Sunset Reservoir solar plan meets green goalsSan Francisco Chronicle
May 05, 2009
With San Francisco’s aggressive efforts to develop renewable energy sources and President Obama’s welcome change-of-tune from the Bush administration on global climate change, it’s difficult to imagine that a proposal to more than triple the city’s municipal solar power - with a single, cost-effective, low-risk project - could become controversial.
But San Francisco’s oft-stated commitments to expanding solar power and reducing our greenhouse gas emissions face a crucial test today at the Board of Supervisors.
At stake is the approval of a new 5-megawatt solar power installation that the San Francisco Public Utilities Commission would like to place atop its recently seismically retrofitted Sunset Reservoir. Once completed in 2010, the Sunset Solar Project would be California’s largest solar photovoltaic system and the nation’s largest municipal solar project - tripling the amount of solar energy generated in the city and delivering the equivalent energy used by about 1,500 San Francisco homes.
The commission would immediately use the clean energy to power city facilities and services such as our streetlights, public schools, Muni and San Francisco General Hospital. And the system can also become a critical source of clean power to meet the energy needs of potential customers at Treasure Island, Hunters Point and other neighborhoods.
Boost to green economy
In addition to offering significant environmental benefits - reducing carbon emissions by more than 109,000 metric tons - the Sunset Solar Project would also boost San Francisco’s emerging green economy. With state and local unemployment levels at their highest in decades, this project would immediately create 71 new jobs in the rapidly expanding solar energy industry. Signed agreements are also in place to give hiring preferences to local and disadvantaged residents.
The project’s environmental and economic benefits have earned it the strong support of organizations such as the Sierra Club, the Union of Concerned Scientists, the Greenlining Institute, S.F. Community Power, Green for All, the Ella Baker Center for Human Rights, the Brightline Defense Project and others.
So what’s not to like?
Some have wondered why the city isn’t building the system on its own. Instead, San Francisco is using a commonly utilized public-private partnership known as a power purchase agreement to move the solar project forward in a fiscally responsible way.
Through this agreement, Recurrent Energy, a San Francisco-based company with significant California solar experience, assumes all the risk and responsibility of financing, constructing and operating the project. The San Francisco Public Utilities Commission commits only to buying all of the solar power from the system at a competitive rate for the next 25 years.
The power purchase agreement lets the city pay for predictable clean power rather than expensive solar infrastructure. In addition to removing the project’s up-front cost, the contract allows the city, which doesn’t pay taxes, to effectively harness a 30 percent federal investment tax credit available to private companies like Recurrent.
$25 million savings
All in all, that’s an arrangement that saves the city $25 million over going it alone. Moreover, the San Francisco Public Utilities Commission has the option to purchase the Sunset Solar Project outright at depreciated costs at various points in the life of the contract. Because of these attributes, every large-scale purchase of solar by a city or municipal utility since 2007, when the federal tax credits were first available, has used a power purchase agreement.
Concerns have also been raised about the 25-year length of the contract commitment. But solar installations need a lot of up-front capital, mainly for equipment and construction costs. Similar to the kind of covenant that banks require of homeowners to secure a mortgage, Recurrent needs a long-term guarantee from the commission in order to line up financing for the project.
Members of the Board of Supervisors have asked responsible questions about the project. But we believe that the commission and Recurrent have worked diligently to address these concerns in ways that make the Sunset Solar Project even more economically compelling and financially responsible for the city.
There is no more time for delay. An approval today by the full Board of Supervisors would demonstrate the city’s willingness to take bold steps toward energy self-sufficiency and once again place San Francisco at the vanguard of America’s clean energy future.
See this article in the San Francisco Chronicle