Solar on Landfill Projects
Solar Facility Siting Case Study
Jurisdiction: Annapolis
Type: Multiple Community-Scale, Brownfield (Closed Landfill) – 50,000 solar panels, 12 Megawatt (MW) power generation total, 70 acres of land
Zoning Used: needed to seek County rezoning to Agricultural for portion of site
Process: Complete Financial Analysis; Issue Request for Proposal (RFP); Obtain Local and State Approvals; Obtain Grid Connection; Community Involvement; Design, Operation and Maintenance Provisions; Sell Power
Largest landfill solar project in the United States: Annapolis Solar Park in Annapolis, Md.
Description of Process:
Financial Analysis
The City of Annapolis is part of the Baltimore Regional Cooperative Purchasing Committee (BRCPC), which is an energy purchasing consortium and the largest purchaser of Baltimore Gas & Electric Company (BG&E) power in Maryland. Due to membership with BRCPC, the City had Enel X (BRCPC’s energy advisor) at their disposal to conduct the project calculations.
The project makes use of allowable net metering in Maryland, where the solar generator can receive a discount on energy bills for the amount of energy generated in excess of its needs. In this case, the project made use of virtual net metering, which allows for multiple energy users to purchase power from a solar generator, where all of the energy users gain access to net metering. The City ultimately used the power to provide for virtual net metering at 114 energy accounts.
As part of the financial agreement, the developer sells power and solar renewable energy certificates (RECs) while earning federal energy credits1 for the project. The energy savings for purchasers originate from only paying the distribution costs (e.g., for small accounts, the savings is four cents per kWh). Each purchaser has a separate negotiated rate.
The City earns $15,000/year per MW of power capacity (except for the portion purchased by the City) plus $10,000/year for the lease of the land to the solar developer. The City has a 20-year contract agreement with the developer; everything escalates by 2% per year based on the federal energy price inflation index.
Overall the City estimates cost savings of $250,000 per year for the 20 years of the contract, plus 2% inflation per year.
Issue RFP
As part of the RFP requirements, the contractor was required to purchase local materials and hire local socially disadvantaged workers to perform the work.
Local Approvals
Although the landfill is owned by the City, the site is located within the County, which meant the City had to get County approval for rezoning, permits, and code requirements. The City discovered a property zoning issue from one of the RFP respondents who identified that the site was partially zoned for open space (although mostly zoned as agricultural); the open-space-zoned portion had to be rezoned as agricultural to enable the project. The City met with the County Planning and Zoning director for guidance on how to obtain the rezoning (via the Administrative Hearing Officer) and met with the County Building Department for a building permit. The County had never permitted a solar park before, so the Fire Marshal at first recommended a full sprinkler system; however, the City conducted research to demonstrate that only fire extinguishers needed to be required. A full sprinkler system would have been cost-prohibitive given the available project financing. The County agreed to the City’s fire suppression approach.
State Approvals
Given that the City planned to site the solar project on a brownfield, the City needed approval from the Maryland Department of the Environment (MDE). In this case, the City demonstrated to MDE that the solar project would not puncture or otherwise damage the cap on the closed landfill. MDE then provided the City a letter of acceptance for the project to move forward; no permit was needed.
Obtain Grid Connection
The City met with the power company (BG&E) to connect to the grid, in this case, to create a substation about one mile from the grid. The original cost estimate was $8 million, but after significant high-level negotiations dropped to $3 million. In retrospect, the City realized that it should have met with BG&E prior to issuing its RFP given that reaching agreement for connection to the grid was not a foregone conclusion.
Community Involvement
Rolling Knolls is nearby. The solar park is not very visible from the community. The City held a community meeting, but the remote project location and lack of view impacts made the project non-controversial. There may be a view of the solar park from the community during the winter months when the deciduous trees lose their leaves. There was some noise during construction, but no ongoing noise can be heard from off-site at this time. In addition to being helped by being located in a relatively remote location, there were no other major desired uses for the property, which also helped to limit controversy.
Design, Operation & Maintenance Provisions
The City currently captures natural gas at the closed landfill, so the development plan needed to leave space around the solar panels and provide an access road.
Given that over the long-term, the solar developer needs to protect and maintain its equipment, the City needed to give up some privacy/access to the property to accommodate the developer’s needs. The City must notify the solar developer when it needs access to the property.
Sell Power
The City Department of Public Works purchased four MW of the 12 MW project, while the Anne Arundel County Public Schools purchased two MW and Anne Arundel County purchased six MW.
The City and the solar developer experienced difficulty finding enough customers to purchase the power. The solar developer cannot get bank financing unless enough customers are found to purchase power.
Best Practices Identified by the City of Annapolis:
Before issuing an RFP, complete any rezoning needed to accommodate the project; contact the power company beforehand; obtain an agreement from the power company to connect to the grid, including obtaining an accurate cost estimate and reaching consensus regarding virtual net metering rules; and decide how to obtain assurances of selling the generated power.
Pre-determine code requirements that will be applicable to the project so you can head-off and prepare for any potential delays or complications, including Planning and Zoning, Building Department, and Fire Marshal. Contact Fire Marshal early on to discuss requirements. Contact MDE to determine requirements and process early on.
Narrow the scope of the RFP to focus the respondents on what the project goals are (for example, to just focus on solar versus all types of renewable energy). Recommend adding to the RFP that the respondent/developer needs to show who the power purchasers (customers) will be.
Solar projects like this one require much local government staff involvement over all aspects of the project, including hand holding with the developer, and collaboration with the local utility and the environmental regulatory agency. Also, the Annapolis Solar Park may have required more involvement than is typical because the project was located within a separate jurisdiction so there was the added element of City and County coordination.
Solar projects on brownfields are financially viable and economically beneficial for local governments.
This type of project takes time: for this project, construction was completed and the solar park activated in the summer of 2018—three years after issuing the RFP.
1 “At its current capacity, the [Investment Tax Credit] ITC provides a 30% tax cut relative to the cost of installation to all residential, commercial and utility solar projects started in 2019 (as long as they’re in operation by December 31, 2023). If a project is started in 2019, the tax credit eligibility lasts four years; if it’s started in 2020, it lasts three years; and if started in 2021, it lasts two years. The ITC will drop down to 26% in 2020, 22% in 2021 and then expire for residential projects in 2021 and stay at 10% for commercial and utility projects indefinitely. That is unless the tax credit is extended again.”
solarpowerworldonline.com/2019/04/prepare-for-the-ramp-down-and-expiration-of-the-itc/.
