Modified January 10, 2020
The Maryland Energy Administration (MEA) has developed the FY20 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.
The FY20 Community Solar LMI PPA Incentive Grant Program has been allocated up to $2,500,000, subject to funding availability, from the Strategic Energy Investment Fund (“SEIF”). One or more grants, totaling up to $2,500,000 may be chosen on a competitive basis. MEA does not expect to award grants larger than $500,000.
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 programs 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 20 LMI-PPA Program: (1) 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). Accordingly, MEA will award grants as part of the LMI-PPA Program to Subscriber Organizations that can effectively address these two issues.
Each application should include contract periods shorter than 20 years for members of the LMI Community. Please note that, while MEA provided an incentive to assure a shorter contract term during the FY 18 grant program, this will not be available for the FY 20 LMI PPA Program. The need for such an incentive was not found to be necessary as Subscriber Organizations already intended to offer LMI households short contract terms (or to make it easy and inexpensive for them to get out of the contract).
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.
It is assumed that most LMI subscriptions will be 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 on the “Additional Information” portion of this webpage, under the Community Solar for the LMI Community.
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 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.
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.
Notice of Grant Availability Posted: July 1, 2019
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 Requirement: 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 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 at https://www.pjm-eis.com/.
Calculations: The03 Community Solar for the LMI Community-FY 20 Rev 3 document 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: This is the third year of the Community Solar Pilot Program and the third year of the Community Solar LMI-PPA Grant Program. MEA reserves the right to modify or change the LMI PPA Program as needed for legal, financial or programmatic reasons.
Consumer Education Requirement: Each grantee will be required to cooperate with the third party energy educators/advisors who work with LMI PPA subscribers to help them understand the terms of the PPA contract PRIOR to executing of them.
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.
For more questions, additional information, or assistance, please contact David Comis:
1800 Washington Blvd., Suite 755, Baltimore, MD 21230
(410) 537-4000 | 1-800-72-ENERGY