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Tax Credits Launch 12 MW Solar Farm for Rocket Propulsion ManufacturerTERESA GARCIA, SENIOR WRITER, NOVOGRADAC & COMPANY LLP
The main challenge to building the largest
utility-scale solar facility in Arkansas had
little to do with construction, and largely to
do with changing the mindset of a historically coal-
fueled region.
Tennessee-based developer Silicon Ranch was tasked
with the mission to build a 12-megawatt alternating
current (AC) solar farm for national aerospace
propulsion manufacturer Aerojet Rocketdyne in
East Camden, Ark. Before construction work could
begin, Silicon Ranch and Aerojet Rocketdyne needed
to address the longstanding misconception that
solar would render utility distributors irrelevant.
“There were some perceived issues from utility
providers that solar was not economic and that it
threatened their business model,” said Matt Beasley,
Silicon Ranch’s senior vice president of business
development. “Fortunately we were able to address
those concerns through open discussion with our
project stakeholders.”
The solution was an innovative power purchase
agreement (PPA) that provided the clean power
Aerojet Rocketdyne needed, while diversifying the
state’s electrical generation portfolio and bringing an
infusion of capital into an underserved community.
To make the project possible, more than $15 million
of total equity in federal renewable energy investment
tax credits (ITCs), federal new markets tax credit
(NMTCs) and Arkansas state NMTCs was monetized.
Under the PPA, Silicon Ranch is the owner and
operator of the solar facility, while the primary off-
taker is Aerojet Rocketdyne. Any excess generation
is purchased by Arkansas Electric Cooperative
Corporation (AECC), which provides wholesale power
to 17 electric distribution cooperatives, including the
Ouachita Electric Cooperative Corporation (OECC),
the utilities provider for Aerojet Rocketdyne in East
Camden.
“We crafted a solution to help Aerojet achieve its goals
and tailored that solution in a manner that would also
work for the distributor and [ACEE],” said Reagan
Farr, vice chairman and chief operating officer of
Silicon Ranch. “The result was the largest operating
solar farm in Arkansas.”
The 76-acre solar farm was completed in December
2015 and will generate more than 30 million kilowatt-
hours annually, reducing carbon emissions by 21,000
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March 2016 • Volume VII • Issue III Published by Novogradac & Company LLP
News, Analysis and Commentary On Affordable Housing, Community Development and Renewable Energy Tax CreditsNews, Analysis and Commentary On Affordable Housing, Community Development and Renewable Energy Tax Credits
metric tons. That is enough electricity to power 2,863
homes and equates to taking 4,383 cars off the highway.
“This is the biggest operating solar field in Arkansas by a
factor of 20 times,” said Erik Didriksen, environmental
health and safety specialist for Aerojet Rocketdyne. “It’s
exciting.”
Choosing SolarConverting to clean power benefited Aerojet Rocketdyne
in several ways. For one thing, Aerojet Rocketdyne was
planning to expand its East Camden facility and so it
needed an energy source that would be cost-effective
in the long term. Additionally, finding a clean source of
power allowed the company to meet the clean energy
goals of its biggest client, the U.S. Department of
Defense. As a contractor for the government, Aerojet
Rocketdyne is dedicated to meeting the department’s
goals for its suppliers to track and reduce their carbon
footprints. This put Aerojet Rocketdyne in a difficult
situation: its Camden facility was located in a region of
Arkansas where the carbon intensity of conventional
energy resources was twice the national average. Aerojet
Rocketdyne needed a drastic change in how it sourced
power.
Aerojet Rocketdyne considered several energy sources,
from biomass to fuel cells, but could not make the
economics work. “When we first started, solar was
thought to be in the infancy stage, but solar came into
focus a lot quicker than a lot of people thought it would,”
said Dr. Corbet Lamkin, director of Ouachita Electric
Cooperative Corporation. “We saw a lowering in the cost
of solar panels and the cost to construct a solar field.”
The cost-effective and predictable pricing of solar power
allowed Aerojet Rocketdyne to proceed with its planned
East Camden expansion without having to worry about
skyrocketing utility bills. “Our energy rates had been
going up at a staggering rate annually and they were
poised to go through the roof … So solar made a lot of
sense,” said Didriksen.
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Image: Courtesy of Silicon Ranch CorporationNational aerospace propulsion manufacturer Aerojet Rocketdyne is the primary off-taker of a 12-megawatt alternating current (AC) solar farm built by Silicon Ranch in East Camden, Ark.
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RENEWABLE ENERGY TAX CREDITS
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Extended BenefitsThe economic benefits of solar extend to the larger
community, an area plagued with unemployment
problems and in which 20 percent of the population
lives below the poverty line. One of East Camden’s
longtime employers, International Paper Company,
ceased operations there in 2001, causing the local
economy to lean heavily on jobs created by defense
contractors. Aerojet Rocketdyne alone employs more
than 500 workers.
“By using both the renewable energy investment
tax credit and new markets tax credits, this project
highlights added benefits of solar facilities that often
go overlooked–job creation and economic development,”
said Gregory Clements, partner at Novogradac &
Company LLP, which performed an economic analysis
and financial forecast for the project.
The Silicon Ranch solar farm created about 150
construction jobs, about 110 of which went to local
workers. In addition, the Novogradac economic impact
analysis estimates that the solar farm will help sustain
767 direct jobs at Aerojet Rocketdyne. Didriksen said
the project created $25 million worth of economic
impact in the region.
“Forward-thinking companies like Aerojet have an
opportunity to drive change,” said Farr. “With the right
partners working together, we can really move the
needle [on solar energy] in this community so that it’s a
win for everybody.” ;
PROJECT BY THE NUMBERS
Aerojet Rocketdyne Solar
Reducing carbon dioxide emissions of 2,863 homes
Taking 4,383 vehicles off the road
Saving carbon dioxide emissions of
2,342,472 gallons of gasoline
is equivalent to...
76 acres with 151,200 solar panels produce
30,190,000kilowatt-hours of electricity
Sources: Silicon Ranch; Novogradac & Company LLP
= 100 homes
= 100 vehicles
= 10,000 gallons of gasoline
Novogradac Journal of Tax Credits
March 2016
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RENEWABLE ENERGY TAX CREDITS
This article first appeared in the March 2016 issue of the Novogradac Journal of Tax Credits.
© Novogradac & Company LLP 2016 - All Rights Reserved
Notice pursuant to IRS regulations: Any U.S. federal tax advice contained in this article is not intended to be used, and cannot
be used, by any taxpayer for the purpose of avoiding penalties under the Internal Revenue Code; nor is any such advice intended
to be used to support the promotion or marketing of a transaction. Any advice expressed in this article is limited to the federal
tax issues addressed in it. Additional issues June exist outside the limited scope of any advice provided – any such advice does
not consider or provide a conclusion with respect to any additional issues. Taxpayers contemplating undertaking a transaction
should seek advice based on their particular circumstances.
This editorial material is for informational purposes only and should not be construed otherwise. Advice and interpretation regarding
property compliance or any other material covered in this article can only be obtained from your tax advisor. For further information
visit www.novoco.com.
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RENEWABLE ENERGY TAX CREDITS
ADVISORY BOARDLOW-INCOME HOUSING TAX CREDITSBud Clarke BOSTON FINANCIAL INVESTMENT MANAGEMENT
Jana Cohen Barbe DENTONS
Tom Dixon BOSTON CAPITAL
Rick Edson HOUSING CAPITAL ADVISORS INC.
Richard Gerwitz CITI COMMUNITY CAPITAL
Rochelle Lento DYKEMA GOSSETT PLLC
John Lisella U.S. BANCORP COMMUNITY DEV. CORP.
Philip Melton BELLWETHER ENTERPRISE
Thomas Morton PILLSBURY WINTHROP SHAW PITTMAN LLP
Mary Tingerthal MINNESOTA HOUSING FINANCE AGENCY
Rob Wasserman U.S. BANCORP COMMUNITY DEV. CORP.
PROPERTY COMPLIANCEMichael Kotin KAY KAY REALTY
Michael Snowdon HIGHRIDGE COSTA HOUSING PARTNERS
Gianna Solari SOLARI ENTERPRISES INC.
Kimberly Taylor HOUSING DEVELOPMENT CENTER
HOUSING AND URBAN DEVELOPMENTFlynann Janisse RAINBOW HOUSING
Ray Landry DAVIS-PENN MORTGAGE CO.
Denise Muha NATIONAL LEASED HOUSING ASSOCIATION
Monica Sussman NIXON PEABODY LLP
NEW MARKETS TAX CREDITSFrank Altman COMMUNITY REINVESTMENT FUND
Merrill Hoopengardner ADVANTAGE CAPITAL
Scott Lindquist DENTONS
Matthew Philpott U.S. BANCORP COMMUNITY DEV. CORP.
Matthew Reilein JPMORGAN CHASE BANK NA
Ruth Sparrow FUTURES UNLIMITED LAW PC
Elaine DiPietro ENTERPRISE COMMUNITY INVESTMENT INC.
HISTORIC TAX CREDITSJason Korb CAPSTONE COMMUNITIES
John Leith-Tetrault NATIONAL TRUST COMM. INVESTMENT CORP.
Bill MacRostie MACROSTIE HISTORIC ADVISORS LLC
John Tess HERITAGE CONSULTING GROUP
RENEWABLE ENERGY TAX CREDITSBill Bush BORREGO SOLAR
Ben Cook SOLARCITY CORPORATION
Jim Howard DUDLEY VENTURES
Forrest Milder NIXON PEABODY LLP
EDITORIAL BOARDPUBLISHER
Michael J. Novogradac, CPA
EDITORIAL DIRECTOR
Alex Ruiz
TECHNICAL EDITORS
Michael G. Morrison, CPAJames R. Kroger, CPAOwen P. Gray, CPA
Thomas Boccia, CPADaniel J. Smith, CPA
COPYASSIGNMENT EDITOR
Brad Stanhope
SENIOR WRITER STAFF WRITER
Teresa Garcia Mark O’Meara
CONTENT MANAGEMENT ASSOCIATE
Elizabeth Orfin
CONTRIBUTING WRITERS
Abby Cohen Tabitha JonesH. Blair Kincer Peter LawrenceJohn S. Sciarretti
Warren SebraJohn Tess John Leith-TetraultJillian Toole
ARTCARTOGRAPHER
David R. Grubman
PRODUCTION
Alexandra LouieJames Matuszak
Jesse Barredo
CONTACTCORRESPONDENCE AND EDITORIAL SUBMISSIONS
Alex [email protected]
ADVERTISING INQUIRIES
Carol [email protected]
EDITORIAL MATERIAL IN THIS PUBLICATION IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED OTHERWISE.
ADVICE AND INTERPRETATION REGARDING THE LOW-INCOME HOUSING TAX CREDIT OR ANY OTHER MATERIAL COVERED IN THIS PUBLICATION CAN ONLY BE OBTAINED FROM YOUR TAX ADVISOR.
© Novogradac & Company LLP2016 All rights reserved.
ISSN 2152-646X
Reproduction of this publication in whole or in part in any form without written permission from the publisher is prohibited by law.
Novogradac Journal of Tax Credits
March 2016
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CREDITS
