Clouded solar vision: Financing delays start of 20-acre, 3.5-megawatt solar project in Wapak
Trouble attracting financiers is delaying a project to provide solar energy to the city of Wapakoneta, but city leaders remain optimistic progress will be made this year.
SolarVision Inc. Vice President Michael Dickman, who appeared before Wapakoneta City Council during Monday’s meeting, updated councilors on the solar energy project expected to have been started by the end of 2011. He shared the company’s difficulties in contracting with financiers to fund the project is delaying its start.
“I know it is a competitive market for them right now and I believe the process is much more intricate than they thought it would be — this is not like getting a home mortgage loan,” Councilor-at-large Steve Walter told the Wapakoneta Daily News. “They have nine projects to get funded and they have one done and they are waiting for the other eight to get funded.
“They will get it together — I am confident they will carry through on this project,” he said. “It is just a matter of keeping the faith and keeping everybody on the same page.”
Walter, who requested Dickman attend the council meeting to explain the situation regarding financing of the 3.5-megawatt solar panel project, said the delays will have no affect on city residents’ or electric consumers’ bills.
“The crux of the financing is either the project is a ‘go’ or a ‘no go,’ ” Walter said. “If it is not built or is further delayed, it will not have any affect on our consumers’ bills because our obligation is only to buy the power they produce — we have no obligation in assisting them to produce power.
“On the downside, if our average cost of electric power goes up before they come on line, we will have to pay a little more marginal cost to purchase power from the market until they come on line,” he said. “It is my personal hope that they get this project funded, they get it built and they provide proof of concept and we can sit down and talk about another project — which we can’t do until this one is up and running.”
SolarVision Inc. executives signed a contract last year with the city to build a solar energy collection field near the city composting facility. A 20-acre field, which straddles a CSX rail line, is expected to generate 3.5 megawatts of electricity — enough electricity to power 300 homes in Wapakoneta — from 12,000 solar panels.
The solar power purchase agreement with SolarVision requires the city to purchase power at 6.75 cents per kilowatt hour for the first five years, 7 cents per kilowatt hour during the second five years and at fair market value for the final 10 years of a 20-year contract, not to be less than 7 cents per kilowatt hour.
The city has no expense in the project other than providing the ground. They can purchase the solar panels after 10 years, but SolarVision retains the green tax credits.
While Mayor Rodney Metz welcomed Dickman’s appearance before council, he said he wanted more positive and defined answers regarding the financing of the project as well as starting and ending dates for the project.
“I understand the financing side and the difficulties they are having with the project,” Metz said. “The hang-up in financing is they have to find investors willing to back the project and to still receive a positive payback on the equipment installed at the site.
“They have never given us any signs that the project will not proceed but the timelines have been stretched way beyond what they first thought,” the mayor said. “The tax incentives they thought would be attractive to investors were not, so they are looking at other ways to make the deal attractive — so it just comes down to finding investors willing to finance the project for the project to proceed.”
Dickman told councilors they are working on nine total projects with the expansion of the Celina solar panel field the only project to date to gain financing. He said the remaining eight projects, including Wapakoneta’s, are in the same financing stage.
“We are committed to these projects and we truly believe these projects will all be started this year,” Dickman told councilors during the meeting. “We had a specific order but the folks with the money have a different order and we don’t know what that is right now.”