Minnesota researcher studies how rural co-ops can build solar capacity

With support from a federal grant, Gabriel Chan aims to clarify the costs and benefits of distributed solar for electric co-ops.

While the grid benefits of distributed solar generation are well known for large utilities, less is known about the impacts for rural cooperatives, which tend to serve smaller populations spread out across a large area.

Gabriel Chan, a University of Minnesota researcher, is working with several electric co-ops to make that picture more clear. Chan believes the findings could lead to more solar generation — and more fairness — within co-op systems.

The structure of co-ops — generally as specialists in either distribution or generation and transmission — creates complexities and opportunities simultaneously.

While utilities often claim that incentives for distributed generation can be unfair for non-participating customers, Chan contends that the potential for inequities is greatly multiplied within systems of co-ops. That’s because costs and benefits impact not only individual customers, but also the co-ops in their business dealings with one another.

But there’s a potentially big upside in that web of relationships, according to Dave Shaffer, executive director of Minnesota’s Solar Energy Industries Association.

“There is so much opportunity here to work together and build capacity and relationships between these co-ops,” he said. “There’s a bigger conversation going on about how consumers can be put back in front of electricity planning, like Energy Democracy New York . This project fits in with that because co-ops already are democratically controlled.”

Federal grant fuels rural focus

Although allegations of cross-subsidization have been addressed by value-of-solar studies in Minnesota and numerous states across the country, Chan said the impact of solar on co-op systems remains murky. Given that co-ops provide about a quarter of the nation’s power, he said his study could prove helpful across the country.

The U.S. Department of Energy, which is supporting Chan’s research with a  $125,000 grant, made a point of targeting rural areas with four of the eight grants it announced in late March. The department said in a press release that it expects researchers to “investigate how to cost-effectively site, install and finance solar and energy storage systems, as well as how to optimize and quantify the value of the resilience these systems provide.”

The web of relationships can mean that the installation of distributed solar generation on one co-op’s system may result in unintentional costs — or benefits — for not just another customer, but another co-op utility, Shaffer said. Solar could reduce the demand fees that distribution co-ops pay to their wholesalers, he said, but that would reduce revenues for the wholesaler.

It can also work on the benefit side. The installation of a solar array on the system of one distribution co-op could reduce the peak demand  — a benefit — for the wholesaler and, in turn, possibly for the wholesale co-op’s other customers.

And wholesalers, which often limit their amount of energy that member co-ops produce on their own, can partner with distribution co-ops in building an array, Shaffer suggested. For example, Great River Energy, a wholesale co-op in Minnesota, installed a 2.24 MW solar array in partnership several years ago with member Wright Hennepin Cooperative Electric Association, and a 1 MW array together with Dakota Electric Association.

‘Benefits for everyone’

Chan hopes that his research, which he aims to complete by the summer of 2021, will clarify the costs and benefits for various parts of the co-op network, and in so doing will identify ways to maximize fairness. He intends to design a couple of pilot projects next year.

“This complex institutional structure creates unique opportunities for models for solar development that haven’t existed yet,” he said. “We are looking for ways to deploy solar that recognizes the unique structure of co-ops. We want to think about shared ownership, community solar, ownership across different levels of co-ops … and what commercial and industrial customers might want,” he said. 

One innovative collaboration among co-ops began several decades ago, when Great River Energy devised a technique for using electric water heaters as batteries. The utility installed smart electric water heaters in the homes of willing customers, then programmed them to engage in arbitrage: Heat water when the price of power is low, use it when the price is high. 

“That’s a place where co-ops have really taken the lead,” Chan said, adding that the water-heater-as-battery project was an “inspiration” for his current undertaking.

“They made the case to members that, ‘If we do this together, we can have benefits for everyone.’ That’s the kind of thinking — creating a common benefit for member-owners through innovation — that we want to bring to solar.”