Energy performance contracting bill advances to Senate

Little Rock – Legislation that would enhance access to solar-generated power and spur solar sector job growth earned strong support from members of the Arkansas House of Representatives today, clearing the last hurdle before being sent to Governor Asa Hutchinson for his signature.

In a vote of 83-5, House members gave their endorsement to Senate Bill 145, legislation sponsored by Senator Dave Wallace that would enable third-party financing for those seeking to deploy solar. The financing tool is particularly important for non-tax entities, such as schools, churches, cities and counties, colleges and universities, state agencies, and non-profit organizations. With the option of a third-party solar services contract, non-tax entities could take full advantage of federal incentives and lower the cost of a solar array, unlocking capital to invest in local communities.

“Advanced energy technologies provide jobs and energy savings in states that deploy them,” said Katie Niebaum, AAEA Executive Director. “By enhancing access to these resources, as Senate Bill 145 does, solar development can play a greater role in Arkansas’s economy. AAEA sincerely thanks Senator Wallace for his leadership and applauds House members for their support of this advanced energy job creation measure.”

Arkansas is among the fastest growing states for solar job creation. Third-party solar leasing could double or triple the number of solar jobs in Arkansas, according to a recent analysis from the Business Innovations Legal Clinic of the William H. Bowen School of Law, University of Arkansas at Little Rock.

Speaking in favor of the bill were representatives Aaron Pilkington, Stephen Meeks, Vivian Flowers, Johnny Rye and Jack Ladyman, who noted that solar is an increasingly competitive and affordable energy resource.

“I think this is a good bill,” Ladyman said. “Solar power is getting a lot cheaper and will continue to do that because there have been many advancements.”

Flowers called renewable energy “important to economic development,” while Rye added that the proposal will help Arkansas cities and counties.

Also today, the House adopted another AAEA priority, House Bill 1636, in a vote of 88-2. HB1636, sponsored by Representative Rick Beck, would enhance the state’s successful energy performance contracting program by providing public entities with additional flexibility and support utilizing this economic development and cost-saving initiative.

Beck said the Arkansas Energy Performance Contracting program has proven to advance energy efficiency in the public sector while also driving economic activity, calling the initiative a “turnkey service” for public entities.

HB1636 would allow a guaranteed energy cost savings contract to be extended if its energy cost savings measures possess either an active equipment warranty period or a combined useful life in excess of 20 years. Current law sets a maximum term at 20 years. The contract length extension would put Arkansas in line with federal government standards and allow for solar systems to become a driver of projects given the decreasing costs and long warranties of equipment.

The proposal also would allow school districts to opt into the existing program rules and regulations, therefore allowing all public entities the ability to utilize the ADEQ Energy Office as a program administrator. School districts in increasing frequency have sought guidance and followed program rules, though K-12 currently falls outside of the program.

Arkansas Energy Performance Contracting provides public entities the opportunity to utilize guaranteed energy savings to improve the energy and operational efficiency of their existing facilities without the need for upfront capital.

The initiative has seen an explosion in interest since its start in late 2014; 21 projects have been fully executed or are in active development, with total executed contract value worth $102.5 million guaranteeing nearly $150 million in energy savings. Those figures are expected to more than double by the end of 2019. Approximately 9,000 Arkansas jobs are tied to energy savings equipment and services and are directly affected by a vibrant AEPC program.

“The successful Arkansas Energy Performance Contracting program has been an economic driver for the state since AAEA members helped secure its adoption in 2013,” Niebaum said. “AAEA thanks Representative Beck for his efforts to provide public entities, including school districts, additional flexibility and support utilizing this economic development and cost-saving initiative.”

HB1636 now advances to the Senate chamber for a vote of all Senators.