Solar water heating builds Nevada co-op’s renewable portfolio

(Editor’s note: This story originally ran in the December 2012 issue of Energy Services Bulletin.)

Valley Electric Association (VEA) in Pahrump, Nev., is emerging as a leader in the next big trend in demand-side management (DSM) by doing a very old-fashioned thing—listening to its members.

Valley Electric Association CEO Tom Husted accepts a $5,000 check from Nevada State Energy Office Director Stacey Crowley. The state funds will help offset the slightly higher cost of upgrading homes from propane to solar water heating.

“Our members wanted renewable energy, and solar water heating was the most cost-effective way to add renewables to our portfolio,” explained VEA Marketing Manager Tom Polikalas

Since the co-op launched its innovative, “no money down, zero percent interest” loan program three years ago, 680 VEA members have installed solar water heaters (SWH) in their homes. Homeowners make the monthly loan payment on their systems with the savings over using either electricity or propane to heat water. The program is a saver for VEA, too, with the systems installed to date now shaving an estimated 340 kilowatts (kW) from the co-op’s peak load.   

Members drive pilot

Polikalas attributes the program’s genesis—and its success—to VEA’s strong relationship with its members. The co-op has an Ambassador Program that boasts more than 200 members. The group works directly with the staff on policies, procedures and programs; enlists member support in shaping policy; and learns how legislation affects the utility and its members. Polikalas, a public power veteran, observed, “I don’t think I’ve seen a membership group this active at other places I’ve worked. It is definitely not something a big investor-owned utility could replicate.”

Yet, initially, VEA’s size, non-profit status and low rates seemed to be a barrier to developing the large renewable energy projects that interested members. The Ambassadors brainstormed ideas with the VEA board, and determined that solar water heating was the renewable technology with the most potential to benefit both members and the co-op.

An 18-month pilot program VEA initiated in 2006, with Cooperative Research Network and 40 participants from the Ambassadors, confirmed that belief. Monitoring SWHs with TWACS (two-way automatic communications system) and Btu (British thermal unit) meters, the study found that each unit reduced coincident peak demand by .5 kW. Installing 1,000 units could shave half a megawatt (MW) off of VEA’s peak.

Homeowners fared well, too, seeing an average 11-percent reduction in their annual electric bill. The system provided 85 percent of their hot water needs, and families using more than 60 gallons daily saved even more money. Those numbers looked good enough that 61 percent of the members who responded to VEA’s   survey about SWHs said they would want a unit within six months. It was time to put together the program.

Assembling the pieces

The Ambassadors’ Conservation Renewable Energy Committee (CREC) played a central role in designing the program, researching business models, equipment and manufacturers, and presenting recommendations to VEA’s board. 

Rheem, a Minnesota-based manufacturer of high-efficiency heating and cooling equipment, was chosen to provide the active solar systems. The program offers a choice of four models—a 65-gallon unit for manufactured homes and three models for site-built homes ranging from 80 to 120 gallons.

Loan financing is coming from the National Rural Utilities Cooperative Finance Corporation. Rural electric utilities formed the financial cooperative in 1969 to raise funds from capital markets to supplement the utilities’ loan programs. “CFC is an extremely valuable resource.  As a co-op, it shares VEA’s values of delivering outstanding service to its members at the lowest possible cost.” Polikalas said.

Homeowners make their loan payments through on-bill financing for energy services. “This is VEA’s first foray into on-bill financing, but utilities across the country are offering it more and more as a way to encourage and support deeper energy-efficiency improvements,” noted Polikalas.

VEA retains the renewable energy credits (RECs) to offset its operating cost. The value of the RECs improves the economics of the program for the co-op itself. Nevada’s Public Utilities Commission (PUC) administers the REC market, which was established as part of Nevada’s Renewable Portfolio Standard

Choose contractors wisely

Encouragement and support notwithstanding, a utility energy-efficiency program needs qualified installers if it is to succeed. VEA CEO Tom Husted took on the task of selecting a general contractor. “The choice can make or break a program, so finding a committed, highly qualified general contractor is absolutely worth the time and attention of a utility’s senior managers,” noted Husted.

That is no overstatement, given that the general contractor functions as the member’s point of contact for the program. Providing the installation estimate, hiring all subcontractors, ensuring that certification and permitting requirements are met, assisting with system design and invoicing VEA are all part of the general contractor’s responsibilities.

The general contractor hires local plumbers who employ certified solar water installers—of which there weren’t many in Pahrump prior to the program. VEA and Great Basin Community College teamed up to change that with a training and certification program. So far, 11 trainees have graduated, and VEA estimates that its SWH program could create 40 to 60 jobs over the next 20 years. “Every single job is important to our community now. Part of a co-op’s mission is local economic development, and we are proud that this program is creating jobs,” said Polikalas.

Big and getting bigger

Jobs are just part of the picture—VEA estimates that the 680 SWHs installed so far eliminate more than 2,000 tons of CO2 emissions annually. The program has kept hundreds of thousands of dollars in sales, payroll and tax revenue in the local economy, and drawn the praise of state and Federal officials, and even Ed Begley Jr.!

State agencies in particular have taken notice. The Nevada PUC asked the co-op to organize a workshop in October. Utility professionals came from as far away as Maryland to learn more about creating a domestic solar water-heating program. VEA is already planning another workshop for next fall.

By that time, even more members will be saving money with SWHs, thanks to a $5,000 grant from the State of Nevada Office of Energy. The funding is specifically for replacing propane water heaters, and should help VEA reach its goal of installing 1,000 residential solar units. “Propane is a little more expensive to convert than conventional electric,” Polikalas explained.

Either way, members, the community, the environment and Valley Electric Association win with solar hot water heaters, and the co-op is more than willing to share what it has learned. Obviously, VEA’s model isn’t going to work for every utility, but it shows that size doesn’t have to stand in the way of developing clean energy. With a little creativity and a lot of member support, even small co-ops and municipalities can become renewable energy leaders.

Utilities that can’t make it to Pahrump, Nev., or can’t wait to learn more about residential and commercial solar hot water programs, should check out Department of Energy’s Utility Solar Water Heating Initiative.