Municipalities Like Solar Energy and Power Purchase Agreements

Municipalities big and small increasingly are looking to power purchase agreements (PPAs) to finance solar projects.

On Monday, PennEnergy reported that the small upstate New York city of Watervliet has entered into a 20-year power purchase agreement with SunEdison for almost 1 MW of DC solar power. The power, the story says, will be used in the city hall, fire station, library and other city-owned buildings. The agreement -- which is predicted to save the city more than $1 million during its term -- includes remote net metering, which broadens the number of customers eligible to benefit from the new energy source.

Watervliet Mayor Michael Manning told Energy Manager Today that the PPA is part of a strategy by the city. “The SunEnergy project will cover all our municipal needs. We are also are big on waste control, recycling and organic waste separation.”

SunEnergy was selected after a search, according to Manning. “We solicited for a larger system within state boundaries but weren't satisfied with results,” he wrote. “Therefore, we expanded to include net metering and came up with this attractive project with SunEdison.”

There have been several other renewable PPA announcements during the past couple of months. Indeed, municipalities taking advantage of these long-term deals range from small hamlets to major cities. Some highlights:

In early December, San Diego signed PPA for solar energy with SunEdison. The deal calls for use of 6.6 MW of solar at 25 city sites and is expected to save $22 million over the 20-year term of the deal. San Diego worked with SPURR, the California joint powers authority, on contract.

The solar installations are expected to offset as much as 70 percent of the energy used by the buildings and reduce carbon dioxide emissions by more than 100 million pounds. Construction will start during the second quarter of the year and be completed by the fourth, SunEdison said.

• In November, the Palos Verdes (CA) Peninsula school board approved a 25-year PPA with PFMG Solar to install solar panels at 16 schools, according to The Daily Breeze.

The vote was 3-2 on the contract, which also includes electrical upgrades at three of the schools. The PPA raised concerns with board members because it was arranged without a request for proposals or request for qualifications, the story says. PFMG is providing solar panels to 153 schools in 17 southern California school districts.

• In late December, the Baldwin City (KS) Council approved a 20-year PPA to buy solar power Marshall Wind Farm. The agreement allows Baldwin City to enter a compact with three other municipalities – Ottawa, Gardner and Garrett – within the Kansas Municipal Energy Agency (KMEA).

The total purchase will be 7 MW for $33.89 per Mwh. Baldwin City will receive 1 MW of the power. The city expects to save $250,000 during the term of the agreement. If so, Baldwin City will be getting 18 percent of its energy from renewable sources.

• Amherst, MA signed a PPA in December with SunEdison to develop a 3.7 MW solar array on a nearby landfill, which the town agreed to lease in November. The town anticipates that it will save $128,000 during the first year of operations and that tax rebates will add $45,000 in savings.
• The District of Columbia entered a PPA with Nextility in early December. The agreement is for 11.4 MW of capacity, which will be generated by panels on roofs and in parking lots of 34 facilities owned by the city. The release says that the solar power will save taxpayers more than $25 million during the life of the contract.

Power purchase agreements are a major financial structure through which municipalities are integrating solar power into their energy portfolios. Watervliet’s Manning offered advice for those thinking of calling in outsiders to provide renewable energy. “Consider all options for the solar panels, such as roof, ground and outside property boundaries,” he wrote. “If you can't handle the project with current staff, get knowledgeable advisors. We did by using Solomon Energy.”