Economically depressed South Arkansas had been bleeding jobs and residents for decades when
Ouachita Electric Cooperative took dramatic action to help revive the rural communities it serves by paving the way for the first utility-scale solar project in the state.
Co-op General Manager Mark Cayce helped negotiate a deal to ensure that Aerojet Rocketdyne expanded its operations in the area by providing the rocket-motor maker with the renewable energy it needs to win federal defense contracts.
The deal brought about 400 new Aerojet jobs to the co-op’s territory in 2017, increasing Ouachita’s residential customers for the first time in years. In early 2020, the project helped the co-op reduce rates by more than 4% for its 7,000 other consumer-members as peak demand expenses dropped because of savings tied to the 12-MW solar array.
Cayce says the success story grew from a stark realization.
“If we didn’t change,” he says, “we weren’t going to exist.”
‘You’ve Got to Entice Them’
Economic development experts are seeing the trend play out in rural regions across the country, as large employers increasingly demand renewable energy to meet ambitious sustainability goals.
“Renewable energy and broadband,” says Zachary Mannheimer, CEO of Des Moines-based
Atlas Community Studios, which helps rural communities plan for growth. “[Those] are the two major services … to take advantage of economic development opportunities.”
And those opportunities are growing quickly amid a trend of companies fleeing the high cost of living in urban areas and looking for a better quality of life for their workers in suburban and rural communities.
Co-ops stand to benefit from the migration, Mannheimer says.
“The pandemic, by showing how people could successfully work from home anywhere, accelerated this trend like I couldn’t even have imagined,” he says. “But you can’t just sit around and wait for the Fortune 500 companies to come. You’ve got to entice them.”
Co-ops have been doing just that through creative agreements to provide renewable energy to their large commercial and industrial members. Among many recent projects:
Inter-County Energy Cooperative Corp. and its generation and transmission co-op,
East Kentucky Power Cooperative (EKPC), came up with a plan to help beverage company Diageo power its new bourbon distillery in Lebanon with 100% renewable energy. The company will license solar panels from the co-op’s 60-acre solar farm, and EKPC is currently looking at proposals for renewable projects.
The Tennessee Valley Authority is partnering with co-ops on several of its Green Invest program projects, which help large commercial and industrial customers reach their long-term sustainability goals.
Duck River Electric Membership Corp. in Shelbyville will provide the grid connection for a large-scale solar installation that is expected to come online in the fall of 2022 as part of a partnership among TVA, Vanderbilt University, and Nashville Electric Service. TVA also is planning to partner with other co-ops on upcoming renewable energy projects.
Green Power Electric Membership Corp.’s 38 member co-ops provide more than 500 MW of renewable energy, including hydropower, biomass, and solar to power a new Facebook data center in the north-central part of the state.
In South Carolina,
Central Electric Power Cooperative purchased 150 MW of solar power at the urging of Google, which operates a data center in Berkeley County that is served by
Berkeley Electric Cooperative.
“It’s a requirement for a growing set of customers to have a renewable solution,” says Chris Hansen, TVA’s vice president of origination and renewables. “Customers increasingly want greater intimacy with their power supply. They want to know where their power is coming from.”
Mind Your C&Is
Cayce says the key for co-ops is to “get to know your large industrial customers and find a way to meet their needs.
“Try to make their life easier,” he says. “We told Aerojet: ‘We want to help you go renewable.’ We knew if we didn’t help them succeed, any expansion they did could happen in another state.”
Diageo officials had already settled on building their distillery in Kentucky co-op country when Inter-County Energy CEO Jerry Carter suggested ways for the company to meet its commitment to renewables, including switching from natural gas boilers to electric boilers, which will be powered by renewable energy. Inter-County Energy and Diageo worked with EKPC to implement renewable solutions.
“That’s really what cooperatives do better than anyone,” says Carter, who credits EKPC with helping to clinch the deal with Diageo. “It’s our job, to the best of our ability, to help our members achieve their goals.”
Diageo says the Kentucky co-ops are delivering on that promise.
“Our primary objective was to work with the local co-ops in an effort to meet our renewable electricity goal,” says Andrew Jarrick, environment and sustainability excellence manager for Diageo North America. “In addition to our commitment to a low-carbon future, we do want to support the local communities where we operate. We believe having the co-ops deliver the plan for 100% renewables provided a win-win situation for all parties involved.”
TVA’s Hansen cautions that deploying renewables is not necessarily a “Build it, and they will come” proposition.
“Companies will want to be part of the process” of finding cost-effective solutions to meet their goals, he says.
Indeed, companies don’t always come, even when a renewable power source already exists.
Scott Peters, CEO of
Columbia Rural Electric Association in Walla Walla, Washington, has tried to attract businesses based on hydropower the co-op gets from the
Bonneville Power Administration. Companies are interested in the renewable energy, but factors beyond the co-op’s control—including state taxes and business rules—have often nixed potential deals, he says.
“It’s never just one thing; it’s the package you can offer,” Peters says. “The importance of green energy has been increasing dramatically over the last five to six years. But it’s still not enough to offset tax incentives or other issues. We’ve tried, but so far we’re always the bridesmaid, never the bride.”
Still, Columbia’s ability to provide renewable energy puts it ahead of many electric utilities, according to “The Greening of Economic Development” by Jim Bausell, executive vice president of business development at Nashville-based Silicon Ranch, which has partnered with co-ops on utility-scale solar projects.
“Electric utilities have frequently offered a predictable and beneficial path to new development prospects,” Bausell writes. “Advertising ‘low electric rates, the most reliable service, and discounts for commercial and industrial customers,’ utilities seek to attract new load with this traditional value proposition they’ve used for decades. Those utility incentives have often led to a ‘win’ in economic development for many regions and states.”
But that’s no longer enough for a growing number of big companies, he says.
“The economic development paradigm has shifted, with new site locations demanding 100% renewable energy and other sustainability attributes.”
In South Arkansas, Ouachita EC is building on its success with Aerojet. Last year, the co-op partnered with another big employer, General Dynamics, and Today’s Power Inc. to build a 2-MW solar energy system that includes on-site battery storage.
Cayce says General Dynamics is looking at a large expansion that could bring more than 300 new jobs to the co-op’s territory.
OEC has found a winning economic development strategy in offering renewables, broadband service, and energy efficiency programs, Cayce says
“We were watching people leave and having to raise rates—a bad combination,” he says. “Now, we’ve been able to bring people in and reduce rates. We’re giving people a reason to move to South Arkansas. We’re changing the landscape.”