ADDISON COUNTY — Last year, the Public Service Board approved 26 projects in Addison County larger than 15 kilowatts, the largest of which were a 2.2-megawatt array in Middlebury and a 2.0-megawatt array in Bridport.
As workers proceed with construction of these arrays, soon to be among the largest in the state, many Addison County residents are wondering who’s making money from these large arrays. Landowners get revenue from leases, municipalities get tax revenue, construction firms get business — but how do investors in solar projects benefit?
Both the Bridport and Middlebury arrays are owned by companies in other states, leaving some residents to wonder if this influx of out-of-state capital is good or bad for Vermont.
Conventional wisdom dictates that you wouldn’t pour a lot of money into an investment unless you believed it would return a profit.
Department of Public Service Deputy Commissioner Darren Springer said large solar arrays can generate a modest return on investment. He gave an example of what that might look like with a project enrolled in the state’s Standard Offer renewable energy program, in which energy producers sell power to utilities at a fixed rate over a fixed period.
Here’s one plausible scenario. A 2.2-megawatt project selling electricity for 14 cents per kilowatt hour over a 25-year period costs about $6 million to install, plus $60,000 per year to operate and roughly $10,000 per year to lease the land. Springer said investors in this type of project could expect an annual return of about 6.5 percent to 7 percent for the duration of a project.
FOREIGN INVESTMENT
Vermont boasts a growing solar industry, but, as the big Middlebury and Bridport arrays show, out-of-state individuals and firms are winning approval from state regulators to put up solar arrays in the Green Mountain State. According to the Vermont Secretary of State’s office, the principal of Bridport Solar Holdings LLC, which is installing 8,750 solar panels on nine acres on the southwest corner of Route 22A and Town Line Road in Bridport, is Ryan Marrone of Lawrenceville, N.J. The principals of Champlain Solar Farm LLC, which are developing the 9,000-panel solar array behind Suburban Propane off Route 7 South in Middlebury, are listed as Karleen Stern and Sujay Parikh; they have a Beltsville, Md., address.
Bridport Selectman Leonard Barrett said he wonders why out-of-state companies are flocking to Vermont to build solar arrays.
“Obviously, these companies are coming from out of state for a reason,” Barrett said. “These projects must be real money makers.”
In addition to property and solar capacity taxes that solar arrays are already subjected to, Barrett said he believes towns should get a larger piece of the profit of large arrays.
“I would hope there would be a way a town could make more from those types of projects,” he said. “There could be a larger cost shift to the town.”
Barrett said he hopes municipalities will also have a larger role in regulating where projects are sited and how large they can be.
INDUSTRY EXPLAINS
Andrew Savage of Williston solar firm AllEarth Renewables acknowledged that many solar projects in Vermont have out-of-state backers, especially larger arrays that are more expensive to construct. But he said this is not a bad thing.
Vermont is the second-least populous state in the Union and has the lowest Gross Domestic Product. Savage said because of those economic factors, there is not a large pool of capital available to invest in solar projects. 
“Out-of-state firms have the access to capital and other financial resources that isn’t inherently part of Vermont’s renewable economy,” Savage said.
Another key explanation for out-of-state cash flowing into Vermont is the federal income tax credit for solar power, which can lower tax bills by 30 percent. While it may seem perverse, Savage said most Vermont businesses don’t have federal tax bills big enough to make investing in solar power worth their while.
“We just don’t have that many businesses in Vermont that have enough tax payments to take advantage of that tax credit,” he said.
Savage said that while projects may be backed by out-of-state equity, the firms actually constructing and managing arrays are often based in Vermont. He cited GroSolar of White River Junction and GreenPeaks solar of Waitsfield as examples. Both firms have proposed arrays larger than 1 megawatt in Addison County.
“There are jobs that are created in developing and installing the projects,” Savage said.
The Bridport array is being built by Greenwood Engineering Management in Hinesburg.
As for Springer’s return-on-investment estimate of 6.5 to 7 percent, Savage said it was in line with industry standards. He said if that margin were smaller, investors would put their money in more lucrative sectors.
“It’s the marketplace, and it attracts investors that want a good, long-term investment,” he said.
Springer, of the Department of Public Service, echoed Savage’s belief that there is simply not enough capital within Vermont’s borders to prop up its fledgling solar industry.
“I don’t think if you were to do an analysis of how we can reach our energy goals, you would find an adequate financing capacity in Vermont alone,” he said. “There needs to be a mix of in-state and out-of-state financing.”
Springer explained that the department’s objective is to provide energy at reasonable, reliable prices and help the state meet its renewable energy goals. He said it is not uncommon for out-of-state capital to flow into Vermont, and said there is a competition among states to bring in renewable energy investment.
Springer said that this investment benefits Vermonters in many ways, from decreasing carbon emissions to lowering energy rates to providing tax revenue and rent to landowners who host arrays.
“If we craft policies that attract reasonably priced capital, that can be a good thing,” Springer said.