Tricky negotiations on city schools’ solar project near resolution, though total size now significantly smaller

By Harrison Horst, contributor

A high-profile solar project put forth by the Harrisonburg City Public Schools (HCPS) is one step closer to being finalized after a months-long, three-way dance between the school board, solar developer Secure Futures, and the Harrisonburg Electric Commission (HEC).

In December, the school board announced plans to pursue a 3800 kW solar installation at several schools. Progress slowed, however, after concerns were raised about the cost implications of the project.

But at their meeting earlier this week, HEC commissioners voted to approve a net-metering agreement for a large HCPS solar installation. The deal included two contingencies, however: that the project comply with HEC’s own contract with Dominion, and that it be just 2700 kW.

According to School Board Chair Deb Fitzgerald, the school board and Secure Futures submitted two proposals for approval to HEC: the 3800 kW plan, and a smaller alternative totaling 2700 kW.

“The larger total would have required an exception to our size limit, per installation, as outlined in our Parallel Connection Agreements, specifically at the two services located at [Harrisonburg High School],” said Brian O’Dell, HEC General Manager, in an email. “The request from HCPS to install a total of 2700 kW across various sites within the City did not require any exceptions to our standard agreement per each site as did the 3800 kW request.”

O’Dell said the 2700 kW proposal that HEC just approved includes some solar installation at the high school, though smaller than proposed in the 3800 kW option.

HEC has also announced that it will not count the HCPS project toward the city’s solar net metering cap, which was recently raised from 1 percent of grid peak load to 2 percent. The school project itself represents just under 2 percent of HEC’s peak load. When it raised the solar cap, HEC also announced a review of the current net-metering policy, with changes possibly to be made later this year. The schools project, however, will operate under the current net-metering policy.

In any case, the clock is ticking on the solar project. In about eight months, the cost of installing solar will rise all across the country as the federal investment tax credit (ITC) program for solar begins to be rolled back in 2020.

“Everyone in the country and in Virginia is rushing to install solar projects in 2019, so there is a bit of a lag,” said Erik Curren, Chief Marketing and Business Development Officer at Secure Futures. “So once we get the agreement worked out, then we’ll have to get in the queue for installers.”

For a company like Secure Futures, whose business model depend on those tax credits, it’s crucial that the installation be completed in time to secure the 2019 tax credits. Without that financial incentive, the company’s profit margin on the project becomes substantially smaller. Curren, though, doesn’t feel that the Dec. 31 deadline poses a significant threat.

“Given a reasonable timeline, we can start installing in the fall,” said Curren. And because of safe-harbor tax law, only a certain percentage of the project needs to be completed by December in order for it to qualify under the 2019 ITC.

However, the path forward is still not completely certain. Despite HEC’s approval of the project, a final agreement between the school board and Secure Futures has yet to be signed. On Wednesday, lawyers for the two met to iron out the remaining contract issues, which have been “thorny,” according to Fitzgerald.

“I understand that [the meeting] was cordial and productive, with exchanges expected soon of proposed contract language to address issues of concern,” she said, in an email. “I hope we will come to a resolution soon. As you know, when we get to negotiation the specifics of any contracts, we rely on the advice of our attorneys on how to proceed.”

The earliest the school board could vote on a potentially finalized contract would be at its next meeting on Tuesday, May 7.

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