Renewable Energy Cooperatives Create Opportunities for Colorado's Rural Communities

While occasionally attributed to the character Mulberry Sellers in Mark Twain's 1873 novel The Gilded Age, most sources agree that the phrase, "There's gold in them thar hills," traces back to 1849 when the director of the mint at Dahlonega, Georgia, tried to encourage local gold miners to stay in Georgia rather than join the rush to California. Regardless of its origin, the phrase has new application today, except the "gold" may now be the clean, "green" energy found in Colorado's rural communities.

The public is generally familiar with the large wind farms that have been developed on the eastern Colorado plains, the utility-scale photovoltaic solar energy facilities in the San Luis Valley, and the seemingly ubiquitous solar panels that dot residential and commercial rooftops throughout the state. Such renewable energy facilities define the two ends of the spectrum of clean energy opportunities in Colorado: at one end, small distributed generation installations designed to serve some or all of the needs of the home or business where they are located; and, at the other end, large industrial energy projects designed to meet the needs of electric utilities and their customers. There is, however, a wealth of clean energy opportunities between these two types of projects.

One example of such opportunity is the community solar garden concept which provides opportunities for residents, businesses, renters, low-income utility customers, agricultural producers, and other persons to participate in solar generation when their circumstances might not otherwise make this practicable. In essence, a community solar garden allows such persons to "own" a portion of the energy from a solar electric generating facility operated by an electric utility or other entity and have that energy credited toward their electricity bill similar to what would happen if they installed solar panels on their roof or property. Renewable energy cooperatives provide another, but different, opportunity.

Originally authorized by the Colorado General Assembly in 2004 through Senate Bill 168, renewable energy cooperatives are intended to "encourage local ownership of renewable energy generation facilities to improve the financial stability of rural communities." Renewable energy cooperatives may be created to promote the use of electric energy efficiency technologies among the cooperative's members, or to generate, transmit, and sell electricity from renewable energy resources. Unlike community solar gardens which focus on the needs of retail electricity consumers through what has been referred to as "virtual net metering," renewable energy cooperatives focus primarily on wholesale electricity transactions. This limitation suggests that renewable energy cooperatives are not intended to compete with retail electric utilities, but rather to facilitate the efforts of Colorado's rural communities to develop and profit from their clean energy resources by organizing themselves and selling the resulting power into the wholesale electricity market.

The renewable energy resources that such cooperatives may develop include biomass, geothermal energy, solar energy, small hydroelectricity, wind energy, and hydrogen derived from these resources. Renewable energy cooperatives may not develop projects based on large hydroelectric resources, nuclear energy, pumped storage, fossil fuels such as natural gas, coal, oil, or propane, or hydrogen derived from such resources. Also, under current Colorado law, and unlike retail electric utilities subject to Colorado's renewable energy standard, renewable energy cooperatives may not develop "recycled energy" resources that convert the otherwise lost energy from the heat of industrial exhaust stacks or pipes into electricity.

These permissible energy resource options provide considerable opportunities for Colorado renewable energy cooperatives. For example, in 2007 the Renewable Resource Generation Development Area Task Force created following the passage of Senate Bill 91 reported that Colorado's eight wind resource areas offered 96 billion watts of energy potential and there is 26 billion watts of potential energy if only two percent of the land area in Colorado's two solar resource areas is developed. The majority of these renewable energy resources are located in rural Colorado.

To help facilitate the development of these resources, the General Assembly also provided two important tools to renewable energy cooperatives. First, the Colorado Agricultural Development Authority is authorized to issue tax exempt revenue bonds to help pay for renewable energy cooperatives' construction of renewable energy generation facilities, high voltage electric transmission lines and other interconnection lines, and acquisition of property on which renewable energy generation facilities or associated electric transmission lines will be located. Bond and interest payments are to be made from the revenue derived from the renewable energy generation facilities or their associated electric transmission lines. Such bonds provide a valuable financing tool for renewable energy cooperative members who might not otherwise be able to raise the capital necessary to support the cooperative's projects.

Recognizing the importance of being able to deliver these renewable energy resources into the electricity market, the General Assembly also helped address the interconnection and transmission needs of renewable energy cooperatives. Under Colorado law, electric utilities must interconnect with renewable energy cooperatives provided the cooperative complies with the reasonable interconnection policies, standards, and rules of the public utility. Furthermore, as part of the biennial energy resource zone transmission plans filed by rate-regulated Colorado electric utilities, such utilities must consider how transmission can be provided to encourage the local ownership of renewable energy facilities such as those that may be owned by renewable energy cooperatives. Given that interconnection and transmission considerations can be significant challenges for the development of any renewable energy project, these legislative measures provide a boost to projects proposed by renewable energy cooperatives. Together, these financing, interconnection, and transmission measures help address some of the key issues that renewable energy cooperatives must manage in order to succeed.

Although there was some initial interest in renewable energy cooperatives following passage of Senate Bill 168 in 2004, it appears that this opportunity has not been taken advantage of in Colorado. Nevertheless, times have changed, and the interest in clean energy continues to grow. While many, if not most, renewable energy projects in Colorado have been developed by large independent power producers, the growing interest in distributed generation such as community solar gardens, rural electric cooperatives' renewable energy projects, and residential and business onsite generation all demonstrate that this need not be the case.

Colorado's farmers, ranchers, and rural communities recognize that their wind, solar, biomass, and other clean energy resources can play an important role in Colorado's "all of the above" approach to meeting the state's energy needs. Rural Coloradoans are also well-acquainted with the benefits of the cooperative business model given their long-time experience with agricultural cooperatives and rural electric cooperatives. Rather than waiting for commercial energy project developers to buy a wind or solar energy lease on their property, rural Coloradoans can use renewable energy cooperatives to combine their cooperative experience with their abundant renewable resources to take advantage of these energy opportunities for the economic development benefit of their communities. If they do, the new rallying cry might just become, "There's green in them thar hills."