Community Solar LMI-PPA Grant Program

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The Maryland Energy Administration (MEA) has developed the FY18 Community Solar LMI PPA Incentive Grant Program (LMI-PPA Program) to help extend the benefits of community solar projects to members of the Low and Moderate Income (LMI) community. The program seeks to achieve this by incentivizing community solar subscriber organizations to include terms and conditions in their Subscription Agreements, which maximize cost savings and minimize the contract period for LMI subscribers.

This program is only open to subscriber organizations that have been assigned LMI Capacity under the Maryland Community Solar Pilot Program, or those projects in the “Other” category subscribing at least 51% of their energy to LMI subscribers. The incentives are designed for a 20-year lifetime so Subscriber Organizations must pass down grant conditions to new owners in any subsequent
sale/change of control of the project.

Available Funding and Grant Amounts

The FY18 Community Solar LMI PPA Incentive Grant Program has been allocated up to $3,500,000,
subject to funding availability, from the Strategic Energy Investment Fund (“SEIF”). One or more grants,
totaling up to $3,500,000 will be chosen on a competitive basis.​ 


Background

 

The Maryland Community Solar Pilot Program commenced in April 2017. Community solar is a form of
virtual net energy metering where the consumer gets energy credit on a local bill for energy produced
off-site (but within the same electric utility service area). The Maryland Public Service Commission has
authorized certain subscriber organizations to participate in the pilot program. This programs allows
Maryland residents and businesses to purchase subscriptions for energy from community solar arrays,
gaining the same economic advantages as having solar modules directly on their roofs.
There are two issues addressed in this grant program: (1) provide the LMI Community with significant energy savings; (2) allow for shorter contract periods to address needs of LMI community.

Accordingly, the LMI-PPA Program will provide grants to subscriber organizations that can address these
two issues facing the LMI Community. Applicants for the grant should be providing contract periods
shorter than 20 years to members of the LMI Community. A subscriber organization seeking a grant
need not sign every LMI subscriber to a shorter contract, but it should be an option available to each
LMI subscriber. MEA incentives partially recompense the Subscriber Organization for added costs
incurred by providing Subscriber Agreement time and savings characteristics needed by the LMI
community.

Incentive

It is assumed that most LMI subscriptions will be offered along the Power Purchase Agreement (PPA)
model (little/no up-front money, pay for electricity used from the solar array on a $/kWh basis). Grants
will be given to subscriber organizations based on the sum of the “Subscription Incentive” and a “Term
Incentive” as described below:

Subscription Incentive: The Subscription Incentive provides funds proportional to the difference
between the net present value of the proposed subscription rate and the net present value of the
assumed baseline subscription rate. The calculation is made using the application spreadsheet and is
further discussed in the Community Solar for the LMI Community document found in the Additional
Information portion of this webpage.

Term Incentive: The Term Incentive provides funds using the “Application Spreadsheet,” and the
algorithm used can be found in the Additional Information portion of this webpage, under the
Community Solar for the LMI Community document. The incentive is zero dollars at a 20-year
subscription period. The term incentive increases by inverse ratio (i.e. a (1/X) rate, where “X” is the
subscription period). Thus, shorter subscription periods have higher incentives than longer subscription
periods. Note, terms of less than 1 year will be treated for incentive purposes as if they were 1 year.

The total incentive is equal to the sum of the term incentive and the subscription incentive.

Given that the incentives are paid when the project starts producing creditable energy but are designed
to compensate for expenses incurred over the 20-year life of the project, MEA will require guarantees
from the subscriber organization that the proposed term and rate structure will be maintained (or made
more favorable to the LMI subscribers) throughout the life of the project.
The incentives apply only to the portion of the array output that is subscribed to residential LMI
subscribers.
 

Project Requirements

Project requirements are as follows:
  • Only one grant may be awarded per project.
  • The subscriber organization must provide sufficient guarantees that the agreed upon terms of
    the LMI agreement will not be changed in a manner that would disadvantage the LMI subscriber
    over the 20-year period covered by this grant. These term limitations and subscription
    limitations must be included as mandatory requirements in contracts to sell the array or move
    operational control to another subscription organization.
  • The subscription agreement must be structured in a PPA model (little to no up-front cost to the
    subscriber: the subscriber pays the subscriber organization for energy credits credited to
    his/her electric bill on a $/kWh basis).
  • Projects must produce creditable power by June 1, 2019. (Creditable power is power provided
    to the electric utility which is used to compute the subscriber’s monthly energy bill).
    o A count of LMI subscribers must be provided by the Subscription Organization to the MEA no
    later than June 1, 2019.
  • The Subscription Organization must provide a detailed explanation of how LMI subscribers were
    certified to their LMI category. If a third party provided the certification, the subscriber
    organization will provide a detailed explanation of how the 3 rd party conducted the verification. 
  • Projects must be part of the Community Solar Pilot Program; Subscriber Organizations must
    have a subscriber number issued by the Maryland Public Service Commission.
  • The project must have been allotted capacity under the LMI category of the Maryland
    Community Solar Pilot Program, or be in another category and provide more than 51% of its
    energy credits to members certified as LMI.
  • The project must meet requirements of the Maryland Historic Trust.

 

Elligibility Requirements

In order to qualify for consideration under FY18 Community Solar LMI PPA Grant Program, subscriber
organizations applicants must meet the following requirements:

  • The Applicant must be authorized to conduct business in Maryland.
  • The Applicant must be a Maryland PSC Approved Subscriber Organization (with Subscriber
    Organization Number)
  • The Applicant must have develop a community solar project allotted capacity under the LMI
    category, or in the “Other” category which will provide more than 51% of its energy credits to
    members certified as LMI.

Application Process

 

  • After reviewing the Notice of Grant Availability LMI-PPA Grant R7.docxNotice of Grant Availability LMI-PPA Grant R7.docx a Community Solar Subscriber Organization with an eligible project submits an application for the Community Solar LMI-PPA Grant. The application consists of an application spreadsheet with the contract terms and subscription rates for the next 20 years.
  • Complete the application spreadsheet MEA LMIPPA Application Worksheet R8.xlsx​
  • After reviewing eligibility of the Subscriber Organization and the project, MEA will review the
    application and negotiate assurances regarding the protection of the terms to the LMI
    community over the next 20 years. In the unexpected event the program appears to be
    oversubscribed, MEA may limit the total maximum size of the grant to ensure all eligible grants
    can be paid from the available funds. (Any Community Solar LMI project that fails to apply AND
    complete the Grant Agreement by June 15th may be deemed ineligible for funding from FY 18
    funding. There is no guarantee of FY 19 funding.)
  • MEA will then forward the subscriber organization a grant agreement for their review and
    signature
  • Upon receipt of the signed grant agreement, MEA will encumber (set aside) funds.
  • Grants will be paid after the project is online, producing creditable power to subscribers. The
    Subscriber Organization will submit a Completion Certificate  MEA LMIPPA Completion Report R7.xlsxMEA LMIPPA Completion Report R7.xlsx which will act as an invoice.
  • o Upon receipt of a complete and accurate invoice, MEA will pay the grant based upon the
    ACTUAL subscribed LMI capacity and the actual average contract duration. For example, if the
    grant agreement is for 40% of a 2 MW array (i.e. 800 kW), but only 600 kW of the LMI capacity is
    subscribed at the time of the invoice, MEA would only pay two thirds (3/4) of the agreed upon
    grant amount. As such, the Subscriber Organization may wish to delay the date of invoice
    submittal until the LMI capacity is filled, but in no condition later than June 1, 2019. Grant
    payments may only be used to support the LMI portion of the project.

 

Evaluation Criteria for Award

The MEA reserves the right to choose one or more applications based on availability of funding, quality of applications, and evolving needs of the Community Solar Pilot Program. In the event that there are more proposals than funds, projects will be chosen based on the size of the total incentive, with the largest incentives being paid first (as it is assumed that they represent the largest benefit to the LMI customer).
 

Timeline

  • Notice of Grant Availability Posted – April 18, 2018
  • Grant Application Deadline – May 15, 2018
  • Grant Agreement Execution Deadline – June 15, 2018
  • Construction and Commissioning Deadline – As determined by the PSC and the utility, but no
    later than June 1, 2019
  • Final Inspection and Document Submission Deadline – Within 10 days of project commissioning,
    but no later than June 1, 2019 

 

Additional Information


Historic Review
Grant funds may not be used to support a Community Solar Pilot Program project that is found to
adversely affect historic buildings or historic districts by the Maryland Historical Trust. Grantees will
verify that a Maryland Historical Trust review has been successfully conducted for the solar array site
(and will pass the results to MEA), or will submit site information to MEA to ensure review by the
Maryland Historical Trust. A successful review must be received before grant funding may be used to
support a project.

NABCEP Grant funds may not be used to support a Community Solar Pilot Program project that does not have at least one person certified as a Solar PV Installer by the North American Board of Certified Energy Practitioners ('NABCEP') involved in the design and/or installation of the community solar array. Grantees will be required to provide the name and certification number of these individuals.

Solar Renewable Energy Credits (SRECs) Grant funds may not be used to support a Community Solar project that is not registered for and produce Solar Renewable Energy Certificates (SRECs). Grantees will be required to verify the successful registration of projects with the Maryland Public Service Commission and with PJM Interconnection. For
information concerning SREC registration, consult the PJM EIS website at https://www.pjm-eis.com/

Calculations Community Solar for the LMI Community R7.docxCommunity Solar for the LMI Community R7.docx discusses the needs of the LMI community and describes how the Term and the Subscription incentives are designed to address this need.
 
Program Changes This is the first year of the Community Solar Pilot Program and the first year of the Community Solar LMI-PPA Grant Program. MEA reserves the right to modify or change the grant program and/or incentive as needed for legal, financial or programmatic reasons.
Consumer Education Subscriber Organizations will cooperate with State contracted 3 rd party energy advisors/advocates to ensure PPA subscribers understand the contents of the PPA PRIOR to signing the contract.
Tax Status of Community Solar Grants The Community Solar LMI PPA Grant Program is operating under the Strategic Energy Investment Fund, which affects how clean energy technologies are taxed. Grants issued by the State of Maryland may be taxable.  As the MEA is unable to give tax advice, any tax-related questions should be directed toward a qualified tax professional.

 

Contact

 

For more questions, additional information, or assistance, please contact David Comis.
 
David Comis
Clean Energy Program Manager
(410) 537-4064