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Lodestar ramps up community energy in New York Stat

Solar project developer Lodestar Energy is recognizing the opportunity for ramping up community energy in New York State with a group of five solar projects-some with power storage capabilities-on the go in special Opportunity Zones.

By Tony Kryzanowski

All across North America, investments in renewable energy are bringing new industry, tax revenue, jobs, and hope to areas struggling with high unemployment and limited tax income.

Some areas are struggling because long established local industries have moved elsewhere, often attracted by cheaper labor costs.

That is one of the unique benefits when a renewable energy project comes to town. It's a new industry that establishes deep local roots, with no chance of moving to Mexico or China. It's there for the long haul, and local governments can plan around it for the community's benefit.

That is what Lodestar Energy, a solar power developer and marketer, is bringing to the Catskills and Southern Tier region of upstate New York. They are developing projects in areas across a collection of three counties and four towns in what are designated as federal economic Opportunity Zones.

These Opportunity Zones are a fairly new concept, created by the federal Tax Cuts and Jobs Act in 2017. It creates tax advantages for companies that invest in these areas, deemed to have low growth prospects and limited development opportunities.

Lodestar Energy is a Connecticut-based developer of smaller scale solar power utility projects with considerable experience building and operating solar power installations in the northeastern United States. It has now launched a $40 million community solar and energy storage development in the Southern Tier in the New York State Electric and Gas (NYSEG) utility service area.

The development consists of five separate community solar farms that are being designed for pairing with storage systems, producing a combined 32 megawatts (MW) of renewable power. The solar farms represent the company's largest development project to date. Each solar farm will be between 3 and 7.5 MW. Their plan is to have the solar farms built and operational by the end of 2020.

The company is procuring VSUN (Vietnam Sun Energy) modules for a portion of the portfolio, and are in the process of determining their vendor for the remainder of the projects.

Lodestar Energy has not yet decided whether all these projects will include a power storage component, but all the installations are being designed with that capability. If the company includes that as part of its development, there will be battery storage to provide power for up to four hours. Lodestar has experience pairing storage with solar farms, as neighboring Massachusetts has a successful storage program.

 
Lodestar Energy is a Connecticut-based developer of solar power projects with considerable experience building and operating solar power installations in the northeastern U.S. 
  

These community solar projects fit in well with the state's economic goals. New York wants to encourage development in that area of the state, having established its Southern Tier Soaring comprehensive blueprint to generate robust economic growth and community development.

Lodestar Energy describes itself as seeking, "win/win solutions that others frequently overlook."

"In terms of off-takers, we originally worked with a lot of low-income housing and municipalities, and now we are transitioning to doing more community solar," says Dan Watson, head of Lodestar Energy Business Development and Finance.

Watson says that the company has two particular strengths. It has a good understanding of tech equity financing for solar projects and positive relationships with its debt partners because of the company's demonstrated ability to bring projects to their financial close with structures that provide minimal risk and with considerable downstream value.

"Secondly, we try to be smart developers, so we focus on projects that really bring local benefit, whether that is providing energy savings to municipalities, to low income housing, or through community solar, while focusing on projects that are low-impact development," says Watson.

By low impact, this means situating projects in brownfield locations and areas zoned industrial. All of Lodestar Energy's Southern Tier projects are low-impact developments with limited tree clearing and only a small amount of civil work required to keep a low environmental footprint.

"We really try to partner with towns in the selection of sites that are best suited for solar, and we don't want to develop just any project," Watson says. "We are selective and careful about the opportunities that we explore and make sure that there are benefits across the spectrum."

 
One of Lodestar Energy's already built solar power projects (at right). The New York State development consists of five separate community solar farms that are being designed for pairing with storage systems, to produce a combined 32 megawatts of renewable power. The plan is to have the solar farms built and operational by the end of 2020. 
  

Lodestar Energy received a warm welcome from municipalities for the local investment they are bringing to the area.

"Solar power is a new industry in these regions, and it takes some getting used to, but overall, we've had a great experience working with the towns, planning boards, and supervisors who have generally been supportive, amenable, and great proponents for these projects," says Watson.

Lodestar Energy has calculated how much the area is likely to benefit from this $40 million investment in solar power over its lifetime.

It's expected there will be more than $2 million in property taxes and $2.5 million in lease payments to landowners generated where the solar farms are located. Roughly $5 million will be contributed to full-time construction and maintenance jobs, and half-a-million dollars in local permitting and engineering jobs.

Watson noted that Lodestar Energy's projects are being constructed in Opportunity Zone areas that are rural, which to date may not be gaining as many of the development benefits as urban areas within Opportunity Zones. They are considering New York-based construction contractors to participate significantly with the development of these projects once shovels hit the ground in early 2020.

Lodestar Energy's investment in this region is not only delivering a significant financial bump to local municipalities, it is also providing notable power cost savings to subscribers.

"The projects will produce approximately $360,000 in annual electric bill savings for local customers, or about $7.2 million over the projects' lifetime," says Watson.

Delta EAS, with two offices in New York, has been tapped by Lodestar Energy as their engineering and surveying provider on these projects. RBI Solar is providing the racking, and the projects will use SMA Solar Technology inverters.

 
  

Community solar-type projects allow individual homeowners and small businesses to participate in the benefits offered by renewable energy.

"The idea behind community solar is that there are many residences and small businesses that simply don't have the rooftop space to be able to install solar systems to provide a direct benefit to them. So community solar programs are designed by the state to allow them to take sort of an ownership stake through a subscription to solar projects that are installed on the same utility, but aren't directly on their own rooftop," says Watson.

Lodestar is paying for upgrades to tie the power they produce into the NYSEG distribution network. The entire production, distribution, and consumption process is handled on a virtual net metering basis.

"The subscribers get savings—usually around 10 percent of their electric bill—and Lodestar Energy, in turn, benefits by being able to build projects," says Watson. "We spend a lot of time and resources to acquire high-quality, long-term subscribers to our projects. To be frank, this is a great deal for everyone involved."

Essentially, the subscribers gain guaranteed savings without any upfront costs while Lodestar Energy has the opportunity to participate in New York's program to develop clean energy projects.

Whether or not Lodestar Energy takes the storage route, Watson says that the company brings its experience in power storage to these projects in New York. They understand the costs and benefits of adding this power delivery capability after the sun sets. The state of New York encourages inclusion of storage components on all solar projects being built there.

The geographic location of the Southern Tier region does require some specific solar farm design considerations. One is that the area delivers slightly less solar yield compared to other surrounding states, and another is the potential snow load, as this area is prone to considerable snowfall in winter. Lodestar Energy has conducted extensive modeling of each project, taking historical solar yield and potential snowfall into consideration, to ensure that they are building efficient projects suitable for that area.

In addition to developing in Opportunity Zones, Lodestar Energy conducted an extensive interconnection study into the NYSEG system and discovered that in several parts of the Southern Tier region, there was a lack of substantial, three-phase power infrastructure. This definitely influenced site selection and required a $2.5 million investment by the company into electric grid upgrades.

"We looked at a lot of sites that we would have loved to have developed, but there was limited capacity on some of the transmission lines out there," says Watson. However, the company continues to look for other potential investments in the state and anticipates more solar project developments down the road.

Lodestar Energy intends to continue to look seriously at investments in Opportunity Zones because of the multiple benefits they provide to economically challenged areas, the savings to subscribers, and tax benefits to solar developers.

 


Winter 2020