T.F. considering installing solar panels at boro hall

T.F. considering installing solar panels at boro hall
Mayor: Further study warranted to investigate costs vs. savings
BY KENNY WALTER Staff Writer

TINTON FALLS — Despite an upfront cost of over $5 million, some Tinton Falls officials believe that installing solar panels at Borough Hall will save money.

In a presentation at the June 15 Borough Council meeting, Technical Advisory CommitteeVice Chairman Rob Mauro gave a preliminary presentation on the borough’s options for solar power.

“The Technical Advisory Committee has been investigating solar options the last 12 months,” he said. “The total cost of the system is $5.1 million, and it is set up to generate about 80 percent of our usage.

“We’d have a positive cash flow in year one,” he added.

Mauro explained to the council what the solar panels really do.

“The solar panels absorb the energy from the sun and produce the electricity,” he said. “They make something called DC, and our houses require AC electricity.”

A solar power inverter would make the necessary conversion, he said.

Mauro said that different amounts of solar energy would be produced at different times during the year.

“The interesting thing about solar energy is this time of year you are making a lot of electricity,” he said. “In December when the sun is out only a few hours a day, you are not making that much electricity.

“The amount of electricity that you make at different times of the year is going to vary.”

Mauro said that the borough couldn’t produce more electricity than it uses.

“At the end of the year you can’t have generated more electricity than you’ve used,” he said. Mauro explained the pricing for installing solar panels.

“Currently installation is going anywhere between $4.50 to $5.20 per watt,” he said. “We use about 1 million watts here per year between borough hall and the public works building.

“The largest component cost is the panels. Right now they are about 50 percent of the costs; the rest of it is in the other equipment and the installation costs,” he added.

Mauro explained that there are certain tax incentives that can be achieved at the state and federal levels, but Tinton Falls would not be eligible.

“Unfortunately … as a government, we don’t get to enjoy that tax credit,” he said.

Mauro said there are three ways that the borough can finance the panels.

“There are three mainstream financing models right now,” he said. “The first two are purchase or lease.

“The third is something relatively new; it’s called the power purchase agreement [PPA],” he added. “It is a legal contract between a company that installs the equipment on your property, owns the equipment, maintains the equipment and then sells you the electricity from it.

“We would essentially be buying a portion of our electricity from the PPA and a portion of our electricity from the utilities.”

Mauro said that solar panels would save the borough from rapid price increases from the utility companies.

“Whatever electricity you generate is electricity you don’t have to buy from the electric company,” he said.

Mauro said there were other benefits for considering this.

“Right now, another pro from the purchase is, money is relatively cheap; bond rates are relatively low,” he said. “So timing-wise, this may be a good thing to do.”

Mauro also mentioned some negatives about purchasing solar panels.

“Cons for purchasing is, there is initial capital outlay, there is financing and [we] as a government organization will not benefit from any of the tax incentives available,” he said. “Another con is, there [are] operation and maintenance costs.”

He went on to describe the leasing program.

“As far as the leasing program goes, there [are] no upfront costs, and the same significant reduction on the electric bill for year 1,” Mauro said. One disadvantage for leasing is the potential for a large buyout at the end, as opposed to initial capital outlay, he said.

Mauro also described the purchasing agreement benefits and detractions.

“For the PPA, no upfront costs and they absorb the insurance costs,” he said. “The con is, it is not a zero electric bill.

“You are not eliminating your electric bill; you are reducing your electric bill somewhere in the neighborhood of 15 to 20 percent.”

Mauro said that he has had conversations with at least one company that would use the tax incentives to help save Tinton Falls money.

“They take advantage of the tax incentives and they pass the savings on to us,” Mauro said.

Mauro said the initial study shows that purchasing would be the best option.

“Based on the numbers, we see the purchase as the best option,” he said.

Tinton Falls Finance Director Stephen Pfeffer explained how the financing would work.

“In order to fund the project it would all have to built into the bond ordinance, and the bond ordinance would have to be adopted first in order to fund all the initial legwork,” he said. “From their financing models, they did show that there was more than enough positive cash flow.

“Do a temporary financing for a year, pay hopefully a minimal amount of interest, and when the project was complete, sell the bonds so that by the time the first payment of the bonds are due, you’d already have a full year of generating cash,” he added.

“The borough might have some minor exposure in the first year covering the interest. For the numbers they presented to me, [purchasing] looked like the best option.”

Mauro also said that the panels do not require much upkeep.

“The panels are virtually maintenance free; they don’t wear out,” he said. “Their life expectancy is 25 to 30 years.

“It shouldn’t be a lot of maintenance. We have enough rain out here that the rain will wash off.”

Mauro described some of the places that the borough may look for installing the solar panels.

“One proposal would be to do an installation along the parkway,” he said. “Another would be … using the space at the public works building.

“We had it analyzed and it is conducive to putting solar panels,” he added. “Another option, which we explored, which would be a little more expensive, would be essentially putting a roof over the parking lot and having the solar panels on top of that roof.”

Mauro acknowledged that all research and discussion on the feasibility of installing solar panels in Tinton Falls have been informal thus far.

“This was a rough analysis both financially and technically,” he said. “We would advise that we do a more in-depth, thorough analysis for exactly what size system we are going to need and what the cost structures would look like.” Mauro gave the steps that would happen after the analysis.

“Then there would be a bond or a lease preparation,” he said. “There would be an RFP [request for proposal] preparation, a proposal review and implementation.”

Councilman Andrew Mayer, who is also a member of the Technical Advisory Committee, said he is in favor of the solar panels, and a Rowan University study may also shed some light on wind energy.

“Solar is one piece of it, and once we get the results of the Rowan [study], maybe we can tie wind into it too,” he said. “It is a win-win situation both for the environment and the taxpayers.”

However, Councilman Gary Baldwin was concerned by the price of the project.

“We are pretty tight on the budget; cash isn’t just laying around to get started on this,” he said. “I sure would like to see a good financial study done.”

Tinton Falls Mayor Michael Skudera said that the administration would study this further.

“We will take the time and look,” he said. “We want to be able to digest this and make sure the numbers are what they are.”





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