The Metropolitan Water District of Southern California (MWD) dials in the sun to help distribute a vital resource to 26 cities. The District of Columbia is harnessing solar rays to run a new fountain. A photovoltaic (PV) system spanning seven acres at the entrance of Denver International Airport will generate more than 3 million kilowatt-hours (kWh) of clean electricity annually.
It’s an impressive snapshot of municipalities embracing a green mindset and the innovative technologies that put the sun to work to generate electricity and heat water and buildings. Additionally, property tax financing and incentive programs like as the ones first chartered by communities, such as Boulder, Colo., and Berkeley, Calif., are opening up this niche renewable energy market.
As with any municipal prospect, there are advantages and pitfalls, but overall, the possibilities are bright. With unprecedented federal and state support to implement alternative energy initiatives, the timing never has been better to bring an energy solutions mindset to customers and challenge solar integrators for a bigger share of project facilitation.
When opportunity knocks
Looking closer, it’s clear that opportunity is knocking and electrical contractors with design/build experience, PV knowledge and procurement arrangements in place can get a foot in the door.
California-based Morrow Meadows Corp. commissioned the 1-megawatt (MW) design/build project at the district’s Robert A. Skinner Water Treatment Plant near Temecula, Calif., to help generate power for water treatment to serve more than 20 million customers. By industry standards, it’s a large-scale project, but the objective is simple regardless of the scope, said Glenn De Soto, director of the Solar and Alternative Energy Division, Morrow Meadows.
“Municipalities are trying to reduce the energy they’re buying from their utility,” De Soto said.
The MWD projections include a generation of 2 million kilowatts of electricity annually, a reduction of carbon emissions by nearly 2.5 million pounds yearly and up to $5 million in rebate incentives. Initial plans for the $9 million facility also included an innovative tracking system that follows the sun’s path to produce an additional 25 percent more energy than fixed panels.
The structure of projects varies by facility and energy needs, as does the municipal project lead. According to Mary Tucker, energy program manager, City of San Jose’s Office of Sustainability, the Solar America City recently bid seven small (less than 3 kW) design/build PV systems on selected community centers, fire stations and libraries with the use of Housing and Urban Development Community Development Block Grant funds. At the other end of the spectrum, San Jose also recently released a 2-MW solar power purchase agreement (PPA) RFP on two of its service yards.
“Our Public Works Department acts as project manager and oversees the installation of projects with the participating facility management personnel and the selected contractor. In some cases, we also conduct design/build bid processes,” Tucker said.
Steve Skolnik, operations vice president for John E. Kelly and Sons Electrical Construction Inc., Upper Marlboro, Md., reported that his firm strongly prefers to seek opportunities for turnkey solar PV generating projects.
“We do not see solar as a market where low price is the most important factor. Most potential customers are people who do not understand the systems, let alone the economics involved, and a very significant preproposal effort is required to get under contract,” Skolnik said.
It’s hard to nail down the size of the U.S. municipal solar market specifically, but it is diverse and expanding. Those who don’t start becoming familiar with project structures and skillsets may risk being left in the dark.
In a report produced by solar research analyst firm Solarbuzz, the overall U.S. PV market saw strong customer demand in 2007, resulting in 57 percent growth. The corporate segment, driven by retail, and government segments were collectively the largest, representing 51 percent of demand.
According to Neal Lurie, director of marketing and communications for the American Solar Energy Society (ASES), California is by far the largest solar state, with nearly two-thirds of all installations. These efforts have been driven in part by California Gov. Arnold Schwarzenegger’s Solar Initiative and state legislation that have combined to establish a statewide goal to create 3,000 MW of new, solar-powered electricity by 2017. Other sun-soaked states, such as Arizona, Colorado, Nevada and New Mexico, are expanding solar efforts, but eastern states, such as Connecticut, New Jersey and New York, also are impacting development.
Lurie challenges contractors to explore solar’s potential.
“You don’t have to be drenched in sunshine to be a leader in solar. State leadership, renewable portfolio standards and other policy measures can significantly boost solar markets providing tremendous opportunities for electrical contractors,” Lurie said, pointing out the infusion of funds from the federal stimulus program. The American Recovery and Reinvestment Act allocates more than $16 billion to energy efficiency and renewable energy projects, including $3.1 billion to state energy offices. Millions are expected to flow through to municipal solar programs.
“The Recovery Act also provides $2.4 billion for Qualified Energy Conservation Bonds to help finance municipal and state programs to reduce carbon emissions. It also removes barriers to municipal solar-financing programs, funds green job training programs and smart-grid investment for demonstration projects in municipalities and other areas,” Lurie said.
“Publicly held facilities are owned by entities that do not pay income tax; therefore, they cannot directly benefit from the federal tax credit that was enacted by Congress last autumn [30 percent of installed cost, no cap, plus accelerated depreciation]. This makes the financial model for a successful public sector project much more challenging,” Skolnik said.
Skolnik also said many states have not enacted a Feed-In Tariff, a legal requirement for electric utility providers to purchase power generated by an alternative source (selling excess energy back into the grid at a premium rate); this discourages construction of large systems with capacity greater than needed to operate the facilities to which they are connected.
The EC’s advantage
Each PV system functions the same from array to inverter to power interconnection. A system produces the same result for a municipality: reduction in carbon footprint and energy cost. The challenge for electrical contractors is securing as much of the work as possible. Although some industry experts maintain that contractors have been too slow to position themselves against the population of “solar integrators,” the contractor’s competitive advantages in municipal bidding situations are shaping up to be electrical expertise and the aptitude to champion an energy solutions approach.
John E. Kelly and Sons Electrical Construction recently installed a 149.5 kW rooftop system composed of 650 solar panels, each having an output of 230 watts. Skolnik sees opportunities growing for contractors to capture more aspects of solar projects.
“Much of the work installing solar generating systems is hardware-installation work, not electrical work, per se. Typically, it is done by the ‘solar integrator’ who is the prime, and who hires the electrician as a subcontractor for the wiring installation only,” Skolnik said.
He also pointed out that the solar integrator may see the direct current (DC) wiring as within their realm. Contractually, he said, only the alternating current portion of the installation may be available to the electrical subcontractor.
“We’re looking to do as much of the overall installation work as possible and do not shy away from mechanical assembly of rack systems, panels and so forth. In addition, the DC wiring, which operates at greater than 50 volts, falls under the jurisdiction of the [National Electrical Code] and, therefore, should be installed by a licensed electrician,” Skolnik said.
Morrow Meadows’ De Soto said municipalities were drawn to solar integrators three to four years ago, but today, the public market is seeking installer firms with name recognition, a good reputation and longevity.
“The integrators are going to fall by the wayside, and if interested electrical contractors make the investment, they can play the role of the integrator. The integrator identifies the project and brings it to fruition. We can do the same thing, and we’re already building the systems,” De Soto said.
Shawn Gibson with T and B Electric Co. Inc., said the Maryland firm, like many other licensed electrical contractors, positions itself as providing a turnkey PV energy-generating system.
“We bid on every portion of a solar project pertaining to the design, build and commissioning of that system. Unlike many solar installers in our area, we are a licensed electrical contractor, and all of our installers are trained and experienced electricians. We are able to obtain all permits required for PV installation, which helps minimize lead time from the planning stage to actual build,” Gibson said.
Let energy solutions drive solar
De Soto espouses an industry paradigm shift toward contracting firms becoming energy solutions providers for its customers through a three-pronged approach:
As stated in the NECA Energy Solutions Summit—held in July 2008 in Los Angeles—report prepared by Dr. Thomas E. Glavinich, associate professor, University of Kansas, contractors should tailor services to meet customer needs.
“Some of the major issues with acquiring and performing PV work are the procurement of PV modules and the need to provide customers with financing. PV module procurement issues include getting a competitive price per watt, having a reliable supply that will provide modules when they are needed, having a quality product that meets the stated output requirements, and providing a reasonable lead time. With regard to financing, customers often want no up-front capital investment, no debt, and a guaranteed energy price through a purchase power agreement (PPA) similar to what they can get from system integrators,” Glavinich wrote.
De Soto further suggested that electrical contractors take an even wider efficiency approach to selling solar.
“The smart thing for electrical contractors to do is to become an ‘energy solutions contractor.’ The kilowatt-hour I save you is the best green energy I can give you, so let’s look at saving a kilowatt-hour before building to generate one,” he said.
MCCLUNG, owner of Woodland Communications, is a construction writer from Iowa. She can be reached via e-mail at email@example.com.