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County Poised to Move Forward with Solar Array Project at Correctional Facility

by on May 23, 2019 3:43 PM

Centre County appears likely to move ahead with a solar panel array to provide the electricity for the county correctional facility.

Commissioners voted 2-1 to add to next week's consent agenda the contract with Solar Renewable Energy LLC, of Mechanicsburg, for construction of the 1.2 megawatt array and a power service agreement. Commissioner Steve Dershem voted no.

The contract for the array, which would be constructed on the east side of the facility and offset 100 percent of the building's energy usage, amounts to $1.67 million — a $600,000 advance payment, annual payments of $101,000 for the first five years, and after year five a buyout option for $567,000.

Over 40 years, the array is projected to save the county $4.3 million to $6.6 million. Those numbers depend in part on the costs of electricity and the value of Solar Renewable Energy Credits, which electricity suppliers are required to buy from solar energy producers or pay a penalty. One credit is equal to 1000 killowatt hours produced and the correctional facility is projected to produce 1.7 million kwh annually. 

Seth Berry, project manager from Solar Renewable Energy, said that the county can lock in selling SRECs for a five-year period at a current rate of about $50 per credit, guaranteeing about $420,000 over the first five years. Solar Renewable Energy CEO Doug Berry said that in recent years SERC values have risen dramatically in Pennsylvania, in large part because of state legislation requiring suppliers to buy SRECs within Pennsylvania.

If SREC values were to bottom out, however, the savings would be closer to the low end of $4.3 million.

Dershem said he had concerns about the value of the project when local electricity rates are at historic lows.

"My concern, and I’ll be quite blunt about this, is we are enjoying in Centre County some of the most historically low electrical energy prices and we have that locked in for three years," he said. "I have to tell you at this point I don’t support this program. I can go into a litany of other questions I have and guarantees I don’t see, but I don’t support this."

A solar panel facility was originally considered as part of a contract last year with McClure Company for a series of guaranteed energy savings initiatives at 12 county buildings. But while negotiations were ongoing, the county changed its electricity supplier to decrease its rates and the solar panel system proposed by McClure would not have been as cost-effective as initially planned.

Commissioners at the time decided to remove it from the contract and in November decided to request proposals to see if it could be done separately at a better price. 

Dershem said the energy savings projects initiatives, which total about $4.7 million but will save the county more over 20 years, have an immediate impact that can be guaranteed.

"My concern is you’re looking at 40 years down the road, technology’s going to change," he said. "There’s a whole lot of things I’m concerned about, frankly, but there are just no guarantee those SRECs are going to be where they are and the numbers work out. I appreciate the whole green energy issue, but to me we spent a lot of money on LED lighting, we spent a lot of money on HVAC upgrades, which have tangible and immediate results and I think those are more effective uses of taxpayer dollars."

Doug Berry said the contract guarantees levels of kilowatt hours production as well as providing guarantees on the equipment, and that the low-end savings estimates are based on the lowest previous SREC values.

Board chair Michael Pipe said he understood Dershem's perspective, but that there are guarantees on savings and that with the potential closure of nuclear power plants in Pennsylvania, analysts expect electricity prices to increase.

"I’m very supportive of this," Pipe said. "I think this is an opportunity for Centre County to beat many other municipalities and entities to the punch when it comes to being leaders in renewable energy. With SREC prices increasing dramatically I think it would be advantageous for us to get that additional inflow of cash that would come in for the project."

Pipe also noted that local municipalities and entities have already recognized the value in implementing solar energy, including panel arrays installed by Penn State near Mount Nittany Medical Center and by the University Area Joint Authority. Centre Region municipalities also have moved toward an intergovernmental purchase agreement for solar power.

"My hope would be people sitting around this table, or wherever meetings for Board of Commissioners take place 40 years from now, would be looking at a spreadsheet and saying ‘We thank the commissioners in 2019 for their foresight and vision on this,’" Pipe said.

Commissioner Mark Higgins said that from a business perspective, it makes sense to spend $1.6 million now on the solar array.

"I’m very much in favor of spending $1.6 million today to save conservatively $4.8 million and possibly, if we take what’s happening today and project it into the future, close to $7 million," he said.

Higgins also noted that last year electricity costs for the correctional facility were about $111,000 to power, but the solar array power service agreement will be $101,000 annually for the next five years.

"Over the next five years, if we lock in the SRECs at today’s price, our cash flow will be positive almost $200,000 per year," he said.

He added that Dershem is correct that electricity rates are at historic lows, but that he does not expect that to continue.

"In most cases the cost of everything goes up," Higgins said. "Either we’re going to bail out the nuclear power plants in Pennsylvania, which is going to cost quite a bit of money, which is going to increase electric rates; or we don’t bail out the nuclear power plants in Pennsylvania which means there will be less power available."

Pipe said that the commissioners would consider further public input in the days before voting on the consent agenda at the May 28 meeting.

Geoff Rushton is managing editor for Contact him at [email protected] or find him on Twitter at @geoffrushton.
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