional benefits that make life great? As someone who has served in township, council of government, and school district government, I have spent my time looking for efficiencies in operations and lower rates. At the same time, I am one of a rising tide of elected officials in local government worldwide who understand the imperative of drawing down greenhouse gas emissions and spurring a just and clean energy transition. Where and how to meet these challenges can flummox even the most resourceful people.

In 2017 – 2018, I saw firsthand how solar projects of a certain size could beat the price of the dirty fossil-heavy grid. A utility-scale solar project piqued the interest of Penn State’s Office of Physical Plant because of its cost and its ability to meet the university’s 2020 greenhouse gas reduction goal. As staff at Penn State’s Sustainability Institute (now Penn State Sustainability) with experience in local government, I was assigned to the University’s project team. We came out with a power purchase agreement with Lightsource BP that was projected to save more than $14 million over 25 years and knock out 25% of our emissions from purchased electricity. During our learning process, we saw data from dozens of projects in PJM, the grid operator. Those data showed that solar projects above 10 MW of installed capacity, or about 60 acres in Pennsylvania, had comparable prices for buyers.

At the time, I was serving on the Ferguson Townships Board of Supervisors where I had passed central Pennsylvania’s first net zero greenhouse gas resolution, helped draft the position description for and hire the Centre Region COG’s Sustainability Planner, and other initiatives. I started to ask myself if central Pennsylvania’s local governments could aggregate their power and put a project out to bid together. We would need a large number of local governments and at least one very large purchaser to carry the group through. As it turns out, it was an unusual question but not unheard of.

The WRI says, “local governments are acting on the ambitious goals they have set to reduce carbon emissions and expedite clean energy deployment. One of the strategies governments, universities and other non-profits, and companies are using is ‘buyer-led aggregated procurement.’” Two or more entities form a buyers’ group and cooperate to create a shared vision, set goals, and set out to create a clean energy project with a developer. These can be physical and virtual power purchase agreements (PPAs) or contracts with utilities. 

STRATEGIES

The vision required a dedicated team with project management ability. I started with the Finance Director at the Centre Region Council of Governments (COG), Joe Viglione. He was interested. Then, step by step, we talked to other finance directors, elected and appointed officials, and used the COG’s committee structures to create an ad hoc working group enabled by Pennsylvania’s Intergovernmental Cooperation Act. To our great fortune, we got the interest of the State College Area School District and the State College Borough Water Authority whose energy demand combined was in excess of 20 million kWh. These two entities would prove to be critical.

We brought governments together. Over the course of a few months in 2019 and 2020, we received representatives appointed by their home governments. We created voting rules, a chair and vice-chair, a proportional-by-electricity-demand cost-sharing agreement, and designated a fiduciary in compliance with federal law. The working group created a set of goals that fell broadly under the umbrella of cost saving, environmental stewardship, and supporting central Pennsylvanians. We also create ad hoc project management teams (PMT) to handle milestone decisions and day-to-day communications with consultants. The COG, State College Area School District, Centre County, and Patton Township appointed planning, finance, and administrative staff to serve alongside elected and appointed officials. 

In 2020, we learned deeply with others. the working group was invited to take part in an aggregation cohorthosted by the World Resources Institute (WRI), the Rocky Mountain Institute (RMI), and the American Cities Climate Challenge Renewables Accelerator.  We were spotted as charting a new path, a path WRI and RMI could see presented local governments with challenges and benefits. Looking back on those challenges and benefits, which held true?

As WRI points out, local governments need help. We rarely have the capacity on take on something novel. When it comes to aggregating electricity to put into a solar power purchase agreement, they will face daunting prospects. We foresaw and encountered logistical, fiduciary, and political challenges. None of us had the in-house expertise needed to navigate the complex process of a solar PPA, retail energy contract negotiation, and energy law for 10+ local governments. Therefore, we hired an energy services consultant to put out the Requests for Proposal the solar PPA itself and the retail supplier to manage the PPA as well as help us find an experienced solicitor who could help us manage risks.

Taken together, we needed a team with a vision, goals, and agreed-upon processes that could be executed by individuals with the authority to do so. It worked well because we communicated well. There is one exception regarding the extent, nature of, and cost legal guidance. I’ll share more on that later. It is important.

BENEFITS

There are at four three benefits to lowering costs and emissions, managing risk, improving community, and enhancing cooperation. First, volume brings a discount. Large enough demand, as my experience on the Penn State team showed, could beat the price on the dirty grid that any individual member government can get. This is most obvious for the smaller governments in our group like Harris and Patton Townships. In our area, we have several municipalities with net zero greenhouse gas commitments, a regional Climate Action and Adaptation Plan with 2030 and 2050 emissions reduction targets, and school district policy pointed toward sustainable energy. The lower price facilitates lowering emissions.

Second, when we work together, we can manage risk. We had a painstakingly slow and deliberate pace that was created by the attention to details across the working group’s members. The project management team engaged regularly with our consultants and solicitors to answer dozens of questions. Finding and providing the answers helped us see where risk lie in wait, ranging from panel failure to default to sale of the solar farm to another party. And as anyone attending to the climate crisis will tell you, managing this risk helps mitigate our contribution to climate risks from rising emissions.

Third, utility-scale projects create other possibilities to help the community. Besides avoiding some costs, large solar farms can benefit the adjacent economy, biodiversity and habitat, and provide education. Landowners and the local government where the solar farm is sited have a steady and stable revenue stream from a lease and taxes. Reputable developers will contract with qualified construction and electrical contractors, creating apprenticeships for local people seeking training in the trades. A well-managed site can be the home of wildflowers for pollinators, be used for sheep grazing, and provide habitat for birds, reptiles, and mammals. Finally, a solar farm’s location, its processes, and its ongoing operation, maintenance, and electricity production can be the subject of study by school kids from K-12 whether in math class or the trades.

Fourth, cooperation creates new relationships and can strengthen existing relationships. We were fortunate to have a COG structure that convened local governments for almost 50 years. Even still, when we started with fifteen local governments that included authorities, municipalities, a county, a COG, and a school district, we had new relationships forming. While 6 of them have signed the dotted line to date and four more (fingers crossed) should sign on in January, the willingness to communicate on issues of shared interest is there. Since our region is growing, this capacity will continue to be important in the near future. It has also increased energy and climate change literacy in the region, providing us with common language for managing climate-induced or -related risks and opportunities. 

CHALLENGES

Min Xian wrote a solid piece on our PPA for Spotlight PA. She labeled our entrance into solar aggregation a journey into “uncharted waters.” While local governments are enabled to work together on special projects, it doesn’t mean it’s easy. 

While RMI has published guidance, there is no easy-to-follow pathway per se on exactly what the path will look like. But the biggest project killers will be lack of transparency, poor or bad-faith communication, and a lack of tolerance for ambiguity. Knowing that, project leaders will have to communicate more than they think they need to. A failure to do so can erode trust. At the same time, it’s critical to keep documentation of all shared processes and decisions so partners and their constituents or ratepayers can access them and ask questions. Communication is especially true as it pertains to expenditures. 

In our experience, we incurred larger legal expenses than we anticipated, some of which were performed “at risk.” Those expenses in the back half of the project were tallied by our energy solicitor but incurred at his and his firm’s risk. This at-risk performance meant that he knew he might not be paid, especially if the project didn’t make it across the line. The “at risk” work was communicated to our working group members but not understood as well as our project management team thought it was. 

As the Chair of the Working Group, I could have more explicitly communicated what it entailed. This slight deficit opened the door to a set of bad-faith actors to take to local talk radio undermine the project with disinformation. They are our very own “merchants of doubt,” filling in the role of fossil-fuel-funded cranks, liars, and killjoys. While I personally suspect they would have found any excuse to go to war, our less-than-absolutely-clear terms handed them a scrap they could use to manufacture a controversy. Thankfully, there is trust in the group and a willingness to tolerate the ambiguity and uncertainty, accepting progress instead of killing it with perfection. Trust was earned by a commitment to transparency, clear records, and solidarity about the goals.

These communication challenges and legal expenses mix with others. Xian quotes Tom Murphy, solar adviser for the Pennsylvania State Association of Township Supervisors (PSATS). He rightly says local governments stay away from these kinds of energy agreements because of their complex grueling and tedium and trivia. “It’s not just hiring an attorney, but it’s hiring an attorney that’s experienced in that space. … And here we are trying to put together a cooperative type of a purchase and then power purchase agreements on top of all that,” he said. “You just have multiple levels of complexity in there to navigate through.” He continues, “It’s an early mover scenario … You’re trying to navigate a situation that you don’t understand all the rules, and to some degree that all the rules might not be there,” Murphy told Spotlight PA. “People are looking to you to help figure out what that might look like going forward.” No pressure.

ONWARD

This entry has been my first deliberate attempt to pass on some high-level lessons inspired by the WRI’s “Five Key Questions” framework. As the world’s substate governments confront the climate crisis and spur on a just transition to a clean energy future, we need better tools including electricity aggregation. We have seen that we can save money, advance clean energy and decarbonization goals, reduce risks, extend and deepen ties, and improve our shared future. These benefits, though, require a great team that shares a vision and goals, communicates well, and remains consistent.