EarlyBird News

← Go back

Cape Hospitals Cut Sunny Energy Deal

January 7, 2013

By Doug Fraser

HYANNIS — Cape Cod Healthcare wanted some portion of the $3 million a year in electricity the company uses to come from a renewable energy source.

Meanwhile, Willard Rhodes wanted to pay off more than $200,000 in back taxes and make some money off a capped demolition-debris landfill in Carver that had been unused in more than a decade.

Enter Southern Sky Renewable Energy, which proposed building the Ravenbrook Farms Landfill Solar Facility, a 6-megawatt solar farm on 15 to 16½ acres of the private landfill. It’s the result of a deal brokered by energy consultant Shaun Pandit, president of EarlyBird Power, that reaps more than $300,000 a year in estimated electricity savings for Cape Cod Healthcare while making possible the largest solar landfill project in the state.

“We’re always looking for ways to capitalize on renewable resources, and solar is at the top of the list for us,” said Edward Browne, the director of real estate and facilities for Cape Cod Healthcare. “If we can do the right thing from a green perspective, and save a little money, that’s the best thing for us and for the environment.”

But how does building a solar farm 40 miles away generate savings for Cape Cod and Falmouth hospitals?

The answer lies in the Green Communities Act of 2008, which created a secondary market for renewable energy such as wind turbines and solar farms. The act ended the requirement that renewable facilities be located adjacent to a big power user, such as a wastewater treatment plant, to be economically feasible. As a result, big power distributors like NStar and National Grid now pay renewable energy generators the retail price for the power they generate, which is two to three times the wholesale price.

But they aren’t paid cash. Instead, the power generators receive net metering credits that can be applied against their utility bills. But because they use very little power relative to the electricity they produce, they must find someone to use those credits before they can build.

As a major consumer of electricity, Cape Cod Healthcare, with two hospitals that use 30 million kilowatt-hours per year, could take all of the net metering credits the Ravenbrook facility can generate. As part of the deal that allowed Southern Sky to build the facility, Cape Cod Healthcare signed a 20-year contract that would save $325,000 a year thanks to the net-metering credits it can apply against its bill.

So, what does Southern Sky get out of the deal? Because Massachusetts requires that utilities pay a significant penalty if a certain percentage of the power they sell doesn’t come from renewable energy sources, a secondary market has developed around what are known as renewable energy certificates. These are bought and sold like stocks or commodities and their price fluctuates depending on how much renewable energy any large power utility needs to fill out its portfolio.

The Carver project will cost an estimated $18 million to $20 million. In addition to paying off Rhodes’ back taxes, Southern Sky will pay $100,000 a year in payments in lieu of taxes over the next 25 years, as well as lease the land from Rhodes. Like any renewable power generator, Southern Sky will get much of its profit from the sale of renewable energy certificates, along with tax incentives, rebates and other incentives.

Cape Cod Healthcare did explore building its own turbine or solar facility, but found the capital required, the permitting, and the risk of locating such an operation on the ocean too great at this time, Pandit said.

“We did an exhaustive review and this made the most sense,” Pandit said.

Cape Cod Healthcare doesn’t risk any capital but does forgo benefits such as renewable energy credits on the amount of power represented by the net-metering credits they receive from the Carver landfill solar facility. But they can develop other renewable energy projects for their remaining power needs.

“We’re always going to have our eye out for other opportunities,” Browne said. “If something else comes along, we’ll look at it carefully.”

This article written by Doug Fraser is posted here as it was released by the Cape Cod Times on January 7.