Solar power is a big cost saver, under the right circumstances. Mammoth Community Water District made a big push into solar recently and expects to see return on its investment within a decade. School districts, however, especially those facing heavy financial challenges, have to be judicious about how they spend money to get savings.
Nonetheless, during its regular meeting last week, Mammoth Unified School District’s Board of Education, still grappling with a deficit spending problem and facing budget shortfalls in the next couple of fiscal years, heard a presentation by Dr. Rick Brown, President of Larkspur, Calif.-based Terra Verde Renewable Partners, on the feasibility of implementing a solar power program.
Terra Verde, according to Brown, is an independent advisor to schools and other public agencies, and is not affiliated with any solar industry manufacturers or equipment suppliers. Instead, the company provides guidance on planning programs for solar energy generation, and purchase and installation of equipment.
“There is lots of hype surrounding solar power,” Brown said, “and there are [school] districts that got involved in it and found that it didn’t work out the way they’d hoped. With small size districts, such as this one, the key is addressing needs and achieving savings without spending any money up front.”
Brown, a self-professed believer in green energy, particularly solar, said one of his goals was to outline the most cost-effective ways for MUSD to take advantage of the technology without crippling its budget. For starters, he recommended no sole sourcing of suppliers. “You want competitive bidding,” he advised. “You don’t want a company without financial stability that disappears halfway through the process.
“Do you want a company with a $5 million balance sheet or a $300 million balance sheet? You need third party vetting, and remember the highest value isn’t necessarily the low bid. We’re not trying to sell anything. We’ll work with you if you decide to pursue it. We’re not interested in excluding any bidders, but rather evaluating them on detailed criteria.”
Terra Verde has done similar solar projects for the Petaluma City Schools, Sonoma County YMCA, Firebaugh Las Deltas USD and is currently putting one in at the Inyo County Juvenile Hall and Annex building in Independence.
First things first, though, Brown outlined. Before spending anything, MUSD would go through some preliminary steps, including an audit and feasibility study to figure out the best program for the district.
He estimated that with current rebates from Southern California Edison of 11.4 cents/kWh (kilowatt hour), based on a 50% cash/50% financing model, the district could save more than $100,000 the first year, and perhaps almost $3 million by the program’s 25th year in operation. New metering rules for school districts allow selling back to SCE during the summer, when schools are out and power consumption is at its lowest, at peak summer rates. That, Brown indicated, could bump the payback up to as much as 14 cents/kWh, and could offset as much as 98% of MUSD’s summer power bills.
Even though solar has no moving parts, any cost savings would also have to account for basic maintenance, and equipment upgrades and replacement. Terra Verde would also provide Project Management support during installation, and financial reporting to track how the program is progressing.
The company, he said, charges a modest 29 cents/kWh produced during year one, which he said equates to about 8-10% of the project’s total cost. Once an Engagement of Services Agreement is signed, the only fee would be a $20,000 Service fee, charged should MUSD get proposals that meet its savings objectives, then opt to not go any further.
Brown said that right now, the timing could be about as good as it’s likely to get. Assuming an average inflation rate for SCE power of 5.4% year after year, he said the power company’s cheapest source of power has been the San Onofre Nuclear Plant, which has been offline for the past 14 months. If it doesn’t come back online, which Brown suggested is a very real possibility, the California Public Utilities Commission is gearing up for a round of rate hikes, which would work to the district’s advantage.
One other option he mentioned, called a Power Purchase Agreement (PPA), brings MUSD’s upfront cost to $1, which the Board seemed to find more intriguing. Under a PPA, the District would basically lease some of its property to a solar provider for $1, and purchase power back from them at greatly discounted rates. The benefit would be less, but the PPA provider would be assuming the lion’s share of the financing costs, even with federal rebates. On the upside, however, there is no out of pocket cost for the district. “Many districts just don’t want to be in the business of owning and producing their own solar power,” he pointed out.
Brown told The Sheet later that part of making solar more affordable is getting more investment from both the public and private sector to bring down the overall cost. Right now, Terra Verde has a financial portfolio totaling about $100 million. Brown said he’d like to get that figure up to about $500 million, so that the California Public Employees’ Retirement System (CalPERS), one of the country’s biggest investors with about $250 billion in assets, will look at the company seriously for investment.
MUSD BOE member John Stavlo asked how solar jives with recent discussions between the Town of Mammoth Lakes and Mono County on biomass as an alternative option. Brown seemed to think biomass might be proven effective on a larger scale, but for schools he recommended keeping things simple. Biomass facilities consume fuel, leave a much larger carbon footprint and require heavy management. “Most schools aren’t up to that task,” he said. The only fuel solar needs is the sun, he added, which is going to be around longer than the trees required to feed a biomass plant.
“If we’re specific about what we want and they can deliver, it might be worth the effort,” MUSD Business Manager Donnie Salamanca commented. Interim Superintendent Lou Stewart agreed. “This is a good time to discuss and investigate, and put things in place, so that when the new superintendent arrives, we’re ready to go forward.” Look for the Board to take up the item again, possibly as early as its next regular meeting on May 23.