Q&A: Jeremy Lipinski on utilizing solar energy on the farm March 13, 2020 | Lesley Weidenbener | Indianapolis Enterprise Journal
Jeremy Lipinski and his son launched Emergent Photo voltaic Vitality in 2016 within the Purdue Analysis Park with the objective of serving to native governments, faculties, producers and different firms make the change to renewable power.
And Emergent Photo voltaic nonetheless serves all these forms of clients. But it surely didn’t take lengthy for agriculture to emerge as a key sector. Lipinski mentioned that’s as a result of photo voltaic is an effective monetary guess for farmers, but additionally as a result of farmers have an interest within the setting and sustainability.
Lipinski known as farmers the “actual stewards” of the land.
He pointed to a 155-kilowatt set up at a northern Indiana hog farm. Photo voltaic is now masking about 75% of the farm’s power demand. That equates to a discount of three,500 tons of carbon emissions over 25 years.
The farmer, Kraig Resler, mentioned the choice to put in photo voltaic was an financial and environmental one.
“We’re all the time discussing tips on how to make our 7,000-pig operation extra cost-efficient and environmentally pleasant,” Resler mentioned in an announcement. “We’re excited that our accomplished photo voltaic array could have a constructive influence on the setting and save us cash on electrical energy for years to return.”
IBJ talked with Lipinski about his firm and why photo voltaic appeals to farmers.
Inform me how you bought began.
For a few years, I labored in business finance and I did monetary modeling and placement of financing for business initiatives. A few of these had been power initiatives—and particularly photo voltaic. And in 2016, my son and I made a decision that there was a chance in Indiana due to Indiana’s power coverage.
I believe on the time, there have been 12 or 14 photo voltaic installers within the state of Indiana, and most of these targeted on residential. And so, in trying on the business aspect, I noticed there was an underserved area of interest. And once we acquired began, working within the AG sector sort of occurred organically as a result of they had been those that all the time contacted us. If I obtained 10 telephone calls from folks excited by photo voltaic, eight of them had been farmers. That sector has been far and away the sector that has confirmed us the very best curiosity in adoption of photo voltaic. It’s not even shut.
Why do you suppose that’s?
The challenge returns for the farmer are fairly spectacular, and they’re so as a result of the farmer will not be topic to what different business entities are topic to, so far as their electrical utility fee tariff. Usually talking, a big manufacturing plant or a small manufacturing facility with a big power load are topic to demand expenses on the invoice. [Demand charges are based on the highest amount of power a customer uses in a specific time period.]
You may have expenses based mostly on demand and also you’ll have kilowatt-hour expenses. Demand expenses are harder to mitigate with photo voltaic.
A very good candidate for photo voltaic is a buyer with a meter that has solely kilowatt-hour expenses, and they’re usually single-phase electrical service. They’re glorious candidates as a result of you possibly can offset all of their power consumption with photo voltaic. And in the event that they’re interconnected into the utility via a net-metering settlement, then they get credit score for power that they push to the grid throughout the day for intervals when there isn’t a solar energy. So, the challenge economics for on-farm photo voltaic appear higher than for bigger customers which have completely different fee billing tariffs with bigger demand expenses.
There’s a challenge measurement that we actually wish to concentrate on, that’s sort of a typical for many grain-drying and CAFOs, which you’d know as a hog barn. That measurement is about 100 to 300 kilowatts, in that vary. Now 100 kilowatts, if you happen to examine that to the common residence photo voltaic, it will be 10-12 instances bigger than the common residence system. However if you happen to examine that to a big manufacturing facility or a faculty, one thing like that, then it will be in all probability 10 instances much less. About 100 to 300 kilowatts is what most hog barns, decent-size grain-drying operations are within the ag sector.
How lengthy does it take that 100- to 300-kilowatt buyer to interrupt even on the funding?
That’s an ideal query. We had an enormous challenge in Tipton County, it’s 124 kilowatts. … This farmer has a hog operation and a really massive grain storage operation. So now he has 90% of his power load offset with photo voltaic and his challenge economics are unbelievable.
His inner fee of return for the lifetime of the challenge is 14.5%. His 30-year return on funding was 183%. His payback interval is 5.4 years. We get there via completely different means. You may have the funding tax credit score, which is now 26% of your challenge in a dollar-per-dollar federal tax fee. It’s stepping down. It’s going to be right down to 10% right here in two years. Then you’ve got MACRs depreciation, which, with the change within the tax regulation, you possibly can take 100% bonus depreciation. … Then you’ve got for farms particularly, the USDA [Rural Energy for America Program] grant, which is an superior program for any entity, farm or in any other case, that’s in a qualifying rural space. … We’ve had nice success with that program. Now, if you add all that collectively, you’re taking a look at an offset 60% to 70% of the full challenge put in value. These numbers make it actually engaging.
For many farmers, is that this a bottom-line choice? Or are a few of them within the environmental advantages?
I focus primarily on the monetary side or the challenge economics as a result of that’s a common curiosity. I believe that appeals to everybody.
However I believe the vast majority of farmers are undoubtedly excited by what I might name the intrinsic advantages of photo voltaic. And a kind of, apart from the environmental advantages, can be independence. And I believe that farmers undoubtedly have an unbiased spirit; they’re entrepreneurs. Farmers wish to be unbiased of every other entity and particularly monopoly utility companies.
You known as it environmental advantages. I might classify it as stewardship. Farmers are the unique stewards. And I’m not a local weather scientist, however I can inform you that clear power from photo voltaic is significantly better various concerning emission air pollution. I consider the environmental impacts of burning fossil fuels are a priority to farmers and so they wish to scale back their footprint.
I believe farms have gotten a foul rap, actually, so far as being polluters. I really feel like that’s completely unfaithful in regard to their method to how they handle their farms.
So [farmers] just like the publicity, the constructive publicity, of going photo voltaic. After I put up photo voltaic for a hog barn, Purdue Analysis Basis places out a press launch on my behalf for the farm. That’s shining a constructive mild on how useful photo voltaic could be and what’s the potential for others. And that’s excellent news for the farms. I believe that it’s simple to color them with a broad brush and say, “Oh, it’s a manufacturing facility farm and so they don’t care in regards to the setting. They don’t care about animals.” I discovered the other of that’s true. How they farm their floor and care for his or her livestock is of the utmost significance as a result of it not solely impacts their status, it impacts their backside line.
What may Indiana be doing to encourage extra firms or farmers or anyone to undertake renewable power?
Indiana’s power coverage in the direction of renewables could be very low scoring, if you happen to have a look at it from a nationwide common. We don’t supply any state incentives for photo voltaic. We don’t have a state renewable tax credit score. We do not need a SREC market that trades in Indiana. Some states … have a market the place you possibly can change renewable power credit. Indiana doesn’t have that. We now have no state incentives. However I believe the most important factor is that Indiana doesn’t permit for third-party possession. And what meaning is, if you see a faculty or a municipal entity, college, school, or city; they have to buy and personal the photo voltaic challenge per state regulation.
In different states, a 3rd occasion can are available and primarily finance that challenge for the varsity and that entity will get all of the tax advantages. They usually promote the facility to the off taker by what’s referred to as a PPA, or energy buy settlement, to non-taxed entity at a diminished worth. The personal entity owns and maintains the challenge and receives all of the tax advantages.
That’s how Ohio does it. That’s how Illinois does it. Indiana doesn’t permit that sort of finance construction. So, each challenge that I construct, no matter entity contracts with me, really owns it. If it’s a non-taxed municipal, like a city or a faculty—they obtain zero tax advantages. None. They’ll’t get the photo voltaic tax credit or the depreciation advantages. In order that’s half the price of the challenge that they must pay {that a} taxed third occasion wouldn’t. Indiana turning into a PPA state would open the door to way more alternative for a lot of several types of photo voltaic initiatives.
Do you count on extra farms and corporations to undertake renewable power?
I believe so. I believe that you’ve two issues taking place. You may have the price of electrical energy persevering with to escalate—there’s little doubt about that. Duke Vitality Indiana simply requested an throughout the board 15% improve in electrical expenses for 2020. Then, you couple that with the price of photo voltaic set up that continues to drop yearly. There will probably be a tipping level. As soon as the photo voltaic challenge can cashflow commensurate to the utility invoice, each enterprise that may go photo voltaic, will go photo voltaic.
IBJ authentic hyperlink:
https://www.ibj.com/articles/indiana-startup-finds-niche-in-solar-for-farms
