700kW Solar Project for Terryville High School, Plymouth, Connecticut
End-User: Plymouth Board of Education
Installer: Safari Energy
Location: Plymouth, Connecticut
Date of install: 5/ 2015
Size of system in kW: 700kW- 1400kW
Energy produced since installation: TBD
Special Challenges Met: Shading Analysis
This Memorandum of Understanding (“MoU”) is entered into by and between the Town of Plymouth, Connecticut Board of Education (“Plymouth BoE”), with offices at 77 Main Street, Terryville, Connecticut 06786, and PhosEnergy LLC (“PhosEnergy”), with offices located at 29 South Street, Manasquan, NJ 08736. Plymouth BoE and PhosEnergy are referred to collectively herein as the (“Parties”).
WHEREAS, the Connecticut Light and Power Company (“CL&P”), pursuant to a Request for Proposals (“RFP”) in furtherance of the “Low and Zero Emissions Renewable Energy Credit Program” (the “Program”) established pursuant to Conn. Gen. Stat. § 16-244(r), 16-244(s) and 16-244(t), conducted a competitive bidding process in order to determine winning bidders based on lowest price and compliance with the terms and conditions of a fully executed Standard Contract for the Purchase and Sale of Connecticut Class I Renewable Energy Credits from Low and Zero Emission Projects (“the Projects”). Based on bids submitted by PhosEnergy, CL&P has awarded PhosEnergy [_____] Standard Contracts for the Purchase and Sale of Connecticut Class I Renewable Energy Credits associated with Low and Zero Emission Projects that are being proposed for installation on or adjacent to four schools in the Town of Plymouth, specifically Terryville High School, Eli Terry Middle School, Harry S. Fisher Elementary School and Plymouth Center School; and
WHEREAS, the Town of Plymouth, Connecticut held a Town Council Meeting on June 4, 2013 and voted unanimously to grant PhosEnergy status as Authorized Developer in order to permit PhosEnergy to submit bids into the Program, in response to the RFP; and WHEREAS, Plymouth BoE and PhosEnergy desire to confirm the major terms under which the Projects will be designed, built, maintained and operated at the specified schools or sites; and
WHEREAS, PhosEnergy has proposed to Plymouth BoE a competitive electricity pricing plan that will reduce Plymouth BoE’s price of electricity below current utility prices and will limit long term future electricity price increases; and
WHEREAS, the Program requires certain timely responses from PhosEnergy during the Month of August 2013, in order to confirm the award of the Contracts, pursuant to the RFP. Now, therefore, time being of the essence, and in consideration of the foregoing recitals, Plymouth BoE and PhosEnergy have entered into this MOU in order to advance their respective interests, and hereby agree as follows: 1. The Parties will commence power purchase agreement (“PPA”) and site lease negotiations in good faith and as follows: within five (5) business days after the execution of this MoU, PhosEnergy shall provide to Plymouth BoE a proposed PPA and lease agreement, incorporating the following major terms: SOLAR POWER PURCHASE AGREEMENT MAJOR TERMS PPA Parties:
PhosEnergy LLC or “Seller”, as defined in the PPA; Plymouth BoE or “Host Customer” as defined in the PPA.
Term: 20 years.
Sites/Solar Systems: 1. Terryville High School; 2. Eli Terry Middle School; 3. Harry S. Fisher Elementary School; 4. Plymouth Center School.
Permitting: By Seller at its expense.
Construction: By Seller at its expense; Seller owns the solar facilities.
Ops. & Maint.: By Seller. Interconnection: Seller will pay security payment, file and manage application with CL&P.
Purchase of kWh: Plymouth BoE buys 100% of the solar output from Seller (up to a maximum of 100% of total annual consumption).
Purchase Price: Plymouth BoE will purchase electricity at a starting price of $0.15/kWh, with annual price increases equal to the rate of inflation, as measured by the U.S. Consumer Price Index. Annual increases will be at least 1.5% per year but will not exceed 3% in any one year. Output Guaranty: Seller guarantees annual output and will make a payment/credit to Plymouth BoE to cover any production shortfall. Educational Program: Seller will provide a custom, interactive educational program at no charge, for the benefit of Plymouth BoE students. Operation Date: On or before October 2014. Purchase Option: At the end of the 20-year PPA term, Plymouth BoE shall have the option to purchase the Systems at an amount equal to Fair Market Value (“FMV”), as defined by the Internal Revenue Code.
Non-Purchase Rights: Should Plymouth BoE elect not to purchase the Systems at the end of the 20-year term, then Seller shall have First Right of Offer to continue to sell electricity to Plymouth BoE at a price (including all ancillary costs of power such as transmission costs, demand charges and other typical utility charges) that is 25% less than the then current cost of power that Plymouth BoE could obtain from the lowest cost electricity provider available, to Plymouth BoE. Seller will be entitled to lease the solar sites for the sum of $1/year from Plymouth BoE. Land Agreement for 132 Harwinton Ave: The 8.5 acre site located at Map-Block-Lot 00096900, 132 Harwinton Avenue, hereinafter referred to as the “Adjoining Land”, will be purchased by Seller at its sole expense, for the construction of a solar system that will provide electricity to Terryville High School. The Adjoining Land will be transferred from Seller to the Plymouth BoE at the end of the 20-year term, for the sum of $1. Early Use of Land: Plymouth BoE is entitled to define a portion of the 8.5 acres of Adjoining Land that Seller will lease to Plymouth BoE or Town of Plymouth for use during the 20-year PPA term. The Parties will agree upon an annual lease rate for the set-aside space.
Billing: Seller will bill the Plymouth BoE every 30 days; Plymouth BoE has rights to audit records and to validate bills. Virtual Net Metering: Plymouth BoE and PhosEnergy will jointly identify opportunities (beneficial accounts as defined by CT Public Act 13-298 to utilize Virtual Net Metering (“VNM”) to reduce electricity bills for additional sites located in the Town of Plymouth that are not tied directly to a solar system. Connection to Grid: All connections will be behind Plymouth BoE’s existing meters.
Rooftop Repairs: Without charge, Plymouth BoE will have 3 days per calendar year to take the solar systems off-line to accomplish any roof maintenance or other repairs; more than 3 days, the Plymouth BoE bears the cost of lost kWh revenue to Seller.
Snow Removal: Plymouth BoE may remove snow from roof, while taking care to preserve safe operation of the solar panels. Property Taxes: Under CT law, solar systems are exempt from local property taxes. 2. Summary proposed site lease terms for the rooftop systems include: SOLAR POWER SITE LEASE AGREEMENT: MAJOR TERMS Party to Lease: A special purpose entity (LLC) to be created and owned by Seller. Lease term: 20 years, running concurrently with the Power Purchase Agreement.
Sites (Rooftops): 1. Eli Terry Middle School; 2. Harry S. Fisher Elementary School; 3. Plymouth Center School. Site Access: Subject to Plymouth BoE facility management requirements during and after construction for periodic maintenance. Roof Rental: $1.00 per year. Ownership: Solar panels and related facilities (cabling, inverters, etc.) up to the CL&P connection are owned by Seller. Maintenance: Seller maintains solar systems. Insurance: Seller provides insurance coverage for the systems. Financing: First priority security interests granted to lenders. Rooftops: Existing warranties protected; no rooftop penetrations in design and subject to Plymouth BoE approval. 3. Plymouth BoE will provide reasonable assistance in support of Seller’s efforts to obtain required permits from all authorities having jurisdiction. 4. PhosEnergy may assign its rights under the agreements in order to obtain financing and for other operating purposes as deemed appropriate. The foregoing represents the understanding of the parties regarding the implementation of a solar program by PhosEnergy LLC in accordance with Plymouth BoE, but does not purport to include all the essential terms of the program or to represent a legally binding agreement between the Parties. A legally binding obligation, if any, shall only arise upon the execution of the definitive agreements for the Projects. As such, the Parties hereto are executing this Memorandum to evidence their understanding of the components of the Program, and to evidence their intent to proceed to take the actions necessary to execute binding agreements and to participate in the Program by the due dates.
PhosEnergy approached Plymouth Board of Education with a solar proposal in 2012, as a result of that effort, bids in the PURA ZREC auction were placed by PhosEnergy to secure subsidies at the highest possible bid in the auction in order to have a correspondingly lowest cost of electricity that would be purchased from solar electric arrays to be installed on the schools at no cost to the BoE. The economics of this balance between the competitiveness of last year’s ZREC bid, plus PhosEnergy’s price of electricity to the BoE had to add up to an attractive investment for a third party financial investor. Despite our bid last year comparing to the highest award by just over 1/10th of a penny per kWh, nevertheless we lost. Presently: Our goal however remained to bid in the 2013 auction and adjust up the price of electricity to the BoE from $0.12 to $0.15 and revise down our ZREC bid from so that it would be more competitive. We also needed to attract investment from the private sector to fund the construction of over $6M of solar electric projects. It is important to point out that there is no cost to the BoE to construct the solar electric projects at the four schools operated by Plymouth BoE. With Plymouth reliably paying for the solar electricity, and CL&P reliably paying for the ZRECs: For the Investor- that those two combined cash flows would amount to sufficient income over a 20 year power purchase agreement (and a fifteen year ZREC contract) to recover cost of construction of the solar projects. Additional Investor use of the investment tax credit and depreciation to buy down cost by year five or six will lead to profitable income for the duration. For the Board of Education- that 8.5 acres of land, adjoining the High School could be purchased by the company that owns the solar project and pay a mortgage on that land as part of a 20 year power purchase agreement with the BoE. At the end of the 20 year term, the investor will deed the land over to the Board of Education for $1.00, subject to terms. For the Town of Plymouth, that some percentage of that land would be available to the Town of Plymouth to build a new police station (subject to ground rent) and co-locate together with the newly constructed solar array on the same property where electricity for the high school was being generated. In addition to the purchase of more cost effective, clean, locally generated solar power, the proposal at hand offers to convey the entire 8.5 acre land parcel over to the BoE for the price of $1 subject to the following terms: The BoE may purchase the solar array in year 20 based upon it’s in-situ, market value (as defined by IRS) assuming continued operation over a minimum of a five year period. The BoE may choose not to purchase the solar array in year 20, but must offer to purchase electricity from the seller for a minimum of a five year period. The seller of the electricity must have first right of offer from the BoE to continue to sell electricity to the BoE at a price that is no greater than 25% less than the year 20 prevailing lowest cost of power from the grid. The BoE, as the new owner of the land will agree in advance to lease the solar area of land to the seller of electricity for $1/ Year.