Dino Barajas Writes on Municipal Utilities’ Help for Solar Projects

Akin Gump global project finance partner Dino Barajas has written the article “Municipal Utilities Ride To The Rescue Of Beleaguered Solar Projects,” published by Solar Industry magazine.

The article notes how the U.S. market has become one of the most competitive in renewable energy due to a number of reasons:

  • reduced willingness on the part of investor-owned utilities to offer additional power purchase agreements (PPAs) after reaching required levels of mandated state renewable portfolio standards
  • increased demands by corporate off-takers
  • reduction in the size of contracted megawatts under available PPAs
  • cost issues relating to grid stability and battery storage needs.

In this challenging environment, Barajas dubs the municipal utility as the “white knight” that can “harness the various market forces and provide opportunities for renewable energy developers and their investors.”

He notes that municipal utilities are “in the unique position of being able to utilize their purchasing power relating to energy off-take and use it to address the economic development needs of their constituents and communities.”  Under the umbrella term “economic development,” Barajas includes job creation and capital investment commitments among “concrete—and auditable—benefits” brought into the communities.

He writes, “The key for municipal utilities will be creating a realistic economic development structure that provides a certain degree of flexibility to the renewable energy developer and its investors, such that the types of jobs created can differ over time as the activities of the developer progress,” citing San Antonio’s Alamo projects—which, according to Barajas, is “the largest solar development currently being built in the U.S.”—as a “success story utilizing the sliding scale economic development model.”

Barajas closes by noting that the solar industry “will be in a position to benefit from this type of structure given the ability of solar developers to scale up their projects in smaller individual phases—as compared to wind projects—that are still economical” and warns that the “critical decision for municipal utilities will be to flex their economic  muscles while industry conditions magnify their purchasing power…Once investor-owned utilities regain their past prominence in the renewable energy market, municipal utilities will lose the opportunity to create additional benefits for their communities as part of their procurement programs.”

To read the full article, please click here.