$40M solar energy PPA now underway

An alternative source of energy in the form of solar panels is expected to become a familiar sight on the islands after the Commonwealth Utilities Corp. disclosed that a contract for an up to $40-million solar energy project is underway.

In a presentation to the CUC board of directors last week, American Capital Energy representative Tom Anderson disclosed that the company was awarded the exclusive right to negotiate a solar power purchase agreement with CUC in 2011. The firm wanted to install up to 10,000 kW on Saipan and Rota, the size of which was subsequently supported by a Novermber 2013 Renewable Energy Integration Study.

The target kilowatt-hour is equivalent to 10 megawatts and the project cost is estimated at $35 million to $40 million.

The company has identified 10 potential sites for the solar panels: Koblerville Road, Pendan St., Kagman Road, Chacha Road, Pale Arnold and Patitida Road, Navy Hill Road, Old CUC site, old Puerto Rico dump, As Matuis Drive, As Perdido Road, and Niyok Road.

In terms of financing, Anderson disclosed that the project is a third-party-owned PPA with CUC, which will cost $0.179 cents/kWh for energy delivered to the CUC grid.

ACE is guaranteeing delivery of a minimum of 75 percent of expected delivery amount.

Under the CUC-ACE power purchase arrangement, the project poses low-risk to CUC because the ACE-Saipan project team will bear the vast majority of the financial risk and the company will finance the project while CUC pays only for energy produced and delivered to the CUC distribution system.

“CUC wants to save money with the prospect of eventually sharing realized savings with the rate payers, while at the same time help the community achieve its renewable energy goals,” according to Anderson’s presentation, adding that the company wants to generate positive cashflow to pay back finance partners and make a return on investment. It also wants to grow its reputation as a go-to renewable energy solutions provider, according to Anderson.

$1.5M savings to CUC per year

The expected total capacity output is 13.5 million kWh per year, Anderson said, with anticipated energy cost savings to CUC. At present, diesel fuel prices cost per kWh generated at the CUC power plants is $0.30/kWh (based on the Renewable Energy Integration Study).

“Every kWh delivered by the PV arrays will eliminate the need for a kWh of diesel generated energy, resulting in a per kWh cost savings of $0.121/kWh. Assuming 13,500,000 kWh/year, CUC’s estimated energy cost savings will be $1,500,000 per year,” according to Anderson.

He added that integrated ramp-rate control technology (batteries and/or ultra-capacitors) will result in the delivery of more energy and reduce the need for ramp rate diesel production, yielding even greater savings to CUC.

During Thursday’s meeting, the CUC board gave the go signal to CUC management to “move forward” and finalize the contract with ACE, with consideration that the planned 10MW capacity be built on Saipan (8MW) and Rota (2MW).

Depending on the approval of CUC, the company is looking at building the project within 46 months.