Utility-scale solar contracts: What you need to know
The Iowa Farm Bureau recently held a webinar for a group called Iowa for Responsible Solar to discuss the contracts that are often signed for utility-scale solar projects. If you…
There were no dignitaries on hand, ribbons to cut or speeches on sustainability to commemorate the latest chapter in solar power at the Maplewood Community Center (MCC).
Five years after a massive $310,000 subsidy from taxpayers and Xcel Energy ratepayers, the St. Paul suburb now has nothing to show for the supposed model renewable energy project—except for 216 obsolete solar panels and 198 reflector panels headed for storage and, more than likely, oblivion.
The Maplewood Community Center’s rooftop solar system was one of dozens of green projects in Minnesota rolled out with little scrutiny under the 2009 federal stimulus program (ARRA), meant to put people back to work after the 2008 Great Recession. A second stimulus solar power project installed at Maplewood City Hall remains in operation.
“It seems silly not to take advantage of it,” Maplewood Mayor Will Rossbach said when the City Council approved the project in December 2010. “I think that’s certainly a risk worth taking.”
Yet it turned out to be a cautionary tale of the pitfalls of government-subsidized activities that are pursued only because of the availability of so-called “free money” from taxpayers and other sources.
“When ‘free money’ is on the table, governments can move forward with these programs knowing they won’t be held accountable for the outcome,” said Peter Nelson, Senior Policy Fellow at American Experiment. “That’s exactly what’s happened in Maplewood with hundreds of thousands of dollars in solar panels now gathering dust in storage.”
The project’s $310,000 in capital costs were covered by a rainbow of Federal and utility grants. State government directed approximately $50,000 in Federal stimulus funds. Because the project used locally-sourced panels, utility ratepayers provided another $78,000 in “Made in Minnesota” solar money. In the end, the City of Maplewood had no “skin in the game.”
The local utility, Xcel Energy, kicked in another $90,000. Presumably, the project hung around long enough to collect $92,000 in Federal production tax credits.
Under the best case scenario, it would have taken 70 years for federal taxpayers and utility ratepayers to break even on their investment, based on the $4,428 in estimated electricity savings generated annually for the city.
Yet the community center solar system didn’t come close, shutting down this fall after about five years in operation. The project ended—not because of an equipment breakdown—but because the MCC roof needed replacement, a factor evidently overlooked when selecting a site for the stimulus project.
In fact, the cost for the removal and potential reinstallation of the 200-plus solar panels essentially offsets the estimated $22,000 in total electrical savings realized by Maplewood so far.
It cost the city the equivalent of three years’ worth of solar power savings from the project—about $13,000—to have a contractor break down the system in recent weeks. City officials estimate it would cost an additional $10,000 to $15,000 to have the panels reinstalled on the MCC roof.
While the solar generation system still works, it may never be plugged into the grid again, due to the reinstallation costs and its already outdated technology. A final decision will be made by spring.
“The technology has changed dramatically since 2011. They’re not even using those systems anymore,” said DuWayne Konewko, Maplewood Environmental and Economic Development Director. “They’re three or four steps ahead of that now. Way back then there was more money from the feds and the state. Most of that is drying up or has dried up.”
In the end, everyone loses. The $50,000 contributed by Federal taxpayers didn’t work as economic stimulus: by the time the project was installed in 2012, the state’s unemployment rate had already fallen back to pre-recession levels.
Federal taxpayers further contributed another $92,000 in production incentives, but missed out on an expected 15 years of carbon-free of electricity production.
Likewise, Xcel ratepayers contributed $78,000 to buy locally-produced solar panels. But the Made in Minnesota solar subsidy failed to sustain a state solar industry and the program was shut down by legislators this year.
Finally, the $90,000 in additional ratepayer money is no longer helping the utility to meet its renewable energy mandate.
“In the end, it just creates a hassle for the city staff and delivers zero benefits to the city residents,” Nelson said. “They had the federal money hanging over their head and they couldn’t say ‘no.’”
Ultimately, everyone got paid on the deal except the people who fronted the money—taxpayers and ratepayers.