Energy co-op facing heat from town boards
Credit: By Patrick Cassidy, Cape Cod Times, www.capecodonline.com 12 March 2012 ~~
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ORLEANS – With local wind energy projects stymied by opposition over potential effects on people, wildlife and the landscape, many Cape Cod communities have turned to the sun.
Photovoltaic projects have been installed on roofs of homes, schools and municipal buildings.
The solar rush, however, has sparked renewed questions for the Cape and Vineyard Electric Cooperative, or CVEC – a regional agency created to pursue renewable energy projects for towns on the Cape and Martha’s Vineyard, Dukes and Barnstable counties and the Cape Light Compact. Members of municipal energy committees in Brewster and Orleans have recently asked whether the towns are getting the best possible deal from CVEC.
“I would be very leery of going to bed with CVEC just because of their actions,” Orleans energy committee member Jim Hungerford said during a special meeting March 5 to discuss concerns with the cooperative.
CVEC has successfully developed solar energy projects that include 750 kilowatts installed in five towns and 16 megawatts planned across seven Cape and Vineyard towns. Both Orleans and Brewster have parcels of land being considered in a new round of CVEC projects.
The pile of projects is expected to save towns thousands of dollars each year in electricity costs.
At last week’s meeting, however, Hungerford and his fellow committee members voiced an array of concerns about CVEC’s activities to Orleans Town Administrator John Kelly.
The energy committee has been pushing for more information about the CVEC proposal so it can compare it with other options and so the town won’t be “under the gun,” associate member David Abel said.
“Finally the day we had predicted has arrived,” he said of the pressure to go with CVEC or have no project at all.
CVEC officials won’t wait long for a decision from Orleans, Kelly said.
In response to the energy committee’s concerns, town officials will draft two articles for town meeting – one for the CVEC project and a second to pursue an alternative, according to Kelly. Any contract of more than three years or $50,000 requires town meeting approval, he said.
Given the expertise and expense required to develop such projects, CVEC is the town’s only real option, Kelly said after the meeting.
“I can’t do it in-house,” he said.
CVEC officials are warning that any hesitation could result in a missed opportunity given the number of applications to a state-run solar renewable energy certificate program.
“From CVEC’s perspective this is a town issue,” the agency’s clerk and assistant county administrator Maggie Downey said about the dust-up in Orleans. “They don’t have to go with CVEC.”
The information the Orleans energy committee is looking for wasn’t available until the final negotiations with the contractor were complete, which just occurred, Downey said.
“The easy, politically expedient approach is to just do what CVEC says and just sign on the dotted line,” said Christopher Powicki, an outspoken advocate for renewable energy and member of the Brewster energy committee.
But when town officials are forced to adopt a one-size-fits-all approach to projects, they are unlikely to get the best deal, he said.
The threat that the solar renewable energy certificates – a commodity awarded for the production of electricity from photovoltaic projects – will soon be unavailable is inaccurate, Powicki said, adding that the program’s cap was recently raised to 400 megawatts.
Massachusetts officials have qualified 63 megawatts of solar and have 2,000 applications under the program, said Dwayne Breger, the state’s director of renewable and alternative energy development.
The CVEC model is not the only option available to towns.
Mashpee contracted independently for two solar projects, including a 1.8 megawatt array at the town landfill, Assistant Town Manager Thomas Mayo said.
“We very much treated it like any other procurement project,” he said.
Under the landfill contract signed with American Capital Energy – the same company responsible for the second round of CVEC projects – Mashpee receives a discounted rate of 12 cents per kilowatt. The town has the option of buying the array after 10 years.
Over the project’s lifetime, the town expects to save $7 million and collect about $500,000 from the contractor in lieu of taxes, Mayo said.
“Every town is different,” Mayo said. “This method worked for Mashpee.”
CVEC is also the best option for Brewster, Town Administrator Charles Sumner said.
“We’re overwhelmed as it is,” he said. “We’re generalists. This is a world for specialists.”
The Orleans energy committee received more information on the CVEC proposals on Thursday and will now be able to do a better comparison of the agency’s proposal and other possibilities, albeit with limited time to make a decision.
There are four articles that town meeting will decide on related to the projects: one for an alternative proposal; one to submit paperwork to the state for required permits for a CVEC project on watershed land; one to approve the watershed project; and one to approve a CVEC project on the town’s capped landfill.
Future revenue at issue
For the second round of CVEC projects, the annual savings for participating towns is estimated at $1.3 million. Solar renewable energy certificates generated by the projects are the property of American Capital Energy.
The value of the certificates fluctuate and is expected to go down over time, but if it exceeds $350 per megawatt the proceeds above that amount are shared with CVEC, according to CVEC and American Capital Energy officials.
This potential windfall could net thousands of dollars for CVEC with no clear mechanism for how it is shared by member towns, Powicki said.
CVEC officials argue that the likelihood of the value exceeding the $350 mark is slim and the long-term values fall well below that amount.
Although CVEC would be pleased with any revenue from the projects, the organization is not counting on it, Downey said. If there is additional revenue it will go to overhead or be shared directly with members, she said.
The state’s program for renewable energy certificates that contractors rely on to secure financial backing is extremely complicated, said William Nelson, a renewable energy certificate market analyst at Bloomberg New Energy Finance.
The price of long-term certificates in Massachusetts is not expected to rise above the $350 mark until 2015 at the earliest, he said. A declining ceiling price will exert downward pressure over time so the window where CVEC could garner any revenue will shrink until it is practically nonexistent by 2021, he said.
“I wouldn’t bank on it,” Nelson said.
Although American Capital Energy would rather sell certificates on the spot market at a higher value, financial backers demand the more stable revenue stream available on the lower valued long-term market, company director of business development Bill Fitzpatrick said.
The price of electricity from the projects of 6.9 cents to 9 cents per kilowatt is a great deal for Cape towns, which are currently paying 15 to 16 cents per kilowatt, Fitzpatrick said.
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