With expected cost savings in doubt, future of Centre County solar project unclear

The developer of a major solar project in Centre County has proposed contract revisions that, if approved, would eliminate any expected cost savings to the 10 local entities involved — an action that could signal the beginning of the end for the long-planned agreement.

Federal changes have made it difficult to finance the Solar Power Purchase Agreement project, the founder of Prospect 14 told the Centre County Solar Group in October. Prospect 14 is the developer of the project, which has divided elected officials for more than a year since it surpassed a legal fee limit, leading to allegations of project mismanagement and wasteful spending.

Most of the federal changes, like the expiration of energy tax incentives that reduce the ability of developers to profit from selling renewable energy credits, were implemented with President Donald Trump’s “One Big Beautiful Bill.” The expiration of the incentives and other hurdles could render the project financially unviable and lead to the renegotiation of the entities’ contracts with the developer, Prospect 14 founder Carl Jackson told the group this fall.

But with the proposed contract revisions discussed during the Centre County Solar Group’s Dec. 3 meeting, the governmental entities involved would not only see the elimination of the project’s expected cost savings — they would also end up paying $650,000. If that’s the case, representatives from several participating entities indicated they would not stay in the SPPA.

The participating entities are State College Borough, College, Ferguson and Patton townships, the State College Area School District, the Centre Region Council of Governments, State College Borough Water Authority, College Township Water Authority, Centre County Government and the Centre Hall Potter Joint Authority. The entities signed 15-year contracts in June.

What would contract revisions mean for the SPPA?

During last week’s meeting, SCASD Finance and Operations Officer Randy Brown said that Prospect 14 was still experiencing hardships with the project’s financing, and said the developer submitted a formal request to revise the SPPA’s pricing terms.

The proposed revisions include increasing the energy rate from $0.04590/kWh to $0.05755/kWh and raising the annual escalator of that rate from 1.5% to 2.5%.

“[The revisions] would eliminate expected cost savings and create an estimated net settlement cost of approximately $650,000 over the 15-year term,“ Brown said. “GreenSky [Development Group] advises that while the PPA will still meet many of the group’s guiding principles, it would no longer meet the cost reduction goal.”

The project’s other guiding principles include contributing to the global effort of mitigating climate change, promoting Pennsylvania’s solar market and job growth prosperity, educating constituents about the energy grid and promoting the diversification of the energy grid, according to a 2023 SPPA presentation.

Some of local officials representing the participating entities said that the elimination of the SPPA’s cost savings element would lead to their exit from the agreement.

“It’s always been a value proposition for us,” College Township Manager Mike Bloom said at the meeting. “Prospect 14, at this moment and in current market conditions, is asking this group to assume the risk of nothing changing in the market, and we eat [the bill] in terms of cost, and that’s not something that I can, in good conscience, take back to my board and find acceptable.”

He further expressed his disappointment in Prospect 14.

“We’ve been through a lot on this [project], and throughout it all it seems like we’ve been kind of dragging them along with us — and here we are at the 11th hour and they want to change,” Bloom said.

Patton Township Finance Director Larry Pegher also expressed cost saving concerns, and Centre County Government Administrator John Franek said that the county would be a “no-go” for the project if the cost saving aspect were to be eliminated.

“We were negotiating for better pricing, and that’s been our goal the entire time — to save money on the county’s electric bill,” Commissioner Mark Higgins said at Tuesday’s commissioners meeting.

What’s next for the SPPA?

GreenSky Consultant Gregg Shively said during the Dec. 3 meeting that there are still some final details that need to be shared before the representatives take the proposed revisions back to their respective entities.

Prospect 14 has yet to provide Shively with proof that the project is not financially viable, and has only submitted the request for revisions. If proof that the project isn’t financially viable is provided, and the working group still wanted to pursue the project, then renegotiations would be necessary.

If it’s determined that the project is still financially viable, and Prospect 14 decides to back out of the agreement, then there would be grounds for the working group to take legal action against the developer for a breach of contract without a valid reason. The group could attempt to recuperate all costs associated with the project — including the consulting and legal fees that were incurred before contracts were signed.

The solar group directed Shively to request proof of the project’s lack of financial viability. If that’s received, he’s to re-enter negotiations with Prospect 14 with a focus on changing non-financial aspects of the project, such as the amount of energy received by each entity, or the length of the contract.

Moving forward, Shively will reach back out to the solar group when he concludes his discussions with the developer. If improved revisions are offered, they will be discussed at a future solar group meeting, and potentially taken back to the local boards and councils for a vote.

“We entered into this [contract] with our fellow municipalities with the understanding that we would be buying a fixed price source of electricity for 15 years, so our idea was that we were trying to lock in what we considered a good rate,” Commissioner Steve Dershem said Tuesday. “My personal feeling here is that a deal’s a deal, so I hope that [Prospect 14] would honor those prices with the contract we signed.”