Aug. 30--MANKATO -- Blue Earth County got a sales pitch on opportunities to invest in solar power, and county commissioners appeared to be intrigued.
SunEdison recently highlighted for the County Board its experience compared to competitors and the environmental benefits of solar energy, but the major emphasis was on potential cost savings. The county's power bills could be reduced by millions of dollars over the 25-year contract, said Christina Zajicek of SunEdison.
If the county chose the largest subscription allowed under the community solar garden rules, the savings could range from $1.6 million to $4.2 million under scenarios presented to the board.
The lowest return comes from simply taking a straight discount available to subscribers, which would range between $62,000 and $68,000 a year. That option presents almost no financial risk to the county.
The board could also choose to lock in a portion of its electricity purchased from Xcel at 11.5 cents per kilowatt hour -- a rate that would never rise regardless of how much Xcel's rates might increase over the next 25 years. The savings under that option would vary based on how much Xcel rates actually rise in the future. Assuming a 2 percent annual increase, the county's annual savings would be $35,000 in the first year but would steadily rise to nearly $320,000 by the 25 year -- totaling $4.2 million.
"So what's the gamble we're taking if we do this?" Board Chairman Vance Stuehrenberg asked. "How do we lose on this? If the price of electricity went down, is that where we'd lose?"
Yes, Zajicek answered. If Xcel's rates declined over the next 25 years, the county would be locked in at a higher rate.
"Well, that'll be a cold day in hell," Stuehrenberg replied.
In fact, the savings could be much more than $4.2 million over 25 years if Xcel rates increase by more than 2 percent per year in the coming decades.
County Administrator Bob Meyer, agreeing it is unlikely that rates will stop going up in the coming decade, said it's harder to predict the impact of technological breakthroughs looking out 20 to 25 years. In the later years, it's possible power rates could decline, so he asked Zajicek to put together a hybrid subscription where half of the county's commitment would have the fixed 11.5 cent/kilowatt/hour rate and half would have the fixed 4 percent discount beneath whatever rate Xcel was charging in a given year.
That option reduces the potential 25-year savings to $2.6 million for the county but greatly reduces any risk that the county would lose money by signing on with SunEdison.
"(Xcel) rates would have to drop 16 percent every single year for you to lose $1," Zajicek said of the hybrid option.
SunEdison would like a decision from the board in late September or early October.
"It could be exciting," Stuehrenberg said, thanking Zajicek for the presentation and promising that Meyer and the county's legal staff will be looking at the proposed agreement in more detail in the coming weeks. "It could be a heckuva savings for the county."
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