Elected leaders in Portland and South Portland will be asked Wednesday to finalize deals to create the state’s two largest municipal solar farms.
The votes, however, come on the heels of an outside review of ReVision Energy’s proposal that raises the possibility that the projects, under certain conditions, could be financial losses instead of moneymakers.
Officials in both cities, who have been working together for more than a year with ReVision, a Portland-based renewable energy company, downplayed the likelihood that the worst-case scenario would play out, arguing that moving toward locally produced, clean, renewable energy is worth the risk.
Portland Mayor Ethan Strimling said he strongly supports the project, even though “the financials are not as strong as originally presented.”
“The goal is to reduce our carbon footprint,” Strimling said. “By having City Hall completely powered by the sun, we are achieving that goal and we’re sending a powerful message. We will walk the walk.”
ReVision originally predicted that each city would make money after 10 years and potentially make $3 million over the 40-year life of the project. But an outside review by California-based Strategen Consulting said that a worst-case scenario could cost Portland more than $400,000 over the next 26 years and cost South Portland more than $433,000.
Portland and South Portland are partnering on the plan in order to reduce costs, so both city councils would have to approve the plan for it to move forward. ReVision would build arrays because as a for-profit company it’s eligible for federal tax credits, unlike nonprofit municipalities.
The arrays could potentially save each city money in the long run, since they would be generating their own power, instead of purchasing it from the grid.
The third-party review was suggested by Portland City Manager Jon Jennings and the communities split the $8,000 cost evenly.
South Portland Mayor Patti Smith said she expects the council will approve the deal Wednesday, since generating solar energy has been a longstanding goal for the community. She said the worst-case scenario is simply part of due diligence rather than a likely outcome.
“It’s important to know the extremes of an issue and a partnership,” Smith said. “I don’t think we’ll be on either end. We will be … in the middle.”
Each community would install nearly 3,000 solar panels on closed landfills on Highland Avenue in South Portland and Ocean Avenue in Portland that would each generate 1.2 million kilowatt-hours of energy a year. That’s enough to produce 12 percent of the energy used in South Portland’s municipal and school buildings and about 3 percent of Portland’s, or roughly enough to power City Hall and Merrill Auditorium for a year.
Each community would purchase the electricity from ReVision at rates higher than traditional pricing for the first six years, before being able to buy the equipment outright for nearly $1.6 million. South Portland would pay an additional $31,000 annually in electrical costs over that initial six-year period and Portland an additional $25,000 annually. Portland would have to pay an additional $50,000 to connect the solar farm to the grid.
“There’s never a decision we make that doesn’t have some risk,” said Portland City Councilor Spencer Thibodeau, who chairs the Sustainability and Transportation Committee. “Notwithstanding that small risk, the upside is much larger for the city as a whole.”
The worst-case scenario by Strategen assumes that electricity rates will remain low, growing at only 0.5 percent a year. The median case assumes 2 percent growth and the best-case assumes 3 percent growth.
The worse-case scenario also assumes that the equipment would degrade faster, be more costly to replace, and be more expensive to operate and maintain.
Another factor is the replacement schedule for the inverters, which are used to pump solar energy onto the electrical grid. ReVision originally estimated inverters would need to be replaced in 20 years, whereas Strategen estimated they’d need to be replaced every 10 years. Fortunat Mueller, co-founder and managing partner of ReVision Energy, said the firm has offered both cities a 15-year warranty on their inverters at no cost. He also said ReVision uses only premium parts. “As a result, we don’t tend to see premature equipment failure and the resulting unexpected operating expense,” he said.
A baseline, or median, scenario by Strategen shows Portland making a little over $50,000 over the first 26 years if current regulations remain in place and more than $136,800 if the Maine Public Utilities Commission adopts more solar-friendly policies. Baseline estimates for South Portland were $26,600 and $410,000, respectively.
Best-case scenarios showed Portland making $521,400 under current regulations and $574,000 if the PUC changed its policies. For South Portland, those gains were $491,500 and $941,000, respectively.
South Portland Sustainability Coordinator Julie Rosenbach said she is confident the worst-case scenario would not come to fruition. Instead, she pointed to Strategen’s baseline and best-case estimates showing both South Portland and Portland breaking even or even making money over 26 years.
“I think what we’re going to be is close to the baseline case, at least for South Portland,” Rosenbach said.
Portland’s sustainability coordinator agreed.
“I don’t think the worst-case scenario is the likely outcome,” Troy Moon said.
Randy Billings can be contacted at 791-6346 or at:
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