Solar Project Development and Procurement
Solar energy reduces monthly operating costs while controlling long term energy pricing. Additionally, a solar electric system can serve as an educational tool for the general public. Solar helps municipal agencies combat shrinking budgets, demonstrate community sustainability, and hedge against rising energy costs. There are several mechanisms that municipalities can utilize in achieving these goals, including:
Solar Energy Purchasing
Energy choice refers to the consumer’s choice to choose who is providing the energy that is delivered to your home. The deregulation of the electricity industry is intended to increase competition and reduce prices for consumers. Twenty-nine states have deregulated electricity, natural gas, or both, with choices of ESCOs available to either all or a limited number of customers. ESCO stands for Energy Service Company, an all-encompassing term that describes any company providing electricity.
More than a million business and residential customers in New York State are now purchasing their electricity and natural gas from an energy service company (ESCO). Learning about the competitive energy marketplace and how to take advantage of it requires understanding of some basic information.
Your energy bill consists of two parts – supply and delivery. You can purchase your energy supply from either an ESCO or your local electric or gas utility. The delivery portion of your energy service will continue to be provided only by your distribution utility.
There are many ESCOs providing a wide variety of “products” and price options. Some provide long-term fixed prices; others offer variable rates that change with market conditions; others give the option for customers to lock-in a rate during certain peak months of energy use. Some ESCO service is provided at a variable price on a month-to-month basis that can be cancelled at any time. In other cases, ESCOs require customers to enter into a contract for their purchase of electricity and natural gas. In some instances the contract requires the customer to commit to purchasing its energy from the ESCO for a specified period of time. The consumer selects the choice that’s best for them.
The New York State Public Service Commission provides a rudimentary search and comparison tool through their Power To Choose website. Energy managers can also visit EPA’s Green Power Locator to find what options are available in their area and use the Green Power Procurement Local Guide. With many ESCO providers you can choose to purchase up to 100% of your annual consumption in clean renewable energy that comes from 100% New York State generated sources. Sources include wind, biomass, and hydroelectric. Renewable energy helps sustain the environment by reducing air pollution and lowering greenhouse gases.
Solar Energy Project Implementation
Solar photovoltaic installations have the ability to lower municipal energy costs, saving taxpayers money while improving the environment. Many New York local governments have not yet taken advantage of this cost-saving technology, however, despite well-established benefits. Local governments are required to meet not only their own operational needs, but to be responsible stewards of taxpayer dollars.
Meeting these objectives can prove challenging when purchasing goods and commodities with which procurement officers are already familiar; these difficulties are compounded when novel acquisitions need to be made. For many procurement officers, the purchase of a solar energy system falls into the latter of these two categories. Solicitations for Solar PV and other Clean Energy systems require that technical or otherwise unfamiliar information be collected, and necessitate the inclusion of a number of unique considerations.
51 kW solar array at the DeWitt Town Hall facility
Suggestions when developing solar energy procurement documents include:
Start with a Clear, Well-Defined Goal
Early Involvement of a Broad Set of Stakeholders
Outcome-Based Requests for Proposals
Provide Site Information and Conduct Site Assessments
Consider Hiring a Consultant or Owner’s Agent
In addition to the considerations listed above, local governments developing a solar RFP should include as many of the following RFP elements as feasible or applicable to their unique circumstances, along with those elements required by law in their jurisdiction including but not limited to:
Roof Integrity and Warranties
Permitting and Interconnection Responsibility
Team Qualifications and Solar Project Experience
Operations and Maintenance
Performance Monitoring and Performance Guarantees
Milestones with Completion Dates
Equipment or Labor Origin Requirements and Community Benefits
NYSERDA's Solar Guidebook provides information, tools, and step-by-step guidance for municipalities managing solar energy development in their communities.
Power Purchase Agreements
What can be done in a community without the upfront financial resources? The answer can be found through Power Purchase Agreements (PPAs), a financing device that entices private developers with tax credits and locks down energy costs for their public-sector partners. The basic idea is that corporate entities can take advantage of tax credits and depreciation for solar, while tax-exempt entities cannot. PPAs are a way to combine the two so that local governments can benefit intrinsically from tax credits. Rather than purchasing the system, a municipality partners with a solar developer and gives them access to a roof or a piece of property. The solar developer buys and maintains the solar system, and the municipality agrees to buy all the electricity from them at a fixed price for 15 to 25 years.
Wider adoption and decreases in manufacturing costs are driving down the cost of solar electricity. As the industry grows and matures, it will optimize and standardize its practices to further reduce costs and make solar energy accessible to a mainstream market. The crucial role of policy in accelerating this industry growth and maturation cannot be understated. Today, however, several barriers remain to bringing solar PV to scale:
Transaction costs can be high. Because the industry is fragmented and installation processes are not standardized around the country, each developer has different procedures and negotiated contracts. Allocating internal staff resources to research solar power and to negotiate fair contracts for each potential site can be expensive.
Learning takes time and effort. Potential buyers have to learn on their own about the solar market, financing, and technology, while building internal consensus for moving forward.
Home that went solar through the 2015 Solarize CNY campaign
Demand is fragmented with many individual sites being developed opportunistically. The current patchwork approach of designing, permitting, contracting, and installing systems for one facility at a time is inefficient.
These barriers help explain the slow pace of solar PV adoption among commercial and government consumers. However, collaborative purchasing can help overcome these barriers and scale up solar PV deployment. By organizing interested consumers (and their potential installation sites) into groups, collaborative purchasing can reduce transaction costs, educate potential buyers, and aggregate demand so that solar panels can be installed at lower-than-average costs.
Communities in CNY are can take advantage of resources available through the Central New York Regional Planning & Development Board to spur implementation for residents and to initiate exploration for installation on municipal properties. Click links below for details!
For additional resources, visit our Resource Library.