San Francisco Approves Major Solar Project

[David Kupfer]

May 8, 2009, 12:00 pm
San Francisco Approves Major Solar Project
By Nick Chambers
Recurrent Energy San Francisco, in a deal with Recurrent Energy, plans
to place a 25,000-panel photovoltaic solar array atop the city’s
largest reservoir.

San Francisco’s Board of Supervisors has approved a plan to build what
would be one of the largest solar photovoltaic arrays in California.
With five megawatts of capability spread over 25,000 panels, it will,
if completed, also be among the largest municipal solar projects in
the United States.

(Larger nonmunicipal arrays exist, including a 14-megawatt, 70,000-
panel array at Nellis Air Force Base in Nevada.)

San Francisco’s proposed system — which would produce roughly the
amount of energy used by 1,000 households, the developers said — would
bring the city’s total solar capacity to seven megawatts. It will be
used to power municipal properties like schools and government
offices.

“Earlier this week, San Francisco took another major step towards
achieving our commitments to reduce greenhouse gases and grow our
green economy,” said San Francisco’s mayor, Gavin Newsom, in an e-mail
message. “With this single project, we will more than triple San
Francisco’s solar energy production, build California’s largest
photovoltaic system and help lead the state towards a future of clean,
renewable energy.”

Under the deal, Recurrent Energy, a local solar company, will assume
the initial financial responsibility for the panels, as well as pay
for continuing operating and maintenance costs. In return, the city
incurs no upfront expenses, but is obliged to purchase energy directly
from Recurrent Energy at a cost of 23.5 cents per kilowatt-hour, plus
3 percent per year.

In years 7, 15 or 25 of operation, the city has the option to purchase
the array outright at fair market value or $33 million — whichever is
higher.

The project had seen some controversy. Four of the 11 San Francisco
supervisors voted against the project, most of them citing concerns
that the deal did not allow the board to review the contract terms
each year. Other opponents thought the city would end up wasting money
over the 25-year life of the agreement, should solar panel prices drop
significantly in the short term.

Proponents of the deal, however, argued that the project would not be
possible without the public-private partnership. By farming out
construction to a private company, the project becomes eligible for
major federal tax incentives worth 30 percent of total project costs.
(Although Recurrent Energy is not releasing its estimates, the city
estimated it would cost $40 million in initial construction costs
alone.)

Had the city undertaken the project itself, it would not be eligible
for those same tax credits, raising the price tag, according to some
estimates, to over $85 million.

Construction on the project is scheduled to begin this summer and
should be completed by 2010.