Monday, October 03, 2011

Sunlight Needs To Be Shined On Airport Solar Farm Project

Indianapolis Airport Authority officials have signed on to the state's largest solar farm project to date in a deal that has been cloaked in secrecy. On September 20, 2011, IAA announced a long-term, $35 to $45 million solar farm project on airport property adjacent to I-70 had been awarded to ET Energy Solutions, LLC, a joint venture involving three local firms, a little more than four months after it issued an RFP seeking proposals for the project on May 11. RFP responders were given just a month to respond to the 23-page RFP document. "No public funds or airport costs are anticipated to be involved with the project" according to a press release put out announcing the deal; however, it is unclear what, if any, public benefit will come from the project.

The joint venture comprised of three locally-based companies, including Telamon, Johnson-Melloh Solutions and Schmidt Associates, will presumably rely on generous government tax credits and its own private financing to build the solar farm that is expected to generate 15 million kilowatt hours of electric energy a year, enough to power approximately 1,200 homes. The solar panel technology being deployed at the solar firm is manufactured by a Japanese-based company, Sanyo. It will involve 41,000 solar panels spread over 60 acres. Interestingly, none of the joint venture partners has any experience developing and operating solar farms despite the RFP's requirement that the responders provide their qualifications for developing and operating solar farms with a preference afforded to responders with experience with "larger solar farm applications." Indianapolis Power & Light will purchase the electric power generated by the solar farm under a power purchase agreement.

The press release put out by the airport says nothing about what the terms of the land lease for the joint venture are to operate the solar farm on airport property for an initial period of up to 30 years. The RFP indicates that the successful respondent would be required to enter into a land lease with the airport and pay an unspecified amount of rent to the airport annually, but the press release makes no mention of any rent payments. A review of the airport authority's board agenda packet for its September meeting that took place prior to the announcement makes absolutely no mention of any approval action taken on the solar farm project, nor is it mentioned in the board minutes or board agenda packets for any of IAA's board meetings since April.

The public learns more about the project in a letter to the IBJ's editor authored by Stephen Woodrow in the publication's most recent edition than the airport's press release or any media reports on the deal. Woodrow's letter calls the solar farm a "tax" on IPL's ratepayers. According to his letter, IPL will purchase the electric power from the solar farm based on the Renewable Energy Production tariff approved by the IURC for IPL, which is 20 cents per kilowatt hour. "This represents a premium of eight times over IPL's published cost of 2.5 cents per kilowatt hour for the production of an incremental kilowatt hour of power," Woodrow claims. "Most noteworthy, the tariff approved by the IURC further provides for the cost for this inefficient solar project to be allocated to and recovered from the basic rates paid by all IPL customers and not IPL shareholders," Woodrow adds.

Woodrow noted the irony that in the same edition of the IBJ where the lead editorial warned that alternative energy was "fraught with risk" and cautioned against government subsidies, the business newspaper provided "only cursory page 6 coverage of the Indianapolis Airport Authority's awarding of a contract to a private company to develop and operate a '$35 million to $45 million' solar farm."  Woodrow challenges the contention that no public funds are to be used for the project. "The reality is that this project is to be 100-percent funded by the 'public' in the form of captive and unrepresented ratepayers of the Indianapolis Power & Light utility monopoly," he contends.

According to responses to questions tendered during the little more than 30-day response period, there was only one meeting with potential responders conducted by airport officials on May 25, 2011 and all written questions had to be submitted by June 7. Airport officials declined the opportunity to meet further on-site with potential respondents in early June prior to the submission of proposals and rejected a request to extend the due date for proposals beyond June 16. It is unclear how many responses the airport received. The press release makes no mention of how many responses the airport received to the RFP.


Paul said...

"will presumably rely on generous government tax credits"

Federal government tax credits?

Had Enough Indy? said...

The airport is pulling as much money as they can from resources that would otherwise pay property taxes. Now they are robbing us through electric rates.

They don't want to charge the airlines the fees needed to cover the extravagance of the new airport. Make no mistake about it, the airport is draining tax coffers by diverting tax payments to other parts of government into lease payments made solely to the airport.

The press should be camped out at the airport just to follow all of the money that is being lost to the rest of us.

Gary R. Welsh said...

Yes, Paul, the federal government offers very generous tax credits for these "green" projects. My brother was thinking about sticking up one of those hugely expensive windmills on my dad's farm after learning how much money he could recoup through the federal tax credit program. Pat, You may want to inquire if this company is going to be forced to pay property taxes on this wind farm since those 60 acres are now being used exclusively for a for-profit, private venture.

Citizen Kane said...

I met or talked to a number of solar firms last year because of the IPL incentive. The first solar rep I met with indicated that they are not here (in Indiana) because of the sun -duh!. He said that they were trying to leverage IPL incentives, federal incentives and hoped to get as many state and local incentives as possible. I respected his honesty. He admitted to be what I like to call solar mercenaries. Apparently, there were not enough incentives. After a flurry of activity regarding 100-acre sites, nothing has happened. Though one guy I talked to on the phone said that there was no way 100-acre solar farm would work. He was looking at about 25 acres.

Mark said...

Because darned if we are ever going to use green energy that doesn't contribute to global warming.