Arkansas utility regulators Wednesday approved a plan to develop a 4.8-megawatt net-metering solar facility near Cabot to provide renewable energy to the regional water utility Central Arkansas Water.
The solar facility is expected to go online in mid-2021 and will be able to satisfy approximately 20% of Central Arkansas Water’s current energy expenses, according to the water utility.
A news release issued by Central Arkansas Water described the project as the first net-metering facility with a generating capacity of more than 1,000 kilowatts that has received the approval of the Arkansas Public Service Commission.
The water utility, which provides drinking water for more than 450,000 customers across seven counties, has partnered with the Little Rock-based solar company Scenic Hill Solar on the project.
The initial contract between the parties is for 20 years, with two subsequent options to extend for five years, as well as an option for Central Arkansas Water to purchase the solar facility after five years.
“This solar facility is one part of CAW’s ongoing efforts to remain environmentally and economically sustainable for the benefit of customers we serve today and those we will serve in the future,” Central Arkansas Water CEO Tad Bohannon said in a statement.
According to a news release from Scenic Hill Solar, the 30-acre plant will be at the Main Street exit of U.S. 67/167 near Cabot.
The statement from the water utility said the energy-cost savings from the project are expected to exceed $7 million over the next 30 years. The process to develop the solar project has taken two years, according to Central Arkansas Water.
The property near Cabot is owned by Central Arkansas Water and will be leased to Scenic Hill so the company can develop and operate the solar plant. Energy produced by the solar farm will be sold back to Central Arkansas Water at a rate of 5.1 cents per kilowatt hour, according to the news release.
In the statement, Bohannon noted the benefits of solar power from the standpoint of environmental sustainability, and added that “utilizing solar power also reduces costs and improves the economic sustainability of the utility for the benefit of our ratepayers.”
In the news release from Scenic Hill Solar, CEO Bill Halter described the decision of the commission as a first-of-its-kind approval under Act 464, state legislation on solar rules that lawmakers passed in 2019 that allowed for third-party financing of solar projects.
Halter said the ruling by the commission favored Central Arkansas Water plus all Arkansas ratepayers with “hard fought victories” on issues related to remote-site net metering facilities and the grandfathering of rates for 20 years with regard to the Central Arkansas Water project. In doing so, the Public Service Commission went against Entergy Arkansas, the state’s largest utility company, Halter said.
“The Arkansas Public Service Commission ruled in our favor and overruled Entergy Arkansas objections on multiple questions,” Halter said in the release.
Net metering in the solar context generally refers to the ability of an energy customer with electricity generating capacity to distribute excess energy to the grid in exchange for an energy credit compensating them for that surplus energy, in some cases at a 1:1 rate equivalent to the retail rate, according to the National Renewable Energy Laboratory.
The order from the Public Service Commission approved Central Arkansas Water’s request for a 20-year grandfathering period from June 1, 2020, at the 1:1 net-metering retail rate.
The board of commissioners for Central Arkansas Water approved the contract for the Cabot solar development proposal and the 5.1-cents rate with Scenic Hill Solar in December 2019.