A 60,000-panel solar power farm capable of powering 4,500 homes may be coming to the Kenai Peninsula. It would be the largest in the state of Alaska and roughly 20 times the size of the largest solar farm currently in the state. They’re both projects taken up by Renewable IPP, a company that develops, constructs and operates utility-scale solar farms.
Renewable IPP CEO Jenn Miller outlined details of the farm in a presentation given to the Kenai Peninsula Borough Assembly during its Tuesday night meeting, where multiple people testified in support of the farm. The company is behind Alaska’s largest solar farm, in Willow, as well as the development of another farm in Houston.
Renewable IPP’s Kenai Peninsula would be the company’s biggest, with roughly 60,000 solar panels distributed throughout about 160 acres of land. The farm would have a rated output of 20 megawatts, but Renewable IPP would install 30 megawatts of solar panels to boost production on cloudy days. The farm would generate enough energy to power about 4,500 homes. The exact location of the Kenai Peninsula solar farm has not been finalized.
Where the cost of energy generation is between $0.07 and $0.09 for HEA, the average cost for solar in the Lower 48 is between $0.03 to $0.04. That solar cost is higher in Alaska than in the Lower 48, but Miller said Renewable IPP’s rates are competitive within the state. At Renewable IPP’s solar farm in Willow, Miller said, the company is selling electricity for about $0.075.
Miller said the farm would generate about 40 to 60 construction jobs that would pay more than minimum wage, with about 20 to 30 long-term part-time workers for operation and maintenance of the farm.
Miller said she worked in the oil and gas industry for about 14 years before starting Renewable IPP, where she said her goal was to make renewable energy affordable for people in Alaska.
“We wanted to help introduce new energy forms that could help suppress energy prices for Alaskans,” Miller said. “It’s not just an altruistic thing. When everybody wins, that’s a good business model.”
IPP stands for independent power producer, which Miller defined as a private entity that owns a generation facility and sells electricity at wholesale prices to a public utility. IPPs aren’t exclusively solar and bring competitive pricing to public utilities.
When Renewable IPP opens a new farm, Miller said, they plug into an existing electric grid and then the utility distributes electricity to its customers. On the Kenai Peninsula, that existing utility is HEA, which would be responsible for distributing solar power generated at the farm to HEA customers.
Miller said that part of the attractiveness of the Kenai Peninsula to Renewable IPP for the farm is the amount of land available and the type of workers who already live here. Miller and her business partners all have backgrounds in the oil and gas industry, and she said that employment background allows for an easy transition to work at a solar farm.
To make solar farms possible, Miller said Renewable IPP relies on a private investor to fund infrastructure and take on the capital risk. Renewable IPP then enters into a power purchase agreement, a contract that sets the price the company will sell power at.
“What’s unique about it, especially here in Alaska, is (that) first, the utility has to say ‘Yeah, we think this price looks good for our members,’” Miller said. “But on top of that, the Regulatory Commission of Alaska has to review and approve that contract.”
Before the company breaks ground on the Kenai Peninsula, however, Renewable IPP has requested that the Kenai Peninsula Borough exempt IPPs from property taxes on their project’s capital assets. Miller estimates that borough property taxes would take between 10 and 15 percent of Renewable IPP’s annual revenue, which would impact rates paid by utility customers.
“It just amounts to a large tax burden on the project,” Miller said. “Ultimately, what that does is it inhibits our ability to offer the lowest possible electricity costs to HEA members.”
Multiple people testified in support of developing the solar farm.
Henry Krull, who owns businesses on Whistle Hill in Soldotna, said high electricity costs, particularly at his hydroponic farm, have prevented him from expanding his business into other communities, and that he supports borough facilitation of the Renewable IPP farm. Krull said the first 1,000 heads of lettuce he grows each month go toward paying his electricity bill and that he has reached out to Renewable IPP independently about starting a utility scale solar farm on the Kenai Peninsula.
“Fortunately, I don’t have to make a living selling lettuce and other greens — it’d be nice to make a little profit — but really, it’d be nice to have a successful business (and) to be able to promote the idea of growing food in your community healthy food,” Krull said. “… Really, the primary limiting factor is the high cost of electricity.”
Homer Electric Association Director of Strategic Services David Thomas said he was not testifying for or against property tax exemptions, but rather to provide information about how the farm would impact HEA rates.
“These kinds of projects are consistent with our board’s desire not to have all our eggs in one basket,” Thomas said. “Currently, 86% of our energy is from natural gas from the same supplier.”
Miller said Thursday that the farm would be beneficial for HEA because the company pays a lot for fuel. Reducing the amount of money HEA spends on fuel prices by diversifying with solar power, Miller said, brings prices down for HEA and thus, for HEA customers.
Tim Dillon, the executive director of the Kenai Peninsula Economic Development District, or KPEDD, wrote in a letter supporting Renewable IPP’s Kenai Peninsula solar farm that the project would support local businesses by stabilizing electricity prices. High energy prices, he wrote, are often cited as one of the “leading deterrents” for starting new businesses in the borough.
“Utility scale solar projects sign long term (20-30 year) contracts which will help stabilize electricity prices, supporting business retention and new business growth in the region,” Dillon wrote. “The Kenai Solar Farm is projected to meet 6.5% of Homer Electric Associations (HEA) energy demand, offering meaningful energy diversification and price competition to the market.”
Kenai Peninsula Borough Mayor Charlie Pierce said he supports the development of solar farms in Alaska, but questioned what benefit the project would provide to borough taxpayers if the borough agrees to exempt the company from property taxes.
“You’ve got some folks out there who would just as soon be left alone and not have to pay more for these types of projects that they may or may not benefit from,” Pierce said.
Miller countered Pierce’s comments by saying that the request for tax exemptions is not unprecedented because the U.S. government subsidizes energy and subsidies are given to the oil and gas industry and to the coal industry. Borough residents will see a benefit, Miller said, because the money the company doesn’t spend on property taxes will allow them to charge customers less.
“By giving projects of subsidies, it results in lower cost energy that helps our economies thrive,” Miller said.
Miller said Thursday that the exemption from borough property taxes is a “key enabler” to making the peninsula solar farm happen.
Assembly member Willy Dunne pointed out during Tuesday’s meeting that the borough already offers property tax exemptions up to 50% for “new industries” that come to the borough. Miller said Renewable IPP would be looking for a roughly 80% exemption on the capital improvement taxes. Renewable IPP currently pays full property taxes in the Matanuska-Susitna Borough for the Willow solar farm, but the large size of the Kenai farm and the use of HEA resources as a backup during times of low production means the company would pay more to operate it.
Miller said Thursday the project does not need to be 100% exempt, but that a 50% exemption is not enough to fully enable the project.
Pierce ultimately said he’d be interested in meeting with Renewable IPP at a later date to further discuss the project.
“I would hope that … you come in here with some very, very strong math that demonstrates where we’re all at an advantage,” Pierce said. “I hope that we take a very strong look at this and really ask some tough questions.”
Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.
