City of Lincoln explores solar options for waste treatment plant

 

[September 06, 2019] 

Tuesday evening the Lincoln City Council approved by unanimous vote to move forward seeking Request For Proposals for a solar energy installation at the city’s waste treatment plant. The RFP process will include Veolia, the company responsible for the management of the city’s waste treatment plant preparing the request and sending it out to a variety of companies who are interested in constructing solar farms for municipal use.

The motion was the result of a presentation given on Tuesday, August 27th by Anthony Fotopolous and Lauralyn Farwell of Keystone Power Holdings, LLC. Keystone will also be among the firms that respond to the RFP.

Keystone gave their presentation at the invitation of Lincoln Alderman Kevin Bateman. Bateman said that City Administrator Beth Kavelman had requested that he take the lead on the idea. He had spoken with Keystone about three possible projects – the city’s Municipal Building on Limit Street, the Lincoln Police Department on Fifth Street, and the Waste Treatment Plant.

During the presentation, Fotopolus ruled out the first two saying that the energy consumption and the space allotted at the individual locations was not sufficient for the solar panel installation. The Waste Treatment Plant however, is an ideal location because the city owns farm land close by where the panels could be installed, and would see significant savings by utilizing solar energy at the plant.

Fotopolous explained that the city would provide the land, and in the case of Keystone, the company would do all the work to install the solar farm and bear all the costs. The city would then enter into a 25-year-agreement to purchase solar generated electricity from the company.

Fotopolus said that he understood that 25 years was a long contract, but there were buy-out options in the contract for the city. He said that the 25 years would be required in order for Keystone to earn back the cost of the construction of the solar farm. For the city the advantages would be - first it was “going green,” secondly it would save money, and there were also tax advantages that passed through to the city via lower electric rates.

At the end of the 25 years, Fotopolus said that the “default option” would be that Keystone and the city would discontinue their agreement and Keystone would “take it (the solar farm) away.” He said of course the more desirable option would be for the city and Keystone to enter into a second term agreement and the relationship between the company and the city would continue on.

Steve Parrott asked about the size of the farm. Fotopolus said that ideally for the city’s needs the farm would occupy ten acres. He added that the minimum would be five acres.

Parrott asked who would be responsible for maintaining the farm once built. Fotopolus said that Keystone would provide operation and maintenance. He explained that it was in the company’s best interest to keep the solar farm in good working condition and to do that, they would need to be the ones taking care of it.

He also explained that there are two types of solar panels, fixed and tracking. Tracking panels move with the sun to absorb as much light as possible. Fixed panels do not move, and are built in the right position to gather the most energy. Fotopolus said that the company prefers working with fixed panels because it doesn’t care for moving parts that can lead to higher maintenance and repair costs.

Parrott also asked if the solar farm at the waste treatment plant could provide electricity to the municipal facilities building and the police department. Fotopolus explained why that was not an option. He said that the project being proposed in not a community energy program, it is specifically for municipal use. Because of this, Keystone needs to connect directly to the building or facility it is providing energy for. The company cannot provide direct lines to the other two buildings from the waste treatment plant because of the distance.

Ron Keller noted that there are other companies who will make similar proposals. He wanted to know what Keystone brought to the table that would make them better than the others. Fotopolus said that the company is strong and growing, and that no company in Illinois is providing power to as many sewer treatment plants as Keystone. In addition he said that from the contract viewpoint, the buyout offer is good and also the cost of energy is good.

Tracy Welch wanted to know of City Treasurer Chuck Conzo, how much annual income the city would lose by converting a portion of the farm land to a solar farm. Conzo said that there was a very wide variance in returns on the farm ground. He would estimate on any given year the city would lose between $2,000 and $6,000 overall for the full 40-acre farm.

Welch said he wanted it to be clear, Keystone intends to put a farm on city property and then turn around and sell energy to the city. Fotopolous said that was correct. He added that there would be discounts to the city as well as some federal energy credits.

For Keystone, they will have the opportunity to sell the excess energy that is not utilized at the Waste Treatment Plant to Ameren.

Welch also sought estimated buy-out costs for the city. Fotopolus said that was not determined at this point. He added that there is considerable depreciation in the value of the solar farm, but he still felt that the offer would be good. He told Welch that he could try to provide some estimates to the aldermen.

Jeff Hoinacki said that he understood that there would be a ‘locked in rate’ with Keystone. He wondered what would happen if the public utilities ended up going lower than the locked in rate from Keystone. Fotopolus said that was the only “gotcha” in the proposal. However, he added that the Keystone rate would be very good, and the odds that electric costs would drop that much are very slim, but not impossible.

Aldermen also discussed seeking more than one proposal for the project as that is the proper procedure for a project this large. Fotopolus said that the city should move as quickly as possible in doing their due diligence. He explained that there are “blocks” of energy that are available. He said that the current block has 13 megawatts remaining. The winning company will need to speak for the city’s allotment before all 13 megawatts are assigned.

Shawn Wright with Veolia was in the room, though he is no longer the waste treatment manager in Lincoln. He does serve with Veolia in a corporate capacity and said that he was very familiar with these types of solar projects, and Keystone was “spot on” with their proposal. He added that he agreed there should be an RFP process and would be happy to work with the city in writing that request.

Fotopolus said that for Keystone specifically, if it should win on the RFP, the company would ask the city to sign a letter of intent saying that it would enter into a contract with Keystone. He said the letter would then be the trigger point for the company to start the engineering and design work on the project. He said nothing would be started until that letter was signed.

Bateman asked that the city put a motion to write and distribute RFP’s for a two-megawatt solar installation, to take up five to 10 acres of the 40 acres already owned by the city on the next voting session.

This week the city’s voting session was held on Tuesday night due to the Monday Labor Day holiday. All eight aldermen were present for the meeting, and all eight approved moving forward with the RFP process.

It is expected that there will be further discussion regarding the solar farm after the RFP’s have been answered. The city will review all the RFP’s and determine the best offer.

[Nila Smith]