On Thursday July 14, the Andover Select Board heard views from residents on whether the Town should conclude its “Pre-Purchase Agreement” (PPA) with ReVision Energy by paying $17,724 from the unexpended fund balance to become outright owner of the equipment installed on the Town Office Building back in 2017. The PPA was negotiated with ReVision by 2017 Select Board members Vicky Mishcon, David Blinn, and Jim Delaney, along with Randall Costa, an attorney who resided in Andover until recently.
A PPA is commonly used by non-profit entities such as the Town of Andover to reduce the up-front cost of solar installations. In the agreement with ReVision, the Town essentially leased its roof space to ReVision to install their solar panels and inverters. ReVision (a for-profit company) is eligible for substantial tax credits on this equipment it owns, while the Town would not have been able to take advantage of tax credits due to its non-profit status. In return, ReVision sold electricity to the town 35% cheaper than the going rate from NHEC (aka “Co-op”). ReVision promised to sell all the equipment to the Town for $17,724 at the end of six years, after the tax credit program expires. (Today’s price to buy and install a brand new system like the one on Town Hall would be $50,000 to $60,000.)
Since it is now 2023, the Town must inform ReVision of its intent to purchase the equipment at that price, or not. Should the Town refuse to buy the equipment, the price for electricity paid to ReVision per kilowatt will increase markedly each year until there is no longer a discount.
At every Town Meeting since 2017, the townspeople have voted to approve warrant articles asking to set aside a portion of the “unexpended fund balance” (think of it as the Town’s savings account) so that in six years the Town could complete the purchase. This was done in such a way as to not require additional increases in Andover’s tax rate. The townspeople voted “yes” six times.
At the recent Selectboard meeting, some Andover residents expressed concerns about whether owning the system could expose the Town to expenses or liabilities down the road. Specific concerns included replacing an inverter should it fail (a $3K electronic control unit) or possible costs to dismantle and properly dispose of the equipment at the end of its useful life (estimated to be 25 to 40 years). These concerns were debated against the demonstrated past performance and future benefits of owning the solar equipment.
For the past six years, the solar equipment’s performance has exceeded predictions. Last year, in spite of paying ReVision 11.37 cents per kilowatt-hour for the electricity used by the Town Office Building, the full value of the energy sold back to the grid netted the Town a $138 cash credit on the building’s annual electric bill.
Next year, as sole owner of the system, the Town’s net per-kilowatt cost of electricity will be essentially free, and the equipment is expected to generate some revenue. The credit for about 21,000kWh of electricity we will sell back to the Co-op will amount to about $4000 of value annually, including the $800 value of the Renewable Energy Certificates (“RECs”) the Town will now be entitled to sell as owner of the system.
And that annual $4000 benefit will be generated every year hereafter. It could even increase in value if electricity prices rise. In upcoming Town Meetings, voters may choose to return these savings to the Town’s “savings account” or allocate it to other necessities.
The Town’s solar panels have a 25-year warranty which states that the output of any panel will not degrade by more than half a percent per year. In other words, they will be producing at least 90% of their brand-new peak performance after 20 years. Each panel’s performance can be monitored on the display in the Town Hall lobby or on the web. (To be clear, a “panel” is one window-sized solar unit, whereas “array” refers to the whole system of panels.) The inverters (there are two in the system) have a 12-year manufacturer’s warranty which can be extended to 25 years. In five years, the accrued benefits should exceed the $17,724 expenditure, and one more year’s benefits could cover the eventual replacement of an inverter.
Beyond the financial considerations, many Andover residents are pleased by the environmental and efficiency benefits afforded to the Town by the combined solar and electric air-source heat pump system. Further benefits may be realized by optimizing the Town Hall’s energy use when the sun is shining (using timers or occupancy sensors to turn down heat or AC at night, turning the oil thermostat down to let the heat pumps do more of the work, etc.)
After deliberation, the Select Board approved the final payment to ReVision, to make the Town the outright owner of the system.