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Archive for the ‘Tips and Tricks’ Category

Cadmus staff presented key challenges and best practices for community renewable energy projects at the MMA annual conference and trade show on January 20th. In a panel entitled “Making Money While the Sun Shines,” Cadmus answered specific questions from community representatives about current or planned solar PV projects.

If your community has lingering questions about solar PV or solar Power Purchase Agreements (PPAs), the slides presented at this panel may be a great resource. A copy of the slides can be downloaded here: Cadmus_MMA 2012 Annual Conf_011912

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The state Department of Energy Resources (DOER) has posted a new program opportunity notice for Qualified Energy Conservation Bonds (QECBs). In summary, these tax credit bonds can be used to help public entities fund the capital costs of energy conservation projects, including renewable energy projects (i.e., solar, wind, biomass, geothermal, small irrigation power facilities).

 To date, the state has committed $20 million in QECBs to public projects in Massachusetts. An additional $15.5 million is available to public projects in Massachusetts.

 More details are available on Comm-PASS (solicitation number PON-ENE-2012-001).

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In a typical solar power purchase agreement (PPA), a community hosts solar PV on public rooftops or land and enters into a long-term contract for the purchase of electricity from the PV system(s). This third-party ownership model is the most common way in which Massachusetts communities procure solar PV systems (as opposed to outright ownership, for example).  While 2010 and 2011 saw a significant number of public solar PPA projects in the state, interest from solar developers has slowed in recent months. As a result, those communities just releasing RFPs for their solar project or reviewing bids from a recent solicitation may not see as many responses or as attractive prices as their predecessors, leaving many to wonder –what is going on in the Massachusetts community solar market?

Concern over Renewable Energy Incentives

Solar Renewable Energy Credits (SRECs) generated by PV systems (which communities typically give over to solar developers in PPAs) are an important revenue stream in a developer’s financial model for a PV project. Due to recent analyses of and concerns about the state’s SREC market, some developers are struggling to secure SREC contracts at sufficient prices. Without adequate SREC contracts, developers cannot offer attractive PPA rates to communities. Many solar developers active in Massachusetts have slowed or stopped activity in the state.

What does that mean for my community’s hopes for a solar PPA project?

Some developers and analysts believe that Massachusetts SREC prices will recover in six to nine months and that the pace of development will pick up again at this time. In the interim, communities may not see as much interest from the development community or receive attractive PPA rates (e.g., less than 10 cents) on proposed projects.

In order to take advantage of federal incentives that apply to solar projects developed in 2012, community solar project teams should use this period to prepare for a summer 2012 RFP (or RFQ) release, should the SREC market turn around at that time. Proactive teams can use online tools such as the National Renewable Energy Lab’s In My Backyard tool or PVWatts for preliminary resource assessments and to narrow down potential project sites. Using the results of these analyses, as well as details about the sites, solar project teams should begin preparing language for a RFP or RFQ. If more detailed site assessments are conducted, finding should also be included in the RFP.

If and when Massachusetts SREC market projections improve, the most proactive project teams will be first in line to do business with an eager solar industry.

What if we are currently negotiating a solar PPA?

Local officials and staff in Massachusetts are constantly contacted by interested solar developers. If your community is executing a PPA project at this time, be sure to get as much information as possible as possible about the SREC assumptions used in the developer’s financial model for your project. If a developer assumes more than $285 per megawatt-hour (28.5 cents per kilowatt-hour) for 10 years worth of SRECs, tread cautiously. Make sure that your PPA does not contain, for example, a “Change in Law” provision that allows the developer to renegotiate the PPA price with you during the contract term if their SREC assumptions do not hold (e.g., if the assumptions about SRECs used to price your project were out of date or overly optimistic). Also, if the solar developer will use SREC brokers to sell the SRECs from your project, encourage them to get regular updates from their brokers on available SREC contracts.

 

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When planning a ground mounted PV system (vs. a roof mount), there are several environmental considerations to evaluate prior to entering a PPA.  The overall size of system, landfill or Brownfield location options, wetland areas, and endangered species are all issues to assess when evaluating sites for PV arrays.  While the solar developer’s engineering team typically has the resources to complete all required environmental permitting, a savvy property owner or municipal committee will want to know “fatal flaws” and/or anticipated permit requirements in advance of committing to the project. Understanding potential environmental challenges ahead of time allows for realistic cost and project timeline planning. The site owner should also confirm that the solar developer has a qualified and experienced permitting team on board.

Site Characteristics

As part of a fatal flaws or feasibility analysis, site characteristics should always be considered. Site characteristics that should always be included in any analysis include ground slope, topographic features, access to the site, path to potential interconnection point(s), existing vegetation, erosion potential and soil type. Analysis of environmental features along possible interconnection routes should be considered in addition to the array site itself.

Local Requirements

Do some research on property boundaries and easements, available mapping (wetlands, topographic, utility, endangered species), local by-laws (zoning, planning, and conservation).  Information obtained from the local conservation office, Town or City Engineer, or zoning office can be included in an RFP or made available for review prior to bid.

 State Requirements

A state environmental review (ie. Massachusetts Environmental Policy Act http://www.env.state.ma.us/mepa/ (MEPA)) may be required if the project meets a State’s “threshold” for review.  State thresholds should be checked to see if any project characteristics exceed the threshold.  If they do, a regulatory review may be required and possibly add 30-60 days minimum to the project timeline.  Most states maintain a free online database of environmental resources/protected areas, historic resources and hazardous waste or Brownfields sites.

For example, if the site is a landfill, the landfill must be closed, capped and in full compliance with State regulations.  A Post-Closure landfill use permit is likely required.  Talk to your state Department of Environmental Protection (ie. NHDES, MADEP).  Permits for post-closure landfill use can take 2-6 months.

Federal Requirements

A federal environmental review (National Environmental Policy Act http://www.epa.gov/oecaerth/basics/nepa.html (NEPA)) may be required if federal money is involved or if the project meets a federal threshold for review. As with state regulations, if any project characteristics exceed federal thresholds, they may trigger a regulatory review that will add to the project timeline.

Any site with over one acre of total land disturbance requires a National Pollutant Discharge Elimination System (NPDES) permit for erosion andstormwater pollution prevention. Easier than it sounds, this is a simple document that can be filed electronically and does not delay a project. Best practices, such as using silt fences or haybales around any open excavated areas, should be utilized.

Drafting a Request For Proposals (RFP)

Give the solar developer as much relevant information from your research as possible in the RFP, or provide a list of available resources to examine.  The more information the bidder has about environmental considerations, the more competitive and accurate the bid outcome can be.

Summary

An owner’s agent can assist in identifying potential feasibility issues and evaluate proposals for a PV system.   Factors to evaluate for a ground mounted system are different from a roof mounted system and include environmental considerations.  Proper planning and knowing what to expect help make the bid and project phases go smoothly.

 

 

Guest Blogger:            Maureen Sakakeeny, P.E., LEED AP

Principal

SAK Environmental

 

About SAK Environmental LLC:

SAK Environmental specializes in environmental permitting and compliance, sustainable development, and Brownfields assessment and remediation, and environmental support during construction, throughout Massachusetts and Southern New Hampshire.  Our goal is to deliver technically sound advice and practical solutions enabling our clients to carry out their initiatives with confidence and peace of mind.  We strive to promote sustainable development and environmentally compatible business practices to allow business, industry and community to thrive. SAK Environmental is a privately owned environmental consulting business founded in 2003 and based in North Andover, Massachusetts.   For more information about SAK Environmental LLC, please visit www.sakenvironmental.com.

 

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This is the second post in our series highlighting “keys to success” for community renewable energy projects. In this post, we focus on how to build a savvy project team to ensure the success of your project.

Who should I consider for the project team?

To build a project team, consider the human capital in your community. Local resources may include volunteer energy committees, municipal energy coordinators, schools and universities, and private citizen groups. Invite interested parties to lend their expertise to the community’s clean energy efforts and create a strong team through collaboration.

Renewable energy projects can be very time-intensive. We have found that the most successful teams have at least one project champion. Ideally, this individual is able to manage the time requirements of the project, and they can organize and motivate a strong team of supporters. The project champion ensures that the project progresses even when other project team members are largely unavailable. They help identify solutions in the face of opposition. These individuals are the backbone of the project team, and they can be critical to a project’s success.

With their wealth of knowledge of municipal facilities, finances, and politics, local officials and staff are also valuable project team members. Facilities managers have detailed knowledge of potential project sites. Finance committee members can critically review price proposals. Teachers can help negotiate the most valuable educational “add-ons” to a project. Town counsel or city solicitors can provide a detailed legal review of contract specifics such as indemnification, representations and warranties, and default and remedies. While local officials and staff may have limited time, their expertise and ownership of a project makes for a very strong negotiating team.

Savvy volunteers often represent the majority of project team members. Consider energy and sustainability-focused disciplines at local academic institutions. Professors may be willing to lend their expertise, and students may have both valuable skills (e.g., financial modeling) and a flexible schedule. Solicit participation among your community’s retirees. Former small business owners, financiers, and engineers –especially those with an interest or experience in clean energy—frequently lead very effective project teams. Tap into existing local energy or climate change committees for those with demonstrated interest in municipal sustainability efforts.

Finally, look to regional organizations, such as regional planning commissions, and state and federal government for technical assistance programs. The U.S. DOE regularly presents technical assistance webinars for state, city, county, and tribal energy practitioners through their Technical Assistance Program (TAP). On September 28, 2011 at 2 p.m. EST, a TAP webinar will cover “Advanced Topics in Power Purchase Agreements,” including the complex terms and conditions of these contracts. The TAP blog provides an up to date list of technical assistance webinars and other resources for communities interested in renewable energy. In Massachusetts, DOER’s Green Communities program provides a range of resources and funding to cities and towns promoting energy conservation and renewable energy.

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This is the first in a series of posts highlighting “keys to success” for community renewable energy projects. These recommendations are drawn from our experience as owner’s agents.  We have presented them at workshops around Massachusetts. In this post, we focus on the importance of garnering support from within the community during the early stages of a project to ensure success. 

Where does support come from in my community?

To build project support, consider the possible stakeholders. Stakeholders can range from a Town Administrator to facilities managers, science teachers, local business owners, and citizens. Their motivations for supporting a project will vary dramatically, as will their concerns. As such, it is important to know your audience when seeking support.

We have found five primary reasons that community members may care about a renewable energy project. Each factor appeals to different groups, but most stakeholders are motivated by at least one of the following:

  1. ECONOMIC BENEFITS: Energy savings from third-party owned PV systems, for example, are real, and they begin on day one.  The PPA provider monetizes available tax credits and other incentives that a municipality cannot monetize. In return, the municipality benefits from a known electricity rate during the contract term (e.g., 20 years) that is ideally less than the rate paid for electricity from the grid. For those stakeholders who value numbers, estimate project benefits using rough calculations or free online tools, such as the National Renewable Energy Lab’s PVWatts
  2. ENVIRONMENTAL BENEFITS:   Some stakeholders may focus almost exclusively on the environmental benefits of a project. Share publically available links from a neighboring community’s Data Acquisition System (DAS), which tracks energy production and estimates a system’s environmental benefits to date. See examples at DAS provider Power One’s website.
  3. OTHER COMMUNITIES HAVE PROVEN THAT THIS WORKS: Communities across Massachusetts are developing renewable energy. Contact those working on renewables–their insights may be invaluable to your efforts. An interactive map showing Massachusetts Performance Contracts is available online.  
  4. DEMONSTRATING LEADERSHIP: While certain stakeholders need to see successful example projects, others are motivated by the opportunity to be “one of the first!” PPAs are still relatively new. Local officials, school teachers, and other supporters of completed PPA projects become local and regional clean energy leaders. A ribbon cutting ceremony can support this goal.
  5. BUILDING MOMENTUM FOR FUTURE PROJECTS: Large-scale efforts, such as community wind projects, take years to complete and may involve a steep learning curve. In the interim, smaller- scale projects can help you build a strong energy committee, get familiar with the various project phases, and begin to engage the community in a dialogue about locally-sited renewables.

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One of the main determinants of whether an RFP for a Power Purchase Agreement (PPA) will attract qualified developers and advantageous bids is estimated total potential capacity. If this information is not available, site area or rooftop square footage can serve as a proxy.

More Space. More Attention.

When conceiving of a renewable energy project, cities and towns should look to aggregate potential sites. Whether or not a PPA makes sense for the community will depend on the total amount of capacity that is feasible. For example, some PV developers require 500 kW of PV potential before proposing a solar PPA. Others will not pursue landfill solar projects that are smaller than two (2) MW. By aggregating as many rooftops and open spaces as possible in your project RFP, you will attract more vendors and capture economies of scale.

Whether conducting your own due diligence or investing in site assessments, your RFP should ultimately focus on quality sites. Buildings with aging roofs, for example, should be set aside for future phases. Those with many rooftop penetrations and little usable space should similarly be deferred.

 If publicly-owned buildings and open spaces are very limited, look elsewhere. Consider partnering with a neighboring municipality or other public entity in the region (e.g., schools, hospitals). This may be especially helpful where the potential partner has experience with renewable energy projects. Together, you may receive bids that neither could have attracted alone.

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