Solar installation comes with no upfront costs but with ongoing savings
What if someone offered to install your solar panels for free, pay for all the maintenance and repairs, implement other energy-saving measures, cut your electricity usage by 12 percent, guarantee you no more than a 2.5 percent increase in electric rates and give you a check at the end of each year for electricity generated above and beyond your usage?
That’s the basic proposition Indoor Environmental Services (IES) outlined for school board members at their June 21 meeting.
How does IES intend to deliver on the sounds-too-good-to-be-true promise?
The deal would involve three entities. IES would provide the technical know-how and installation. Another group, IEC, would form a limited liability company (LLC) that would own, operate, insure and protect the solar installation. PUSD would sign a power purchase agreement with IEC to buy the solar-generated power, instead of purchasing its power from Pacific Gas and Electric, for a 25-year term.
Chris Bristow, a mechanical engineer and facility solutions specialist with IES, explained to the board why this model works for school districts.
Because public entities, like school districts, do not pay taxes, they cannot take advantage of current incentives for installing solar-energy systems, such as tax credits. This makes installation of such systems cost prohibitive for many public entities.
By forming an LLC, a tax-paying entity, IES can take advantage of those tax incentives. IES will also make money when PUSD purchases power. Bristow said the district’s rate might go up slightly, from 17 cents per kilowatt-hour (about what it pays PG&E now) to 18 cents.
But during the summer when most of PUSD’s facilities are closed and solar generation is at its highest, the system would generate far more electricity than PUSD could use. Since energy is at a premium during those months, and if PUSD went to a time-of-use rate, PG&E might be buying energy at a rate of 40 cents per kwh. The arrangement would yield a net gain for PUSD over the whole year. PG&E “trues up” its accounts at the end of the year, said Bristow, at which time PUSD would get a check for the excess energy produced.
As part of the deal, IES would also install energy-efficient lighting and make other conservation recommendations.
Bristow said 60 percent of the school district’s sites are powered by PG&E. Plumas-Sierra Rural Electric Cooperative powers the others, which would not be affected by the proposed solar deal.
Based on a preliminary analysis, Bristow said, the arrangement could yield a 12 percent annual savings for PUSD. IEC would guarantee no more than a 2.5 percent escalation in rates, about 2 percent less than PG&E’s escalation rate over the past 10 years. He called the 12 percent a “minimum or conservative” estimate.
IES is recommending the PUSD project be 50 percent ground and 50 percent carport installations. Bristow said the ground mounts provide the most benefit, carports are second best and roof installations are the least desirable.
Bristow acknowledged one caveat to the deal: The project would have to start this year and be 15 percent complete by the end of the year to qualify for the tax breaks, which may not be continued into the future. So, the board would have to act this summer to get the project underway.
He said the district’s only exposure would be development fees if it backed out after a certain point, and promised if the cash-flow projections did not pencil out, “you can walk.”
Board members had many questions for Bristow.
Bret Cook: “We have no capital outlay?”
Chris Russell: “What if you encounter problems with our gear?”
Bristow: “We’re geared to deal with that up front. We take on the risks up front. We’re used to identifying potential and unforeseen problems. Some things we can ‘tuck in.’”
Sonja Anderson: “Can the panels support 100-pound snowload? That’s what we have in Chester.”
Mouths fell open when he said the Division of the State Architect (DSA), the notoriously sluggish state department in charge of overseeing construction projects at schools and colleges, approves the projects “over the counter.”
He assured board members that both the angle of the panels and their heat retention would shed snow “like a metal roof.”
Bristow’s presentation was an information item on the June agenda. Superintendent Glenn Harris indicated he would bring the matter back to the board for possible action at the July 12 meeting. Bristow said he would bring an IEC representative with him next month.