COMMUNITY SOLAR: READY TO WORK FOR CONNECTICUT

JOB & ECONOMIC BENEFITS REPORT - JUNE 2017

CONTACT: Sean Garren Northeast Director

Sean@Votesolar.Org 301.541.8675

EXECUTIVE SUMMARY

States across the country are transitioning away from our fossil-fuel based energy system to a clean, renewable, and equitable energy future. Community solar is a promising new model being used by many states to achieve an equitable energy transformation. Connecticut has an opportunity to join the leading edge of states expanding access to clean energy by establishing a statewide community solar program that includes a specific requirement to serve low-income individuals. The purpose of this report is to determine the potential employment, earnings and economic impacts of a 200 megawatt (MW) statewide community solar program in Connecticut. Vote Solar used the Jobs and Economic Impact (JEDI) Model developed by the National Renewable Energy Laboratory (NREL) to reasonably estimate the employment, earnings and economic impacts from the construction and operation of the renewable energy facilities that are expected to be developed in Connecticut under the expanded community solar program. The Solar Photovoltaic JEDI model has been used extensively by decision makers to assess the expected impacts of solar energy projects, proposed programs and policy decisions. The analysis assumes Connecticut’s legislature enacts enabling legislation in 2017, with project construction in 2018. These assumptions are made to simplify the analysis and do not reflect the reality that these projects would be built over a span of several years. Summary of Findings: Connecticut can expect the following economic benefits from statewide 200 MW community solar program:

• 2,580 full time jobs during construction and an additional 104,000 hours of work associated with maintenance.

• $192 million in earnings for those employed.

• $374 million in local economic benefits for the state, excepting local tax revenues.

• $6.25 million from property tax revenues in the first year, with a total of $81 million over 25 years of operating life.

Construction&Other

DirectJobs49%

SolarSupply

ChainJobs31%

Induced Jobs20%

JOB CREATION BY SECTOR

1.0 INTRODUCTION

Community solar is policy tool that is being adopted by states leading the transition to clean energy. Fifteen states and the District of Columbia have enacted community solar enabling legislation.1,2 These states have recognized the benefits community solar can provide to its citizens. According to NREL, as much as 75 percent of homes and businesses in Connecticut do not have the ability to put a clean energy project on their own roof or property.3 Many homes or businesses have old roofs, shaded roofs or poor orientation, all of which prevent rooftop solar installations. Furthermore, low-income individuals and affordable housing properties have been underserved by rooftop solar financing solutions. Community solar is a solution that provides flexibility with project design, siting and financing to increase solar energy access to underserved markets, individuals and businesses. Community solar models, as defined by NREL, are those solar energy projects “that allocate the electricity of an individual jointly owned or third-party-owned (TPO) system to offset multiple individual businesses’ or households’ consumption.”4 Additional requirements are often imposed on community solar project eligibility, such as siting community solar projects in the same utility service territory as the individual subscribers to the output of the generating facility.5 Community solar projects achieve economies of scale through cost, design, and operational efficiencies when compared to traditional on-site solar project 1 Interstate Renewable Energy Council, Inc. (2016). State Shared Renewable Energy Program Catalog.

Accessed online, http://www.irecusa.org/regulatory-reform/shared-renewables/state-shared-renewable-energy-program-catalog/.

2 Interstate Renewable Energy Council, Inc. (2017). New IREC Scorecard Grades State Shared Renewables Programs. Accessed online, http://www.irecusa.org/2017/05/new-irec-national-scorecard-grades-state-shared-renewables-programs/.

3 Paidipati, J., Frantzis, L., Sawyer, H., Kurrasch, A. (2008). Rooftop Photovoltaics Market Penetration Scenarios. National Renewable Energy Laboratory. Accessed online, http://www.nrel.gov/docs/fy08osti/42306.pdf

4 Feldman, D., Brockway, A., Ulrich, E., Margolis, R. (2015). Shared Solar: Current Landscape, Market Potential, and the Impact of Federal Securities Regulation. National Renewable Energy Laboratories. Accessed online, http://www.nrel.gov/docs/fy15osti/63892.pdf.

5 O’Conner, R., Cronin, T., Sparks, A. (2017). Securities Law 101 for Community Solar Market Participants. Energy Today. Accessed online, https://www.energytoday.net/economics-policy/policies/securities-law-101-community-solar-market-participants-orange-groves-country-clubs-solar-condos/.

deployments.6 A single community solar installation serves multiple subscribers, thereby reducing fixed transaction costs associated with project siting, design, engineering, permitting, procurement and interconnection costs. In addition, a single community solar installation is expected to have reduced operations and maintenance expenses compared to multiple individual installations. As a result, the economies of scale associated with community solar enables projects to achieve additional cost reductions and implement flexible financing solutions with diverse energy offtakers. Community solar offers the opportunity to expand affordable solar energy solutions to underserved markets, low-income and moderate-income individuals, and disadvantaged communities. According to the Interstate Renewable Energy Council, there are five guiding principles to any community solar program:7

1. Expand Consumer Access. Shared renewable energy programs should expand renewable energy access to all energy consumers, including those who cannot install renewable energy on their own properties.

2. Offer Tangible Economic Benefits. Shared renewable energy programs should provide a fair value proposition to participants and tangible economic benefits on their utility bills.

3. Put Consumers First. Shared renewable energy programs should be consumer-centric and accommodate diverse consumer preferences.

4. Promote Fair Market Competition. Shared renewable energy programs should encourage fair market competition to enable the development of diverse business models and product offerings in a way that expands consumer choice.

5. Complement Existing Programs. Shared renewable energy programs should be additive to and supportive of existing renewable energy programs, and not undermine them.

Community solar presents a tremendous opportunity to expand solar photovoltaic access to Connecticut’s citizens, especially for low-income communities that face a disproportionately high energy burden. A statewide community solar program also provides the necessary market certainty to support substantial employment and economic growth for the State of Connecticut. The purpose of this report is to inform decision makers, advocacy organizations, and other interested parties of the benefits of a statewide community solar program in Connecticut. 6 Parts of the analysis employed in this report have been utilized in other JEDI-based studies, most

notably: Schatz, D., Tomic, M. (2016). Virginia’s Community Solar Pilot Program. The Solar Research Institute. Accessed online, http://solarresearchinstitute.org/product/study-community-solar-pilot-in-virginia-economic-impacts/.

7 Interstate Renewable Energy Council, Inc. (2017). Five Guiding Principles for Shared Renewable Energy Programs. Accessed online, http://www.irecusa.org/2017/02/new-guiding-principles-for-shared-renewable-energy-programs-released-by-irec/.

2.0 METHODOLOGY

2.1 JEDI Model Basics The National Renewable Energy Laboratory developed the JEDI Photovoltaic (PV) model to estimate the impacts of project-related inputs and the associated jobs, earnings, and economic outputs during the construction and continued operation of solar photovoltaic arrays.8 This input-output model utilizes economic data derived from the Minnesota IMPLAN group’s accounting software, which applies state-specific data to provide a comprehensive estimate of economic impacts associated with new solar energy generating facilities.8 IMPLAN’s data and analytical software has been approved by industry-leading economic research analysis. The JEDI model utilized in this report specifically analyzes projects expected to be deployed as part of a 200 MW statewide community solar program in Connecticut. It accounts for various ways in which investments in PV projects may have effects during both the construction and the operations and maintenance period of the generating facility, as well as economic impacts across the solar supply chain and related industries. NREL’s JEDI model calculates jobs, earnings, and output distributed across three categories:8

• Direct Impacts. Direct impacts arise from solar project development, design, permitting, construction, and onsite labor. This category also assesses economic impacts from continued onsite work over the course of solar array operations and maintenance.

• Indirect Impacts. Investments into PV solar projects stimulate economic impacts in industries outside of onsite construction and maintenance activities. Indirect impacts refer to changes in local revenue and industry impacts across the PV supply chain for local construction activities and ongoing operations and maintenance.

• Induced Impacts. Induced impacts result from reinvestment in the local economy, and spending of earnings by direct and indirect beneficiaries of solar projects. Examples of induced impacts include money spent on restaurants, gas and groceries.9 The JEDI model captures the additional induced job creation and economic benefits during both construction activities and ongoing operations and maintenance.

2.2 Project-Specific Inputs and Assumptions 8 National Renewable Energy Laboratory (2015). JEDI Methodology. Accessed online,

http://www.nrel.gov/analysis/jedi/methodology.html. 9 The Solar Foundation (2017). U.S. Solar Industry Added $184 Billion to U.S. GDP in 2016. Accessed

online, http://www.thesolarfoundation.org/solar-jobs-census/economic-impacts-report-2016/.

The JEDI model allows users to calculate economic outputs for a range of system sizes or types of installations. These size ranges include: • Residential (1 – 10 kilowatts or kW) • Small commercial (10 – 100 kW) • Large commercial (100 – 1000 kW) • Utility scale (larger than 1000 kW)

Each system size range has varying multipliers in the JEDI model to appropriately estimate economic outputs due to economies of scale achieve with larger project sizes. Due to the fact that community solar projects allow for optimal siting, it is assumed that there will not be any community solar projects that fall in the residential size range. In order to maximize the accuracy of JEDI outputs for a potential statewide program in Connecticut, this report applies system attributes from installed and operational projects in neighboring Massachusetts’ community shared solar program. The Commonwealth of Massachusetts currently has 48 community solar projects located across 30 towns for a total installed capacity of 63.24 MW. Historical installation data was used to approximate the distribution of community solar project sizes, the average system size within each size range, and the associated installation cost. It should be noted that installation cost is taken from projects deemed qualified and operational in 2016. The information gathered on Massachusetts successful community solar program provided the basis for project-specific assumptions associated with a statewide community solar program in Connecticut.

Table 1: Key JEDI Inputs and Assumptions of the Model for CT Community Solar

Key JEDI Input Assumptions

Year of Construction or Installation 2018

Installation Type (Residential, Commercial, or Utility Scale)

Small Commercial, Large Commercial, and Utility scales are all applicable applications to community solar. Model is run separately for each type of installation and combined to derive an aggregate economic impact:

● Small Commercial: 10 – 100 kW ● Large Commercial: 100 – 1000 kW ● Utility Scale: 1000 – 3000 kW

Solar Cell/Module Material Crystalline Silicon

System Tracking Fixed Mount

Average System Size

Average System Size for each type of installation was obtained by reviewing data on community solar installations in Massachusetts provided by the Coalition for Community Solar Access and the Massachusetts Department of Energy Resources, SREC II. The distribution of installed capacity for each installation type or size range was then applied to the total program size outlined for Connecticut.

Number of Systems Installed

Utilizing the derived average system size above, we apply those estimated system sizes to the modeled sector sizes outlined for Connecticut. The JEDI model is run separately for each system application and combined to derive an aggregate economic impact.

Table 2: Model Assumptions for Average System Size, Base Installed Cost, and Number of Systems Associated with a 200 MW Statewide Program

Project Scale Small Commercial Large Commercial Utility

Average System Size 51.79 kW 584.56 kW 1747.73 kW

Base Installed Cost $4.20/W $2.86/W $2.40/W

200 MW CT Program Expected Number of

Systems 19 27 104

200 MW CT Program Expected Capacity 0.98 MW 15.55 MW 182.38 MW

Total Construction or Project Installation Cost $4,124,190 $44,451,143 $435,775,168

3.0 RESULTS

The JEDI model assesses the job, earnings and economic impacts derived from of a potential 200 MW statewide community solar program in Connecticut. Direct, indirect, and induced impacts to employment, earnings and economic impacts were calculated. Employment impact figures represent full-time equivalents (FTE), or 2080-hour units of labor (job years). Earnings reflect wages, salary compensation, and benefits paid to workers. Economic output refers to economic activity or the value of production in the state or local economy, and it is reported in 2018 dollars reflecting the expected date of construction. Taken as a whole, these metrics of job impacts and output offer a comprehensive snapshot of the impacts of a potential 200 MW community solar program in Connecticut. Results are grouped into three main categories reflecting employment impacts, earnings impacts, and economic outputs. Note: Totals included in the summary tables may not add up due to independent rounding. 3.1 Employment Impacts During Construction and Operations and Maintenance Solar installations require significant upfront private investment in capital and labor. Once installed and commercially operable, community solar arrays require a workforce for continued operation and maintenance. In the case of a potential 200 MW community solar program in Connecticut, the JEDI model shows that those investments would yield a significant increase to the Commonwealth’s workforce. As shown in Table 3, the JEDI model reveals that approximately 2,492 jobs are expected during the construction period of community solar projects in 2018. In addition, the JEDI model estimates that a total of 104,000 hours will be spent on the operation and maintenance of these community solar projects. Over 49% of jobs created are direct jobs, reflecting on-site labor related to the construction and operation of PV arrays. Indirect jobs, or employment associated with the supply chain of PV array construction, accounts for over 31%. The remaining 20% of job years is attributed to induced jobs, or labor and spending resulting from both direct and indirect earnings in local economies. In summary, a statewide community solar program in Connecticut can expect to see the creation of over 2500 FTE jobs during the construction and operations of these facilities across the state.

Table 3: Direct, Indirect, and Induced Employment During Community Solar Construction and Operations, Reported in Job Years or FTE.

Categories of Employment

During Construction

During Operations & Maintenance

Total

Direct 1,236 37 1,273 Indirect 788 7 795 Induced 504 6 510

Total Employment (FTE) 2,528 50 2,578

3.2 Earnings from a Statewide Community Solar Program In addition to reporting on FTE figures, the JEDI model also captures the expected employee salaries, wages and earnings during the construction and operation of community solar projects in Connecticut. Table 4 illustrates that a statewide community solar program would support tremendous earnings potential among Connecticut’s citizens. Community solar installation, operations and maintenance jobs pay incredibly well. On an hourly basis, individuals directly employed as onsite workers during the construction period are expected to earn $35.65/hour. During the ongoing operations and maintenance, individuals that continue to provide onsite labor are expected to earn $28.90/hour. These economic benefits significantly contribute to Connecticut’s overall economy, both in terms of personal wealth creation and induced economic impacts from well-paying jobs in the clean energy sector.

Table 4: Labor Earnings During Construction and Operations of CT Community Solar Projects

During Construction

During Operations & Maintenance

Total

Direct $91,674,600 $2,205,800 $93,880,400 Indirect $61,386,300 $721,500 $62,107,800 Induced $35,365,000 $413,500 $35,778,500

Total Earnings $188,425,900 $3,340,800 $191,766,700

3.3 Economic Output in Connecticut’s Economy Overall, the JEDI model calculates the total economic impact of community solar in Connecticut could be nearly $375 million. The majority of the economic benefit is derived from the direct, indirect and induced impacts during the construction period. A 200 MW

statewide community solar program in Connecticut is expected to create nearly $370 million in economic benefits simply during the construction period of the solar installations. An estimated $5 million of economic activity is expected during the continued operations and maintenance period. Reference Table 4.

Table 4: Economic Output During Construction and Operations of Connecticut Community Solar Projects

During Construction

During Operations & Maintenance

Total

Direct $136,943,400 $2,205,800 $139,149,200 Indirect $146,007,500 $1,763,800 $147,771,300 Induced $86,325,400 $1,009,600 $87,335,000

Total Economic Output $369,276,300 $4,979,200 $374,255,500

3.4 Local Revenue and Supply Chain Impacts during System Operating Years Section 3.3 provides a snapshot of the total economic impact The JEDI model captures local revenues and supply chain impacts during operation of the community solar projects. Local revenue and supply chain impacts include changes in demand for supporting industries, such as the purchase of materials, return on investment paid to local investors, and all off-site labor.10 A combined snapshot of small commercial, large commercial, and utility scale community solar projects built in 2018 suggests that Connecticut can expect approximately $1.7 million in economic benefit from local revenue and supply chain impacts over the operating life of the systems (reference Table 5).

Table 5: Local Revenue and Supply Chain Impacts During Operations and Maintenance

During Operations & Maintenance

Small Commercial $11,000 Large Commercial $140,000

Utility Scale $1,612,800 Total Local Revenue/Supply Chain Impacts $1,763,800

10 National Renewable Energy Laboratory (2015). Interpreting Results. Accessed online,

http://www.nrel.gov/analysis/jedi/results.html.

3.5 Property Tax Revenue during System Operating Years Community solar facilities will also contribute to Connecticut’s economy through the payment of local property taxes for each year over the 25-year operating life of the installed systems. Local property taxes are also known as mill rates. According to the State of Connecticut, a mill is equal to $1.00 for each $1,000 of assessment.11 The state’s approach to calculating the property tax is to multiply the assessed value of the property by the mill rate and divide by 1,000.12,13 Using this calculation, the State of Connecticut can expect to receive approximately $6.25 million in property tax revenues in year 1, and approximately $81 million in property tax revenue over the 25-year operating life of the community solar installations (reference Table 6).

Table 6: Local Property Tax Revenue During Operations and Maintenance

Annual Revenue

Total Revenue over 25-year

System Operating Life14

Small Commercial $53,389 $694,057 Large Commercial $583,139 $7,580,813

Utility Scale $5,613,603 $72,976,838

Total Property Tax Revenue $6,250,131 $81,251,708

11 State of Connecticut Office of Policy and Management (2017). Mill Rates. Accessed online,

http://www.ct.gov/opm/cwp/view.asp?a=2987&q=385976. 12 An average mill tax rate of 19.44 was used for the analysis. It is an average mill rate based on

individual Connecticut municipalities for fiscal year 2016 – 2017. Information accessed online, http://www.ct.gov/opm/cwp/view.asp?a=2987&q=385976,

13 For this calculation we assumed an assessment is equal to 70 percent of the fair market value as established by the municipal assessor. For example, see the Town of Killingworth: http://www.townofkillingworth.com/offices/tax_assessor.html.

14 The authors used an age-life analysis to determine the value of the generating facility over the 25-year operating life of the facility, a methodology further explained in Sandia National Laboratories’ Standardizing Appraisals for PV Installations report, accessed here: http://energy.sandia.gov/wp-content/gallery/uploads/SAND2013-5239C.pdf. This simplified approach is intended to provide an estimate. It only takes into account the physical depreciation and does not reflect the actual market value of the facility.

4.0 CONCLUSIONS

The JEDI model provides a useful tool to estimate job and economic impacts of a potential 200 MW statewide community solar program in Connecticut. The findings from the JEDI analysis suggest that a potential 200 MW statewide community solar program in Connecticut would create over 2500 jobs in 2018. Expected average hourly wages of $35.65/hour and $28.90/hour during construction and operations activities, respectively, creates an opportunity for local citizens to earn to substantial annual salaries. The hourly wage calculated in the JEDI model is consistent with the findings from a recent study by The Solar Foundation. The Solar Foundation’s 2016 Solar Job Census finds an average median wage of $26/hour for installers.15 Policymakers in Hartford cannot ignore the $374 million dollars that a community solar program could bring to the state’s clean energy economy. The economic benefit to Connecticut’s economy is driven by on-site labor, increased demand for professional services and supporting industries, as well as benefits from reinvestment in Connecticut’s economy. The JEDI findings clearly show that a statewide community solar program will meaningfully contribute to Connecticut’s economy both during the construction and ongoing operations and maintenance of the systems. In addition, the State of Connecticut is expected to receive over $81 million in property tax revenues over the operating life of the community solar installations. Municipalities across Connecticut use property tax revenues to fund community services such as public education, police and fire protection and public road maintenance.16 As a result, Connecticut’s local governments and citizens stand to benefit tremendously from the economic benefits community solar can bring to their communities. What’s most exciting though, is that community solar offers a broad range of additional benefits to the end-users. Community solar expands access to affordable solar energy solutions in a way that current solar offerings do not. Community solar installations are installed at a lower per unit cost, providing system owners the opportunity and flexibility to pass those savings to currently underserved markets. A 200 MW statewide program should include a requirement to serve low income individuals, moderate income individuals, and affordable housing communities. These individuals stand to benefit most from affordable and predictable energy costs, yet under the current policy framework, lack access to clean renewable energy solutions. Connecticut has done a great job establishing renewable energy policies and programs. But now, it’s time for Connecticut to create a robust, statewide community solar program that can provide clean energy for all its citizens, drive new investment to the state, and provide meaningful economic benefits for years to come. 15 The Solar Foundation (2017). National Solar Jobs Census. Accessed online,

http://www.thesolarfoundation.org/national/. 16 State of Connecticut Office of Policy and Management (2017). Statues Governing Property

Assessment and Taxation. Accessed online, http://www.ct.gov/opm/cwp/view.asp?q=383128.

Report Authors: Sean Garren, Northeast Director

Marta Tomic, Community Solar Program Director Vote Solar