The solar bond vote: Questions and recommendations addressed

By JIM EMERSON, Brandon Energy Committee

What are the costs to build this system and how much needs to be borrowed?  

Brandon’s Town Manager solicited and received four sealed bids from solar installers.  The low bid is $468,500.  There are added costs of up to $10,000 possibly expected.  The federal government will fund 30% of the construction costs, or $140,550, and the Selectboard authorized $60,000 of ARPA funds for this project, leaving $277,950 to be borrowed.

What is the interest rate on the bond and repayment period?

The federal government supports these projects with 2% bond money to be paid back over 10 years.

Will taxes need to go up to pay off this bond?

No.  Savings from the electricity that the system will generate will be sufficient to cover the bond payments and operating costs.

What is the financial benefit of doing this project?

The Town pays over $30,000 a year for electricity from Green Mountain Power.  The GMP bill can be offset by solar credits generated by a town-owned solar system.  The proposed 150kW system will generate $35,000 in solar credits and the town has offered to allocate $5,000 to the Water Department of the Fire District after a 10% discount to them.  Thus, the town should expect to save a total of $34,500 per year ($30,000 in electric charges and a net of $4,500 from the Water Department).

What are “solar credits”?

Solar credits represent the value of the kilowatt hours that the solar system sends to GMP. In effect GMP “buys” electricity from Brandon and deducts the money from the town’s electric bill.   

What about the costs of operating the system?

The costs required to operate the system include monitoring, repairs, inverter replacement, insurance, and mowing.  The town will require the contractor building the system (local Green Earth Energy) to handle the first three.  Insurance is provided through the Vermont League of Cities and Towns.  A contractor, experienced in mowing solar fields, will be hired to attend to the mowing.  

These costs should be under $3,000 for the first five years and then modestly grow.  The system only requires 3 inverters, which are warranted for 10 years and are expected to need replacement after year 15 at a cost of $25,000, well after the bond has been paid off in year 10.

Is this a risky project?

Over the past eight years, Addison County’s Acorn Energy has developed four community solar projects designed to benefit individuals who cannot put solar on their homes.  These are producing benefits close to or above projections.  We have relied heavily on this nearby real-world experience in developing our projections.  

In addition, more than 16 towns in Vermont have built solar projects similar in size, and this was before the 30% federal rebate of the construction costs that is now available.  Many more towns have built smaller solar projects under 90kW in size.

How have other towns done with their solar projects? 

In the past 6 years, Colchester has built two 150kW projects like the one we are proposing. They are working on building their third project this year.  Their town manager indicates one project is saving more than projected, another modestly less due to a problem with tree shading they did not anticipate properly.  Their projections for their next 150kW project indicate they expect net cash flow from energy savings minus costs will be $1,097,000 over 25 years.  

Of note, they project costs of only 8%, while we project more conservatively at 20%.

How will Brandon benefit in the long term?

We have used Acorn Energy’s data and input from professional seasoned and well-respected contractors who bid on the project, as well as a local private solar developer. We project the Town of Brandon will pay off the ten-year bond using savings generated from the project.  After the loan is paid, savings of $35,000 a year or more should result for decades.

How likely is it that those results will be achieved?

A “Monte Carlo Analysis” is designed to evaluate just this.  It is a mathematical technique that allows one to analyze the impacts of how a variance with each assumption made with our projections may influence the results both individually and in combination with each other assumption.  The analysis of our projections is summarized in the chart and table at the end of this article.

Otherwise, my survey of other projects includes two community solar projects in Vermont, one built in Bennington in 2016 and another in Hinesburg a year ago.  The one in Bennington has performed as rated and costs have been about 15%, as projected.  The project in Hinesburg just had its first year with costs that apply to our system at under 5%, which is expected in the early years of the project.

The Brandon Rescue Squad built a system about 9 years ago that has fully offset the cost of the kWh’s that the Rescue service uses from GMP. It paid for itself in short order. The Rescue Squad has reported no costs to maintain the system and no significant drop-off in productivity.

Don’t solar panels become less productive with time?

The solar industry has adopted a standard that panels should lose only 0.5% in productivity a year.  Current panels are warranted to still produce 85% after 25 years. These warrantees are not high-risk promises.  According to dozens of anecdotes from older system owners, as well as nonprofit solar experts, actual loss of productivity is well lower than the industry standard. It is reasonable to expect these systems to last and be productive for 35 to 40 years or more.  

What about decommissioning costs?

The States of New York and Massachusetts have developed formulas for calculating decommissioning costs of solar projects 25 years out that are required to be considered by larger solar projects being built in their state. The formulas indicate that the cost of decommissioning a system of the size we are considering will be $5,000 25 years out. Lacking the cost savings due to large-scale decommissioning operations, one can estimate this to be 2 to 5 times greater for the system being proposed for Brandon.


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