Community Solar LMI-PPA Grant Program

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Update: Governor Larry Hogan issued an executive order on March 12, 2020 mandating teleworking for non-essential state employees across all state agencies in response to COVID-19. With this in mind, the Maryland Energy Administration (MEA) encourages that all correspondence and reporting regarding the Community Solar LMI-PPA Incentive Grant Program be submitted via email to David.Comis@Maryland.gov.

During this time, MEA Clean Energy Program Manager David Comis can most easily be reached via email at David.Comis@Maryland.gov or via phone at (443) 908-1743. We apologize for any inconvenience this may cause and we appreciate your understanding. ​

 

FY21 Community Solar LMI-PPA Incentive Grant Program

Modified September 21, 2020

The Maryland Energy Administration (MEA) has developed the FY21 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 over 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 under the Program are designed for a project with a 20-year lifetime. Therefore, a grantee must require that any new owner comply with all of the grant conditions as a part of any subsequent change of control or ownership of the project.

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Available Funding and Grant Amounts

 

 

The FY21 Community Solar LMI PPA Incentive Grant Program has been allocated up to $669,721, subject to funding availability, from the Strategic Energy Investment Fund (“SEIF”). One or more grants, totaling up to $669,721 may be chosen on a competitive basis. MEA does not expect to award grants larger than $500,000.

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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 project developers (“Subscriber Organizations”) to participate in the pilot program. This program allows Maryland residents and businesses (“Subscribers”) to purchase subscriptions for energy from Subscription Organizations, gaining the same economic advantages as having solar modules directly on their roofs.

To help assure that the LMI community may effectively participate in the Community Solar Pilot Program, MEA focused on addressing two issues in its FY 21 LMI-PPA Program: (1) Provide sufficient savings - LMI households’ priority will be to save money, and therefore, any subscription offered to them must provide a sizeable amount of savings; (2) Validation - to participate as an LMI subscriber, each household will need to be validated as meeting the LMI definition set forth in the Pilot Program requirements of the Code of Maryland Regulations (COMAR) and PSC Letter Order dated February 14, 2020. Accordingly, MEA will award grants as part of the LMI-PPA Program to Subscriber Organizations that can effectively address these two issues.

 

Incentive

 

 

The incentive grant payments described below will only apply to the portion of the Community Solar array output that is subscribed to residential LMI subscribers.

This grant is only for LMI subscriptions that are offered along the Power Purchase Agreement (PPA) model (little/no up-front money and payment for electricity used from the solar array on a $/kWh basis). MEA will determine grant award amounts for a successful applicant based on the sum of the “Subscription Incentive” and the “Validation Incentive” as described below:

Subscription Incentive: MEA determines the grant amount provided for the Subscription Incentive 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, which is the typical PPA rate as determined by MEA. The calculation to determine this incentive is made using the application spreadsheet (see below) and is explained in detail in the Community Solar for the LMI Community.pdfCommunity Solar for the LMI Community document, which is also available under the Additional Information section of this webpage.

Validation Incentive: MEA determines the grant amount provided for the Validation Incentive using the “Application Spreadsheet.” The algorithm used can be found in the “Additional Information” portion of this webpage, under the Community Solar for the LMI Community document. This incentive will reimburse a grantee for actual costs incurred for in-house or third-party validation of the applicable LMI income category. MEA will only reimburse for validation after creditable energy is produced from the Community Solar array. In determining the grant amount MEA will assume 350 validations however final payment will only include $30/review for actual in-house or third-party reviews actually conducted. Please note that this incentive is only available if the Subscription incentive is greater than $0.

The total grant award offered will be equal to the sum of the subscription incentive and the validation 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 the grantee to provide guarantees that the proposed term and rate structure will be maintained (or made more favorable to the LMI subscribers) throughout the life of the project.

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Project Requirements

 

 

  • Only one grant may be awarded per project.
  • Only a project associated with a subscriber number issued by the Maryland Public Service Commission will be considered.
  • To be eligible, the project must be part of the Maryland Community Solar Pilot Program and in compliance with its implementing regulations, COMAR 20.62.01.01.
  • The applicant must guarantee that the terms set forth in the initial LMI-PPA offer, which are incentivized by the LMI-PPA Program, will not be changed in a manner that would disadvantage the LMI subscriber over the 20-year period covered by this grant. These subscription limitations (LMI-PPA terms) must be included as mandatory requirements in any contract for change of ownership or control of the Community Solar project.
  • The subscription agreement for the project 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).
  • A project must produce creditable power by three years and one month from the date of the agreement. Creditable power is power provided to the electric utility which is used to compute the subscriber’s monthly energy bill).
  • A count of LMI subscribers for the solar array, and the percentage of array energy provided to Low Income subscribers and all LMI subscribers, must be provided by the Subscription Organization to the MEA with the Completion Report.
  • The grantee Subscription Organization must provide a detailed explanation of how it validated its LMI subscribers as a part of the relevant LMI category (“low income” or “moderate income”). If a third party carried out the review for validation, the applicant must provide a detailed explanation of how the 3rd party conducted the validation.
  • The project must not be identified as “adverse” by the Maryland Historic Trust.

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Eligibility Requirements

 

 

In order to qualify for consideration under FY21 Community Solar LMI PPA Grant Program, the applicant must meet the following requirements:

  • The Applicant must be authorized to conduct business in Maryland and have a Certificate of Good Standing from the Maryland State Department of Assessment and Taxation.
  • The Applicant must be a Maryland PSC approved Subscriber Organization (with Subscriber Organization Number).
  • The Applicant must have developed a community solar array allotted capacity either under the LMI category; or in the “Small/Brownfield/Other” category. If allotted capacity in the “Small/Brownfield/Other” category, it shall provide 51% or more of its energy credits to members certified as LMI.

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Application Process

 

 

  • After reviewing theFY21 Notice of Grant Availability - LMI-PPA Grant.pdfFY21 Notice of Grant Availability - LMI-PPA Grant, a Community Solar Subscriber Organization with an eligible project may submit an application for the Community Solar LMI-PPA Grant. The application consists of an application spreadsheet with the subscription rates for the next 20 years.
  • Subscriber Organizations will submit an IRS Form W-9 with their Grant Application Spreadsheet as well as other documents required by the application.
  • A combined LMI and SBO application spreadsheet can be found here: Application Worksheet FY 21 (LMI and SBO Categories).xlsxApplication Worksheet FY 21 (LMI and SBO Categories).
  • 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. While not anticipated, if the program appears to be oversubscribed and limited to available funds, MEA may limit the total maximum grant amount to maximize participation in the LMI PPA Program by interested Subscriber Organizations.
  • MEA will then forward the successful applicant a grant award document, including a grant agreement for their review and signature. Any Community Solar LMI project that fails to sign the Grant Agreement by June 1, 2021 may be deemed ineligible for FY 21 funding. Funding for this Program in FY 22 is not guaranteed.
  • MEA will only distribute grants funds after the project is online, producing creditable power to subscribers. After the project is online, the applicant will submit a Completion Report - FY 21 Project.xlsxCompletion Report - FY 21 Project, which will act as an invoice.
  • Upon receipt and verification of a complete and accurate Completion Report (invoice), MEA will distribute the grant funds based upon the ACTUAL subscribed LMI capacity (if less than the amount specified in the grant application) and the actual number of LMI applications reviewed (up to 350). The applicant may wish to delay the date of invoice submission until the LMI capacity is filled; however, it must be received by MEA no later than three years and one month from the date of the agreement. Grant funds will only be awarded to support the LMI portion of the project.​

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Evaluation Criteria for the Award

 

 

The Maryland Energy Administration reserves the right to choose one or more applications based on availability of funding, quality of applications, or to address the evolving needs of the Community Solar Pilot Program. In the event that MEA receives more applications then it can fund with available grant funds for the Program, projects providing greater benefit to the LMI customer from the project will be funded first.

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Timeline

 

 

  • Grant application window opens – September 15, 2020
  • Initial Application Deadline – January 5, 2021
  • Grant Agreement Signature Deadline – March 1, 2021
  • Construction and Commissioning Deadline – As determined by the PSC and the utility, but not later than three years from the date of the grant agreement
  • Final Inspection and Document Submission Deadline – Within 10 days of project commissioning, but no later than three years and one month from the date of the grant agreement
  • Note: MEA may extend one or more deadlines to all participants, or on a case by case basis. Such an extension will be in writing, or by changing the MEA website

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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. A grantee may verify to MEA that a Maryland Historical Trust review has been successfully conducted for the solar array site (and provide the results to MEA), or a grantee may submit site information to MEA for review by MEA’s in-house historic professional. Only projects that have no adverse effects on historic property will be funded.

NABCEP
At least one person certified as a Solar PV Installer by the North American Board of Certified Energy Practitioners ('NABCEP') must be 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 produces 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.

Calculations
Community Solar for the LMI Community.pdfCommunity Solar for the LMI Community discusses the important benefits that community solar should provide to the needs of the LMI community and describes how the Subscription incentive and Validation incentives are designed.

Program Changes
MEA reserves the right to modify or change the LMI PPA Program as needed for legal, financial or programmatic reasons.

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.

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Contact

For more questions, additional information, or assistance, please contact MEA Clean Energy Program Manager, David Comis:

David Comis
Clean Energy Program Manager
David.Comis@Maryland.gov
(410) 537-4064