MD: Looking at Public/Private Solar Partnership
28 Feb, 2010
Late in January, Frederick County officials drafted a letter to the Maryland Energy Administration expressing its interest in an initiative known as the Sunburst Project.
According to Hilari Varnadore, director of the Frederick County Office of Environmental Sustainability, which is pushing the Sunburst Project, the initiative would allow county officials to authorize private companies to install solar systems on the roofs of county buildings, which the companies would then own, leaving the county to benefit from the clean, renewable energy – and the energy savings.
According to Varnadore, the state has about $6 million in funds slated for solar energy developments, and state officials have encouraged the county to participate as a model for future solar installations under Project Sunburst.
Project Sunburst hasn’t gotten much press, either locally or nationwide, but the program aims to build on the Solar Energy Grant Program, which through 2009 gave $2.75 million to install more than 1,800 megawatts of clean, renewable solar energy on the roofs of almost 500 Maryland homes.
Project Sunburst’s goal is to double the amount of solar energy currently installed on public buildings throughout the state.
The public/private partnership agreements are likely to be power purchase agreements, or PPAs, in which the state provides “seed” money to a developer to help defray installation costs. The developer is also able to capture federal and state energy tax credits.
Lease, or lease buyback, programs may also provide the model, and these leases generally involve the developer leasing the rooftops for the life of the installation and selling the electricity to the building owner, with a clause that the building owner can buy the system back at the end of that period for a portion of the installation cost, or sometimes acquire it for free.
In either case, the county buys the energy produced, usually at a rate less than that asked by the local or regional utility. In this case, that entity is Allegheny Energy, whose 300-mile, $1.8 billion proposed power line known as PATH (Potomac Appalachian Transmission Highline) has a substation in Frederick County. The costs of that alone are likely to add significantly to area utility bills.
Add to that the fact that, on Feb. 11, FirstEnergy announced the proposed purchase of Allegheny Energy. The price is $4.7 billion, in a deal that is billed as “creating one of the nation’s largest power companies”.
Proponents of the deal say the purchase will improve Allegheny’s generation mix, which is primarily coal, at a time when future carbon regulations are expected to raise the cost of electricity. FirstEnergy relies primarily on nuclear.
The Sunburst Project will also allow Frederick County to meet its renewable energy goals, which include reducing the use of nonrenewable energy in all county buildings by 2024.
Maryland’s renewable portfolio standard, or RPS, mandates that all electricity suppliers get 20 percent of their electricity from renewable sources by 2022.