Council agrees to solar deal

Council agrees to solar deal

No obligation to also award Southern Sky landfill project

CUMBERLAND – Town officials have approved a 25-year net metering contract with Southern Sky Renewable Energy, the top bidder of six involved in an analysis process.

Southern Sky’s project includes a $500,000 up-front “balloon” payment, a $10,000 annual “Mayor’s Grant” for various uses over the life of the contract, and $358,000 in annual savings on the town’s electric bills over 25 years.

In addition to negotiating the up-front payment after he came into office, enhancing former Mayor Bill Murray’s initiative on a net metering pact, Mutter also brought charter school Blackstone Valley Prep into the agreement.

The electric savings break down as $132,303 each year for Cumberland schools, $183,546 for the town, and $42,553 for BVP.

The 25-year benefit to the town is estimated at $11.15 million, including $868,404 in up-front savings and payments in year one.

The Town Council approved a resolution authorizing Mutter to enter into an agreement with Southern Sky at its meeting last Wednesday, April 3.

There is no cost to the town for this project, and it won’t impact the tax rate. Ralph Palumbo, of Southern Sky, told town officials that this deal is essentially “free money” for the town, as his company is “doing all the work, taking all the risks.”

Best Practice Energy, hired under Murray to plan this agreement to allow an apples-to-apples comparison of projects, recommended that the town go with Hopkinton-based Southern Sky over Massachusetts-based Ameresco as the winner of a request for proposal, or RFP, process.

Jordan Berman, director of energy services for Best Practices Energy, told the council that Murray originally reached out to request a streamlining of the process for Cumberland to enter into a virtual net metering deal, where the town will enter into a solar power purchase agreement with Southern Sky and the developer will then design an offsite solar facility. The fact that Southern Sky has an approved site already in Hopkinton counted in the company’s favor, as Cumberland officials were looking to avoid risk.

Berman said he expects Cumberland will be on the upper end of a savings range of 16 percent to 22.5 percent on its electric bills.

Power generated by the facility will feed directly into the power distribution system and the town and its schools will receive a credit on their National Grid bill equal to the amount of power produced by the Hopkinton facility multiplied by a net metering credit rate determined by National Grid. Cumberland pays a percentage of the credit to Southern Sky and keeps the rest.

There were originally 10 companies interested in entering an agreement on net metering with Cumberland, but several dropped out when an addendum by the new administration made the changes on the charter school and the up-front payment.

The project is expected to go online by November.

Mutter said Southern Sky’s proposal made the most sense, with strong economics and the ability to move forward more quickly. There was less risk with that proposal, as permitting is in place and the company is ready to build. “It’s more of a sure thing,” he said.

The mayor said the balloon payment was a big deal to him. The Ameresco deal might be better financially, with one option showing an estimated $13 million in benefits over 25 years, but it came with more inherent risk, he said, something he simply didn’t want to take on.

This project is entirely separate from the town’s push to have the old Albion Landfill capped and used for a future solar facility. Councilor Scott Schmitt sought clarification that this agreement with Southern Sky doesn’t obligate the town to also have the company help with the capping and do that landfill solar project, and was assured that the town can still go with another partner.

Southern Sky is known for developing solar projects on closed dumps.

Schmitt said he especially likes this project because it doesn’t take up space in Cumberland, yet the town benefits greatly from it.

Councilor Bob Shaw brought up “four huge points” in Southern Sky’s favor:

• That there is no risk to the town over 25 years, and no financial burden will ever be placed on the town if anything changes on Southern Sky’s end.

• That there are “no hurdles” on the project, as Southern Sky owns the land already.

• That the $500,000 balloon payment will immediately help with Cumberland’s budget issues.

• And that the town should score among the top projects in the state on reimbursement totals.

Southern Sky was rated ahead of Ameresco in three of five categories, including experience and qualifications, cost/benefit and proposal detail and approach. Two other categories, performance guarantees and financial stability, were rated as neutral.

The deal is contingent on a number of other approvals.