State's questions resolved on UI solar farm
A field of solar panels designed to supply about 2 percent of the electricity demand at the University of Illinois has cleared a major hurdle with the state, and officials are hopeful installation will start later this year.
The "solar farm" is considered a key part of the UI's transition to renewable energy but it's been delayed for months because of state questions about the project.
To be built near the southwest corner of First Street and Windsor Road, the solar farm is a public-private partnership between the UI and Phoenix Solar Inc. of San Ramon, Calif., which would design, build and operate the farm for the first 10 years and then turn it over to the UI.
As proposed, the UI would buy all of the energy produced from Phoenix Solar through a power-purchase agreement, paying the company about $1.5 million a year or about $15.5 million over 10 years.
That's about $5.3 million more than it would cost to obtain the same energy from conventional sources, but the idea is to move the campus toward renewable energy. After 10 years, the university would own and operate the farm at little or no cost, other than an annual warranty fee that is part of the $15.5 million, according to the UI.
Construction of the 20-acre solar power installation on the south campus originally was scheduled to start last summer. But a state procurement officer questioned the financial wherewithal of Phoenix Solar and raised technical questions about the bidding process, according to documents released under the Freedom of Information Act last year.
Phoenix Solar, like other solar companies, showed a decline in profits in 2012 and early 2013 as the industry went through a downturn, though the company's share price later rebounded.
State officials said the complex financial arrangement — a multiyear contract with an outside vendor operating on university land — warranted further scrutiny, and new state procurement rules extended the review process.
The delay threatened the UI's goal of achieving 5 percent renewable electricity by 2015 under its 2010 Climate Action Plan, as the solar installation will get the campus about halfway there.
Ben Bagby, chief procurement officer for Illinois higher education, said the state's questions have been resolved. State Procurement Officer Steve Rotello approved the arrangement on March 6, and the Illinois Procurement Policy Board waived the 30-day waiting period the following day.
That cleared the way for the university to issue the contract, said Morgan Johnston, sustainability coordinator for UI Facilities and Services title.
The university is now reviewing a draft power purchase agreement and finalizing details with Phoenix Solar Inc., Johnston said. The major points of the agreement were negotiated previously.
Phoenix Solar will also have a lease agreement with the university, as it will operate on university property, she said.
Officials have emphasized that Phoenix Solar will assume all financial risk with the project, covering the upfront investment — the engineering work, construction and solar panels.
If it fails to produce the promised amount of energy, the UI will simply pay less, Johnston said.
"We only pay for electricity received. That's the only cost to us," she said.
The company will create a limited liability corporation to run the solar project, and that will also need state approval, she said.
The hope is that construction will start this calendar year, she said.
Installation is expected to take 30 weeks — more than seven months — from the time the UI receives a final notice to proceed until the farm is producing energy. The schedule will also depend on the weather, Johnston said.
The UI Board of Trustees has already approved the plans.
The university will take ownership of the solar farm after 10 years.
"We are absolutely counting on it lasting at least 20 years total, and it's likely to last longer than that," she said.
This is believed to be the largest solar farm of any Big Ten campus, she said.
"We would like to be an example of a successful installation," Johnston said.
Facts about the UI installation:
— It will be built on 20.8 acres near the southwest corner of First Street and Windsor Road, west of the pond and east of the railroad tracks.
— UI will buy all electricity produced by the installation (at 19.6 cents per kilowatt hour) and retain all renewable energy credits.
— It will have a 5.8 megawatt capacity and can produce 7.5 million kilowatt hours per year, though production will degrade slightly over time.
— That's about 2 percent of the campus' electricity use, which in turn makes up 41.6 percent of total energy use on campus. The rest is produced by steam.
— The 10-year, $15.5 million cost is based on the annual 7.5 million kilowatt figure. If the farm produces less, the UI will simply pay less, according to the proposed agreement.
Source: University of Illinois Faciliites and Services