October-December 2008 (Quarterly Newsletter)
Editorial
PROACTIVE vs. REACTIVE GOVERNMENT
by Terry Finefrock
Did you know?
• That coal mining electricity production requires 70-260 million gallons of water per day and coal plants withdraw 3 times that much for operation? ( Arizona Research Institute for Solar Energy).
• In an average year ONE typical electricity generating plant that uses coal also generates 3,700,000 tons of carbon dioxide, the primary human cause off global warming— as much CO2 as cutting down 161 Million trees, 10,000 tons of sulfur dioxide, and 500 tons of small airborne particles (Union of Concerned Scientists)
• Did you also know that coal is used to generate about 50% of the electricity generated in the USA ? (Federal EIA//Department of Energy 2006)
Photo courtesy of “SunEdison”: 8.2 MW Solar Electric Installation at Alamosa , CO. December 2007
OVERVIEW of PIMA COUNTY
SOLAR ELECTRIC POWER CONTRACTS
SEPTEMBER 2008
To avoid conservative forecasted increases of 4.7% per year (US DOE May 2007) in the cost of electricity and to support Pima County Board of Supervisors Sustainable Community resolution by reducing the amount of greenhouse gases and pollution generated by coal/electric generation, the Pima County Procurement Department collaborated with the Facilities Management Department to establish Blanket Contracts and Master Agreements with two contractors to develop Solar Arrays to generate a minimum of 6 Megawatts of electricity over the next three years. One megawatt of capacity in the Tucson area will generate about 2,000,000 kilowatt hours (kWh) of electricity per year and is sufficient to power about 150 homes. The projects are contemplated to utilize photovoltaic technology and expected savings over the 20-year term of each facility is contemplated to be about $2.4 million per megawatt of installed capacity (Details provided at the end of this document). Facilities Management will administer the contracts and integrate the development of Projects with County Departments and the Suppliers. As acceptable Projects are identified Blanket Contract Purchase Orders(Subcontracts) will be issued and include a Power Purchase Agreement and License to use County property for the array. The PPA's are typically for a period of about 20 years and will be funded from County electricity expense budgets. The Agreements require that the Suppliers establish a minimum of 1 MW per year for the next three years at pricing equal to or less than that provided by the Utility and competitive with other market offerings at the time that the project is ordered, regardless of the availability of subsidies such as Renewable Energy Credits (REC), Accelerated Depreciation of Facilities and Federal Income Tax Credits (ITC). REC's are finite and demand is projected to exceed supply. Federal ITC will reduce from 30% to 10% 1/1/09 unless extended. The 50% Accelerated Depreciation allowed in 2008 will be reduced to 20% in 2009 unless other wise extended.
RELEVENT FACTORS AND PROJECTED SAVINGS/BENEFITS
Pima County spends about $14 million per year for electricity. The Arizona Corporation Commission (ACC) is expected to grant Tucson Electric Power's request for a rate increase of about 8% and an additional Fuel Surcharge effective January 1, 2009. About 80% of power generated by local utilities uses coal as the primary fuel which generates a significant amount of pollution and greenhouse gases and requires millions of gallons of water a day to mine the coal and generate the power, competing with and increasing the costs for residential users. Costs to mine and transport coal to the power plants and probable carbon and water taxes are expected to generate significant increases in the cost of fossil fuels in the near future. Assuming a conservative 4.5% increase, including fuel surcharge but excluding probable carbon or other taxes per year, TEP price per kWh will range from 8 cents to 19 cents, average of about 14 cents over the next 20 years. Establishment of the minimum 6MW of Solar electric facility at 8 cents/kWh, the County's approximate current base rate, would generate average savings of about 6 cents per kWh for about 240,000,000 kWh over the next 20 years, resulting in savings of about $14,400,000 or about $2,400,000 per megawatt.