Chapel Hill investigates community-financed solar

Jan. 08, 2014 @ 05:34 PM

The town of Chapel Hill wouldn’t be able to take advantage of state or federal tax credits in-place to try to encourage new solar development projects.

So to put a 100-kilowatt solar array on the roof of a town aquatics center, officials are gauging whether community investors, who could take advantage of tax incentives, would step up to help pay the initial estimated $350,000 cost.

“Right now, we’re kind of testing to see what kind of interest is within our community to have a … community-funded approach to doing solar energy installations,” said Brian Callaway, Chapel Hill’s energy management specialist. He’s working on the community-financed solar project proposal for the town. “What we’re following are some models that other communities and nonprofit organizations like universities and churches have used to form a partnership with interested investors.”

The town has hired The Appalachian Institute for Renewable Energy to gauge local interest in investment in the project, Callaway said. According to its website, the nonprofit works with groups like churches, schools and local governments to use third-party financing for solar projects.

The town and the group are hosting the first community meeting on the project today. Callaway said he expected a full room at the Thursday morning meeting, for which he took reservations.

Although Callaway said town officials are still investigating their options, the town seeks a “host-to-own” model. Under the arrangement, the town would allow a solar project to be installed on its property. A group of third-party investors would pay for it and own it, and would take advantage of existing financial incentives for renewable projects. Several years later, he said, the town would take ownership in a “radically reduced buyout” or through a tax-deductible charitable donation.

“This is kind of the launch of public engagement,” Callaway said of Thursday’s meeting, adding that if there’s interest in financing the project, a lease would have to be negotiated and approved by the Chapel Hill Town Council.

The project wouldn’t be the town’s first solar project, however, Callaway said. Smaller solar arrays already are installed on some town buildings, some financed by grants.

“We have a great interest in seeing renewable energy installed in town,” he said. “A lot of other communities are doing solar projects right now.”

In nearby Carrboro, a group of local investors formed a limited liability company that worked to finance, own and operate a solar array placed on a rooftop of the Carrboro Farmers’ Market. The investors have an agreement to sell the project or donate it after six years.

Randy Dodd, Carrboro’s environmental planner, said that after the investors take advantage of the financial incentives and recoup their investment, the town will take ownership and get revenues from the sale of the electricity it generates.

“We community financed it because the private sector has financial incentives available to it, particularly tax credits, that aren’t available to the public sector,” Dodd said. “There’s really no financial incentive available to the public sector.”