Projects being built by Dublin-based BNRG Renewables and Dirigo Solar LLC in Portland are only the first phase of three large endeavors planned to come online by 2024.
Source: Sun Journal
By Tux Turkel
A global solar-electric development company from Ireland is partnering with a Maine firm to develop large-scale projects in eight communities over the next year, an enterprise that has attracted roughly $100 million in private capital investment.
And the projects now under construction by Dublin-based BNRG Renewables and Dirigo Solar LLC in Portland are only the first phase of a trio of large solar endeavors planned to come online by 2024. Taken together, they could bring $500 million in capital spending to Maine over the next few years, along with thousands of jobs during the construction period, BNRG said.
They also could create a total of 350 megawatts of generating capacity, enough energy to power roughly 78,000 homes.
Maine may not come to mind as a top-tier location for major solar farms. But it has relatively inexpensive land, connections to the New England power grid and much more sunshine than the so-called gray sky countries of northern Europe, where BNRG is based. Moreover, wider market conditions are aligning now with recent state government actions, namely the laws and policies Gov. Janet Mills and the Maine Legislature enacted to favor renewable energy development and fight climate change.
Those and other factors have set off a land rush in Maine, with solar developers trying to nail down sites with good southern exposures and access to high-voltage power lines and substations. Dozens of projects are vying today for limited links to the power grid.
For instance, as of late June, projects representing 240 megawatts of solar capacity had applied for connections under an expanded net metering law, a billing mechanism that credits renewable generators for surplus power they produce. Most are under 5 megawatts, reflecting a limit set in the rules.
Another law aimed at upgrading the state’s renewable portfolio standard, which requires electricity suppliers to get an increasing percentage of power from “green” generators, has attracted bidders that include utility-sized undertakings.
“Maine has a late-bloomer advantage,” said David Maguire, BNRG’s founder and director. “Maine has the opportunity to do solar right at a time when the cost of capital is historically low and the cost of the technology is historically low.”
SOLAR A BRIGHT SPOT
Maine solar also has come to the attention of institutional investors. Renewable energy projects are seen as having less risk and more stable financial returns, because they have long-term contracts for power that isn’t generated by fossil fuels. In this instance, the first phase of the BNRG-Dirigo projects has been sold to The Carlyle Group, a global investment firm based in Washington, D.C.
“So Maine is benefiting from a nice moment in time, a sweet spot in time,” Maguire said.
Construction has begun on the projects, located in Oxford, Fairfield, Milo and Augusta. The other four are in Auburn, Palmyra, Winslow and Hancock. They range in size from roughly 26 megawatts in Milo to 7.3 megawatts in Palmyra and Fairfield.
The first-phase projects will have the capacity to power roughly 22,440 homes and will create 1,000 jobs during construction, BNRG estimates. In all, roughly 265,000 solar modules will be spread across 435 acres, of which 84 percent are fields or previously cleared woodland.
BNRG and Dirigo will continue to manage the projects. The electricity will be used by Maine customers, through Central Maine Power Co. and Versant Power, formerly Emera Maine. Based on a 20-year contract awarded by the Maine Public Utilities Commission in 2015, the power has a starting wholesale rate of 3.5 cents per kilowatt hour, a low price that the PUC reasoned would benefit electric customers. At the time, there were questions about whether utility-scale solar farms with such a competitive rate could be built profitably in Maine.
“We kept very much below the radar screen because there wasn’t much to talk about,” said Bob Cleaves, a co-founder and principle investor in Dirigo. “But since then, the landscape has dramatically changed in Maine. It’s just a remarkable turn of events and an amazing growth opportunity for the state of Maine.”
As the project evolved, other large solar developers were looking at Maine and at Dirigo, Cleaves said. Dirigo chose to form a joint venture with BNRG in 2017, he said, in part because both companies had a common vision of where the region’s wholesale power market was headed. That is, they calculated that they could hit the PUC’s low contract rate because solar panel prices were falling while output was increasing.
MAINE A FOCAL POINT
BNRG entered the U.S. solar market in 2016, with projects in Oregon that total 30 megawatts. It’s also now making forays into the Carolinas, Virginia and Pennsylvania. But Maine has emerged as its focal point, with as many as 448 megawatts of capacity possible by 2024, according to its website.
Aside from the business case to grow in Maine, BNRG also has discovered a cultural connection.
“Maine is very much like Ireland,” Maguire said. “It’s rural. There’s a real tie to the land. There’s an emphasis on community.”
Solar projects scattered across the countryside also can create jobs in parts of Maine hit hard by the decline of the forest projects industry, Maguire added. Even after construction ends, each 100 megawatts of capacity will need roughly 30 workers for ongoing service and maintenance, he said.
As BNRG and Dirigo work to complete the first-phase projects, they are securing permits and financing for an estimated 110 megawatts of capacity in 27 communities stretching from York to Limestone. This second phase will require another $100 million or so in private capital, Cleaves said. Half the power is going to businesses and institutional buyers in Maine, rather than utilities. Construction is expected to begin next year.
A third phase totaling 150 megawatts or so is still on the drawing board and dependent on a procurement bidding process at the PUC. If Dirigo is selected this fall, construction would start in 2022 or 2023, Cleaves said.
If all three phases are built, the BNRG-Dirigo solar portfolio would become the largest investment in renewable power generation in Maine since the wind energy boom of the previous decade, Cleaves estimated. Industrial wind farms kicked off $2 billion in spending, according to the Maine Renewable Energy Association, half of it on turbines and towers.
‘INVESTMENT WILL FLOW’
A handful of sizable solar arrays have been developed in Maine in recent years, the largest being roughly 10 megawatts. But they will be dwarfed by the next wave. In addition to the BNRG-Dirigo projects, a few other big solar farms are either under construction or seeking approvals.
At the Sanford Airport, NextEra Energy Resources is finishing a 50-megawatt project that will sell power starting in late fall to utilities in southern New England. The project created 100 construction jobs and will generate nearly $20 million a year in local tax revenue and lease payments.
NextEra, which says it’s the world’s largest wind and solar operator, also is developing a 77-megawatt project in Farmington that’s expected to begin operations next September. The power will go to utilities, communities and colleges in southern New England. The company declined to disclose the capital spending for either project.
In central Maine, a Boston-based renewable energy company plans to build a $190 million solar project in Unity Township, Benton and Clinton.
Longroad Energy Partners says its Three Corners Solar Project will cover a total of 700 acres. Construction could start next year, pending a winning bid in the PUC procurement process and approval from the Maine Department of Environmental Protection.
The 109-megawatt project would generate enough electricity for 10,000 to 20,000 homes. Longroad recently submitted a bid to sell the energy to CMP.
Longroad, which operates a remote operations center in Portland that monitors hundreds of solar projects across the country, is backed by investors that include a New Zealand pension fund.
Matt Kearns, chief development officer at Longroad, said so much solar development is in the pipeline now in Maine that the industry is having trouble hiring and training enough skilled labor.
“Access to the workforce is a big issue for solar right now,” he said. “We’re talking three, four, five years of work. In the world of construction, that’s a big backlog.”
Jeremy Payne, executive director of the Maine Renewable Energy Association, said one indicator of the pending activity is membership in his trade group. Roughly 40 new members have joined in the past 18 months, he said, and most have ties to the solar industry.
“What it tells me,” Payne said, “is that if you build a reasonable public policy, the investment will flow.”
Asked about his advice to other entrepreneurs, Mazuroski says it’s not enough to have a lofty goal, but also to ensure it makes sense from a business perspective: “We live in a capitalist society. If the economics don’t work, you’ve got to find another way.”