Do Solar Farms Make Economic Sense for Municipalities?
The answer is, under the right conditions, Yes.
A solar farm is designed to produce more energy than it uses at the connection point in the grid. This is different from solar installations used to offset electrical use for a municipal building or facility.
What rate will your electricity fetch?
A solar farm in Alberta, where the author is the CAO of a Village, can either be a small micro-generator producing under 150kw or a large one producing more. Doing research prior to considering a solar project is critical. A net producer of electricity at a connection point can currently get 25.85 cents per kwh versuse a net user at a rate of 8.10 cents per kwh. Solar vendors are a good resource along with http://mccac.ca and https://www.alberta.ca/micro-generation.aspx .
How long will it take to pay back the original investment?
The solar farm in the Village of Carmangay where the author is the CAO cost $380,000 to construct and is budgeted to create just over $13,000 revenue each year. For a 25 year payback that doesn’t make sense unless one factors in the https://mccac.ca/project-showcase/carmangay-ground-mount-solar-pv-project/ grant of $145,920. The major change in recent years has been the warranty period of 25 years on the solar panels which makes the financing more feasible. The payback window in this example is 14 to 15 years assuming electricity rates don’t go up. If rates go up the payback window will get shorter.
One of the best benefits is that the revenue generated can be used for any municipal purpose each year. For examples, the Village of Carmangay has used the revenue to offset the energy cost for all its buildings, the library as well as putting in a free car charging station.
Does your municipality have the space?
The Village of Carmangay example uses approximately .25 hectares or 2/3 of an acre for the solar panels. This land was owned by the municipality, was flat and open enough for ground mounted solar. This cost may have to be included in more urban centres where land is scarce.
Does your municipality have a good connection point?
The electricity generated has to be connected to the grid. This is usually done by exchanging the electricity meter to be a 2 way meter at an existing point. In the case of the Village of Carmangay that point was the lift station. The lift station has a separate electricity bill that is negative (the utility provider owes the Village) each month. The energy produced is more than the energy used and the excess is paid out each month or used for other energy bills.
The connection will also need a sufficient connection to the grid. A transformer upgrade done by Fortis was required for the Carmangay project and budgeted into the project.
Lastly, the connection point is best if it is indoors and has room for a lot of the required connection boxes and monitoring required.