Technoeconomic Analysis of a Utility-Scale Solar Farm in ... Analysis of a Utility-Scale Solar Farm in Coastal North Carolina Nicholas Batista, Alexa Baumer, Jeet Desai, Ruochen Zhu

Technoeconomic Analysis of a Utility-Scale Solar Farm in Coastal North Carolina

Nicholas Batista, Alexa Baumer, Jeet Desai, Ruochen Zhu

Living Lab to Study Solar Farms

(Edited for clarity by Dr. Saniya LeBlanc)

April 2015

Table of Contents

1. Abstract ...................................................................................................................................3 2. Introduction ..........................................................................................................................4 3. Economic Viability of Colonial Eagle One .................................................................5

3.1 Tax Credits & Incentives ...................................................................................5 3.2 Renewable Portfolio Standards .....................................................................6 3.3 Grid Connectivity to Potential Investors ....................................................7 3.4 Grid Access (Dominion resources limitations) .......................................8 3.5 Operation & Maintenance Costs ....................................................................9 3.6 Cost & Sensitivity Analysis ........................................................................... 10

4. Levelized Cost .................................................................................................................... 12 5. Alternative Land Use ...................................................................................................... 13

5.1 Agricultural Applications............................................................................... 13 5.2 Outline of Crops grown through the North Carolina ......................... 15 5.3 Outline of Farms of the Pasquotank County .......................................... 15 5.4 Analysis for Agricultural Alternatives...................................................... 16 5.5 Possibility for Alternative Energy Production .................................... 16

6. Discussion and Conclusions ......................................................................................... 16 6.1 Policy Driven Economic Impacts ............................................................... 16 6.2 Land Use ............................................................................................................... 18 6.3 Comparisons of Colonial Eagle One and Other Solar Farms ........... 18 6.4 Suggestion for Future Development of Solar Farms .......................... 20

7. References .......................................................................................................................... 21 8. Appendix ............................................................................................................................. 23

Acronyms ................................................................................................................... 23 A: First Year of Operation- Calculations ......................................................... 24 B: Twenty Year Cash Flow Calculations .......................................................... 25

Solar Farm Project MAE 6291 Page 2

1. Abstract Solar energy generation is becoming increasingly prevalent as a renewable, clean energy resource. It is currently being used all over the world due to the growing demand for electricity, as well as the growing desire to reduce the emission of greenhouse gases, commonly emitted by generating electricity from burning fossil fuels. In 2014, Duke Energy Renewables launched a 20-megawatt (MWAC) solar farm in Pasquotank County, North Carolina to generate and supply electricity to The George Washington University, American University, and The George Washington University Hospital for the next 20 years. This power purchase agreement (PPA) is the first of its kind, and The George Washington University Office of Sustainability is hopeful other organizations can benefit from similar sustainable energy investments. The process by which Colonial Eagle One (CE-1) was developed is both intricate and unique. This study reflects the particular conditions that made the siting of a solar farm in northeastern North Carolina, on an arm of the PJM grid, a feasible opportunity for large-scale investment by an organization located 230 miles away. This case study discusses the feasibility of generating and supplying electricity to the grid from North Carolina, and the economic benefits of the site at local and regional levels. The purpose of this report is to outline the development and feasibility of this solar farm with respect to technical and economic factors. By researching and analyzing the different usage possibilities, from historical and current data, the overall economic potential of the land is evaluated. In addition, discussion of the incentives and tax credits which made this site possible gives insight into the importance of future renewable energy policy decisions. In this report, we also analyze the land use alternatives under different scenarios and compare the Colonial Eagle One (Capital Partners Solar Project, Phase 1) solar farm with other successfully operated photovoltaic solar plants. While the success of this project was a culmination of circumstances unique to this region and PPA, this study should provide insight into future development of utility-scale, sustainable energy investments in the southeastern United States.


2. Introduction In a changing climate and an uncertain energy future, creating opportunities for utility-scale renewables has become critical for the transformation of energy portfolios away from fossils and towards renewables. While the history of utility-scale solar is not particularly long, it has been the fastest growing sector of the photovoltaic market since 2007 [1]. The downward trend in pricing for large scale projects is due to a variety of influences. A major contributing factor to the decreasing capital required for photovoltaics is economies of scale. The larger the project is in output, the more cost effective it becomes. This is especially relevant for utility-sized operations. A solar farm is a large-scale photovoltaic system (PV system), sometimes located on agricultural land, designed for the generation of reliable, clean electrical power to be input into the electrical grid and supply power at the utility level. It can address the problem of greenhouse gas emission and climate change, hence balancing environmental protection with increasing demands for energy. The renewable energy is generated through photovoltaic modules that convert absorbed solar irradiation directly to electricity; the modules can be fixed tilt using single or dual axis trackers. Many arrays of PV modules are connected together through a combiner or recombiner box. Then multiple (re)combiner boxes feed into the inverters (SC 500HE-US model in Colonial Eagle solar farm) that convert the solar power output from DC to AC. Transformers are joined through a collection system into a substation connected to the interconnect medium voltage grid.

Figure 1. Diagram of the solar farm system.

Most existing large-scale solar power stations are owned and operated by independent energy companies. However, due to incentives such as feed-in tariffs or tax credits from federal and state governments and lower module costs, community owned projects are increasing. One case demonstrating this trend is the Capital Partners Solar Project (CPSP), which is a 20-year Power Purchase Agreement (PPA) under which Duke Energy Renewables (DER) will build a 52-megawatt (MWAC) solar photovoltaic system in North Carolina and sell the electricity to The George Washington University (GWU), American University (AU), and The George Washington University Hospital (GWUH). The motivation for this kind of investment came from the university’s commitment to reduce carbon emissions by 40% by 2025, ultimately aiming to hit carbon neutrality by 2040 [2]. Through GWU’s Office of Sustainability, a PPA was reached with Duke Energy Renewables to develop a utility scale solar project in northeastern North Carolina.


Site Visit Summary: Duke Energy Renewables is a part of Duke Energy, the largest electric power holding company in the United States. Duke Energy serves 7.4 million customers over 95,000 square miles with a total generated capacity of 50,200 MW [3]. Duke Energy Renewables operates 2,500 MW of renewable energy in large scale wind and solar developments. One of these sites is Colonial Eagle One, a 20 MW capacity solar farm in Pasquotank County.

Fig 2. Colonial Eagle One Solar Farm [26] Fig 3. Colonial Eagle One Site Visit

Colonial Eagle One is situated just outside Elizabeth City, North Carolina in Pasquotank County. It sits on approximately 204 acres of farmland, of which 121 acres have been covered by photovoltaic modules. It was designed, engineered, and constructed by Sun Energy 1.There are over 95,000 photovoltaic modules with a 30-year designed system life; they provide an overall AC capacity of 20 MW interconnected to a 34.5 kV grid. These modules are mounted on racks which track the sun throughout the day, providing larger energy gains. The estimated environmental attributes include preventing 3,750 tons of CO2 from being released and saving 7.5 million gallons of water from being consumed [4]. This report will take a look at the economic viability of the site, the role of state and federal tax credits, and the alternative economic opportunities for the land, be it agricultural or another energy resource.

3. Economic Viability of Colonial Eagle One 3.1 Tax Credits & Incentives One of the biggest drivers for solar farm development is the incentives and tax credits. The 30% investment tax credit (ITC) at the federal level has driven solar development. However, in addition to tax credits at the federal level, state tax credits are a crucial part of choosing a particular development site. According to the 2015 report, Utility Scale Solar 2014, published by LBNL, “most of the projects (and capacity) in the population are located [...] where the solar resource is strongest and where state-level policies (such as renewable portfolio standards and state-level tax credits) encourage utility-scale solar development.” [1]


Because this PPA is centered around Washington, D.C., the states of Virginia and North Carolina will be compared for their incentive options. While the solar resource is similar between North Carolina and Virginia, the state-level policies diverge drastically. In the table below, the state and federal level tax credits for solar development are broken down. The ITC is on the federal level while the Renewable Energy Tax Credit is state-by-state decision. Table 1. Relevant state and federal level tax credits for solar development, NC & VA State North Carolina

Virginia

Federal level: Business Energy Investment Tax Credit (ITC)

30% 30%

State level: Renewable Energy Tax Credit (corporate)

35% max at $2.5 million per installation

---

There are other incentives for North Carolina and Virginia. For North Carolina, the options are [5]:

(1) Local Option - Financing Program for Renewable Energy and Energy Efficiency (2) Property Tax Abatement for Solar Electric Systems: 80% of the appraised value (3) TVA - Solar Solutions Initiative:

Offering additional financial incentives for Solar PV systems participating in the Renewable Standard Offer program. The program offers performance based incentive of $0.04/kWh for the first 10 years after the project is operational. This incentive is in addition to the seasonal and time-of-day price for electricity offered through the Renewable Standard Offer program.

(4) Clean Renewable Energy Bonds (CREBs) CREBs are a tax credit bond in which interest on the bonds is paid in the form of federal tax credits by the United States government in lieu of interest paid by the issuer, which offering qualified issuers/ borrowers with the ability to borrow at a 0% interest rate.

(5) Renewable Energy and Energy Efficiency Portfolio Standard (6) USDA - High Energy Cost Grant Program

Assisting energy providers and other eligible entities in lowering energy costs for families and individuals in areas with extremely high per-household energy costs (275 percent of the national average or higher).

For Virginia, the options are [5]:

(1) Dominion Virginia Power - Solar Purchase Program: $0.15/kWh for system sizes less than 50.00 kWAC. (2) Energy Project and Equipment Financing: The Virginia Resources Authority (VRA) provides financial assistance to local governments in Virginia for a variety of projects, including energy, energy conservation projects and renewable energy projects. (3) TVA - Solar Solutions Initiative (4) Clean Renewable Energy Bonds (CREBs) (5) USDA - High Energy Cost Grant Program


3.2 Renewable Portfolio Standards for North Carolina and Virginia The renewable portfolio standards (RPS) of the two states have some variation as well. This aspect of the renewable energy market, combined with the tax credits, has driven PPA prices down for many states. Therefore, it is useful to take a look at the RPS for both North Carolina and Virginia. In North Carolina, an RPS was set in 2007 for 10% by 2018 and 12.5% by 2021. In addition to these standards, the state broke down the standard by individual renewable energy systems. The goal for solar is 0.2% by 2018 [6].Virginia, on the other hand, established a “Voluntary Renewable Energy Portfolio Goal” in 2007 for 12% renewables by 2022 and 15% by 2025 [6]. A voluntary renewable energy target differs from a renewable energy portfolio standard due to the non-compliance condition of the target. 3.3 Grid Connectivity to Potential Investors. The Capital Partners Solar Project has been developed in eastern North Carolina and its customers are in the District of Columbia. The grid connectivity between eastern North Carolina and DC through PJM Interconnection LLC (PJM) enabled electricity generated in one state to “supply” another state. PJM stands for Pennsylvania New Jersey Maryland Interconnection LLC; it is a regional transmission organization (RTO) which oversees the transmission of the electricity generated in the Mid-Atlantic region. It is part of the Eastern Interconnection grid operating an electric transmission system, and it centrally dispatches generation and coordinates the movement of wholesale electricity in all or part of 13 states, namely Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia and the District of Columbia.

PJM provides wholesale electricity, capacity and other services to the member utilities in its region, serving 58 million people over a 211,000 square mile area. PJM acts as a neutral oversight body coordinating the production and use of power by utilities in the region. PJM and other RTOs also serve a long-term planning function to assure efficient and effective improvements to the grid. [7]

Figure 4. Dark blue represents areas serviced by the PJM grid [8]

PJM Interconnection uses a system called locational marginal pricing (LMP) to establish the price of energy purchases and sales in the PJM wholesale electricity market. LMP takes into account the effect of actual operating conditions on the transmission system in determining the price of electricity at different locations in the PJM region. The LMP is calculated every five minutes [9]. The map shown below gives the LMP for the entire PJM grid at peak hours. The LMP in Washington, North Eastern North Carolina and Virginia are the same, so there will be no difference in price for transporting electricity from North Carolina to the District of Columbia. It will be the same as bringing it from DC or Virginia as they have the same congestion, almost the same demand at peak hours, which makes the LMP the same for these regions.


Figure 5. LMP values for the entire PJM grid [10].

The Capital Partners Solar Project in Eastern North Carolina will generate and send energy through Dominion North Carolina Power, which is part of the PJM Interconnection regional transmission grid. This option of receiving energy from North Carolina is possible only because customers in District of Columbia are allowed to choose their energy provider as long as they are in the PJM Interconnection grid. This is not true for all states. For example North Carolina has a regulated utility system, which requires the solar developers to sell their power to utilities for resale. In projects like CPSP, the plant was built in Duke Energy's service area, where it can take advantages of the rebates, and the power is sold directly to a third party customer in a PJM state where the third party sales are legal. The solar power generated on the solar farm is fed into the PJM grid. The PJM grid accepts power from all generators in the grid, whether it is generated by natural gas, coal, nuclear or renewable, and then the PJM transmits this electricity to different locations. The amount of electricity generated by the solar farm in North Carolina will be supplied to the consumers in DC through the grid irrespective of how/where that electricity is generated. The CPSP participant will not necessarily receive the electricity generated specifically by the solar farm, but the CPSP participants (George Washington University, American University and George Washington University Hospital) will get the credit of using the electricity generated by the renewable energy. 3.4 Grid access (Dominion resources limitations) There are several devices on the solar farm which themselves require electricity to operate. The electricity generated on the solar farm is in the form of DC and has to be converted to AC before feeding it to the grid. For converting this DC current into AC, an inverter is used. This inverter needs to be supplied with the electricity which has to be AC. The tracking devices used for the panels also need power. All the computers on the farm used for monitoring the performance of the solar panels need electricity to run. All these devices need AC current which cannot be supplied from the electricity generated by the solar farm because that electricity is DC. Hence, these devices take electricity from the grid the same way electricity is supplied to a house. This electricity is supplied by the Dominion Power as this plant is in the Dominion Power service area. The solar farm is not set up in Duke’s service area because that area is not in the PJM grid. A condition of the CPSP is the electricity should be supplied into the customers’ (GWU, AU, GWUH) regional grid, thus helping the customers to work towards reducing the air pollution and greenhouse gases across the Mid-Atlantic region.


Figure 6. Utility Company Service Area [11]

Apparently, Duke Energy faced minor problems related to service and response from Dominion Power. According to Duke Energy, Dominion Power takes 4-5 days to shut off the circuit when DER performs a routine maintenance, changes a faulty/broken solar panel, or produces excess electricity and needs to cut off the supply to the grid. (Supplying excess electricity would cause them negative pricing for generating excess electricity when there is less or no demand for electricity.) To tackle this problem, DER has installed a knife switching system which controls the flow of electricity in the circuit and can be controlled by the solar farm technicians. Thus, they do not have to wait for Dominion Power to shut off the circuit; they can do it immediately themselves on site.

3.5 Maintenance costs (staffing, landscaping, equipment upkeep) The man-power required to run and monitor the solar farm is minimal. There is only one dedicated technician for regular operation of the solar farm. This person is supported by other staff members who also work on other projects and in other locations. This shows how easy and economical it is to run the power plant once it is up and running. All the solar farms are monitored from a control room at the headquarters of Duke Energy Renewables in Charlotte, NC. If any of the farms is not giving the expected output, the control center will inform the designated worker at the farm, and he/she will take necessary troubleshooting actions. For cheap and efficient landscaping, Bermuda grass has been used on the whole farm as it is low growing and low in maintenance. Once solar panels are installed, they need to be maintained over the entire panel lifetime to ensure maximum output. Some of the maintenance measures are:

1. Repairing and replacing damaged panels 2. Managing spare parts 3. Predictive maintenance (forecasting issues based on analysis/trends and taking preventive actions for any issues such as storm, floods, etc.) 4. Preventive maintenance (tracker lubrication, module/rack inspection, circuit testing, IV curve tracing, thermal imaging, etc.) 5. Site maintenance (module cleaning, vegetation control, snow removal, site security)

3.6 Cost & Sensitivity Analysis In order to analyze the economic viability of a utility-scale solar plant, an overall cost analysis was performed. In this analysis, two types of costs are considered: capital expenditures (CAPEX) and operational expenditures (OPEX). Capital expenditures refer to items that require capital investment, the pre-construction and construction phases of the project.


Operational expenditures refer to items required for operation of the project and maintenance. In addition to the types of cost considered, the tax credits and incentives were taken into consideration to determine their influence in ultimate levelized costs. The capital expenditures are as follows:

o Solar modules - Two kinds of solar modules were used on the Colonial Eagle One site: the Jinko Solar JKM305P-72, of which there are 82,612, and the Jinko Solar JKM300P-72, of which there are 9,329.

o Inverters - There are a total of 14 inverters on the Colonial Eagle One site. They are ABB Ultra 1500-OUTD.

o Balance of systems (BOS) - The balance of systems includes the meters, cabling, switchgear, SCADA operating system, and the transformers.

o Mounting racks - The mounting racks used on the site are DuraTrack HZ Solar Trackers. They are single axis trackers with 0 degrees of tilt. It is estimated that they provide a 25% electricity production gain versus the fixed tilt mounting racks.

o Construction labor - Before the modules could be installed, the site first had to be leveled off and dug out slightly. The labor force at the peak of construction was between 300 and 400 people.

There were two options in calculating the total capital costs of the farm. The first was to track down prices of the above components in the spot market. While PV modules have excellent, published spot market details, the rest of the components were much harder to track down. Therefore, an alternative method was used. According to LBNL’s 2014 Utility-scale Solar Report [1], the median utility-scale PV installed price was $3.1/WAC or $2.3/WDC. While the report does not distinguish between single tracking and dual tracking prices, the vast majority of data collected for the report’s cost analyses comes from single tracking systems. Therefore, it is a safe assumption to use this price point. If we apply this to the rating of this farm, we find the total capital expenditures to be around $62 million. While this price is not exact, it is a valid estimate for a farm of this size. The operational expenditures are as follows:

o Operation & maintenance - Since this development is not an investor-owned utility, there is no reporting requirement to the Federal Regulatory Energy Commission on the O&M costs. For the purposes of this report, we use the numbers calculated in LBNL’s 2014 Utility-scale Solar Report [1]. The average O&M cost for PV plants is estimated at $17/kW in 2014. This would mean O&M costs around $340,000 annually for this farm.

o Transmission costs - The other aspect of the operational expenditures are the grid costs which were assumed to be $60,000 annually.

From Table 2, it is clear that tax credits play a huge role is overall capital cost for utility scale solar projects.

Table 2. CAPEX for North Carolina and Virginia

No tax credits Federal tax credit Federal + State tax credit

VA CAPEX $62,000,000 USD $43,400,000 USD $43,400,000 USD

NC CAPEX $62,000,000 USD $43,400,000 USD $40,900,000 USD There are several components of the system that can be analyzed with a sensitivity analysis. For the purposes of this report, we will look at increasing and decreasing tax credits as well as increasing and decreasing the capital costs. In order to determine the cash flow, we first


take into account the total capital spent building the farm. With the federal and state tax credits, we estimate the capital investment to be $40.9 million.

To determine the generation of the farm over its lifetime, first we have to determine its generation in the first year of operation. Solar irradiance and weather data has been taken by NREL for Elizabeth City in 2012 [12]. Using this data, we can extrapolate what the solar farm’s generation could be for the first year. The full spreadsheet can be found in the Appendix. The first year of generation can be estimated as 34.9 GWh. After the first year, we apply a degradation factor of 0.05% per year to the output. With the PPA set at $60/MWh, and taking out the O&M and grid costs, we can calculate the first year of cash flow at just over $1.4 million. At this rate, the payback period exceeds the number of years on the PPA. Of course these are not exact values, but rather estimates based on existing pricing data. It is interesting to note how tight the margins are. For the sensitivity analysis, we adjusted two factors, the tax incentives and the O&M costs. The reason for choosing these two aspects rather than the range of others is due to the fact that these are most malleable and relevant. The price of solar panels is approaching its bottom end, and, while it is not the lowest possible yet, it does not have as much bearing as O&M does. Looking at the tax incentives is also significantly more interesting since many states are debating extending or creating new tax programs for renewables. Adjusting the O&M costs, we decreased and increased the value by 25% on each side of the calculated value $340,000 per year. On the low side, this would mean O&M at $255,000; and on the high side, O&M would be $425,000. With O&M at $255,000 per year, the first year of revenue approaches $1.5 million; with O&M at $425,000, the first year of revenue decreases to $1.32 million. Adjusting the tax benefits at the state level makes the most sense because they are the most likely to change. We once again look at increasing the tax benefit by 10% (to 45%) and decreasing it by 10% (to 25%). Assuming the maxing out is no longer part of the tax codes, the following table compares these new tax rates.

Table 3. Sensitivity analysis

No tax credits Federal tax credit Federal + State tax credit

NC Current $62,000,000 USD $43,400,000 USD $40,900,000 USD

NC w/o max $62,000,000 USD $43,400,000 USD $28,210,000 USD

NC +10% $62,000,000 USD $43,400,000 USD $23,870,000 USD

NC -10% $62,000,000 USD $43,400,000 USD $32,550.000 USD If the North Carolina state tax credit were increased by 10% and the cap removed, the solar farm’s 20 year revenue would exceed the capital investment.

Levelized Cost In general, there are two types of PV modules (Jinko Solar JKM305 and JKM300) utilized in the solar farm, fixed using single axis tracking mounting structures. The modules are programmed to automatically follow the sun's trajectory from east to west every day, and thus optimize the capture of solar radiation.


Table 4. Photovoltaic modules summary [4]

System 28 MW DC, 20MW AC, system ILR: 1.39

Module A 82612 of Jinko Solar JKM305P-72

Module B 9329 of Jinko Solar JKM300P-72

Inverter 14 ABB Ultra 1500-OUTD

Module A Quantity 82612

Modules per source

19

QTY of source circuits 4348

Module B Quantity 9329

Modules per source

19

QTY of source circuits 491

DC capacity (KW) 27995

AC Capacity (KW) 20160

ILR (DC/AC) 1.39

Figure 7. Monthly Energy Generation from Solar Farm (Refer to Appendix A) We also use the NREL data to analyze the monthly energy generation profile of the solar farm. Figure 7 above provids a graphical representation of the power output of megawatt-hours that will be produced each month by the proposed system. The levelized cost of electricity (LCOE) is the cost of an energy system in relation to its performance and lifetime:

𝐿𝐶𝑂𝐸 =𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑓𝑒 𝑐𝑦𝑐𝑙𝑒 𝑐𝑜𝑠𝑡(𝐶𝑐𝑒𝑙𝑙 + 𝐶𝑏𝑜𝑠 + 𝐶𝑖𝑛𝑠𝑡𝑎𝑙𝑙𝑎𝑡𝑖𝑜𝑛)

𝑇𝑜𝑡𝑎𝑙 𝑒𝑛𝑒𝑟𝑔𝑦 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑖𝑜𝑛 (𝜂𝐿𝑆𝑃𝑆𝑓𝑃)

0

1000

2000

3000

4000

5000

1 2 3 4 5 6 7 8 9 10 11 12

Pow

er O

utpu

t, M

Wh

Month (JAN - DEC)

Solar Farm Monthly Generation of Colonial Eagle One (Capital Partners, Phase I)

Monthly outputModule 300

Monthly OutputModule 305


where η is solar cell efficiency; LS is lifetime of the system; PS is peak power, and fP is fraction of time at full solar power.

The cost used are:

• Capital cost (system plus installation): $62,000,000; $43,400,000 (VA scenario); $28,210,000 (NC best scenario, as discussed in the sensitivity analysis)

• O&M cost plus transmission cost: $400,000 annually

The electricity production is 34.928 GWh/year (calculated in the spreadsheet in the Appendix). Using a 25-year life cycle calculation, we simplify the total electricity generation by multiplying the annual energy production and corresponding life cycle.

Figure 8. LCOE Analysis

The $62 million investment with no tax credit cost yields $1.786/ KWh for the first year and will go down to $0.1/KWh for a 20 years life cycle. The VA scenario with $43,400,000 capital cost will have $0.07/KWh for a 20 years life cycle compared to $1.25/KWh for the first year. Moreover, the NC best scenario with most favorable tax benefits (ideal situation) can achieve $0.819/KWh for the first year and have a more competitive price of $0.05/KWh for a 20-year life cycle.

Alternative Land Use 5.1 Region Designation & the Landowner’s Perspective The Pasquotank County solar plant is implemented in the southeastern region of the United States, east of the Appalachian Mountains along the coast. The available solar resources, climate, and land conditions of this region are comparable to that of the Virginia coastline to the north. The coastal plain regions of North Carolina and Virginia are composed of mainly wetlands and farmland. The climate is regarded as humid, sub-tropical, and average monthly temperatures range between 27-88 °F, the average never dropping below 20°F, year-round.

00.20.40.60.8

11.21.41.61.8

2

0 5 10 15 20 25 30Cost

per

ene

rgy,

$/k

Wh

Solar Farm Life, years

Levelized Cost of Electricity

62M investment

NC best scenario

VA scenario


Additionally, there are no distinct wet or dry seasons along the coast. Sunshine and precipitation occur consistently throughout the year. These conditions yield a long growing season, ranging between 242-270 days per year [13].

Figure 9. National Solar Photovoltaic Resource Potential, US, 1998-2009 [14]

Traditionally, the land of eastern North Carolina has been used for farming. The reliable rainfall and sunshine have maintained the farming potential of this land. The figure above depicts the photovoltaic resource potential across the United States. Although the solar intensity along the south-eastern coast of the United States is not markedly high, the consistent solar availability throughout the year facilitates the opportunity for both small and large scale solar installations.

With the growing interest of solar utility companies installing plants across the region, current landowners must consider the opportunity of leasing their own land for profit. Many of the farms in North Carolina are considered small, averaging around 168 acres. [19] These farm owners near the coast often use only part of their land for a number of reasons. Cycling land use is common to maintain arability [15], but the farmers must also consider the output they can sustain with the difficulties of managing a small coastal farm. For example, limited staff, and the high watering requirements for the sandy loam soil of the region. [13]

From the perspective of a farmer, leasing their land to a solar utility company is often viewed as a way of diversifying their crop. Unlike maintaining crops on farmland, though, the leased land will provide calculated profit without maintenance costs, or the risk of diminished output and market fluctuation. Duke Energy Renewables (DER) speculated that the leasing costs of the land for the Pasquotank County solar farm ranged from $400-$800 per acre, annually. Before considering taxes, the roughly 200 acre solar farm could earn the landowner between $80,000-$160,000 per year, leaving all of the maintenance work to DER. North Carolina State University provides a more conservative estimate for the rental value of farmland in the coastal plain of North Carolina, considering the value to range closer to $125-$200 per acre, annually (resulting in $25,000-$40,000 paid to the landowner, per year). [16]

The state of North Carolina provides statewide tax incentives for both large and small farms. North Carolinian farmers are eligible for property tax deferment when their land is being utilized for agricultural production, mitigating annual property tax dues. [17] They also offer a sales tax exemption for farmers to purchase certain items and equipment necessary for farm operations. [18] In order to qualify and benefit from these programs, farmers must fulfill agricultural output and acreage requirements. Landowners must consider the additional property taxes they must pay if they are considering converting previous farmland to leased land.


As discussed above, the average North Carolina farm (168 acres) yields an annual net income of $57,042. [19] Leasing out excess or unused farmland to solar utility companies seems to be a reliable investment opportunity for landowners. Each landowner must weigh their options, considering the expected profits of utilizing the land for leasing, agriculture, or possibly both.

5.2 Outline of Crops grown through the North Carolina

Table 5. Agriculture overview of North Carolina [20, 21] · The Number of farms in North Carolina 52,218 · Land in Farms 8,414,756 acres · Farm Real Estate Value per Acre $4,338/ acre · Average size of Farm 168 acres · Net Income per Farm $57,042 · Value of Agricultural Exports $3,937,500,000

North Carolina has a variety of agricultural commodities, including field crops, such as tobacco, cotton, soybeans, corn, peanut, and wheat; and livestock, such as hogs, cattle, and turkeys. The top crop items (in acres) are soybeans, cotton, and wheat. The top livestock inventory items (in number) are Broilers (chickens), turkeys, and hogs. Since wheat and soybeans are the traditional major crops, of which the detailed data can be found in North Carolina, we take them as two typical agriculture commodities for alternative land use scenarios [22]. 5.3 Outline of Farms of the Pasquotank County For the purpose of analyzing the alternative scenarios of land use, we need to obtain data on agriculture of Pasquotank County, where the solar farm has been located. For Pasquotank County, the general agricultural farm information is as follows:

Table 6. Farms in Pasquotank County 2014 [23]

Total Acres in County 145,203 Number of Farms 136 Total Land in Farms, Acres 72,270 Average Farm Size, Acres 531 Harvested Cropland, Acres 67,411 Average Total Farm Production Expense $ 335,397

Data which could be found are listed below; other commodities are either less than 100 harvested acres or withheld to avoid disclosing data for individual farms.

Table 7. Major Crop Productions for Pasquotank County 2014 [24, 25] Commodity Planted All

Purposes, Acres

Harvested, Acres

Yield per Harvested

Acre, Bushels per Acre

Production, Bushels

Wheat 16,500 15,600 73 1,140,000 Soybeans 43,900 43,700 46 2,010,000


Table 8. Agriculture Revenue for Pasquotank County 2014 [23] Cash Receipts for 2014 Dollars

Livestock, Dairy, and Poultry 577,248 Crops 72,815,226

Government Payments 1,024,843 Total 74,417,317

5.4 Analysis for Agricultural Alternatives for Colonial Eagle Solar Farm The Colonial Eagle solar farm in Elizabeth city covered about 204 acres. The average size of a farm is 168 acres, and the average net income per farm is $57,042. For the solar farm with 204 acres, the alternative agricultural net income should be $69,265 per year. Based on previous information, we do assumptions and calculations as follows. In the wheat farmland scenario, the annual revenue should be: $4.85/Bu * 73 Bu/acre * 204 acres = $72,226. In the soybeans farmland scenario, the annual revenue should be: $8.5/Bu * 46 Bu/acre * 204 acres = $79,764. Livestock revenue is estimated as $60,000

Table 9. Agricultural Alternatives for Colonial Eagle Solar Farm Description Revenue Per Year

Wheat Scenario $72,226

Soybeans Scenario $79,764 Livestock Scenario $60,000

Average $70,663

The calculated average revenue is $70,663, which is close to the net income $69,265 per year.

5.5 Possibility for Alternative Energy Production on Colonial Eagle Solar Farm Foremost, power demand is not high in this region. The same acreage capable of supporting the 20 MW solar plant in Pasquotank County could be utilized for farming, but additional power production methods must also be discussed. Wind resources in the southeastern United States are not negligible, especially across farmland near the shore. The average wind speeds are considered to be too low to sustain a utility-scale wind farm, and additional acreage would be required (typical wind farms range closer to 10,000-30,000 acres). Traditional fossil fuel plants could be utilized on the same land but with the risk of increasing the greenhouse gas emissions and causing other environmental concerns. Tidal energy from the bay could be taken into consideration.


Discussion and Conclusions 6.1 Policy Driven Economic Impacts

The federal tax credit plays a vital role in deciding the site of solar farm. From the Fig. 11, we can infer that if the federal tax credit drops down from 30% to 10%, the cost will greatly increase from $40.9 M to $53.3 M for building a solar farm in North Carolina. It would also increase $12.4 M for a solar farm in Virginia.

Figure 10. CAPEX cost for North Carolina and Virginia with different initial costs

(Federal ITC: 30%; state tax credit for North Carolina is 35% with a maximum of $2.5 M)

Figure 11. CAPEX cost for North Carolina and Virginia with varying federal tax credits

(Initial cost is $62 M; state tax credit for North Carolina is 35% with a maximum of $2.5 M)

The state tax credit matters, as well. Fig.12 shows that the cost will decrease along with the increase of the maximum cap of state tax credit. Compared to Virginia, North Carolina has an advantage in building solar farms due to the considerable tax credit applied for solar power generation. If Virginia could establish a state tax credit for the renewable energy, such as 30% with a maximum of 3 million dollars per installation, then building solar farms in Virginia might have a promising future.

0

20

40

60

80

0 50 100 150

Cost

with

tax

cred

its,

mill

ion

dollo

rs

Capital Cost, million dollors

NC

VA

010203040506070

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

Cost

with

tax

cred

its,

mill

ion

dollo

rs

Federal tax credit

NC

VA


Figure 12. CAPEX cost for North Carolina and Virginia with varying state tax credits

(Initial cost is $62 M; no state tax credit for Virginia)

6.2 Land Use The production of electricity is 34.93GW/year, and the price for electricity is $ 63/ MWh. Thus, the gross revenue is $2,200,590 per year. Based on the description and analysis presented previously, the profits of farming can reach $70,663 for a year. If the landowner leases the land to the renewable energy company, the leasing of roughly 200 acre solar farm can provide the landowner between $80,000-$160,000 per year as discussed in the part 5.1. Therefore, the solar farm dominates on the economic viability compared to the traditional farming.

6.3 Comparisons of Colonial Eagle One (Capital Partners, Phase I) Solar Farm and Other Solar Farms In this analysis, instead of doing LCOE analysis for lack of data, we come up with another method of comparing the power generation per area of land utilized. Colonial Eagle One: This solar farm with 204 acres has a production 34.928 GWh / year, with capital cost $ 62,000,000. The electricity generation per acre is 0.171 GWh/ year/ acre.

Case 1:

Figure 13. The Arnedo Solar Plant [27]

The Arnedo Solar Plant is an operational solar photovoltaic farm located in Arnedo, La Rioja, Spain, with 173 acres covered area and a capacity of 34 MW which is provided by 172,000 flat PV panel modules 200 W each. This solar farm produces an impressive 49.936 GWh (49,936,510 kWh) every year, which is equivalent to the power consumption of 11,451 households and prevent 375,000 metric tons of CO2. Developed by T-solar Company, the commission year is 2008, and the project’s budget was around €181,000,000 ($208,045,977) [27, 28]. The electricity generation per acre would be 0.289 GWh/ year/ acre.

3738394041424344

2 2.5 3 3.5 4 4.5 5 5.5 6 6.5

Cost

with

tax

cred

its,

mill

ion

dollo

rs

Maximum state tax credit, million dollors

NC

VA


Case 2:

Figure 14. The Sishen Solar Farm [29]

The Sishen photovoltaic plant, located in the municipality of Dibeng, South Africa, has a peak capacity of 94.3 MWp with a covered land about 250 hectares (617.76 acres). It was developed and built by ACCIONA in cooperation with the South African group Aveng and other partners, and came into operation on November 29, 2014 (Ownership: ACCIONA Energía (51%), Aveng (29%), Soul City (10%), Dibeng Community Solar Energy Trust (10%)). Its 319,600 photovoltaic modules, supported by 470 horizontal trackers are expected to produce electricity of 216 GWh annually, which is equivalent to the consumption of 100,000 South African households. Moreover the solar plant will prevent a total of 208,000 metric tons of CO2 emission from coal-fired plants every year, which makes a contribution of purifying atmosphere equivalent to ten million trees. [29]

Table 10. General Information of Sishen Photovoltaic Power Plant [29]

Location

Dibeng, Northern Cape (South Africa) Covered area 250 hectares(617.76 acres)

Number of photovoltaic modules 319,600 Peak power

94.3 MWp Nominal power

74 MW Technology

Photovoltaic solar with horizontal tracking Commissioning year

2014

Annual average production 216 GWh CO2 emissions prevented 208,000 metric tons/year Electricity generation per acre: 0.349 GWh/ year/ acre

Case 3:

Figure 15. The Monte Alto Solar Farm, Milagro, Spain [30]

Another project of ACCIONA Energía is the Monte Alto Solar Farm which has an average annual production of 14 GWh, equivalent to the consumption of 4,000 homes, with


adaptation to a low hill relief. It has 864 solar trackers (with capacities of 5 kW and 11 kW) and 25 fixed structure [30].

Table 11. Monte Alto Photovoltaic Power Plant Statistics [30]

Location

Milagro, Navarra (Spain) Covered area 51 hectares(126.02 acres)

Number of photovoltaic modules 319,600 Peak power

9.50 MWp Technology

Photovoltaic solar with azimuth tracking Commissioning year

2007

Annual average production 14 GWh CO2 emissions prevented 13,400 metric tons/year Electricity generation per acre: 0.111 GWh/ year/ acre

Figure 16. Power generation per area utilized

We can see the effectiveness of using land to generate electricity of different solar farms. The Colonial Eagle One plant only has an advantage over the Monte Alto Solar farm with the capacity of 9.5 MW. We also think the electricity production per area may have some relationship to the peak capacity of the solar farm, so the results may not demonstrate the performance of the solar farms, indicating that more analyses like LCOE are needed to help compare the performances between these solar farms.

6.4 Suggestion for Future Development of Solar Farm

The amount of energy generated from a 20 MW Colonial Eagle One solar farm at the site is estimated to be 34.928 GWh per year, with a 20-year LCOE cost from $0.05/KWh to

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

ColonialEagle

One(20MW)

Arnedo(34MW)

Sishen(94.3MW)

Monte Alto(9.5MW)El

ectr

icity

pro

duct

ion

per a

rea,

GW

h/ye

ar/a

cre

Electricity Generation From Different Solar Power Plants

Colonial Eagle One(20MW)

Arnedo (34MW)

Sishen (94.3MW)

Monte Alto (9.5MW)


$ 0.1/KWh based on the probable range of capital costs required for this project, which can be impacted by different tax policies. Based on the dominated scenario of developing solar farm rather than other agricultural land use, we have come up several suggestions:

1. Develop a cost-effective energy storage system

2. Develop an eco-solar farm by breeding animals and grass on the site

3. Couple the technology with photothermoelectric devices to utilize heat energy

4. Increase public awareness and foster the establishment of laws and regulations for promising tax credits regarding renewable energy.

References [1] Mark Bolinger, Jochim Seel, An empirical analysis of project cost, performance, and pricing trends in the United States, 2015, Lawrence Berkeley National Laboratory <https://emp.lbl.gov/sites/all/files/lbnl-1000917.pdf>.

[2] "Commitments | Sustainability at GW | The George Washington University."Commitments | Sustainability at GW | The George Washington University. N.p., n.d. Web.. <https://sustainability.gwu.edu/commitments>.

[3] Fast Facts: Duke Energy Corporation. Duke Energy Corporation, 31 Dec. 2015. Web. Apr. 2016. <http://www.duke-energy.com/pdfs/de-factsheet.pdf>.

[4] Bollinger, Mark, and Joachim Seel. "Utility-Scale Solar 2014: An Empirical Analysis of Project Cost, Performance, and Pricing Trends in the United States." Energy Analysis & Environmental Impacts Division, Lawrence Berkeley National Laboratory, Sept. 2015. Web. Apr. 2015. <https://emp.lbl.gov/sites/all/files/lbnl-1000917.pdf>. [5] "Programs for North Carolina & Virginia." DSIRE. Web. Apr. 2016. <http://www.dsireusa.org/>. [6] Durkay, Jocelyn. "State Renewable Portfolio Standards and Goals." National Conference of State Legislature. NCSL, 23 Mar. 2016. Web. Apr. 2016. <http://www.ncsl.org/research/energy/renewable-portfolio-standards.aspx> [7] "PJM - Home." PJM - Home. N.p., n.d. Web. Apr. 2016. <http://www.pjm.com/>.

[8] PJM. Digital image. Legal-Planet.org. UC Affiliates, n.d. Web. Apr. 2016. <http://legal-planet.org/wp-content/uploads/2013/06/pjm.gif>. [9] "PJM: Locational Marginal Pricing." PJM.com. PJM, n.d. Web. <http://www.pjm.com/~/media/about-pjm/newsroom/fact-sheets/locational-marginal-pricing-fact-sheet.ashx>. Statistics at a Glance Fact Sheet

[10] "Locational Marginal Pricing Map." PJM.com. PJM, n.d. Web. Apr. 2016. <http://pjm.com/documents/maps/lmp-map.aspx>.

[11] PJM-Territory. Digital image. Emergentesolutions.com. Emergent Energy Solutions, LLC, n.d. Web. Apr. 2016. <http://www.emergentesolutions.com/wp-content/uploads/2015/08/PJM-Territory.png>.

[12] "Solar Radiation Data: Elizabeth City State University." NREL National Solar Radiation Data Base. rredc.nrel.gov. National Renewable Energy Laboratory. Web. Apr. 2016. <http://rredc.nrel.gov/solar/new_data/confrrm/ec/>. [13] "A Look at North Carolina Agriculture." Agclassroom.org. National Agriculture in the Classroom, n.d. Web. Apr. 2016. <https://www.agclassroom.org/kids/stats/northcarolina.pdf>.

[14] National Photovoltaic 2012-01. Digital image. Nrel.gov. National Renewable Energy Laboratory, n.d. Web. Apr. 2016. <http://www.nrel.gov/gis/images/eere_pv/national_photovoltaic_2012-01.jpg>.


[15] O'Connell, S., J.m. Grossman, G.d. Hoyt, W. Shi, S. Bowen, D.c. Marticorena, K.l. Fager, and N.g. Creamer. "A Survey of Cover Crop Practices and Perceptions of Sustainable Farmers in North Carolina and the Surrounding Region." Renewable Agriculture and Food Systems Renew. Agric. Food Syst. 30.06 (2014): 550-62. Web.

[16] Brown, Blake, PhD, and Hugh C. Kiger. "North Carolina Farm Land Prices."Ncsu.edu. North Carolina State University, 8 Apr. 2013. Web. Apr. 2016. <https://tobacco.ces.ncsu.edu/wp-content/uploads/2013/06/Farm-Land-Prices.pdf?fwd=no>. Article

[17] "Present Use Value Deferment - Agriculture, Horticulture, Forestry."Charmeck.org. Mecklenburg County Government, n.d. Web. Apr. 2016. <http://charmeck.org/mecklenburg/county/AssessorsOffice/RealEstate/Pages/Present Use Deferment.aspx>.

[18] "Sales Tax Exemption for Farmers." Carolinafarmstewards.org. Carolina Farm Stewardship Association, n.d. Web. Apr. 2016. <https://www.carolinafarmstewards.org/nc-sales-tax-exemption-for-beginning-farmers/>.

[19] Webb, Dee. "North Carolina Agriculture Overview." Ncagr.gov. North Carolina Department of Agriculture & Consumer Services, 7 Apr. 2015. Web. Apr. 2016. <http://www.ncagr.gov/stats/general/overview.htm>.

[20] "2012 Census of Agriculture." Agcensus.usda.gov. United States Department of Agriculture, 2 May 2014. Web. Apr. 2016. <https://www.agcensus.usda.gov/Publications>. [21] "USDA Economic Research Service, 2012." USDA ERS. United States Department of Agriculture, n.d. Web. Apr. 2016. <http://www.ers.usda.gov/>. [22] "2015 State Agriculture Overview: North Carolina." USDA/NASS. United States Department of Agriculture, National Agricultural Statistics Service, n.d. Web. Apr. 2016. <https://www.nass.usda.gov/Quick_Stats/Ag_Overview/stateOverview.php?state=NORTH CAROLINA>. [23] "Pasquotank County: Census of Agriculture." Ncagr.gov. North Carolina Department of Agriculture & Consumer Services, n.d. Web. Apr. 2016. <http://www.ncagr.gov/stats/codata/pasquotank.pdf>. [24] Webb, Dee. "Wheat: County Estimates." Ncagr.gov. United States Department of Agriculture, National Agricultural Statistics Service, n.d. Web. Apr. 2016. <http://www.ncagr.gov/stats/coest/WheatCoest.pdf>. [25] Webb, Dee. "Soybeans: County Estimates." Ncagr.gov. United States Department of Agriculture, National Agricultural Statistics Service, n.d. Web. Apr. 2016. <http://www.ncagr.gov/stats/coest/SoybeansCoest.pdf>. [26] Colonial Solar 1 Farm. Digital image. Bizjournals.com. Charlotte Business Journal, n.d. Web. Apr. 2016. <http://media.bizj.us/view/img/5326881/eliz-city*750xx2388-1343-0-29.jpg>. [27] "Solar Energy-Arnedo, Spain, 34 MW." exenewable.com. eXenewable. Web. Apr. 2016. <http://www.exenewable.com/projectProfile.asp?id=12606>. [28] "Arnedo Solar Plant ~ Solar Energy." Solarenergypowerplants.blogspot.com. Energetic, 4 Oct. 2009. Web. Apr. 2016. <http://solarenergypowerplants.blogspot.com/2010/11/arnedo-solar-plant.html>.

[29] "Solar Photovoltaic: Highlighted Projects." Acciona.com.au. Acciona Australia, n.d. Web. Apr. 2016. <http://www.acciona.com.au/projects/energy/solar-photovoltaic>.

[30] "Monte Alto Solar Garden, Milagro." Acciona.com.au. Acciona Australia, n.d. Web. Apr. 2016. <http://www.acciona.com.au/projects/energy/solar-photovoltaic/monte-alto-solar-garden-milagro/>.


Appendix Acronyms: MW: Mega-Watt GW: Giga-Watt PPA: Power Purchase Agreement CE-1: Colonial Eagle One PJM: Pennsylvania New Jersey Maryland Interconnection LLC NC: North Carolina VA: Virginia PV: Photo-Voltaic DC: District of Columbia GWU: George Washington University GWUH: George Washington University Hospital AU: American University DER: Duke Energy Renewables CPSP: Capital Partners Solar Project RTO: Regional Transmission Organisation LMP: Locational Marginal Pricing CAPEX: Capital Expenditures OPEX: Operational Expenditures


A: First Year of Operation- Calculations

A1. Solar Farm Monthly Generation of Colonial Eagle One Solar Farm

(Summary of Appendix A)

Month Montly power output_300 (GWh)

Monthly power output_305 (GWh)

Monthly output (w/losses)_300 (GWh)

Monthly output (w/losses)_305 (GWh)

JAN 0.198 1.779 0.168 1.512 FEB 0.219 1.970 0.186 1.675 MAR 0.347 3.125 0.295 2.657 APR 0.423 3.810 0.360 3.239 MAY 0.479 4.310 0.407 3.664 JUN 0.532 4.791 0.452 4.073 JUL 0.526 4.738 0.447 4.028 AUG 0.414 3.730 0.352 3.171 SEP 0.375 3.381 0.319 2.874 OCT 0.256 2.301 0.217 1.956 NOV 0.188 1.694 0.160 1.440 DEC 0.150 1.354 0.128 1.151


Annual power output_Moduel300 (Gwh) 3.491

Annual power output_Moduel305 (Gwh) 31.437 Year 1 Total Power Output

(Gwh) 34.928

B: Twenty Year Cash Flow Calculations


Documents

Technoeconomic Analysis of a Utility-Scale Solar Farm in ... Analysis of a Utility-Scale Solar Farm in Coastal North Carolina Nicholas Batista, Alexa Baumer, Jeet Desai, Ruochen Zhu