Pottsville Area School District’s solar panel project hit a major snag right out of the gate in 2020.
It’s something the district may not want to talk about right now.
School board members there promised to give some kind of update on the solar panel project at its December reorganization meeting. But when that meeting adjourned last week, that presentation hadn’t happened.
Maybe that’s because the news isn’t all that great when it comes to said solar panels … at least not initially.
Pennsylvania SREC Prices Tank in 2020 – Pottsville Solar Project Directly Hit
It’s been about a year since the school board members at Pottsville Area agreed to enter into a deal that would put thousands of solar panels on the roofs of school buildings and anywhere else on school grounds that they could find.
Earlier this week, a report from RepublicanHerald indicated the solar panel array at Pottsville Area School District was online and an initial payment to the company that actually owns them for at least the first 5 years of their lifespan has been made.
That report also indicated that the size of the solar panel project was reduced by about 20%.
The good news from that? The solar panels are installed and operational.
Now, reducing the size of the project will cut into early estimates on how much money the school would save on electricity costs, how much electricity the school would produce, and how much money the school would make by selling what are known as Solar Renewable Energy Certificates to companies required to buy them. However, the cost of the project overall would likely go down with less panels involved.
We’re still waiting to hear the details on that publicly from the school itself.
SREC Market in Pennsylvania Tumbles in 2020
The goal of Pottsville Area’s solar panel project was to not only reduce electricity costs by becoming an energy producer, but also to generate revenue through its production.
For every 1,000 kWh of energy the solar panels at Pottsville Area produces, the school gets 1 Solar Renewable Energy Certificate. That certificate can be sold on a state-controlled marketplace. Energy companies and others who are required to invest a specific amount into renewable energy sources purchase these certificates as sort of a carbon offset.
In addition to the electricity savings, Pottsville was looking to line its coffers and get back in the black. And the sale of these SRECs was a critical part of that plan.
Well, in 2019, it all sounded jim-dandy.
The average bid price for an SREC in late-2019 was around $45. When the district wrote up its forward-looking financial report on the solar panel project, they used that figure as a conservative estimate for the price clear into the future.
It was all sunshine and roses. Hopefully, lots of sunshine. Because at that price, as one school official put it early one, “the cash would start rolling in” from these SRECs flying off the proverbial shelves.
Six-Figure Losses?
Problem is … 2020 happened.
And whether it was pandemic-related or not, the market tanked on these SRECs. Right now, someone in the market for an SREC can get one in Pennsylvania for $23.
Here’s a look at a chart monitoring the bid price for an SREC in Pennsylvania through 2020:
(NOTE: We captured this image just before the price on an SREC in Pennsylvania went up a buck.)
You can see that the bottom fell out on these SRECs right about when Pennsylvania Gov. Tom Wolf pulled the plug on the economy statewide in response to the coronavirus pandemic.
The price hit an even $20 in the Fall and has recovered slightly since, but we’re not seeing anything slightly resembling a “hockey stick” recovery from this chart.
The sale of SRECs is just one piece of the financial puzzle in relation to the solar panel project, but it’s like a corner piece. With prices halved on SRECs like they are now compared to the school’s economic forecast on this project, losses could end up totaling in the six figures in just the first couple years the array is online.
We obtained a copy of a 40-year financial outlook for the solar panel project at Pottsville Area. In the first 5 years of it being online, Pottsville estimated that it would generate $398,916 in SREC sales – at $45 apiece.
When we factored in the new cost of SRECs in December 2020 ($22 when we did the math), we see the school only generating $194,980, using the school’s estimates. And that likely is estimated using the original size of the project.
There’s no way of telling how long SREC prices will stay in the $20-25 range but as long as they do, the estimated revenue Pottsville Area hoped to make from them is about half that now.
And, of course, this is just temporary in a lot of respects. No one knows how long SRECs will even be a thing that’s bought and sold. And the market on these has fluctuated dramatically in the last few years. Wolf even had to step in to stabilize the market on SRECs back in 2017 by requiring Pennsylvania companies to buy SRECs generated in Pennsylvania on a closed marketplace.
Prior to that, the marketplace was flooded and SRECs could be hand for a couple bucks a piece.
We’ll await the school’s promised presentation on an update of the solar panel project in January on how the SREC prices and smaller-in-scope solar panel project will affect the financial outlook.
ALSO READ:
- Pottsville’s Solar Panels Will Create E-Waste Crisis
- Blinded By the Light – The Pottsville Solar Panel Disarray
- State Audit: Pottsville Schools Finance Management “Especially Alarming”
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