A Roadmap For Solar On Mine Lands In West Virginia

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A Roadmap for Solar onMine Lands in West VirginiaEMERGING OPPORTUNITY TO GROW THE WESTVIRGINIA ECONOMY, ATTRACT NEW EMPLOYERS,INCREASE INVESTMENT AND CREATE JOBS

TABLE OF CONTENTSINTRODUCTION. 3ROADMAP . 4STAKEHOLDER PLAYBOOK . 5GOVERNMENT LEADERS AND REGULATORS . 6SURFACE AND MINERAL OWNERS . 9MINING COMPANIES . 10CORPORATE OFF-TAKERS . 11ELECTRIC UTILITIES . 12NON-PROFITS AND OTHER ADVOCATES . 13CONCLUSION.14ii R o a d m a p f o r S o l a r o n M i n e L a n d s i n W e s t V i r g i n i a

INTRODUCTIONThis report lays out a roadmap for West Virginia to build upon its legacyas a domestic energy provider by capitalizing upon the vast land base offormer surface coal mines as sites for new solar generation facilities.Preliminary analysis suggests there are up to 400,000 acres of formermine lands and other brownfields that could meet minimum sitesuitability requirements for large-scale solar across central Appalachia.If this land area was harnessed for solar development, it could doublethe total solar capacity that has been installed in the United States todate. Solar developers are scrambling to find suitable sites across theregion. If West Virginia were to implement a fair and predictable policyframework, the state has a unique and timely opportunity to become aglobal leader as the broader market transitions to a new energyeconomy.A variety of stakeholders would benefit from advancing this marketopportunity and could all play important roles in facilitating solardevelopment in West Virginia. They include government leaders, mineland owners, mining companies, electric utilities, large electricity consumers,nonprofit organizations and local solar industry advocates, among others.These stakeholders could be involved in advancing specific projects orbroad policies. An alliance of diverse stakeholders working togetherwould make it possible for more solar development to occur, and quicker.This report describes each type of stakeholder and provides specific stepsthat each stakeholder group can take to move toward the implementationof solar on former mine lands in West Virginia.DEVELOPING SOLAR ON FORMER SURFACEMINE LANDS WOULD UNLOCK ECONOMICOPPORTUNITIES TO: create new jobs and retrain laid-off coal industryworkers and others to apply transferable skills such asheavy equipment operation for site preparation andelectrical wiring; attract new manufacturers and employers to the regionas large companies are increasingly choosing to locate theirfacilities where they have access to renewable energy tolock in the financial benefits of long-term, fixed-pricedpower while furthering their corporate social responsibilityand environmental goals; replenish the much-needed tax base for localcommunities and state budgets that have dwindled withthe decline in coal markets; create new revenue streams for mine land owners byturning unproductive liabilities into potentially profitableassets; and minimize land use conflicts from all forms of energyexploitation, thus making it a win-win-win for nature,economy and climate by avoiding conversion of forestsand farms, allowing them to continue to provide myriadresources including, clean water, clean air and carbonsequestration.3 Roadmap for Solar on Mine Lands in West Virginia

ROADMAPThis report provides recommendations and explores two interrelated waysto spur new investment in solar arrays on former surface mines in WestVirginia: (1) pilot projects and (2) new policies. Successful pilot projectswill help demonstrate feasibility and provide a roadmap for new policies,and new policies will help accelerate the development of additionalprojects.Pilot projects and new policies are bothimportant to implementing the roadmapPilot projects Nonprofit organizations and other local solarindustry advocates involve nontraditional partnersand bring grant and corporate funds to the projectGovernment leaders and regulators and surfaceand mineral property owners see a successfulproject and study a West Virginia financial modelCorporate off-takers benefit immediately fromlow-cost, fixed-price solar electricityLocal communities are rewarded with new jobs,revitalized tax base and cleaner air and waterNew policies As barriers to solar development in West Virginiaare addressed, solar becomes more profitable tomine land property owners and mining companiesCorporate off-takers have more options forpurchasing or self-generating solar electricityGovernment leaders and regulators supportexisting manufacturing jobs and attract new jobs atcompanies with corporate sustainability andrenewable energy goalsFIGURE 1 – ADVANTAGES OF FORMER SURFACE MINE LANDS FOR SOLAR4 Roadmap for Solar on Mine Lands in West Virginia

STAKEHOLDER PLAYBOOKGrowing the solar energy industry on West Virginia mine lands requiresleadership and action from six key stakeholder groups within the state: Key stakeholders involved in developing solaron mine lands government leaders and regulatorssurface and mineral property ownersmining companiescorporate off-takerselectric utilitiesnonprofit organizations and local solar industry advocates Independently, these players could make some headway towarddeveloping pilot projects or amending key policies; collectively, they canmaximize their impact and have the greatest likelihood of success to seeWest Virginia capture new investments, new jobs and new revenue fromsolar energy developments.Here we present a playbook of actions that each stakeholder group maychoose to take to facilitate redevelopment of former mine lands for largescale solar. The identified actions are intended to build understanding ofthe options and of the current obstacles and inform collaborative action toovercome these obstacles. Government leaders and regulators. Policymakerscan change policy to facilitate solar projects andcan support pilot projects to create jobs, replenishthe tax base and diversify the economy.Surface and mineral property owners. Manylarge landowners are looking for replacementrevenue due to the downturn of mining in theregion.Mining companies. Preparation of former minelands for solar during reclamation or constructionmay reduce costs.Corporate off-takers. Many existing manufacturershave high electricity demand, and more and morecorporations have renewable energy goals.Electric utilities. Utilities may diversify their fuelmix to hedge against future increases in wholesaleelectricity costs and to reduce emissions andexpand their portfolio of rate-based assets. As theeconomy grows, overall electrical demand mayalso increase.Nonprofit organizations and local solar industryadvocates. These groups can focus resources,including time and funding, to achieve policychanges and build pilot projects.5 Roadmap for Solar on Mine Lands in West Virginia

GOVERNMENT LEADERS ANDREGULATORSWest Virginia generates almost all of its power from coal,and despite enjoying historically low electricity rates fordecades, industrial electricity costs have risen by seven percent per yearover the last two years. 1 A diversified fuel mix could help stabilize pricesto the benefit of the broader economy, though would require thatlegislative and non-legislative actions be taken by government leadersand regulators. Several state government agencies are particularlyrelevant for efforts to implement solar pilot projects or new solar-friendlypolicies.The Public Service Commission (PSC) has substantial authority over WestVirginia’s electric utilities and how they provide power to their retailcustomers. Several policies discussed in this report hinge on PSC action. TheCommission is made up of three commissioners appointed by the governor.Commission staff, including the Consumer Advocate Division, typicallyintervene in cases and play important roles in the proceedings.Reclamation oversees work on coal mines abandoned before 1977. TheOffice of Special Reclamation reclaims mines for which bonds wereforfeited since 1977. And the Division of Mining and Reclamationregulates active coal mines. Also within the DEP, the Brownfields Section ofthe Office of Environmental Remediation oversees the repurposing offormer industrial sites, including former mine lands, where future use isaffected by real or perceived environmental contamination.Many, but not all, policy changes must go through the West Virginia StateSenate and House of Delegates and must be signed by the governor.Like the governor, legislative leaders can facilitate pilot projects orspearhead legislative changes that would help diversify the state energyeconomy and attract new businesses and manufacturers to the state.The Department of Commerce (DOC) works to retain and expandexisting industry and to attract new industry. It would not be uncommon forpotential corporate off-takers with renewable energy goals or solardevelopers to contact the DOC to investigate options in West Virginia. Itcan therefore play a key role in facilitating pilot projects andcommunicating the benefits of solar-friendly policies to both the public andlegislators. Various economic development entities within DOC, such as theBusiness and Industry Division (BID) Office of Energy and the Small BusinessDevelopment Center (SBDC), play important roles in identifying andconnecting interested parties.Within the Department of Environmental Protection (DEP), several officescould potentially play a role in the development of solar projects on minelands. For example, the Office of Abandoned Mine Lands and1 West Virginia Forward. Undated. West Virginia Forward Strategy for Economic Developmentand Growth. West Virginia University, Marshall University, and the State of West Virginia.FIGURE 2 – WEST VIRGINIA’S SOLAR MARKET COMPARED WITH SURROUNDING STATES’THAT ARE BOOMING BECAUSE OF FAIRER & MORE PREDICTABLE POLICY FRAMEWORKS.SOURCE: SEIA, 20186 Roadmap for Solar on Mine Lands in West Virginia

ACTIONSGovernment leaders and regulators can take numerous actions toimplement solar pilot projects or new solar-friendly policies.Onsite third-party electricity salesSite certification and marketingIdentifying mine sites that are reasonably prepared and viable for solarahead of potential development opportunities could direct interest to thosesites when development opportunities arise. A “Solar-Ready Mine Lands”certification could foster large solar investments in West Virginia. Further,advertising the availability of these sites through a targeted marketingcampaign could attract developers and new businesses into the WestVirginia market that may have otherwise not come.This endeavor could be a collaborative effort between the DEP and DOC,with support from non-profits and land and mineral owners. The DEP couldidentify and certify shovel-ready sites, and the DOC could market theSolar-Ready Mine Lands to potential buyers or lessees. (See Appendix A –Racer Trust Case Study)Although specific details would need to be worked out, a Solar-ReadyMine Land would have its liabilities minimized and would be close to anelectrical substation. Valley fills and outfalls would likely be delineated,and a Phase 1 Environmental Site Assessment would likely be completed.A Good Samaritan law might also be passed by the Legislature to furtherminimize liabilities associated with developing minelands with solar arrays.Leasing from willing landowners, rather than purchasing land, wouldprovide another opportunity to shield solar developers from previousenvironmental responsibilities.One of the primary opportunities to expand the distributed solar market inWest Virginia is to enable third-party electricity sales, a common financingmechanism that is legal in the majority of states in the United States.Currently, a retail customer in West Virginia must own a solar array to usethe electricity it produces. Many states have built robust solar marketsbased on third-party sales. In these states, a project developer can pay tobuild the array on a customer’s site, own and operate the asset and sellthe electricity it produces to the onsite customer. This business arrangementeliminates the need for the customer to pay a large upfront cost to accesssolar electricity, effectively making solar more accessible.Limited open market accessThe electricity “market” is largely determined by the state laws andregulations that govern the way the utilities provide power to customerswithin their service territories . If West Virginia wishes to prioritizeredevelopment of underutilized former minelands, legislative action couldopen up competitive access to portions of the grid for the limited purposeof allowing the output from solar arrays sited on mine lands to be sold tothird parties, and wheeled over the network of the electric utilities, at afair and reasonable rate approved by the PSC. This is a simplealternative to a broad restructuring of the electricity market and wouldboth incentivize growth of an emerging renewable energy market andvaluable economic activity on underutilized degraded areas.7 Roadmap for Solar on Mine Lands in West Virginia

Net-metering reformNet-metering has been a primary driver for solar installation on hundredsof homes, businesses, schools and churches across West Viriginia. Netmetering currently is allowed under: (1) the “two-mile rule,” which allowsvirtual meter aggregation for a customer to another property owned bythe customer within two miles of a solar installation, and (2) installedcapacity limits by customer class—25 kW for residential, 500 kW forcommercial and 2 MW for industrial customers. Expanding or eveneliminating the two-mile rule and increasing the customer class limits wouldmake it easier for consumers to install more solar and would be the subjectof a rulemaking proceeding at the PSC.Green tariffGreen tariff programs enable utility customers to purchase electricitygenerated by renewable energy sources directly from their electric utilityby voluntarily opting into a special service arrangement with no rateimpact to other customers. Green tariff programs have been essential tothe growth of many solar markets by increasing the demand for solarprojects as customers elect to purchase power with solar and wind energy.The PSC has the necessary statutory authority to enable a utility todevelop green tariff options, pursuant to its broad authority to set “justand reasonable rates.”Amend existing PURPA rulesIn response to the energy crisis of the 1970s, the Public Utility RegulatoryPolicies Act (PURPA) of 1978 created a market for non-utility powerproducers by requiring utilities to purchase power from all eligible powerproducers as long as the cost of the electricity was below the utility’savoided cost. Across the nation, PURPA contracts have resulted ingigawatts of solar development; and today, PURPA is viewed as one ofthe driving forces behind a rapidly growing solar market, especially so innearby states such as North Carolina. However, the implementation ofPURPA varies across states and utility markets. In West Virginia the PSChas the statutory authority to evaluate and determine how the utilitiescalculate their avoided costs to create a level playing field and sendconsistent price signals to the market to spur solar development in WestVirginia.Renewable portfolio standardTwenty-nine states, Washington D.C. and three territories have adoptedrenewable portfolio standards to promote local economic developmentand a diversified, less carbon-intensive energy portfolio. West Virginia’sformer Alternative and Renewable Energy Portfolio Standard (AREPS)established a voluntary goal which allowed the state’s utilities to meetrenewable energy targets with projects developed both inside andoutside the state. If West Virginia were to adopt to enact a RenewablePortfolio Standard (RPS), a provision could be included that would requireRPS requirements to be met with in-state renewable energy projects.Further, extra credit could be provided for renewable energy projectsthat are sited on former mine lands, similar to what was included in theformer AREPS. Enacting an RPS in West Virginia would require legislativeaction.8 Roadmap for Solar on Mine Lands in West Virginia

SURFACE AND MINERAL OWNERSEngage private developersMuch of West Virginia’s land and minerals are owned bylarge landholding companies. Many of these companieshave collected lease and royalty payments from coal miningcompanies and a variety of other enterprises sited on their land, such astimber operations or natural gas wells. For many generations, coal mininghas generated most of the revenue for landholding companies. Today,large landowners are looking for new or replacement revenue streamsdue to the downturn of mining in the region. Also, some landowners’holdings are completely mined out or otherwise uneconomic. Solar couldprovide a viable long-term land use option and provide revenue tolandholding companies in the form of lease payments during the typicallease term of 20-30 years.ACTIONSAdvocate for pilot projects and new policiesLandowners are key stakeholders with potentially much to gain frombringing large-scale solar development opportunities to their mine sites inWest Virginia. Around the region, landowners are increasingly looking atinnovative approaches to diversify their revenue streams and enhanceprofitability. A pilot project would allow for a West Virginia–specificfinancial model to be implemented, tested and evaluated.Seek out solar opportunities on abandoned mine lands and bondforfeiture sitesThousands of abandoned mine lands and bond forfeiture sites arescattered across West Virginia. The availability of funding, both from thetraditional Abandoned Mine Reclamation Fund, Abandoned Mine LandPilot Program grants and the Special Reclamation Fund, could potentiallyhelp offset costs associated with making these sites ready for solar.Solar development, especially at large scales, is highly competitive. Solardevelopers would likely be more than willing to engage landholdingcompanies on specific projects or parcels, even before being under formalcontract. West Virginia currently has 10 solar installation firms withthousands more scattered across the United States.If and when suitable sites are identified, there must be formalarrangements with surface owners that are sufficient to satisfy investors’due diligence requirements for development to successfully occur.Engaging with developers early in the process will allow landowners todetermine how to most effectively and economically proceed on issues suchas making appropriate arrangements with mineral owners of severedestates.Publicize opportunities and market propertiesFor people outside the coal mining industry, landholding companies andtheir land assets are difficult to track. This has contributed to thechallenges faced by developers looking to explore siting solar on formerminelands. Landholding companies could consider solar as an opportunityto make use of underutilized land assets. Advertising their openness toenter into long-term lease arrangements or

Undated. West Virginia Forward Strategy for Economic Development and Growth. West Virginia University, Marshall University, and the State of West Virginia. Reclamation oversees work on coal mines abandoned before 1977. The Office of Special Reclamation reclaims mines for which bonds were forfeited since 1977. And the

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