When organizations evaluate solar, the financial model has to make assumptions about the future: how much electricity the system will generate, what that electricity will cost, and how utility rates may change over time.
Several years ago, Entegrity helped public-sector organizations across Arkansas make long-term energy investments based on those projections.
Today, we can compare those forecasts with actual operating data.
Across three Entegrity solar projects, utility rates increased faster than originally modeled. The result is simple: every kilowatt-hour generated by those solar arrays offset electricity that became more expensive than expected.
For these customers, that translated into approximately $257,000 in additional value beyond the original utility-rate assumptions.
WHY RISING UTILITY RATES MATTER
A solar array does not have to produce more electricity than expected for its financial value to increase.
If a kilowatt-hour of solar generation offsets electricity costing 8 cents, it avoids roughly 8 cents of purchased power. If that same kilowatt-hour offsets electricity costing 12 cents, its financial value increases.
That is exactly what we are seeing in these projects.
Fayetteville Public Schools: Nearly $140,000 in Additional Savings
Fayetteville Public Schools’ original financial model assumed approximately 2% annual utility-rate escalation. Actual electricity prices increased more quickly.
Using actual solar generation, the district would have realized $750,246 in savings at projected utility rates. At actual rates, savings reached $890,127 — an additional $139,881 from the same level of solar generation.
The arrays did not need to generate more electricity to create that added value. The electricity they generated simply became more valuable.
City of Green Forest: $98,000 in Added Value
The City of Green Forest operates two solar arrays totaling 1.439 MW DC, expected to generate approximately 2.45 million kWh annually.
Based on the original utility-rate assumptions, net solar savings were approximately $59,887. Using measured operating data, actual rates and PPA costs, verified savings reached $158,147 — approximately $98,000 more than projected.
The original model assumed utility rates would rise gradually. Instead, costs increased more quickly, increasing the value of every kilowatt-hour produced.
Farmington Public Schools: More Than 7 Million kWh at Work
Farmington Public Schools‘ three solar arrays total 1.732 MW and have produced approximately 7.14 million kWh to date.
At the rates assumed in the original financial model, net solar savings would have totaled $126,084. At actual utility rates, savings reached $145,211 — more than $19,000 in additional value.
Solar is part of Farmington’s broader energy strategy, which has also reduced energy use by 27.7% and utility costs by 39.8% over four years.
WHAT THIS MEANS FOR ORGANIZATIONS CONSIDERING SOLAR
Solar economics vary by market, utility and project structure, but the lesson from these projects is consistent: locking in a portion of long-term energy costs can become increasingly valuable as utility rates rise.
In many markets, incentives are still available, although federal eligibility windows are tightening. For organizations considering solar, that makes timing part of the financial equation.
The exact economics will vary from project to project.
The underlying question does not:
What could the electricity an organization buys today cost over the next 10, 20 or 25 years?
