At last week’s selectboard meeting, Dr. Ralph Meima, the southern Vermont representative for Green Lantern Group, met with board members to gauge their interest in leasing the town-owned land for a 150 kilowatt solar array. The site would hold about 500 solar panels. Green Lantern Group, a solar power developer, would permit and build the site but, Meima said, private investors would provide the capital.
In addition to providing renewable energy to the grid, Meima said the project would have a number of benefits for the town and for investors. For the municipality, the project would offer annual lease income for the use of a property that is unsuitable for most traditional structures or uses. “We’re proposing an annual lease payment of $3,750 for the first 10 years, after which it would adjust upward to take inflation into account,” Meima said.
But the town could also take take advantage of “net metering credits” the project will produce. Green Lantern Group develops solar projects and sells some of the net metering credits to an “offtaker” such as a municipality, school or nonprofit. Meima said the town or the school would be among those who have first priority for the credits resulting from the Wilmington project.
Meima explained that net metering credits are, essentially, the value of the electricity added to the grid by a solar array or other renewable source. The electricity from the renewable source has a lower cost, and the credit would allow the town to pay the lower rate for an equal portion of their electric bill. Meima says the town (or school) could expect to see a reduction in their overall electric bill of 10% to 15% if they choose to use the credits.
The town is already negotiating a deal for net-metering credits from a Windham Solid Waste Management solar array, but Meima said the municipality may be able to take advantage of even more credits.
Although Green Lantern has financed a number of projects through larger investors, Meima told board members that a financing model they’ve used on several recent small projects could be perfect for their proposed project in Wilmington. “If the town goes for it, the project would most likely be what we call a Community Solar Array, which is, basically, owned and financed by individuals and businesses, who buy and own the solar panels in the array.”
Meima says the concept is similar to that of a private home array, except that the panels are offsite rather than on the owner’s rooftop.
Meima says the cost of solar panels is figured at about $3.80 to $4 per watt, making the investment for one panel in the proposed project about $1,100 to $1,200. Investors can purchase one or several panels. Investors get their return in two ways. According to Meima, the panels last 30 to 35 years. There’s an estimated 10-year payback period on the investment, after which the panels would continue to produce income for another 20 to 25 years.
The first return for investors is in the form of a federal renewable energy tax credit of up to 30% of the investment. Meima says the tax credit doesn’t have to be used immediately, and can be used any year in which the investor has a federal tax liability. “If you have a whole bunch of tax liability, you can take 30% of the cost of the panels and use that as a credit against your taxes. If you buy a $1,200 panel, you can take advantage of a $360 tax credit right off the bat.”
The second return is in the form of net metering credits. Meima says a single panel produces about $70 per year in credit. The credit begins as soon as the panel starts producing electricity, and will continue through the life of the panel. “So you get a large part of the return up front, and the rest trickles in over the life of the panel.”
In addition to the return on investment, Meima says solar investors are supporting green energy, boosting solar in Green Mountain Power’s renewable energy portfolio, and helping Vermont reach its goal of 90% renewable energy by 2050. Meima says Green Lantern would offer the investment exclusively to investors in the community for a limited time, before marketing the investment to the general public.
Wilmington Selectboard members asked Meima to submit a written proposal for their consideration. Meima says he submitted the documents this week. But even if selectboard members give their stamp of approval to the project right away, it may take some time for construction to begin.
Before any ground-breaking takes place, Green Lantern has to conduct a feasibility study and obtain permits. And Meima says he’s not sure that the landfill cap is the ideal location at the property. “We won’t know exactly where the array should go until we get the board’s approval to get on the site with civil engineers and talk with the Agency of Natural Resources.”
And if the town finds that their experience with solar is positive, Meima says there are other development possibilities. “They could even lease the roof of the town garage and be the net metering offtaker there,” he said.