By Angeljean Chiaramida
SALISBURY — The ink is drying on the biggest and most complicated solar-energy deal this region has ever seen, with plans in place for a massive solar "farm" to start making electricity in 18 months.
Along with the city of Newburyport and Triton Regional School District, Salisbury will contract with proposed local solar farm True North LLC in a deal that should give the town a 15 percent discount on a good portion of its electric bills over the next 20 years.
After getting permission on Monday from Town Meeting to negotiate the contract, Salisbury selectmen will meet in a special session Thursday authorizing Town Manager Neil Harrington to sign the contract with True Energy owner James Vaughn for the discounted energy.
It's the third such contract Vaughn has negotiated in recent weeks, as he moves to meet deadlines imposed by his financial backers, who want to see the project's revenue stream before committing funds, as well as the Dec. 31 federal and state government deadlines related to alternative-energy tax incentives. Those tax incentives are pivotal in making expensive solar farm projects viable, Vaughn said.
Within the next 18 months, Vaughn hopes to complete construction of his six-megawatt solar energy facility on 43 of the 54 acres of Salisbury land he owns off Rabbit Road. The farm will consist of 30,000 ground-mounted solar panels behind Vaughn Manufacturing, the water heater company he once owned and ran.
According to Vaughn, when up and running, True North should produce commercially seven million kilowatt-hours of electricity every year. That's enough to displace some 500,000 gallons of oil needed to do the same.
The six-megawatt size of Vaughn's solar farm makes it eligible in the state for solar renewable-energy credits. These incentives are part of Gov. Deval Patrick administration's move to have 20 percent of the state's electricity generated by renewable energy sources by 2020.
An important part of Vaughn's plan — and that of any solar energy development — relates to the net metering energy credits, such as those that Newburyport, Triton and Salisbury will be allocated through their contracts with True North.
The net metering credits come when entities that generate electricity from any renewable sources — such as solar or wind — connect with the grid, sending energy that exceeds the grid's own use. The renewable energy producer then receives a credit for the net excess electricity generated. Renewable energy providers can then assign those credits where they choose, Vaughn said.
Conventional utilities — like National Grid — take part in the net metering credit programs with True North and other renewable energy providers because they are required to have a percentage of energy created from renewable sources in their overall energy portfolios.
In his contracts with Newburyport, Triton and Salisbury, Vaughn agreed to assign 44 percent of the net metering credits to Newburyport, 45 percent to Triton and 11 percent to Salisbury. Credits have a monetary value, Vaughn said, and he's agreed to discount the credits to each of the three, offering a 10 percent discount on the credits Newburyport and Triton will be assigned and 15 percent to Salisbury.
Although it a complex system, Salisbury's town counsel, Rick Holland, who helped write a contract with True North, explained the concept using a dollar-and-cents example. Holland said that if, hypothetically, Salisbury got a $125 electric bill with 100 net metering credits on it, the town would pay $25 to National Grid. Then, with its 15 percent credit discount, Salisbury would pay $85 to True North due to its 100 credits.
Since Salisbury's monthly bills are much higher, the savings will be considerably more than $15 a month. The result should lower the town's operating costs, saving taxpayers money. Plus, since Salisbury is a part of and pays to support Triton School District, the savings the district will realize because of its agreement with True North will again save Salisbury money.
True North isn't the only company proposing to build a six-megawatt solar farm in Salisbury. The Thompson Design Group, the firm hoping to revitalize Salisbury Beach Center, wants to develop 100 acres of land behind Salisbury Elementary School into a six-megawatt solar farm.
Although the project has not progressed as far as Vaughn's, according to spokesman Norman Beaulieu, his company is currently working with National Grid regarding interconnection issues.
State Rep. Michael Costello, D-Newburyport, worked to improve the plight of the solar industry during the 2010 legislative session. Costello filed the solar-energy amendment to the House version of the economic development package, which state Sen. Steven Baddour, D-Methuen, shepherded through the Senate. The change increased the size of solar projects eligible for solar renewable-energy credits from two megawatts to six megawatts, the size of both of Salisbury's proposed energy projects.
The change was meant to help solar farms acquire financing, Costello said. Six megawatts is big enough to make money and put energy into the grid, while still attracting small operators, Costello said. Projects of that size, with the tax incentives, should be able to attract financing, for getting backing for solar farms isn't easy, Costello said.
"You don't walk into to most traditional banks and get a loan to build a solar farm," Costello said. "You're more likely looking at venture capitalists who are attracted to the projects because they can take part of the tax incentives."
Costello has heard from some developers around the state who are gaining interest in solar farm development, but none other than Vaughn and The Thompson Design Group have expressed interested in locating in this region.
The tax incentives are an important part of the package in tempting developers to take the risks involved in building renewable energy sources like solar, although some are concerned the incentives won't be around long enough to make the financial risks acceptable, he said.