The solar power purchase agreement approved by the city council
is scaled back in size and energy output from what Borrego Solar
presented earlier this month, but energy savings from the deal
could triple from what was originally anticipated.
The solar power purchase agreement approved by the city council is scaled back in size and energy output from what Borrego Solar presented earlier this month, but energy savings from the deal could triple from what was originally anticipated.
The council voted unanimously Wednesday to enter an agreement with Borrego Solar, in which the company will install solar panel carports in the parking lots of the Centennial Recreation Center, the Morgan Hill Library and the Morgan Hill Police station. In return, the city will agree to purchase solar power from Borrego at a fixed price for 20 years.
The city will contribute $1 million in redevelopment agency funding for construction, and the rest of the installation and maintenance costs will be borne by Borrego. That’s why the projected savings jumped to about $3 million in 20 years, from the projected $1 million expected at the Dec. 1 meeting, when city staff and Borrego proposed a project that would have included the parking lots of the Community and Cultural Center and the Aquatics Center, according to Morgan Hill program administrator Anthony Eulo.
The council at the Dec. 1 meeting wanted to eliminate the CCC from the project, and Wednesday decided to eliminate the Aquatics Center from the project, city staff said.
The project will produce more than enough energy than is required for each facility, according to city staff, though the Aquatics Center consumes significantly more energy than the others.
Furthermore, the council agreed Wednesday to spend up to $50,000 in application fees for solar power rebates available from the state, as an effort to offset some of the cost of project’s cost.
The council’s approval of an agreement is still subject to Borrego’s willingness to agree to other sticking points raised by council members Wednesday. Councilman Larry Carr insisted the final contract should require Borrego to provide certain maintenance efforts, such as the removal of graffiti, immediately rather than within one week as the draft agreement stipulated.
Still concerned about the “disincentive” to conserve energy because of the agreement is Carr. Under the proposed contract, the city will pay for a pre-measured number of kilowatt-hours for the four facilities, even if they don’t use all of it, thereby eliminating an incentive to use less energy.
The revised draft of the agreement is expected to be presented for final council approval Jan. 26, 2011. Since the Dec. 1 proposal, at the council’s request, the number of trees expected to be removed by the construction project that will require tearing up existing parking lots at the facilities has been reduced from 131 to 93.
The deal is under consideration as a way for the city to be more energy-efficient and to save money.
The key to the contract is a 20-year agreement by the city to purchase a predetermined amount of power from Borrego, regardless of how much power is consumed at each facility, at a fixed price. Under those terms, the city’s energy price will increase by 3 percent per year.
Based on an analysis by city staff, if energy prices charged by PG&E increase by 4 percent or more for each of the next years, the city will pay about $10.6 million for energy at the originally suggested four facilities with no solar power. Under the power purchase agreement with Borrego, however, the city would pay about $7.5 million over the same time period – a savings of about $3 million, according to Eulo.
City staff and energy industry experts predict that PG&E’s prices will increase by at least 4 percent annually for the next 20 years, or at least at a higher rate than that written into a contract with Borrego.
