Wednesday, February 19, 2014

Strategy for Faster Implementation of Solar PV projects in Sustainable Green Communities

An Year has gone by as we tried to find a way to help our small communities to find Energy Independence with Power Purchase Agreement (PPA) with a Private Developer who would finance, build and operate the solar PV system. 

This is a great  idea but with no risk comes the delays and uncertainties. Some of the host communities found out that Developer was unable to complete the projects in time due to weak financial support where the investor just backed off from the deal. What should the community do to assure faster and more assured implementation?

We are now following a two step procurement approach that can save money and get better outcome for all parties. It all starts with community education to first build the buy in and desire to go green and make your own power at a suitable site. Study of all of the municipality owned facilities energy consumption is necessary to estimate the current energy use and size the Solar PV system and a site with adequate electrical service to be able to supply excess power to the grid.

The second step is to present the opportunity to financing Companies and get a commitment from them as Proforma PPA based on a projected capital cost of the system. Once the terms of the power purchase agreements are executed then we issue a Request for Proposal to design and build the system from local developer -solar installers. These proposals are evaluated to select the contractor to submit the bid proposal to NYSERDA and get the grant commitment.The final PPA is executed after modifications to take into account the actual capital cost and grant amount. This approach takes away the need for solar PV installers to search for financing partner since the Owner makes this choice at the beginning of the project.

This market needs fast track and simpler process to cut costs and get best value for the communities. 

Go Solar Now. The process is now better and many communities now realize that this is the right thing to do.

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Saturday, February 01, 2014

Taming the Increasing Cost of Energy with Solar PV by Sustainable Communities

Municipal leaders in Upstate NY face challenges of increasing cost of operations and reducing tax base. Fewer tax payers need to support these cost increases. Energy is one of the operational cost elements that can now be reduced by conservation efforts. However as the unit cost of power goes up from 12 cents to 24 cents in next 20 years, what can be done at the present?

Fortunately the cost of Solar PV has come down significantly and Federal and State tax credits or grants help reduce the capital cost to make it affordable. These cost factors have created an opportunity to work with third party developers who can finance the project based on a long term power purchase agreement with the Municipality.

This concept of public private partnership offers a Win Win proposition where the cost of power can be fixed and depends on the level of risks taken by the investors. If the Municipality wishes to take zero risk then they would end up paying more for the cost of power sold to the Municipality.

Some communities can see the benefit of Solar Power and are willing to make some capital contribution as Advance payment toward future purchase of the system after the private party has taken all of the tax benefits including faster depreciation. At this time the system can be purchased at fair market value. Communities willing to invest about 20% of the capital cost at the beginning of the project are finding that they can bring the cost of electricity down to 6-8 cents now and expect to reduce it further to 5-6 cents per kwh after 10 years and lasting for another 25 years for the life of the solar PV system. This is a smart way to control the cost of power for a very long term with small investment at the beginning. Energy Independence is now possible and some leading communities are on their way to achieve it. This approach can make all of their public buildings achieve  Net-Zero electric energy goal.

Good financial planning and consideration of risks should be done as the communities develop a strategy for their energy future. What ever path you take, do start the process and join the fast growing solar power trend based on available incentives in New York.

Good Luck!

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