The Time Is Right For Solar
If your school district previously explored solar through state-sponsored programs that did not come to fruition, now is the time to take a fresh look!
By Aldo Mazzaferro, PE, CEM, CEA
Director of Technical Services
New York State is a major supporter of the Solar industry. In 2012, Governor Andrew Cuomo announced the NY-Sun initiative to build a sustainable solar market. In 2014, Governor Cuomo expanded the NY-Sun initiative by announcing a program called “K-Solar.”
The K-Solar program was conceived with the intent to incentivize the state’s school districts to install solar arrays. Nearly half of the state’s 700+ school districts registered for the program. Unfortunately, many of these districts never moved forward with their solar projects. In most cases, projects did not proceed due to unfavorable economics.
If your school district explored the K-Solar program, but was unable to facilitate a solar installation, now is the time to take a fresh look at your solar opportunity through an alternative strategy: an Energy Performance Contract (EPC). Since 2014, ECG has successfully designed and installed over 30 megawatts (MW) of solar through EPC projects. That’s the equivalent of almost 60 football fields worth of solar!
Currently, there are several factors that make EPCs attractive vehicles to facilitate solar.
- EPCs are eligible for NYSED State Aid Reimbursement:
Through an EPC, school districts will own their solar energy system, as opposed to leasing it from a 3rd party entity in a power purchase agreement (PPA). K-Solar used the PPA model and school districts missed out on the opportunity for state aid reimbursement. An EPC will generate guaranteed energy savings as the funding source for the solar installation. The New York State Education Department (NYSED) requires that guaranteed energy savings – as opposed to building aid – be used to pay for the cost of the solar array, but you will still receive building aid on the EPC project. As a result, most districts that install solar through an EPC experience a positive cash flow back to the school district. During these times of constrained budgets, many school districts are looking for the chance to reduce costs and generate revenue and this is one way to do that. In some cases, our EPC solar clients are generating nearly $500,000 per year in excess positive cash flow.
- Historically Low Interest Rates:
Most EPCs are financed through a Tax-Exempt Lease Purchase (TELP) and rates are lower than ever. This means districts can minimize their annual debt costs and drive additional positive cash flow by using an EPC to finance large-scale solar arrays.
- Technology Has Improved:
Today’s solar panels are significantly more efficient and will generate more savings from the same square footage as older, less efficient panels. For example, a panel that could deliver 280 watts a few years ago can now deliver 400 watts within approximately the same dimensions. That’s a 42% increase and a huge leap forward in savings per square foot of available area.
If this all sounds attractive, it is important to know that you must act now to capitalize on these benefits. The solar industry is changing, and your district could miss out on the full value of this opportunity if you wait too long. We are urging all our clients to initiate the project development process as soon as possible for the following reasons:
- Rapidly Changing Interconnection Conditions:
Unfortunately, electric utilities are beginning to push back on the installation of large-scale Distributed Generation (DG) resources like solar arrays. As more solar is installed, utility grids will become saturated. For example, the local utility on Long Island (PSEG-LI) publishes an interconnection map that provides information on the ability for local substations to accept capacity from DG resources like solar. As of November 2020, PSEG-LI’s interconnection map estimates over 30% of substations have “Not Favorable” conditions for the installation of solar. This means that, if your district wants to do solar, but the site falls within a “Not Favorable” region, you may face higher interconnection costs than if you had acted sooner.
- Modifications to Net Metering Rules:
Recently, the Public Service Commission (PSC) chose to temporarily reinstate Net Metering and Remote Net metering tariffs, which allow for the “banking” of excess energy produced by your solar array to offset consumption at other times of the year. This means the site owner will realize and retain the full value of the energy produced by the array. The PSC has made it very clear that they intend to retire the net metering tariff in favor of a system called the “Value of Distributed Energy Resources,” or VDER for short. This transition has already taken place in some areas. Under this new tariff, excess energy must be sold back to the utility in real-time at a variable rate that may be less than the actual retail value. In other words, school districts will no longer be able to save the energy produced in the summer (peak solar production) to offset consumption in the winter (peak school building consumption). In many cases, this may reduce the annual financial benefits from installing a solar array.
If your district has any desire to move forward with a solar project, you must act immediately to secure the full economic benefit for your community.
Case Study: Nyack Public Schools, NY
Excited by the opportunity to save with solar energy, Nyack Public Schools in New York was one of the early registrants for the K-Solar program when it was first announced. The District came to an agreement with a vendor for solar panel installation and paid for a preliminary proposal. After spending significant time, money, and resources, the vendor informed the district that the roof structures were not strong enough to support the weight of the panels. As a result, Nyack paid for a solar assessment that ultimately never moved forward. Did your District have a similar experience?
Undeterred by this development, Nyack was still interested in solar arrays and engaged ECG to help make it happen. As with all our projects, ECG investigated Nyack’s solar opportunity at no out-of-pocket cost. By using an EPC as the funding vehicle, ECG conducted the upfront analysis and assessments, including finding solutions to overcome the structural limitations found during the original assessment. ECG solicited proposals from Energy Services Companies (ESCOs), provided oversight in the preparation of the Comprehensive Energy Audit, and designed the detailed plans and specifications for submission and approval by the New York State Education Department. In the Fall of 2020, Nyack PS was granted their permit for construction. In 2021, Nyack PS will begin the installation of solar arrays at their schools to generate nearly $200,000 in guaranteed annual savings.
The Time is Right for Solar
With rapidly changing conditions, now is the time to consider installing solar arrays through an EPC. The EPC will fund the project with guaranteed energy savings and the detailed plans and specifications will be developed with no out-of-pocket costs and no risk to the Owner. The revenue generated will completely offset the costs associated with the project.
If you have considered solar in the past, there is no time like the present to act!
Contact the experts at ECG. We can guide you through the process to install solar with guaranteed annual savings for your school district.
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