STARKVILLE — Starkville has accepted a deal from Tennessee Valley Authority that could earn the city millions of dollars over two decades, helping to compensate for clean energy credits the city missed out on amid rising solar costs.
Derek McGill, TVA’s director of customer relations for the southwest, pitched the idea Friday during a board of aldermen work session. TVA would allow Starkville to step in as a partial middleman between TVA and Origis Energy’s Golden Triangle I solar farm, which came online Jan. 20.
“If you do that, it’s estimated to generate about $160,000 per year in additional revenue for Starkville, and it’s a 20 year agreement, so that’s $3.2 million over the 20 years,” McGill said. “(This is) in the spirit of just being a good partner and trying to provide financial compensation in response to the solar developer’s price increase. It’s a unique opportunity only offered to Starkville and Knoxville for being early adopters.”
Starkville was the first municipality in Mississippi to enter into TVA’s Green Invest program, committing in 2020 to buy 30 megawatts worth of Renewable Energy Certificates from Golden Triangle I at prices McGill characterized in a Wednesday interview as “a really, really good value.”
An REC is a token representing green energy generated, in this case, by a solar farm, and they allow cities, businesses and individuals to say they are invested in renewable energy, even if the actual energy produced by the solar farm is not going to the holder of the REC.
When REC prices ballooned in 2022 due to rising construction costs, however, Starkville reduced its commitment from 30 megawatts of RECs to just 6.3. While that allowed the city to avoid exceeding its budget, it did mean substantially fewer RECs for Starkville to claim itself or trade to another party.
“The RECs do have value, there is a market for those,” McGill said. “… The opportunity to buy them at a really, really good value – that was lost to them. That’s what we’re compensating them for. Honestly, part of it is just rooted in some strong disappointment that we had to renegotiate the contract with this solar developer.”
On a technical level, the deal would let Starkville directly buy 1.5 megawatts of power from the solar farm at TVA’s rates, which TVA would buy in turn at a higher price set by an existing buyback rate in the flexible energy allotment TVA offers to its partners. That allotment is the 5% of Starkville’s power TVA allows it to get from external green sources.
“We’re not aware of any downsides for Starkville,” McGill said. “It’s very low risk. It’s basically a contractual arrangement that would save Starkville money without having to build their own solar or really do anything.”
The actual flow of electricity would be unchanged, running from the solar farm through TVA infrastructure to TVA’s many customers, including Starkville.
The city accepted TVA’s offer during Tuesday’s board of aldermen meeting, pending approval from City Attorney Berk Huskison and concurrence from TVA.
Mayor Lynn Spruill said she was thankful TVA was keeping track of the REC changes and working to make sure early adopters don’t get a bad deal.
“It is (a relief), certainly, and I appreciate that they would take a look at that and work to compensate us,” she said Friday. “They said they wanted to do this because we’ve been good partners, and whatever the reason I’ll take this as a positive thing.”
Edward Kemp, general manager of Starkville Utilities, endorsed the deal as well, and confirmed the $160,000 per year matches SU’s estimates of the value lost by scaling back Starkville’s investment.
“TVA correctly identified what we would have paid if we kept the same investment level,” he said Tuesday. “We recommend this transaction and it is a very good opportunity for Starkville to exercise a portion of the flexibility allotment.”
TVA is also mulling an additional offer to allow Starkville to divest the remaining 4.8 megawatts of RECs that are not part of the conversion plan, McGill said Friday. That offer is conditional on approval by TVA leadership and on TVA finding someone else to buy those leftovers. McGill said TVA is working on that right now.
“We’re hoping that we’ll know in the next couple months,” McGill said.
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