Are Indiana and Michigan Ready for a Wave of Solar?

After years in court, American Electric Power (AEP) recently agreed to a settlement in a case that was originally brought against them over a decade ago. Though a prior settlement had been reached in 2007, a revised deal was agreed upon in late February. The February 25th revision is seen by supporters of renewable energy as a major victory. The case, which was brought against AEP by citizen groups, state governments, and the U.S. Environmental Protection Agency, cited concerns for public health and violations of the Clean Air Act. The new settlement focuses largely on electricity generation and will promote the development of renewable energy.

The three outdated coal-fired plants AEP agreed to retire in the settlement generate a portion of the electricity used in Ohio, Indiana, and Kentucky. The plants in question have a total generating capacity of 2,011 megawatts (MW) of electricity, which add 12 million tons of carbon and 84 thousand tons of sulfur dioxide in the atmosphere each year. The plaintiffs argued that public health and environmental concerns arose as a result, and AEP agreed to replace these older plants with a combination of more efficient electricity generation methods, utilizing both traditional and renewable sources.

In the recent version of the settlement, AEP agreed to replace a portion of their electric generation capacity with renewable sources. They plan to develop 50 MW by the end of 2013 and an additional 150 MW by the end of 2015. The electricity produced by these renewable sources, mostly wind energy, will serve residents of Indiana and Michigan. In addition, AEP has also agreed to invest $2.5 million in energy and land conservation and on-site distributed renewable generation.

Indiana-Michigan

What if half of the new electricity development were solar? How much land would be needed in Indiana and Michigan if solar had been a major component of this settlement? For the purposes of this analysis, let’s assume that, of the 200 MW, AEP will install an even amount of wind and solar. Let’s also assume that half of the additional $2.5 million ($1.25 million) will also go towards solar installations.

Final system costs for solar installations can vary. Costs change quarterly and the size, geographic region, and type of production must also be taken into account. According to GTM/SEIA’s Solar Market Insight: 2012 Year In Review, the national weighted average cost per watt (W) – that’s dollars per watt of solar energy capacity averaged across residential, non-residential, and utility sectors – is $3.01/W. At that price, $1.25 million could result in approximately 415 kilowatts (kW) of solar installations. Indiana and Michigan are therefore looking at 100.42 MW of solar being installed over the next 2 years.

How much is 100.42 MW of solar? Assuming 6.4 acres per megawatt, at least 643 acres that will be needed to site all of those solar modules. However, installation wouldn’t occur all in one area. If even half of the required solar development occurred on residential rooftops, commercial rooftops and small, ground-mounted systems, there could be thousands of installations occurring across Indiana and Michigan. Approving such a large number of systems would put municipal policies and ordinances affecting solar development to the test. Local governments in these states would have to ask themselves a number of key questions: Are our permitting processes sufficient to approve these systems quickly while continuing to ensure they are installed safely? Will the cost to the homeowner of obtaining these permits prevent them from taking advantage of the program? Have zoning ordinances been established to guide solar development? In addition, this level of solar development could support many local jobs.

Using labor intensity figures from the U.S. Department of Energy’s SunShot Vision Study for solar installation and operations and maintenance jobs, we can reasonably say that 100.42 MW of solar would support more than 2,500 local jobs. Without the proper forethought, local government policies can sometimes stymie solar development and the associated employment opportunities.

In many cases local governments are in need of resources to help guide solar development. Fortunately, the Solar Outreach Partnership works to assist local governments in their solar development needs through a variety of resources. The Partnership strives to help build strong, local solar markets and, to that end, offers complimentary technical assistance to jurisdictions seeking guidance to reduce barriers to local solar market development.

For further information please visits the Solar Outreach Partnership’s Resource Database and Technical Assistance pages.

One Response to Are Indiana and Michigan Ready for a Wave of Solar?

  1. Tom Stanton says:

    Alexander — I am trying to understand what appears to me to be a leap in logic from the average $3.01 per Watt and $1.25 million, which equates to 416.67kW by simple division, versus the 100.42 MW you say might be installed in Indiana and Michigan. Do you mean that first you assume 1/2 of the 200MW will be solar and then you assume adding 0.42 MW of solar by virtue of a $1.25 million investment at $3 per Watt? I expect the first assumption will be far, far off base, because wind tends to dominate utility investments in renewable energy in this part of the country (on the order of 90-95% utility-scale wind). As far as the second part, if a utility has $1.25 million to invest, why not use those funds to leverage private investments (for example, by using most of the funds as a loan-reserve-guarantee-fund)?

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