Inside Cox Enterprises' high-wattage solar investments
Media, communications and automotive services giant Cox Enterprises doesn’t abide by an official renewable energy consumption target but it’s striving for a carbon-neutral operational footprint by 2044. To realize that vision, the Atlanta-based company has invested in developing close to three dozen solar photovoltaic projects — with a combined capacity of 29 megawatts — over the past decade.
Many of those installations are situated on “behind the meter” on Cox facilities across the United States: The capital expenditures to make them possible were motivated and justified by an interest both in offsetting the company’s carbon dioxide emissions and reducing energy costs. Electricity is the company's second largest operational expense.
“We like to own and operate these assets, both for the near-term financial benefits and also for the long term as a hedge of cost increases,” said Steve Bradley, assistant vice president of environmental sustainability for Cox. “That’s a huge moat around our operation.”
Since 2007, the company’s sustainability program, called Cox Conserves, has inspired alternative energy investments in states including Arizona, California, Hawaii, Maryland, Massachusetts, Missouri, Nevada, New Jersey, New York, North Carolina, Oregon, Rhode Island, South Carolina, Tennessee and Texas.
In late 2017, the company switched on its most ambitious projects to date — four solar farms in Georgia and Florida that collectively can produce 13 MW of power, including one that uses advanced solar tracking technology to boost panel efficiency by up to 30 percent. And it’s looking for similar “creative” opportunities across its territory, rather than opting for a strategy that relies heavily on buying renewable energy credits through virtual power purchase agreements (VPPAs).
When I spoke with him about the strategy, Bradley said the shift was prompted by logistical considerations. For one thing, Cox is running out of physical space to host solar generating resources at its own facilities. The team was also interested in deepening its direct impact in the communities and states where it sells its services. “When we started, we quickly built projects where it made sense to do so. … Five years ago, we shifted and started looking at utility-scale [opportunities]. That took the handcuffs off,” he said.
Practically speaking, Cox didn’t want to be saddled with the responsibility of maintaining the more than 42,000 panels make up these farms. So it allied with solar contracting and development company PEC Velo to create a $25 million partnership that will manage the installations.
Cox is the major investor, through a tax equity deal, but it doesn’t have operational control (that’s a nod to the requirements of the tax regulations that made the structure of this deal possible). Aside from its integration partner, a private equity firm stepped in to participate.
“It made sense for the three of us to get together,” Bradley said. “We are actually looking at more projects. We’re also looking at other alternatives.”
How does Cox finance investments of this nature? The company’s sustainability mandate — and an assessment of its progress toward carbon neutrality — is considered when the company plans its capital budget each year and money is set aside to fund projects to maintain forward momentum, Bradley said.
The sustainability team uses a modeling tool with “sliders” to weigh the pros and cons of various development opportunities. Here are three of the main considerations:
1. Economics – Cox expects a certain “fiscally responsible” return in order to engage, although Bradley declined to disclose the exact metrics. Markets that offer feed-in tariffs or other incentives are prioritized.
2. The friendliness of local utilities and utility commission – For now, at least, Cox isn’t interested in waiting two to four years to get a project interconnected. It looks for places where policies and regulations favor investments in distributed generation.
3. Potential carbon impact – For this, the Cox Conserves team uses eGrid data, published by the Environmental Protection Agency, that considers emissions and other environmental attributes of the electric power grids across the United States. In situations where Cox is weighing multiple proposals, it will opt for the one that has the potential to reduce the most CO2, Bradley said. That’s one of the reasons that Cox is particularly excited about its most recent installations in Georgia and Florida. “We finally got to work in our backyard,” Bradley said.
Since the Cox Conserves program was started 10 years ago, the company has invested more than $116 million in efficiency projects — related to energy, water and waste. During that time, Cox has offset approximately 93,000 tons of CO2 through a combination of energy conservation and clean power investments. The new solar installations will offset another 14,000 tons, the company estimates.