Trico and CoBank double down on solar projects in Arizona
All across America these days, demand for solar energy can best be described as red hot.
Consider this: despite the global pandemic and related economic woes last year, solar’s share of new electricity capacity that was added to the grid reached a record 43%, making it the fastest-growing sector of the U.S. energy industry, according to the Solar Energy Industries Association. And solar’s popularity isn’t expected to wane anytime soon. Industry experts predict that solar generation (including distributed) will jump from today’s 11% of total renewable generation to 48% by 2050.
Few co-ops are taking such an aggressive lead in the domestic solar market than Trico Electric Cooperative, an Arizona-based nonprofit. Formed in 1945, Trico provides reliable, cost-effective energy and distribution for its more than 45,000 members, the vast majority being residential customers who live in rural and suburban areas that surround the city of Tucson.
It’s no secret that Arizona is experiencing a population explosion led by seniors who are flocking to the state in record numbers. For Trico, whose service area includes a plethora of retirement communities, the unabating influx of newcomers has contributed to the co-op’s continued growth and business success. Compounding Arizona’s energy demand this past year, many snowbirds never left the state during the summer months due to COVID-19. In early summer 2021, Trico had record sales in terms of total energy provided, more than 200 megawatts at peak.
Setting their sights on solar
Looking forward, Trico intends to continue providing reliable, cost-effective energy to its members by integrating community scale solar into its overall resource planning. Case in point: the co-op has partnered with CoBank Farm Credit Leasing (FCL) as well as Torch Clean Energy, a privately held renewable energy developer, to build a 10-megawatt photovoltaic solar generating facility along with a 15-megawatt battery storage system. Construction of the project, called Chirreon, located near the growing SaddleBrooke retirement community north of Tucson, will begin this fall and is expected to be in service by mid-2022.
The battery storage system at Chirreon will be one of the first of its kind for an Arizona co-op, and this latest project exemplifies Trico’s commitment to achieving its mission and serving its members in innovative ways, said Eric Hawkins, Trico’s Chief Legal and Administrative Officer.
As a finance partner for our solar projects, we like the team approach that CoBank FCL takes. They’re easy to communicate with, provide us with a small, dedicated team to work with, and have always understood where we’re coming from and exactly what we’re trying to achieve.
– Eric Hawkins, chief legal and administrative officer, Trico Electric Cooperative
“We’ve already had a record number of consecutive days over the 110-degree mark this summer,” Hawkins said. “One major benefit of developing a facility powered by solar that includes a battery is that it can help cover those peak energy periods and protect our members with service that’s reliable, economical and environmentally responsible.” Once deployed and thanks to economies of scale, he said, community scale renewables such as Chirreon can be more cost effective than individual retail systems and spread the benefits of solar to all Trico members.
Chirreon will have more than 40,000 photovoltaic solar panels, and the battery storage system will be capable of discharging 30 MWh of energy. Chirreon will be situated on approximately 90 acres of land owned by the Arizona State Land Department. The solar panels have single-axis tracking devices that automatically track the sun throughout the day to maximize power generation. The battery storage will help Trico delay the cost of transmission and distribution upgrades and manage area load in a more efficient and cost-effective manner.
Financing based on trust
Through a long-standing financing relationship, CoBank FCL provided the financing for Chirreon. The solar array project marked CoBank’s second consecutive project financing of its type with Trico; in December 2018, a separate solar-generating facility called Avion began producing power in the town of Marana. Avion also uses a single-access module that tracks the sun to maximize the amount of energy that can be drawn from the system. As with Chirreon, the Avion facility will provide power for about 3,000 homes. FCL purchased the Avion solar array after it was constructed, then leased it back to Avion.
When it came time to finance each of the two solar projects, Trico had considered other funding options besides CoBank FCL, Hawkins said. In both cases, though, it soon became clear that CoBank was “hands down the best choice.”
“A large part of working with CoBank FCL is their real expertise in passing on the investment tax credits (ITCs) to solar projects like ours,” Hawkins said. (Up until 2019, the solar ITC provided a full federal tax credit equal to 30 percent of the installed cost of a solar project; the credit will step down annually through 2021, with a permanent 10 percent credit for commercial and utility systems thereafter as the legislation currently stands).
Hawkins said CoBank stands out as a financing partner for renewables projects because of its deep understanding of rural infrastructure, its flexibility in financing options, and its expertise in making financing work for co-ops. For the Chirreon project, CoBank FCL provided interim construction financing and will provide permanent financing once the project is complete.
“Honestly, one of the best things about working with CoBank is that they are really trying to find solutions. These solar arrays are complicated projects. You’re trying to work within tax requirements and you’re also dealing with cutting-edge technology. It takes a lot of institutional knowledge where you can get to the point of closing, funding and permanent financing,” he said. “When you can trust your financing partner and know that they’re going to work with you closely to get the project started and completed, it makes all the difference.”