| Overall Rating | Gold |
|---|---|
| Overall Score | 75.28 |
| Liaison | Kara Holmstrom |
| Submission Date | Feb. 25, 2022 |
Luther College
IN-50: Innovation D
| Status | Score | Responsible Party |
|---|---|---|
|
0.50 / 0.50 |
Chris
Frantsvog Sustainability Coordinator Center for Sustainable Communities |
"---"
indicates that no data was submitted for this field
Name or title of the innovative policy, practice, program, or outcome:
Local Power: Renewable Energy, Demand Reduction and Creative Financing
A brief description of the innovative policy, practice, program, or outcome that outlines how credit criteria are met and any positive measurable outcomes associated with the innovation:
Economic sustainability is enhanced by reducing operating costs. In FY 2020, one-half of Luther's electricity bill was comprised of demand charges from the electric utility. In its most recent solar array, commissioned in the fall of 2020, Luther added a 360 kW lithium-ion energy storage system that could discharge energy reduce demand during peak periods.
Luther College’s creativity in financing, and its partnering with investors has made possible local production of renewable energy that might otherwise have been difficult or too expensive. Most recently that same creativity was combined with an energy storage system to enable cuts in electricity costs through demand reduction.
Over the last decade, Luther College has partnered with local investors to develop three significant solar energy projects on campus. The first involved Luther leasing 280 kW of solar photovoltaic (PV) equipment; the second involved Luther contracting to purchase all of the power from a 776 kW PV system installed in three places on campus; and the third is an installation of another 950 kW of PV paired with a 360 kW lithium-ion energy storage system that will help Luther limit peak demand and reduce related demand charges.
Luther College has become a valuable resource for other campuses looking for innovative ways to finance renewable energy systems. Luther College has created resources on how colleges can find potential investors in their communities. Luther has been a resource to peer institutions about how the federal Investment Tax Credit (ITC) and accelerated depreciation (MACRS) on eligible equipment are attractive to investors. Luther College is an example of how to use "open book" processes to develop projects that offered a reasonable rate of return to the investor as well as short and long-term cost-savings to the college. We have established and shared guidelines for which parties on a college campus (Financial Services, Facilities, Legal) and off campus (Contractors, Accountants, Legal) can play a role in developing the projects.
This excerpt from an article by Second Nature summarizes the achievements of the innovative financial partnerships developed by Luther College:
"Universities face a few significant challenges when it comes to developing solar photovoltaic (PV) systems on their campuses and associated properties. One of the foremost challenges is leveraging the tax incentives available to tax paying entities, including the Investment Tax Credit (ITC) and the accelerated depreciation of PV assets. These incentives alone can represent more than a 30% reduction in total project cost under optimal circumstances. Yet developing the private partnership necessary to take advantage of these incentives is complicated and can represent significant legal and contractual costs, which reduce the financial benefits. Additionally, understanding the financial performance and risks associated with third party financing can require considerable analysis and stakeholder engagement.
Luther College, by beginning with small, low risk PV projects, developed the internal capacity needed to effectively scale their solar efforts. The measured approach to project development, dedication to campus stakeholder engagement, and partnership with a trusted supporter of the college has resulted in a successful, replicable pathway to advance solar energy projects that meet the college’s financial and sustainability goals. They now boast more than 1.1 Megawatts (MW) of solar energy, beginning with a 3.78 Kilowatt (kW) system in 2011 and continuing with their most recent installation, an 821 kW system representing a $1.6 million dollar investment in on-campus solar."
This outline of our innovative financial partnerships was included in a 2016 white paper by the Intentional Endowments Initiative:
• Power Purchase Agreement (PPA): The Preus Library and Regents Center PV arrays were financed via a third party PPA at a fixed price for ten years. Luther College is buying both the solar power produced and the RECs, and the project is predicted to save $1 million in electricity purchases over 25 years.
• Purchasing “Unbundled” Renewable Energy Credits (RECs): Luther College purchases all of the Renewable Energy Certificates (RECs) from a single turbine community wind project owned by WindVision, LLC.
• Direct Ownership / Asset Acquisition: The Luther College wind turbine was installed on September 19, 2011 and, on average, generates 3.6 million kilowatt hours (kWh) of electricity per year, which is about 27 percent of all power consumed on campus. In order to complete this $3.2 million project Luther College established a for-profit corporate entity, Luther College Wind Energy Project, LLC. Formed in 2005, LCWEP receives Iowa’s 476C tax credit for renewable energy, which adds about $50,000 per year to the project’s bottom line.
• Green Revolving Fund (GRF): In 2015, the College established the roughly $1 million Climate Action Fund to provide necessary financial resources for Luther to achieve the goals in its Climate Action Plan, especially Luther’s emission reduction targets.
• Asset Leasing: The Baker Village 280 kilowatt (kW) solar photovoltaic (PV) array was constructed in the summer of 2012. Leased for seven years from Decorah Solar Field, LLC, Luther’s lease payments are funded by avoided electricity purchases, donations to Luther earmarked for renewable energy, and the sale of solar renewable energy certificates (SRECs). After the lease period ends and Luther acquires ownership of the facility, Luther will pay less for electricity over the 25-year-rated life of the panels than it would to purchase electricity from the grid to power Baker Village.
Luther College recently purchased the formerly leased system. As a result, the Baker Village complex is the first part of the college campus that is carbon neutral.
Luther College’s creativity in financing, and its partnering with investors has made possible local production of renewable energy that might otherwise have been difficult or too expensive. Most recently that same creativity was combined with an energy storage system to enable cuts in electricity costs through demand reduction.
Over the last decade, Luther College has partnered with local investors to develop three significant solar energy projects on campus. The first involved Luther leasing 280 kW of solar photovoltaic (PV) equipment; the second involved Luther contracting to purchase all of the power from a 776 kW PV system installed in three places on campus; and the third is an installation of another 950 kW of PV paired with a 360 kW lithium-ion energy storage system that will help Luther limit peak demand and reduce related demand charges.
Luther College has become a valuable resource for other campuses looking for innovative ways to finance renewable energy systems. Luther College has created resources on how colleges can find potential investors in their communities. Luther has been a resource to peer institutions about how the federal Investment Tax Credit (ITC) and accelerated depreciation (MACRS) on eligible equipment are attractive to investors. Luther College is an example of how to use "open book" processes to develop projects that offered a reasonable rate of return to the investor as well as short and long-term cost-savings to the college. We have established and shared guidelines for which parties on a college campus (Financial Services, Facilities, Legal) and off campus (Contractors, Accountants, Legal) can play a role in developing the projects.
This excerpt from an article by Second Nature summarizes the achievements of the innovative financial partnerships developed by Luther College:
"Universities face a few significant challenges when it comes to developing solar photovoltaic (PV) systems on their campuses and associated properties. One of the foremost challenges is leveraging the tax incentives available to tax paying entities, including the Investment Tax Credit (ITC) and the accelerated depreciation of PV assets. These incentives alone can represent more than a 30% reduction in total project cost under optimal circumstances. Yet developing the private partnership necessary to take advantage of these incentives is complicated and can represent significant legal and contractual costs, which reduce the financial benefits. Additionally, understanding the financial performance and risks associated with third party financing can require considerable analysis and stakeholder engagement.
Luther College, by beginning with small, low risk PV projects, developed the internal capacity needed to effectively scale their solar efforts. The measured approach to project development, dedication to campus stakeholder engagement, and partnership with a trusted supporter of the college has resulted in a successful, replicable pathway to advance solar energy projects that meet the college’s financial and sustainability goals. They now boast more than 1.1 Megawatts (MW) of solar energy, beginning with a 3.78 Kilowatt (kW) system in 2011 and continuing with their most recent installation, an 821 kW system representing a $1.6 million dollar investment in on-campus solar."
This outline of our innovative financial partnerships was included in a 2016 white paper by the Intentional Endowments Initiative:
• Power Purchase Agreement (PPA): The Preus Library and Regents Center PV arrays were financed via a third party PPA at a fixed price for ten years. Luther College is buying both the solar power produced and the RECs, and the project is predicted to save $1 million in electricity purchases over 25 years.
• Purchasing “Unbundled” Renewable Energy Credits (RECs): Luther College purchases all of the Renewable Energy Certificates (RECs) from a single turbine community wind project owned by WindVision, LLC.
• Direct Ownership / Asset Acquisition: The Luther College wind turbine was installed on September 19, 2011 and, on average, generates 3.6 million kilowatt hours (kWh) of electricity per year, which is about 27 percent of all power consumed on campus. In order to complete this $3.2 million project Luther College established a for-profit corporate entity, Luther College Wind Energy Project, LLC. Formed in 2005, LCWEP receives Iowa’s 476C tax credit for renewable energy, which adds about $50,000 per year to the project’s bottom line.
• Green Revolving Fund (GRF): In 2015, the College established the roughly $1 million Climate Action Fund to provide necessary financial resources for Luther to achieve the goals in its Climate Action Plan, especially Luther’s emission reduction targets.
• Asset Leasing: The Baker Village 280 kilowatt (kW) solar photovoltaic (PV) array was constructed in the summer of 2012. Leased for seven years from Decorah Solar Field, LLC, Luther’s lease payments are funded by avoided electricity purchases, donations to Luther earmarked for renewable energy, and the sale of solar renewable energy certificates (SRECs). After the lease period ends and Luther acquires ownership of the facility, Luther will pay less for electricity over the 25-year-rated life of the panels than it would to purchase electricity from the grid to power Baker Village.
Luther College recently purchased the formerly leased system. As a result, the Baker Village complex is the first part of the college campus that is carbon neutral.
Optional Fields
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The website URL where information about the programs or initiatives is available:
Additional documentation to support the submission:
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Data source(s) and notes about the submission:
The EPA uses Luther's model as an example in this Guide for Purchasing Green Power: https://www.epa.gov/sites/production/files/2018-08/documents/guide-purchasing-green-power-appb.pdf
The story about the ribbon cutting for Luther's most recent solar array with storage: https://www.luther.edu/headlines/?story_id=928960
The story about the ribbon cutting for Luther's most recent solar array with storage: https://www.luther.edu/headlines/?story_id=928960
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