The Vermont Public Service Board plans a Jan. 12 hearing at the Panton Town Hall over a Nov. 3 application by GMPSolar-Panton LLC for approval of a 4.9-MW (ac) solar photovoltaic project.
Among those supplying Nov. 3 opening testimony in this case was Rod Viens, Executive Vice President with groSolar, which is working with GMPSolar–Panton (GMPSP) to develop the proposed project. He noted that the GMP Solar Panton Project site is located off of Panton Road in Panton. The project will be sited on approximately 40 acres leased by GMPSP. The project is proposed to be located in a field that is currently being used to plant corn by the landowner.
The photovoltaic project will use single axes trackers for racking. Single axis trackers follow the sun, turning from east to west throughout the day. A precisely controlled motor automatically rotates the trackers 120 degrees over the course of the day. The project is expected to generate approximately 9,100 megawatt hours (MWh) of electrical energy per year.
Viens wrote: “In order for the Project to be constructed and operational by its contractual in-service date, construction needs to begin by no later than summer 2016. For this reason, Petitioner is requesting a 6-month timeline for the Board to review, and that a decision be issued regarding this petition by May 03, 2016. This timing is necessary to allow sufficient time to order all of the equipment and to have an adequate construction window.”
Also supplying testimony was Kirk Shields, the Director of Business Development for Green Mountain Power Corp. (GMP). He said that in order to maximize the cost effectiveness of this particular project for customers, GMP is using a financing method called a “Partnership Flip” structure to make efficient use of the Investment Tax Credits (ITC). GMP created an affiliate company named GMPSolar–Panton to own and operate the project, again, specifically done to accommodate a tax equity partner. GMPSP will be jointly owned by GMP and by a tax equity partner. The value of all of the products and attributes produced by the solar project will flow directly to GMP customers through a Power Purchase Agreement (PPA) between GMP and GMPSP.
Project costs were modeled using a tax equity cost of service model provided to GMP by accounting firm Cohn Resnick to determine the levelized cost of the project to customers under the Partnership Flip model. The total constructed cost of the project will be about $12.3 million and the levelized cost of the project over 25 years will be about $0.122 per kWh. The PPA price to GMP will be set at the same $0.122 per kWh levelized cost resulting from the cost of service model.
Since GMP, as an electric utility, is required by the Federal Energy Regulatory Commission to “normalize”, or amortize, the federal ITC over the project life, a tax equity partner is necessary to make the most effective use of the ITC for customers, Shields noted. The tax equity partner will contribute cash to the project upfront and receive most of the cash flow, depreciation and ITC benefits from the project until their negotiated rate of return is realized from the project, usually in 5-7 years.
GMPSP is a regulated affiliate company of GMP, which will own and operate the oroject for the first five years of the project’s life. GMP will pay GMPSP a fixed rate for the output of the project, the project’s sole source of revenue, and the benefit and value of that output will flow directly to GMP customers as a power supply resource. GMPSP will then flow those proceeds back to GMP and the tax equity investor based on ownership share in the project.