Going Solar With Zero Up-Front Cost

• By Christine Beitenhaus
• 12/01/09

As schools implement sustainable initiatives across campus, many are looking at renewable energy sources as a way to uphold green practices and save money. While some campus initiatives can cost little, short of students volunteering their time, the cost of installing renewable energy systems, such as solar panels, can be a deterrent to adopting this form of renewable energy.

One way to avoid up-front costs and still benefit from using renewable energy sources on campus is through a power purchase agreement (PPA). A PPA program entails a third-party company paying for the installation of the system, and then selling the power back to the college or university. The school often agrees to pay for the power for a certain number of years with rates established in the contract, and the third-party company that installs the system is then often responsible for the operation and maintenance of the system as well.

We talked with Dano Weisbord, Smith College’s environmental sustainability director, about Smith’s decision to use a PPA to finance the installation of a 33 kW solar power system. Without the PPA, Smith would have paid $240,000 to install it.

We also reached David Umstot, vice chancellor, Facilities Management at San Diego Community College District (SDCCD), through e-mail to discuss SDCCD’s use of a PPA to install a solar power system. SDCCD’s solar power system will generate savings of more than $110,000 annually.


Smith College

First, where is Smith installing the solar power system, and what prompted Smith to go with solar?

Dano Weisbord: We're installing it on the roof of our Campus Center. It is one of the most prominent buildings on campus and serves as a crossroad for students, faculty, and staff.

Smith is committed to taking action on climate change. For an educational institution, this means reducing the impact of our operations and educating our students. This particular project serves as a demonstration of what's possible.

In conjunction with an ambitious "real-time" metering project underway by our Facilities Management Department, we look forward to when we'll have a building dashboard inside the Campus Center that shows solar production and building consumption.

How did the idea of a PPA fit into the decision process involving installing a solar power system? Was a PPA part of the initial discussion, or did it become a funding option later in the process?

Weisbord: We would not have pursued this project if it was not through a PPA. Like all institutions, Smith has needed to cut budgets during the economic downturn. The PPA provided an opportunity to bring solar to campus without any expense and with some small long-term savings.

For other schools considering this option, what advice can you give to them based on your experience?

Weisbord: We're pleased with this project, and we may consider doing more at some point. It is important to note that under current carbon accounting protocols, bringing solar to your campus via a PPA does not reduce your carbon footprint. This is because the owner of the solar facility owns and may sell the "green power attribute" (or renewable energy credits [RECs]) to other parties. If we counted the power created by the solar installation developed through the PPA as a carbon reduction, we would be double counting.

San Diego Community College District

Where is SDCCD installing the solar power system, and what prompted SDCCD to go with solar?



David Umstot: San Diego Community College District intends to install solar power systems at each of our three college campuses and two of our Continuing Education campuses under the initial terms of our PPA. We expect to install 2.4MW district-wide in our first phase.  
 


We are aggressively pursuing a district-wide solar initiative as part of our board's Green Building and Sustainability policies. We are in the middle of a $1.555B capital bond program that will double the facility square footage we manage, and we are looking at multiple strategies at reducing our operating costs associated with this build out. Solar plays very well into our utility strategy.
 


How did the idea of a PPA fit into the decision process involving installing a solar power system. Was a PPA part of the initial discussion, or did it become a funding option later in the process? 



Umstot: We evaluated multiple options for implementing our solar initiative, including self-funding with bond proceeds, tax-exempt bonds, a Power Purchase Agreement, and other financing sources.  We ultimately selected a PPA as our preferred procurement strategy for the following reasons:

1. There was essentially no initial capital cost to implement, thus it allowed us to retain bond funding for other programming needs.
2. It reduced long-term maintenance and ownership costs.
3. We could take advantage of the California and federal tax incentives and accelerated depreciation schedules through third-party financing and ownership that we as a public agency could not otherwise leverage and translate this into lower electrical rates.

For other schools considering this option, what advice can you give them based on your experience?

Umstot:

1. Look carefully at what your objectives are and what makes the most sense to your organization based on these.  All of the strategies we evaluated offer advantages and disadvantages.
2. Clearly identify candidate sites prior to proceeding with a program. Make certain that you factor in long-term facilities master plan requirements (e.g., buildings slated for demolition/replacement, new building footprints, utility easements) as well as scheduled maintenance activities (e.g., roof replacements).
3. Clearly understand and evaluate your current electrical loads (baseline, average, and peak) to size your system appropriately. Do not oversize the system so that you do not consume all the power you potentially generate.
4. Seriously consider making a selection through a competitive process rather than direct sourcing or negotiating with a single entity. This assures that you are getting the best value for your available funding.
5. Take advantage of net metering of your system so that power produced when campuses are at low electrical loads (e.g., weekends and breaks) is transmitted back into the grid. This literally spins your meter backwards allowing you to bank the kWh for future consumption.
6. Develop clear terms and conditions of your PPA and Site License Agreement and share these at the time of proposal and selection. This avoids protracted negotiations of agreements after selection.
7. Closely scrutinize the financial backing of the PPA provider. You do not want to be left with an unfinished project or program.
8. Clearly identify how the system will be monitored and how billing will be performed.
9. Enjoy the benefits of your hard work for years to come!