Today is a big day. After 1,015 days – and for us, nearly three years of work as the solar consultant – the Millbrook School solar system is finally cleared by Central Hudson to operate for 20 years. With a 1.73 MW solar system, that’s 40 million kilowatt-hours!
In June of 2012 I first heard from Millbrook School, a prep school two hours north of New York City in the rolling hills of Dutchess County, New York. A faculty member there knew of EcoMotion’s expertise. Millbrook and its Board had made a commitment to go carbon neutral by 2020. Could Millbrook go solar with no money down?
We quickly became immersed in project planning. We walked the back fields of the 800-acre campus, looking for ten acres, also examining meters and power usage. Where would we put it? What about the neighbors? What about horseback riding and cross-country trails? By August, I was in close communications with a thoroughly engaged Board member, unfamiliar with solar in general and specifically the PPA ownership model. He ultimately became an essential project proponent.
By the fall of 2012 our scope exploded. The Board would only consider solar in a broader context so we became the School’s carbon mitigation strategist.
We were under fire! Although the Board had technically committed to carbon neutrality, now the actual planning and interest in solar was making some members nervous. One Board member wanted us to explore bringing gas on campus. Even if possible to permit, the estimated price of the seven-mile line was $5.174 million and prohibitive.
Our team did energy audits of all 43 buildings on campus, documenting 107 efficiency opportunities with insulation, new windows and doors, lighting, and for geothermal heating systems to replace aging oil-fired boilers. That led to solar system sizing: Current consumption is about 2 million kWh a year, but efficiency would lower consumption. Concurrently, the School is adding a new dorm, a new dining hall, and maintenance facility. And we’d need more capacity for additional geothermal pumping.
Cash and PPA Pricing
Millbrook pays low rates for electricity. While this keeps power bills low, it makes the offset value of solar low as well, extending the payback period. Could we at least break even and buy solar through a Power Purchase Agreement at “parity?” With an offset value of 8.6 cents/kWh, we did not expect to do so.
An EcoMotion business associate and Millbrook alumnus, Mark Hopkinson, had an idea: What if he could amass a number of alumni, parents, and other benefactors to invest in solar and to sell the School power at a low rate? We named this the Benefactor Investment Model or the BIM: After a group of benefactors monetizes tax credits and depreciation benefits, reaps net energy metering values, and gets well past the tax recapture period… they could then donate the system to the School leaving it with free power for 20 years, while picking up a charitable contribution value in the process. We vetted the model with two New York tax attorneys.
With the Board’s support, EcoMotion developed a Request for Proposals for a 1.6 MW solar system for Millbrook School. We asked for a cash price for the BIM and a PPA price. It was released to 12 leading solar providers. We managed two job walks, formally responded to questions, and received nine proposals. Each factored in the expectation of a NYSERDA grant.
To our surprise, three bidders were able to undercut the price the School now pays for power. The winning bid was from SolarCity; it bid a PPA price of 7.5 cents for 20 years with a 0% escalator, well below the current energy price. Now the only big variable was the cost to interconnect.
At our direction, each of the bids received included a $250,000 interconnection allowance.And we had a formula that for every $25,000, that the PPA price would adjust up or down by a tenth of a cent accordingly. At the end of the day, interconnection cost less than its allowance.
We’d also insisted that Millbrook retain the Renewable Energy Credits (RECs) associated with the solar system output. While RECs are traditionally held and monetized by PPA investors, we were successful in keeping these for Millbrook.
While Millbrook’s eight-acre solar field was largely out of sight, neighbors were treated with care and informed by a letter from the headmaster. To date, there has not been a single complaint from neighbors.
The Great Power Factor Hurdle
SolarCity built the system before the interconnection study was done. This was risky, but the risk was on SolarCity. If the cost turned out to be out of sight, Millbrook could have terminated the entire arrangement. Finally we got results that were highly discouraging: It would cost $580,000 to interconnect… twice our “generous” allowance.
The study found that the solar system would have a negative effect on the grid.Expensive transformers would be required. We knew we still had headroom in our PPA price – even this high cost would only raise our PPA price to 8.5 cents/kWh – but we hoped for another solution.
The solution proposed by SolarCity’s engineers was to reduce the system’s power factor by adjusting each of the system’s 76 “string inverters.” While we’d lose 5% of the system’s output this was nearly completely offset by more efficient panels and onsite equipment.
At the end of the day, well today, everyone is happy! The School has cut its footprint by 30 – 35%, will lower its annual utility bill by $35,000, and it will save a million dollars over 20 years, all with no money down.
Timing, patience, perseverance, and leadership were keys to project success: EcoMotion was carefully tracking NYSERDA incentives, panel prices, and depreciation schedules to recommend the right time to pull the trigger. We found a solution to finance the system with no money down.
Patience was critical. The Board’s diligence was at times stifling. One key member of our team had to stop attending specific Board meetings for health reasons. At one point we had to talk a C-level Millbrook professional “off the ledge!” No setback was worth a leap. We experienced zoning, interconnection, legal, and power factor challenges… all trying but overcome with perseverance.
Finally, Millbrook’s system would not have been installed without the determination of longstanding faculty – Jane and Jono Meigs – without a forward-thinking headmaster named Drew Casertano, without an open-minded CFO experienced with solar – Bob Connolly — and without a Board member, Rick Stuckey, whose drive was essential for project success. Now we celebrate and move on to Phase 2 of our carbon neutrality plan.