Wayne, NJ, USA — Situated on 375 rolling and tree-covered acres in Wayne, N.J., William Paterson University might offer an idyllic classroom setting, but a less-than-ideal spot for solar energy.
But the university wanted to improve its sustainability profile, reduce its electric bill and offer a teachable experience for its 11,000 undergraduate and graduate students. An early plan to site solar PV on some of the university’s classroom rooftops was set aside due to cost and lack of space from existing heating, ventilating and cooling equipment.
That left a second option: cover portions of university-owned surface parking lots with elevated PV panels. The option presented engineering challenges such as drilling footers that reach into the shallow bedrock and bracing the tall structures against wind forces. It also presented economic challenges stemming from the cost of building atop the parking lots.
These and other challenges were overcome and since October 2010 the university has hosted a 3 MW solar PV array. (An additional 500 kW is expected to come online in 2012 atop a 1,100-space parking structure.) The university also signed a 15-year power purchase agreement with Nautilus Solar Energy, which developed and owns the project. Through the PPA the university cut its electricity bill by 25 percent from utility Public Service Electric and Gas. An escalator tied to the rate of inflation adjusts the rate every three years. Over the life of the PPA, the university could save $4.3 million in electricity costs, said Steve Bolyai, the university’s vice president of administration and finance.
The PV array is set on precast foundations 30 inches in diameter that are sunk 6 to 12 feet in the ground, depending on the bedrock. The solar PV array is fixed in place and tilted at a 10 degree angle toward the south. A tracking system generally “doesn’t make economic sense in New Jersey,” said Al Bucknam, CEO of SunDurance Energy, which built the project. New Jersey’s solar intensity is not high enough to justify the extra cost of tracking. Plus, a tracking system’s moving parts can reduce reliability and increase maintenance costs.
Compared to a traditional ground-mounted system, the William Paterson project had to span longer spaces with fewer columns to accommodate cars and pedestrians moving beneath it. Wind and snow loads also had to be figured into the project’s engineering. All totaled, the elevated array structure added around $1 a watt to project costs, Bucknam said.
The university considered a self-finance option to develop the project. That path would have seen it sell tax-exempt bonds to finance the investment. Bolyai said the university ultimately decided it didn’t want to be in the power generation business and it did not want to use up its bonding capacity for a solar energy project.
A second option was to pursue a public/private partnership. Through this model the university put up no money, but would partner with a developer, provide the land and become a long-term power customer.
The William Paterson project has proven to be a “classic behind-the-meter system” for developer Nautilus Solar, said Laura Stern, president. She and CEO James Rice started Nautilus in 2006, drawing on their expertise in power development and finance. “We came with the thesis we could apply typical finance structure of large-scale projects to distributed solar,” Stern said. In late 2008 the pair sold a majority interest of their business to Starwood Energy, a venture capital fund, which committed $50 million to investments. The finance and development model Nautilus first used in New Jersey has since been applied to projects in Connecticut, Maryland, Florida, California and Ontario.
The project received a $5 million, 10-year, interest-free loan from the New Jersey Economic Development Authority through a solar incentive program. That program quickly reached capacity and has since closed to other participation. The William Paterson project may be the portfolio’s only project that includes a non-recourse loan and a third-party with a PPA. Stern said the loan proved “very helpful” in the months between first estimating both project costs and the value of available solar renewable energy credits (SRECs) and the time construction began. “Prices in both these markets move,” Stern said. “Then you’re really juggling assumptions you made nine months ago with current market dynamics.”
The loan has a 10-year term, but will be “significantly shorter as we accelerate amortization,” Stern said.
One quirk in New Jersey’s SREC market has worked to depress SREC prices in recent months. Although the market is growing in liquidity and depth, the only public record showing capacity in the REC market comes from a list published by the Board of Public Utilities. But discrepancies can develop between the number of credits applied for and the number of projects that actually move forward. This means the market can carry a lot of “bragawatts,” Stern said, in which developers apply for credits but then fail to develop the project. As a result, SREC buyers often perceive the market as being oversupplied, which leads to lower REC prices. “This is a very New Jersey-specific structure” not seen in other markets where Nautilus is active, Stern said.
Siting solar PV on a structure atop a parking lot can make sense where vacant land or suitable rooftops are not available, Bucknam said. “A lot of buildings have HVAC on the roof” or the roofs themselves may need repairs or reinforcement to support a structure. A parking lot may not always make sense, particularly if it is on the shady, north side of a building or otherwise blocked from the sun.
Another consideration is the disruption that construction can cause commuters. SunDurance coordinated deliveries to make the most of available laydown space and avoid taking away too many parking places at any one time, Bucknam said.
The university also insisted that for public safety reasons lighting levels beneath the structures be at least the same as they were before construction. Bolyai said lighting levels actually improved after construction. The additional operating costs for the highly efficient lighting fixtures installed on the structures are passed on to Nautilus.
In the end, solar turned out to be the “right thing to do” for the university, Bolyai said. The project has been well received, gives the university predictable electricity costs and improves its sustainability profile. Plus, the elevated solar panels offer a shady place to park on hot, sunny days.