City of Lincoln explores solar
options for waste treatment plant
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[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.
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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] |