In an effort to save money, Millheim is exploring options to invest in solar power for all borough buildings. While some residents aren’t sure the potential savings outweigh the risks, council members said that not taking the chance could result in greater consequences.
During a public hearing on Wednesday, Sel Edor of BAI Group presented two options for council to consider for funding the project — a power purchase agreement and power service agreement. The proposed project would result in the installation of a solar field stationed at the sewer treatment plant — the borough building with the highest electric bill.
Currently, the borough spends about $32,000 a year on electric bills, said council member Robert Zeigler. Cost of the solar field would vary depending on which route the council takes for funding the project.
“We’re spending everybody’s money. We aren’t spending the borough’s money,” council member Beth Cowher said to four residents in attendance. “We are spending the community’s money.”
Under a PPA, the solar array is owned by a third party and operated under a lease agreement with Millheim. An investor, Edor said, would be responsible for building, operating and maintaining the system while the borough enters into a 25-year agreement at a predetermined yearly rate and agrees to buy power from the array. If desired, the borough may purchase the entire system in the sixth year.
Edor estimates the borough would save $125,000 under a PPA agreement, but in order to pursue this offer, the borough must secure grant funding from the United States Department of Agriculture. While there are no operation and management costs for Millheim under a PPA, Edor said the borough has limited control and the savings are minimal compared to a PSA.
“This offer actually is not common at this size of a project,” Edor said. “You need about 10 times the size of this to get an offer like this, so what we have to do is find other funding sources that could come into the project ... we can achieve this PPA offer if we win a grant. That’s the caveat.”
Also a third party agreement, a PSA means that an investor builds, owns, installs and manages the solar energy system, and the borough enters into a 25-year lease agreement. The borough has more control over the system and owns solar renewable energy credits that can be sold to outside entities — generating a profit for Millheim.
Edor said the PPA would save the borough $991,000, but savings are contingent on the borough buying the system after the fifth year. Depending on when the system is purchased, the borough could spend an upward of $400,000 to own the array. In turn, the borough would then be responsible for all operations, but Edor said Millheim can negotiate contracts in a way that will maximize warranties and additional management costs.
Millheim residents Dave Grazier and Sharon Heckman voiced concern about noise generated by the solar panels, the borough not seeing savings until years later and the risk of buying old technology.
“What happens if there’s something a whole lot better and a whole lot cheaper out there than what you’ve committed to?” Heckman asked.
Not wanting to wait to see if better equipment develops, Council President J. Alan Ilgen said the borough wants to start saving money as soon as possible. Edor said if equipment is going to fail, customers usually find out early on in their agreements while solar arrays are still under warranty. If the array does not function as it should, he said the borough could choose not to buy the array.
Zeigler prefers the PSA agreement, calling it an “investment to the future.” If the borough enters into a PSA agreement, he said the borough could be debt free in 15 years if the system works as it should, but there’s no guarantee.
“What if we don’t do anything? What if we don’t take any action? That’s the real question,” Zeigler said. “The biggest risk in my life has been never taking the risk, period. It’s a question of how do we do this.”
Council members will discuss the solar project at the Nov. 12 borough meeting and hear public comment before taking a vote. If either plan is approved, construction for the PSA would begin spring of 2020 or fall for the PPA.