South Portland hears pitch for solar energy agreement
SOUTH PORTLAND — After installing solar-powered energy systems for companies in southern and mid-coast Maine, a Portland company now wants to bring sunshine to city government.
The idea to install solar panels at the Department of Planning and Development office on Sawyer Street gained City Council favor at a workshop Monday night, but not enough to schedule a vote on the proposal presented by ReVision Energy co-founder Fortunat Mueller and Steve Hinchman, the company's director of financing.
Hinchman and Mueller said council interest must become council approval in the next few weeks to make the proposal a reality.
Since 2003, the company has installed photovoltaic cells at properties in Maine and New England, and has set its sights on municipal and nonprofit installations as a way to capture federal and state tax credits.
By the time Mueller and Hinchman had concluded their presentation, it was apparent city Planning and Development Director Tex Haeuser and Finance Director Greg L'Heureux did not consider City Hall a viable option, despite its inclusion in the proposal.
But placing photovoltaic cells on the roof at the former Hamlin School was favored in a plan where the company would pay the $76,000 installation cost and sell energy generated by the panels to the city for less than market rates for six years.
The initial price would be 10 cents per kilowatt hour, compared with the current rate of 12 cents per kilowatt hour. The photovoltaic cells are expected to last 40 years because they have few moving parts, Mueller said
The process is called a power purchase agreement, allowing ReVision to lease roof space for $1 annually, create a limited liability company to sell the energy, and recover the tax incentives, while also generating renewable energy credits that can be sold to the city or on the market. The sales arrangement must last six years to get the federal tax credit.
After six years, the city would have the option to buy the system for $20,000. Projected savings in electricity costs mean the purchase price would be recovered in 5.4 years, according to Hinchman's estimates. In 30 years, Hinchman estimated the city would save $64,000 in electricity costs by using solar power.
Electricity generated would not heat or cool the building, Haeuser said, but would provide hot water. The building boiler was recently converted to natural gas.
If councilors did not want to buy the system in the future, the city would continue to buy electricity at a full market rate under a 20-year power purchasing agreement. The agreement could be extended for 10 years when the initial agreement expires.
The catch is ReVision needs to install and operate the system before the end of the year to gain federal tax credits that are set to expire.
"We need to flip the switch by Dec. 31," Mueller said.
Because South Portland is not the only municipality ReVision has approached, the company needs a commitment by mid-September to fit installation into its work schedules by the end of the year.
Councilors including Tom Blake were receptive to the idea, but coupled the issue with the future of the building, which was given to the city last year by the School Department.
Councilor Tom Coward said he expects the school to remain in city hands at least six years, but he and Blake suggested city staff examine the $1.1 million performance contract signed in 2010 with Siemens Industry to ensure there are no conflicts of interest in signing an agreement with ReVision.
The performance contract allowed Siemens to make energy efficiency improvements to municipal buildings in exchange for future savings in energy costs.
Hinchman said the contact should not pose problems, because electricity will still be generated, and Haeuser noted much of the work by Siemens was geared to saving on heating and cooling costs.
Councilor Maxine Beecher suggested inspecting the roof before installation, but Mueller said the rows of photovoltaic cells would stay in place in stormy weather.
"If the panels come off the roof," he said, "the roof is coming off the building."