Power Point presentation here

Report
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
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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?
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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 http://www.wright-pierce.com/solar-power-implementaion-easier-in-massachusetts.aspx)
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: http://solarsofa.com/constellation-energy-to-develop-4-5-mw-solar-power-system-with-holyoke-gas-electric/
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
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Annual Electric Bill (current $)
Annual Rate Increase (%/yr)
Change In Electric Use (%/yr)
Net Metering Rate (current $/kWh)
Net Metering Rate Increase (%/yr)
Normalized PV Generation (kWh/kW)
PV Annual Generation Degradation (%/yr)
Proposed PV Capacity (MW)
PPA Rate ($/kWh)
PPA Rate Escalation (%)
-
$1,000,000
2%
-1.0%
$0.160
1%
1,239
0.50%
4.65
$0.070
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
• 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 Q1 2014
– 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
Questions/Comments
Appendix
Risk/Benefits to Leasing
Source: http://www.mass.gov/eea/docs/doer/green-communities/pubs-reports/pvlandfillguide.pdf
Source: http://www.mass.gov/eea/docs/doer/green-communities/pubs-reports/pvlandfillguide.pdf
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: http://www.mass.gov/eea/docs/doer/green-communities/pubs-reports/pvlandfillguide.pdf

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