The solar industry in Arkansas is beaming as new opportunities look to advance the green energy source across the state. To borrow a line from the Beatles, here comes the sun.
A recent event at the University of Arkansas – Pulaski Technical College shed light on the upcoming fourth largest university solar project in the country between the University of Arkansas System, Scenic Hill Solar and Climate United. The $31.8 billion investment marks the largest of its kind in state history.
The project is “by far the most ambitious and complex” project of its kind in the nation, said Bill Halter, CEO of Scenic Hill Solar. It consists of 18 different solar power plants all over the state in 14 different utility service territories. At three times the size of any previous commercial and industrial project in Arkansas, it is set to provide $120 million in savings over 25 years to the UA System without any capital expenditures.
Bill Halter
“It really has profound economic impacts with projects all over the state,” Halter said, “as well as very significant environmental impacts.”
The press conference was held Tuesday, Oct. 22, at UAPTC’s Center for Humanities and Arts. Several officials spoke at the ceremony, which followed a solar panel signing.
Apart from the cost savings, Halter said the university system was interested in the project for the advancement of academics and research.
“The university [system] has a number of programs geared around solar power, renewable energy, electric vehicles, batteries,” he said, “and so we’re tying those academic efforts and programs to a very large project.”
The third consequence, he said, is that the project, like the system, touches every part of the state.
“Those three things together not only provide a great opportunity for solar energy, but they also provide a great opportunity for the state for economic development surrounding solar energy and batteries,” Halter said. “We think this is a natural fit for the state.”
Halter’s company is Arkansas’ largest solar developer and is the fifth largest commercial and industrial solar developer in the country. Scenic Hill Solar specializes in the commercial space and does not work in residential solar or the utility side of the industry.
“It’s a very nice project and a very nice fit for what we do,” he said.
It is not as simple as finding a nice sunny spot and setting some panels on the ground, though. It takes a lot of planning and capital for a project like this to get its day in the sun.
Climate United connected with the Scenic Hill Solar team and recognized the project was having trouble accessing pre-development capital, the funds needed to get started. The first phase of capital supplied by Climate United went towards equipment purchases, land acquisition and interconnection deposits or fees for hooking up the new solar farms to the electrical grid.
In the words of CEO Beth Bafford, Climate United is a national coalition of three nonprofit financial institutions: Calvert Impact, Community Preservation Corp. and Self-Help.
Beth Bafford
Together, the three organizations applied for the National Clean Investment Fund Program under the Greenhouse Gas Reduction Fund.
The National Clean Investment Fund Program is a $14 billion program, part of the Inflation Reduction Act administered by the Environmental Protection Agency. Bafford’s organization was awarded $6.97 billion to go towards a national financing entity that is built to finance projects across three sectors — distributed generation and storage, building decarbonization and electric transportation, she said.
Marking the first Climate United project to use the National Clean Investment Funds, a contract was signed in August for an initial investment of $31.8 million in the university system undertaking for pre-development financing.
“Our job really is to look at market gaps in those sectors where those technologies are not particularly reaching low- and income-disadvantaged families, rural communities across the country,” Bafford said. “How do we use this capital in a way that’s more flexible and affordable to make projects work that otherwise would have challenges accessing financing?”
The current plan is to invest the entire $6.97 billion over the next five years into various projects, although repayments from previous ventures will also be added to the pool, allowing Climate United to reinvest funds into projects for the next 30 years and beyond.
The portion of construction and permanent financing, which will be put towards building the projects, will be assessed and doled out over time for the joint venture.
“We’re really looking at exciting projects and programs that meet the three objectives all across the country,” Bafford said, “but primarily in places like Arkansas that haven’t had as much local investment in the clean energy economy transition as other parts of the country, so we’re really looking where we can find opportunities to dramatically reduce emissions, to bring direct benefits to peoples’ lives and to catalyze private investment where private capital is not efficiently flowing today.”
Climate United sees an exciting pipeline of opportunities ahead, looking to expand its work in Arkansas and in other parts of the country, particularly in rural America and in other low and income-disadvantaged communities.
While the project stands to position Arkansas as a leader in the global solar industry in coming years, the renewable resource has been gaining traction across the country over the past 15 years or so.
Chris Kane
Little Rock-based Delta Solar is getting in on the growth as well. Chris Kane, vice president of business development, said solar has grown from 4 percent of new grid capacity in 2010 to more than 66 percent this year. He said lots of new energy storage has been added as well, growing from 1 percent in 2018 to over 14 percent in 2024.
A Delta Solar array in east Arkansas. (Photos provided)
Kane said each incremental addition of solar generating equipment adds less to the grid as it all tends to produce during the same time of the day, while integrating storage and allowing the grid to determine when the most valuable time to discharge helps to overcome this challenge.
Delta specializes in commercial and agricultural solar arrays, typically ranging from 50 kilowatts to 5 megawatts. Kane sees great opportunities for small businesses and farms to harness the benefits of solar technology. Initially envisioning the enterprise as a nonprofit, the founders realized that profit and impact often go together.
Midcontinent Independent System Operator, the electric grid operator for 15 states in the central U.S. and the Canadian province of Manitoba, announced in April that 93 percent of the 123 gigawatts of new generation in the queue was renewables/storage. Solar represented 50 gigawatts, wind 19 gigawatts, storage 29 gigawatts and hybrid 17 gigawatts.
“Solar is the lowest-cost energy generation option globally, and that holds true in Arkansas, as well,” Kane said. “The state will see significant growth in solar installations, but the key question is who will own these systems, and who will benefit most from the value they create?”
It is not just sunshine and rainbows when it comes to installing solar anymore.
Kane said historically, private citizens were incentivized to invest in solar through the one-to-one net metering policy. Changes made in 2023, however, have shifted much of the value to utility operators for any new solar energy systems. The changes went into effect in October.
“As a result, while Arkansas will continue to see substantial solar development, the current regulatory framework favors utility-driven projects over privately-owned installations,” Kane said.
Net metering is more than a buzzword; it is a system that tracks electricity consumption and production on a given meter or set of meters. Kane said the previous policy helped make it possible for individuals who owned systems to get ahead financially. Each month, utility providers calculated the “net usage” which amounts to energy consumption minus production; any excess production was credited to the customer for future use. Customers who produced excess solar energy “effectively provided it as an interest-free loan to the utility.”
The energy was then distributed to others, while customers could draw on their credits later when needed. No energy was sold under the system; it was simply accounted for as a credit.
“Encouraging this sort of mutually beneficial relationship is what will allow some states and utilities to thrive while others struggle with the relentless march of progress in solar and storage,” Kane said.
Arkansas has switched to a two-channel billing system which means customers are charged retail rates for the energy they consume, while the utility companies purchase any excess energy “at wholesale rates, less than half the retail value,” Kane added. The wholesale rate is based on a 12-month average “avoided cost,” which includes hours when the sun is not shining and grid demand is at its lowest.
“This approach undervalues solar by including off-peak times and creates financial challenges, particularly for agricultural producers,” Kane said. “These producers generate power for the grid for most of the year at low wholesale rates but must purchase power at full retail rates during peak usage months, making solar a less favorable long-term investment for their operations.”
The issue has been heavily debated at the Arkansas Public Service Commission, the stated reason for the change to two-channel billing being to prevent cost-shifting from solar customers to nonsolar customers.
“While some data suggests this might happen in states with extensive residential solar adoption, it is unlikely to affect commercial systems,” Kane said, “the reason being commercial systems are typically demand-metered, meaning they include a line item on their bill designed to cover the fixed costs of providing service.”
He said in some instances a service charge is applied to all customers under the new regulations. Once Electric Cooperatives of Arkansas included a “service availability charge,” which it defines as “a fixed charge designed to recover the basic monthly costs of providing poles, wires, transformers, meters, billing, etc.” Kane said charges like that further undermine the rationale for the policy change, especially for demand-metered rate payers, as it already accounts for costs that are claimed to be shifted to nonsolar customers.
“This is oversimplified, but fundamentally, utilities are rewarded for owning generation,” Kane said. “It is a big reason why customer-owned generation like solar is seen as a threat. One way to address this would be to reward the utility for managing the distribution of energy as much or more so than owning generation assets. Short of that, there are many models around the U.S. that seek to ‘split’ the value of customer generated electricity.”
He cited Florida, where customers receive 85 percent of retail rates for their generation after Gov. Ron DeSantis vetoed a two-channel billing bill similar to the one in Arkansas.
“The nice thing about this approach is that it can be adjusted based on changing conditions,” Kane said.
It is worth noting that Florida, the “Sunshine State,” gets a lot more sun per year than Arkansas, and that could be one factor in its ability to offer better solar policies. That does not deter Kane’s sunny disposition about the changes in his industry.
Delta specializes in commercial and agricultural solar arrays.
“By transforming the variable, ever-increasing cost of power into a predictable and manageable expense, we help businesses and farms achieve long-term financial stability,” Kane said.
“Delta Solar is a fan of consumer choice and free market economics,” he said. “The worst outcome is having policies that encourage those with money to minimize their interaction with the grid or disconnect all together. This is what, ultimately, will shift the cost of grid maintenance to those customers who can afford it least and create an aptly named ‘utility death spiral.’ It is easy to dismiss this and assume that it won’t happen here or that it is many years away. If I was a policy maker or a utility executive, however, I would be nervous about how fast technology is developing. We are closer than you probably think.”
Regardless of whether the net metering change is here to stay, it is not unwise to bet one’s bottom dollar the sun will come out tomorrow as advancements in technology and new partnerships push Arkansas to the forefront of the industry.
Halter said there is “tremendous opportunity” in the Natural State for the future of solar energy. Arkansas ranks 11th in the amount of sunshine per year in all 50 states, and there are also abundant land and water resources valuable to the industry. For now, the university system’s project could be enough to brighten the outlook for some time.
“It will be a very visible sign of the university’s commitment,” Halter said, “not just to cost savings and the academic enterprise but also local economic development.”
