TELLURIDE – At the request of the applicant, Erdman Energy Enterprises, LLC., the public hearing for a special use permit to build a solar renewable energy project before the San Miguel Board of County Commissioners was continued on Wednesday, until a meeting in April 2013, so that a power purchase agreement to be worked out with the San Miguel Power Association.
Erdman Energy Enterprises is proposing to build a 300-kilowatt solar array project on land off Last Dollar Road near Telluride Regional Airport. Since April, the project has been working its way through a county review process; so far, the San Miguel County Planning Commission has recommended a conditional approval of the project – if Erdman Energy is able to reach a power purchase agreement with SMPA.
Negotiations between Erdman Energy and the rural cooperative have, so far, failed to find common ground on a price for the solar-generated power, a fact underscoring the reality that building new renewable energy projects alongside SMPA’s power-purchasing contract with Tri-State Generation and Transmission Association can be difficult and limiting.
“We are asking for an extension to April,” project manager Dirk de Pagter said in an interview Monday, “the reason being is that we are having a devil of a time getting adequate information to truly understand the limitations that SMPA has.”
Ideally, de Pagter said SMPA would purchase the solar-generated power at about the same price as it pays for power generated from the community solar garden in the Paradox Valley, which is being operated by the Clean Energy Collective.
But SMPA Board President Rube Felicelli said Tuesday the community solar garden, where SMPA members are able to purchase solar panels to receive credits on their energy bill, is a “totally different animal” from Erdman’s. Furthermore, Felicelli said the Erdman Energy project is being treated no differently from other renewable energy projects generating power for SMPA in the region, including the Bridal Veil Hydroelectric Plant and the Ouray Hydroelectric Plant. SMPA, Felicelli said, could purchase energy from the Erdman project at a price equal to those projects, but not the community solar garden in Paradox because it is a different type of project.
For de Pagter, it’s that price difference that makes building the project near the airport “economically impossible.”
An even larger hurdle than hashing out a power purchase agreement in the coming months, between Erdman Energy and SMPA looms on the horizon – with all the renewable energy projects already online and those coming online soon, SMPA will soon reach its 5 percent renewable energy ceiling mandated by its contract with Tri-State.
“The real problem is the cap,” de Pagter said, “and therefore because there is a cap on the renewables, the friendly rate structure associated with the cap can no longer be passed onto green consumers. As a community, we need to realize that we are tied to Tri-State and they are tied to coal.”
“When you look at it from their perspective, Tri-State makes a profit from burning coal and selling electricity, and any electricity they don’t sell is a loss of profit,” Erdman Energy Chief Executive Officer Tim Erdman said. “Anything over that 5 percent ceiling, they need to recoup that profit. Having photovoltaic electricity generated next to the place of use is completely different than burning coal and transmitting it, and that is basically what Tri-State’s business is.”
But SMPA, Felicelli affirmed,is very much in favor of renewable energy, and its board of directors is lobbying Tri-State to allow for more renewables once that 5 percent ceiling is reached.
“We have taken an official position with Tri-State requesting that they increase our renewables portfolio,” Felicelli said. “We do see that Tri-State is bending a little bit. If one of the co-ops aren’t using their five percent, they may allow another co-op to use it. It looks like that may work out.”
Still, Felicelli said SMPA must adhere to Tri-State’s pricing, regardless of the co-op’s desire for more renewable energy.
“We have this contract with them for the next 36 years, and we are bound by the contract that says 95 percent of our power must be purchased from Tri-State. And that pricing is set with Tri-State.” Felicelli said.
As for the Erdman Energy solar project, both de Pagter and Erdman still hold out hope that a price can be agreed upon or some other arrangement can be made between now and the April 2013 hearing. For Erdman, embarking on this solar project has brought unintended consequences.
“We were hoping to demonstrate how simple, economic, efficient and significant a solar energy system could be to be installed,” Erdman said. “I wanted to demonstrate how simply it could be done, but somehow I am demonstrating the opposite.”