Peter Walks for Democracy

As readers of this blog know, ten of Centre County’s local governments will soon vote to adopt affordable, carbon-free, Pennsylvania-supplied solar power. Brought together in 2019 as a special working group, we set our sights on two primary goals: being more responsible as fiduciaries with our energy dollars and playing a positive role in reducing greenhouse gas emissions. It will take the form of a solar power purchase agreement (SPPA). As the SPPA’s Working Group’s chair, I can’t be more grateful to the team of staff, fellow elected and appointed officials, citizens, and consultants who have gotten us here. It has been a wandering path, but one worth treading. Recognized early on as part of the American Cities Climate Challenge we are doing something original and trailblazing.

I have been asked by a few citizens and Centre Region elected officials about the merits of purchasing renewable energy on 12-, 24-, or 36-month contracts vs. the SPPA. Why would you go into a 10- to 25-year power purchase agreement if you could accomplish the same goals? It’s a great question that we asked early in the process by our regional Finance Directors. The answer from my vantage point: We probably wouldn’t. But the SPPA accomplishes the goals better.

There are a four options for local governments, including schools, to adopt renewable energy in Pennsylvania. They are:

1. Enter into power purchase agreements (PPA’s) where they become the purchaser of power directly or virtually from a developer.
2. Purchase “green power” through their retail supplier.
3. Purchase RECs.
4. Build and manage a ≤5 MW solar array or a number of distributed systems on their own property.

There is a fifth which is a hybrid of the above (which is happening). I’ve written about why the Working Group and State College Area School District are not doing #4. Neither would supply enough energy to the entities. It defeats the economic benefits of aggregation and would be more expensive. Arrays >5 MW in size can’t be built and managed by local governmental entities in Pennsylvania. So that leaves #1, 2, or 3. I will work backwards.

The individual entities in our group have different climate and renewable energy goals. Ferguson, Harris, and Patton Townships, State College Borough, and the Centre Region Council of Governments have all articulated such goals by Resolution. For example, Ferguson Township is trying to achieve net zero greenhouse gas resolutions by 2050 in line with the Paris Agreement. Each of these entities are connected to the Centre Region Council of Government’s Climate Action and Adaptation Plan (page 48 includes the SPPA).* Entities who enter the SPPA will have the chance to purchase RECs. The Working Group decided to leave that decision to individual governments because lower cost and price stability were the primary drivers. Second most important was “additionality,” “projects [that] have a material impact on displacing global emissions by reducing conventional fossil sources of generation on the grid,” writes Schneider Electric.

So then why do a 15-year SPPA instead of a shorter contract? The answer is simple. We can bundle the SPPA into our regular bill and save lots and lots of money over 15 years. The SPPA will cost $.0701 per kWh in year one and will escalate 1.5% per year to $.084 in year fifteen. That price includes generation, ancillary services, ongoing management, and more. Compared to a standard contract, we conservatively estimate $4 million of savings for all the governments combined. So when a recent opinion piece by a local official calls on the Working Group’s entities to enter a 36-month contract at $.1089 or $.1299 per kWh, it is confusing to say the least. $.07 < $.13. Even if we add national RECs, we would be somewhere around $.08. $.08 < $.13.

The SPPA is more affordable. It adds zero carbon electricity to the grid.

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* Full disclosure: I wrote the Ferguson Township Resolution 2017-14, co-authored the Centre Region’s Resolution 2020-01, and serve on the Centre Region’s Climate Action and Adaptation Plan’s Technical Advisory Group. My students in the Local Climate Action Program provide technical assistance to local governments in Pennsylvania, including the Centre Region Council of Governments, State College Borough, and Centre County. There is no financial exchange between these or any community partners and Penn State, any of its units, or employees of the University. It is wholly voluntary.