News
Toyota Driving Demand For Solar Power In Ohio Valley
By: Sydney Boles | Ohio Valley ReSource
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Automaker Toyota is planning to announce a major investment in solar and other renewable energy in Appalachia and the Southeastern U.S. The plan includes a massive new solar facility on an old surface coal mine property in Kentucky.
Sources close to the deal tell the Ohio Valley Resource that the Kentucky site is part of a much larger plan. Toyota plans to purchase as much as 800,000 megawatt hours per year, or roughly 365 megawatts, of renewable energy, primarily from developers in Appalachia and the South.
“A project of this magnitude is certainly significant,” said Alex Hobson, director of communications for the Solar Energy Industries Association, a leading industry research group. “You’re talking enough energy to power about 50,000 homes.”
Toyota has already undertaken ambitious energy efficiency goals, with a similarly sized solar array installed on its headquarters in Plano, Texas. But once completed, Toyota’s solar mega-project would place the automaker among the largest corporate investors in renewable energy.
The portion of the project scheduled to be built in Pike County, Kentucky, is a 15- to 20-year power purchase agreement. Partners in the development include: coal company RH Group; French renewable energy company EDF Renewables; and Adam Edelen, former state auditor and current candidate for governor in Kentucky’s Democratic party primary.
At 100 megawatts, the site would be largest solar array in Kentucky and, according to one of the project’s developers, would likely be visible from space. The project is expected to cost $130 million, will be built on a 700-acre reclaimed surface mine site and could create between 50 and 100 renewable-energy jobs in a region still reeling from the loss of coal employment.
Toyota declined to confirm the scope of the project. A spokesperson issued a written statement hinting at an upcoming announcement. “We have been working with certain electric power providers on a very innovative initiative.”
Developers say the massive project is a smart business decision that happens to make a larger point: It’s proving that Kentucky’s economic future is in energy production, but perhaps that energy won’t be limited to coal and other fossil fuels.
“It doesn’t matter whether you care about the environment or not, this is pure economics,” said Ryan Johns, vice president of business development at RH Group. In a nod to Toyota’s slogan, Johns added, “If we don’t diversify our thinking, we’re never going to be able to keep moving forward.”
Power Politics
Toyota’s power purchase agreement would be the final missing piece in a plan that had been in the works for several years. The idea began in 2016 as a conversation between Johns and his longtime friend Edelen, now a Democratic candidate for governor.
The pair were brainstorming ways to reuse previously mined land in RH Group’s portfolio, Johns said, when Edelen suggested a renewable energy project. “Well, I’m the coal guy,” Johns said, “So that gave us quite a good laugh.”
Edelen, who served as Kentucky’s state auditor from 2012 to 2016, said the pitch was immediately of interest to solar developers. “We’ve got a coal company that wants to partner with a renewable energy firm to do a renewables project on a mountaintop removal site and hopefully put a bunch of out-of-work miners back to work. The response was amazing,” he said. “And that’s when we knew we had lightning in a bottle.”
The project was in the works long before Edelen decided to run for governor. But in deep red Kentucky, Edelen acknowledges part of the appeal of the project is uniting people across diverse ideologies and backgrounds for a common purpose. The solar project was “just two Kentucky boys trying to help their community,” he said.
The optics of the announcement are certainly a boon to Edelen, a progressive running against more centrist and better-known opponents in the gubernatorial primary.
Johns acknowledged the challenge of building a large-scale solar farm in a Appalachia.“Solar’s not a new concept, but for here, it’s very new,” Johns said. “All the ancillary businesses that go along with a solar farm, those have to be created for here.”
Johns said he hoped to help other coal companies redevelop surface mine lands into solar farms if the Pike County site is a success.
Developers hope to break ground in summer 2019 and be fully operational by 2021.
Driving Solar
Hobson said businesses are pushing for renewable energy programs to meet corporate sustainability goals and to help their bottom lines.
Virtual power purchase agreements are a popular way that corporations have chosen to pursue renewable energy goals. In those agreements, a buyer, in this case Toyota, pays a fixed price to the seller for the energy that’s generated, but the specific units of energy generated at the site do not go to the buyer directly.
PPAs accounted for nearly five gigawatts of solar energy in the United States in 2018. For context, that’s 15.6 million individual solar panels.
Toyota’s partnership with RH Group is the part of the company’s goal of a net-positive carbon impact by 2050. The company’s central Kentucky plant has been implementing renewable-energy and energy-efficiency solutions for years, with LED lights and methane-capture technology systems already in place.
An investment of this size would make Toyota a significant player in what SEIA characterizes as a major push from corporations to embrace renewable energy.
Coal Country Solar
Adding 100 MW of solar energy would more than triple Kentucky’s existing solar energy output, which was less than 50 MW at last industry report. “An additional 100 megawatts in the Bluegrass State could produce enough electricity to power about 12,000 households,” said Hobson.
Restrictive net metering policies in Ohio Valley states have lowered the return on investment for residential and commercial consumers who install solar, and the region’s deep ties to the coal industry have made politicians reluctant to embrace renewable energy.
Still, the economics are clear. Because of cheap natural gas, dozens of coal-fired generators have been retired or switched to natural gas in the Ohio Valley alone. The federally owned utility Tennessee Valley Authority voted in February to close more of its coal-fired power plants in Kentucky and Tennessee despite opposition from elected officials including President Donald Trump and Kentucky Governor Matt Bevin.
Johns said he expected RH Group to continue as a coal-centered business, but he acknowledged that the writing was on the wall. “We would love more than anything for coal to keep being mined,” he said. “But the reality of it is, on the power generation side, our customers are gone. They have switched to natural gas and diversified their portfolio.”
Johns said he hoped that the involvement of a coal company in a massive solar project would defray what he considered outdated rhetoric pitting coal against renewables. “In no way are we turning our backs on the fossil fuel industry. All we’re doing is adding to the growth Kentucky can have.”