Presentation on theme: "Town of Hopkinton Solar Energy Project Proposal March 2013 Presented by Hopkinton Sustainable Green Committee."— Presentation transcript:
Town of Hopkinton Solar Energy Project Proposal March 2013 Presented by Hopkinton Sustainable Green Committee
Overview Objective – Significantly reduce the Town’s Municipal Energy spending Proposal – Install ground based solar photovoltaic system on portion of Fruit Street property based on system designed and approved for Dennis, MA Expectations – Recognize approx. 50% savings in electricity costs over next 20 years – Estimated savings of $8-$12m over this period. – Use approx. 23 acres of Fruit Street property – A Positive Revenue Project for Town Benefit and future cost savings as Fruit Street is developed
Why are we here? To Review Proposal for Solar Farm at Fruit Street property. In order to proceed: We need your vote at Town meeting to support Zoning Bylaw proposed by Planning Board. (simple majority) We need your vote at Town meeting to allow Board of Selectmen to lease the land to a Solar developer (simple majority)
What are the Financial Incentives? Solar Renewable Energy Certificates Net Metering Federal Investment Tax Credits Accelerated Depreciation
What is a PPA and how does that work? In a PPA (Power Purchase Agreement), the developer leases the property, such as a closed landfill, school roof or other open space and finances, installs, owns and maintains the solar installation. The developer then sells the generated electricity to the site owner or municipality through a long-term contract at a reduced rate. The PPA market is currently driven by the size of the installation, the availability of energy credits and equipment /installation costs. Numerous Massachusetts municipalities are implementing solar PPAs on school rooftops, closed landfills and other municipal buildings. (source
Why Fruit Street? 2 Proposed Parcels on Fruit Street town land – Areas designated in concept Fruit Street Master Plan as: 13 acres [Parcel 9] formerly reserved for Low Income housing 10 of 31 acres [Parcel 8] formerly reserved for Market/Senior housing – 2 feasibility studies obtained via grant funding indicate both locations are very favorable solar locations – We have assessed numerous properties in town and these proposed locations are our best candidates for this project. – Parcels are existing sand pits. Field conditions are ideal for solar ground installation.
Proposed use of Parcels 8 and 9
What are Hopkinton’s Current Plans for Fruit Street – The Fruit Street Master Plan identified 104 Affordable Housing Units in the area of the proposed solar farm. – We’ve been working with the town Land Use Director and due to other town developments (The Acres at Lumber Street, Legacy Farms etc.) there is no longer an immediate need for housing units on these Fruit Street parcels. – Former proposed school site [Parcel 7] is not included in this assessment.
What would it look like? Figure 1: Rendering of 4.5 MW PV System in Holyoke, MA Source:
Financial Summary Town currently uses approx. 6 million kwh of electricity to meet municipal needs per year -Sizing system to be able to meet slightly less than these needs, not looking to generate more than need Current annual spend is approx. $1M for municipal needs -Pay $0.16/kwh today for electricity, expect to negotiate price in range of $0.07/kwh -This reduction expected to result in a savings of $400k to $600k per year No cash required from Town to install or remove system -Funds will be required to be put in escrow by bid winner to ensure they are available 20 years down the road to pay for removal Following through with Nstar study will provide means for future upgrades with development at Fruit St.
Financial Summary (Cont.) Conservative cost/revenue model – Under sizing of system to avoid over commitment in purchase agreement – Built in assumptions regarding cost/use Annual Electric Bill (current $)-$1,000,000 Annual Rate Increase (%/yr)-2% Change In Electric Use (%/yr)--1.0% Net Metering Rate (current $/kWh)-$0.160 Net Metering Rate Increase (%/yr)-1% Normalized PV Generation (kWh/kW)-1,239 PV Annual Generation Degradation (%/yr)-0.50% Proposed PV Capacity (MW)-4.65 PPA Rate ($/kWh)-$0.070 PPA Rate Escalation (%)-2.0%
Incorporating Best Practices HSGC worked with a state consultant, funded from grant awarded earlier this year, to develop Project documentation – We have verified cost/usage and financial model as conservative estimates – Drafted Request for Proposal and PPA Lease agreement Built in protection for Town of Hopkinton Interests These are based on existing documents that have already been used in previous municipal installations – 2 Feasibility Studies completed on site – At least 18 Other Towns in MA have done similar municipal Solar projects
What would be the town’s commitment? – Financially we commit up to $25k up front and would anticipate repayment upon signing the contract. Years 1 through 20 would result in a profit to Hopkinton. Positive Revenue. – Solar proposal is not a permanent commitment In 20 years we can choose to develop, sell or keep operating. – Zoning Bylaw language:
Additional Benefits Existing Electrical load at Fruit Street is maximum capacity to accommodate the Waste Water Treatment only. An Nstar connection study is required for any additional development at Fruit Street. Solar Project would upgrade the electrical infrastructure at the Fruit Street site [estimated at ~$100k]. An upgrade will be required in future as the Waste Water Treatment facility needs come to fruition and as other future development occurs at the site. While not the primary motivator, this project will reduce our CO2 production by ~2,500 Tons annually
Time is of the Essence Any changes in the following areas could effect the feasibility of this project: Net metering - there are concerns being raised about the size of some of the projects, and some talk of limiting any given project to 2MW (we are proposing 4+MW) - This would significantly impact the upside of this project. Tax credits/deductions - currently there is a 30% tax credit and accelerated depreciation. Any change in tax legislation will significantly effect the profitability of a project like this and effect the number and quality of competitive bids we receive.
Time is of the Essence (Cont.) Renewable energy credits (RE) - There is a lot of interest in/projects underway, and within the next few years there will be a lot of municipal projects on line, driving down RE revenue. This combinations of net metering, tax credits and RE credits may continue for several more years, but it is more likely than not that it will come to an abrupt end once the utility and regulators realize that their demand can be met without giving the farm away. The more profitable the deal for the Developer, the better the benefit that is passed onto the Town. We need to have an installation agreement in place by mid 2013 to maximize value
Timelines Approval to proceed with feasibility study Approval from Appropriations initiate Nstar interconnect study. – Community Outreach Meetings in March-May – Member of Fruit St. Planning Board subcommittee – RFPs go out March 29 – RFPs returned April 30 – Present at Town Meeting May 6 – Award Bid in June – NSTAR Upgrades completed by Q – Installation complete and operational in Q2 2014
HSGC has achieved similar successful projects in Hopkinton – Received grant for $137.5k in 2010 Implemented energy savings on number of town buildings, currently generating monthly utility savings – Received second grant for $156.8k in 2012 Focus on energy management systems for Town Hall, lowering future utility costs – Received grants for $5k and $10k to investigate feasibility of PV Solar Farm on Fruit Street Property
Risk/Benefits to Leasing Source:
Land Lease The land lease scenario is significantly different from the municipal ownership scenario, in that much of the risk and responsibility is shifted away from the municipality to the project developer/owner. In a land lease scenario, the municipality selects a vendor to design, finance, build, own, operate and maintain a system at a municipally owned site. The vendor is responsible for all aspects of project development, assumes all risks, and claims much of the project revenue. In exchange, the project developer/owner negotiates a land lease with the host municipality. Source: