GCEA weighs options on more localized renewable energy

“Buy down” from Tri-State may work better in a few years

[ By Katherine Nettles ]

The Gunnison County Electric Association (GCEA) is exploring all of its options with its wholesale energy supplier, Tri-State Generation, in an effort to get more renewable energy powering members throughout the area.

Tri-State recently announced it was committed to increasing its renewable energy production to 50 percent by 2030, having also promised to retire all coal plants by 2023.

“As we increase renewables and decrease emissions in our Responsible Energy Plan, we are also delivering on our commitment to lower, more competitive rates for our members, and greater contract flexibility to self-supply power and locally produced renewable energy,” said Duane Highley, Tri-State CEO, in an October press release.

Tri-State has pledged to implement an 8 percent wholesale rate reduction over the next three years. The wholesaler is offering a potential buy-down or buy-out of its contract to member electric co-ops, but GCEA is not ready to go there given the costs and uncertainty of an alternative supply.

GCEA CEO Mike McBride said GCEA wants to rely on more locally sourced renewable energy but is not ready to separate from Tri-State. GCEA has 11,000 consumer owners and operates 1,100 miles of distribution power lines. The higher voltage lines are owned by Tri-State. “We’re small,” said McBride, “and we’re spread out across a large area.”

Currently, the contract between GCEA and Tri-State is considered an “all requirements” one, meaning GCEA is required to buy all of its power from Tri-State. In fact, GCEA currently buys more than 99 percent of its power from Tri-State, but is working to increase local renewables to 7 percent due to some other “carve outs” it has available for renewable energy.

The board concluded that a partial requirements option combined with these previous options would allow GCEA to supply up to 53.5 percent of its own energy through its own sources or independent contractors. But that would involve potential “buy downs” on power supply, where GCEA would pay Tri-State a percentage of the portion of supply revenue it backed out of in its contact.

The buy downs or a buy out would cost GCEA several million dollars. “Tri-State uses [contracts] as collateral to invest in its own systems,” said McBride. “So there are consequences to breaking contracts. And we have voluntarily agreed to that contract in the past. So if we wanted out now, it makes sense that there would be a buy down or a buy out.”

The current contract with Tri-State runs through 2050.

McBride reviewed the possibilities for solar, wind and hydroelectric power, and how they could supplement GCEA’s power.

While acknowledging that Tri-State prices are higher than other providers, McBride said being a not-for-profit co-op, there is more to the story. Co-ops own more miles of energy lines for a smaller return on kilowatt-hour sales, for example. The other two styles are public owned suppliers such as the city of Gunnison, where they own few miles of line compared to sales, and investor-owned suppliers like Xcel Energy, who own fewer miles of line compared with many more sales.

McBride referred to a “common narrative” regarding the costs of solar versus Tri-State’s energy mix, in which people sometimes show how much less expensive solar energy is to produce without showing its complete context. McBride said this is misleading. “It’s like comparing the total cost of ownership of a car, insurance and infrastructure versus the cost of gasoline,” he said.

McBride predicted a 3 megawatt hydroelectric power plant could produce about 15.8 percent of GCEA’s load, or about 21 million kilowatt hours annually. “That’s about three times more than 3 megawatts of solar,” he noted. The buy down payment for this would be $4.7 million.

A lot of mathematical calculations basically concluded that self-supply couldn’t quite get GCEA to the finish line—yet.

The conclusion was generally that it might be best to chip away at local options, while sending Tri-State a continual message that GCEA will want to purchase more power from any renewable sources it can provide.

“If Tri-State is successful in getting their rates to decline and we move into a fixed price, long-term contract, we would be losing ground,” said McBride.

“It could look better in three years—or whenever the next open season is,” he said.

Local projects
Matt Feier, GCEA’s strategy execution specialist, reviewed all the local projects, including a community solar array at the GCEA headquarters in Gunnison, scheduled to be energized on December 17. All 215 short-term shares available have been reserved and 37 members are on a short-term wait list.

There are also 25 long-term, 20-year shares reserved, with 45 more to still be sold. If those don’t get leased, they can be converted to short-term leases 90 days after energization.

The next solar garden, if all goes well, will be in Crested Butte South. Feier introduced the idea to the property owner’s board, and on November 11 the board gave it preliminary approval. The Crested Butte South metro district will discuss it next at its December meeting.

Feier said an option GCEA has explored is adding a solar garden outside of Lake City, where an old telecommunications structure could be retrofitted.

Another project coming together is the Avalanche Park solar array in Crested Butte. Feier said they recently chose Outshine Energy to develop that site, pending a final contract. Avalanche Park would produce about 2,086 megawatt hours per year.

Last, Feier described a hydroelectric facility at Taylor Dam. “The [Bureau of Reclamation] is accepting development applications through January 29, 2021,” he said. GCEA intends to submit an application, and is working on developing a business agreement with the Uncompahgre Water Association for a project there. Once it goes through the BOR, it would go through a federal approval process.

“It’s exciting. It’s not the quickest process, but it’s exciting to see that project potentially moving forward,” said Feier.

He said GCEA is working to expand its electric vehicle charging stations, including a new free station at Taylor Park marina for those going over Cottonwood Pass or around Taylor Park. There are also free stations in Sergeants and Lake City.

Several on-network, fee-based stations are also located in Almont, Pitkin, Lake City, Elk Creek Marina, Gunnison and Crested Butte.