Letter to Town of Amherst Regarding Its Solar Aspirations

I wrote a letter to the editor of my local paper, laying out an alternative path for my town to take in its plans for going solar.

It was published on October 22, 2015, republishing here to preserve it.

Big dollars are at stake to the town and homeowners, property owners and business owners — and by extension to its tenants and patrons of local businesses.

Assuming 2 or 3 percent annual inflation, the town will likely pay $35 million to $40 million to Eversource between 2017 and 2036. SunEdison has put forward a proposal that could reduce that cost to $23.3 million over that period (and offer the benefit of providing 80 percent of the town’s energy needs by clean solar power.

I attended the last meeting and from the reaction of those attending, it appeared those two facts were enough to win people over.

But I am wondering if the town has explored the possibility of purchasing its own photovoltaic array rather than entering into a 20-year Power Purchase Agreement (PPA) with SunEdison.

Assuming worst case numbers ($2 per watt of PV installed, and borrowing at a 5 percent annual interest rate), the town could purchase its own 7 megawatt solar array for $14 million plus $700,000 of annual interest over 20 years.

Assuming another $150,000 annually for insurance, maintenance and administrative costs, the total expense to the town over the 20-year term of the bonds it would have to issue would be $31 million.

However, by doing so, the town would own and be able to sell the solar renewable energy certificates — the SRECs — generated by the system.

Over the 10-year term that PV in Massachusetts can generate SRECs, such a system should generate over 68,000 SRECs, which should yield at least $14 million.

This means that the net outlay to the town would be in the range of $17 million — a 25 percent savings over the PPA route — and it would be able to enjoy the benefits of its solar panels for far longer than the 20-year SunEdison deal.

I am using worst case numbers: SunEdison estimated its cost to build the two landfill arrays at $11 million, and the town would likely be able to borrow at a far better rate than 5 percent. If the total cost of the project was $11 million and the town could borrow at 3.5 percent (both reasonable assumptions), the total net cost to the rown would be just under $8 million over 20 years, which includes the additional administrative/maintenance expenditures.

Long story short, if the town does nothing at all, it will pay at least $35 million over the next 20 years, while using conventional dirty fuels to do so. If the town goes with the SunEdison’s proposal, it would go green and reduce that expenditure to around $23 million.

But if Amherst purchased its own system, its maximum cost should be just over $17 million over the same 20 years.

There are many Massachusetts-based businesses just as capable as SunEdison at installing landfill arrays. Whoever the town chooses to advance its solar aspirations, it seems like it should look to the resources available within Massachusetts, before sending our dollars outside of the state.

For such an important project, it’s paramount that the town investigate all the angles.