The solar panels sitting on many of the buildings at the Pottsville Area School District have been online for 3 months now.
And while the head of the company that currently owns them did have to deliver a little bad news during the district’s January school board meeting, he had enough good news to soften the blow.
In short, Doug Neidich, CEO of GreenWorks Development, says, the installation was a success and Pottsville Area School District is on its way to “green” future.
“You’re now a very green district that’s got renewable generation on your rooftops,” he said last month.
Those solar panels are reportedly producing 50% of the school district’s electricity.
Pottsville Area School District Gets Update on Solar Panel Project
Neidich appeared before the board at their regular January meeting to provide the public an update on the controversial solar panel project. Until this, the public hadn’t heard too much about the solar panel project through much of 2020.
Remember, the project was quickly approved and appeared almost out of nowhere on the district’s agenda back in late-2019. Board members and the public had plenty of questions and a little bit of blowback as details of the project were scarce.
One thing the board assured the public was that the solar panels were a way out of financial straits at Pottsville Area. But to get out of that dire financial predicament, the board really did attempt to pull a fast one.
Not making the idea seem any brighter was the requirement that in order to get this solar panel project off the ground, the district would have to sink itself further into debt through a 40-year loan to afford to buy them from GreenWorks in a few years. As part of the deal, GreenWorks owns these panels on Pottsville’s schools until the district agrees to purchase them outright after 5 years.
But the board plodded ahead and by August, the solar project was ready to go online. Then, as Neidich explained last month, it hit a snag when they were required to install a piece of equipment – a “switch gear” – that set the start date back until November.
By Nov. 5 though, the solar panels were online and generating energy.
Neidich Addresses Fallout in SREC Market
In addition to generating energy, these solar panels are supposed to be generating revenue for Pottsville Area School District. And boy, do we need it. When the state’s threatening receivership, you best get your finances in order.
Well, that’s where Neidich’s struck a slightly different tune with Pottsville’s school board members. While the long-term prospects of this solar project do look good if the estimates he provided to the board are accurate, that’s not the case for right now.
And that has everything to do with two variables:
- Electricity demand
- The value of Solar Renewable Energy Certificates (SRECs)
Overall, through 2020, electricity demand was down in Pennsylvania. Businesses use a lot of energy and if they’re closed for any significant portion of time as they were through last year, overall use in the state is down. Less demand means less value on the energy Pottsville is creating.
The other factor that’s dampening the kickoff for the solar panel project is the value of those SRECs. When Pottsville Area agreed to this solar panel deal in late-2019, the value of these SRECs was $45 each.
Pottsville gets 1 SREC for each megawatt-hour of electricity its solar panels generate.
But by the time the system at Pottsville went online, the value of each SREC in Pennsylvania plummeted to about $25.
“In the shorter term, especially over the first 5 years, a $25 credit value versus the early $45 credit value puts you a little bit under water,” Neidich said. “Those certificates are significant pieces of the revenue stream.”
Under water? That’s never a good thing to hear, especially when you’re talking about a solar project.
How much under water? About $15-20,000 per year, Neidich explained.
“SREC values are based on the fact that solar demand, as mandated by the Commonwealth, is a percentage of Pennsylvania’s total electric generation,” he said.
In order for SREC values to increase as much as Neidich believes they can, a few things have to happen. First, is an increase in demand for electricity. That’s a natural. And right now, he told board members, demand is down 20%.
“That pushes the market down,” he said.
Lobbying Effort Underway
Another way to influence the price of SRECs in Pennsylvania is a little more unnatural than waiting for demand to rise again … putting pressure on the state government.
Neidich told the board he’s part of a group actively lobbying lawmakers in Harrisburg to require electric suppliers and generators to buy and offer more renewable sources. The power companies buy SRECs to meet their renewable mandates.
Pennsylvania requires its electric distribution companies and electric generation suppliers to supply at least one-half percent of its electricity from solar power. That’s low compared to a state like New Jersey, which requires 5%.
Despite the downturn in the value of those SRECs, Neidich says Pottsville’s 40-year “project savings” would still be $2.856 million.