RFQ for Convention Center Solar Array Issued

Hello! The City of Knoxville issued a Request for Qualifications last Friday seeking firms interested in designing, installing, and financing a large solar array for the Knoxville Convention Center. Interested parties may find the full RFQ at: http://www.cityofknoxville.org/purchasing/.

Below is the city's press release about the project, and below that additional information regarding electricity generation, cost, and pay back calculations.

Please contact Susanna Bass at 865-215-4430 for more information.

PRESS RELEASE

The City of Knoxville is seeking a contractor to design, install, and finance a large-scale solar photovoltaic (PV) array, ideally on the roof of the Knoxville Convention Center.

The City allocated $250,000 of Energy Efficiency & Conservation Block Grant funding towards this project and is seeking a firm that can leverage those funds by taking advantage of tax credits and other financial incentives, so that the solar array can be much larger than one directly financed by the City.

A Request for Qualifications of interested firms was issued today. Responses are due on March 5 and the City anticipates selecting the most qualified contractor on March 19. The solar installation should be completed and generating electricity by 2012.

The Convention Center solar project is only one element of the City’s overall plan to use the $2 million EECBG grant to encourage the development of clean energy sources here in Knoxville.

Although the exact size of the solar PV system will be determined by the financing structure proposed by the selected firm, the City hopes to achieve a system capacity of about 100 kW. A system this size would be comprised of over 500 solar panels and could generate enough electricity annually to power roughly 15 average American households for a year (according to average electricity consumption data from the EIA).

The system will participate in TVA’s Generation Partners Program, which means that all the clean energy it produces will feed directly into the electrical grid.

Knoxville still has to obtain the necessary environmental approvals to place the array of solar panels on the Convention Center. If it cannot obtain those, the city would look to install the system on another large publicly-owned structure.

“The intent of this project is to catalyze local solar market growth through successful execution of a third party financing model” says Susanna Bass, the City’s Sustainability Program Manager. “These grant funds provide an opportunity for the City to host this project, providing both a location and seed funds for a financing plan.”

The innovative financing model sought for this project means that the City can expect significant leverage of grant funding. Assuming the total cost for designing and installing a 100 kW system is $1 million dollars, the City will only contribute $250,000, and the winning company will be responsible for the remaining $750,000. Tax credits, depreciation benefits, and the value of produced electricity - which TVA will purchase for $0.12 above the GSA 1 electricity rate - can help that company re-coup their investment.

Beyond the obvious positive environmental impacts of deploying clean energy systems (solar PV creates energy without emitting any pollutants), providing a successful example of how third party financing of renewable energy can work in the Tennessee Valley will compliment the Knoxville’s Solar America Cities Program’s efforts to build a strong local supply and demand market for solar. If the system size reaches 100 kW, it will be the largest PV system in Knoxville and will help build a market for other large solar arrays that can create and sustain local jobs in the solar industry. This project is estimated to create or retain 8 jobs, according to DOE’s job calculator for stimulus activities.

“Third-Party Financing has helped solar grow tremendously in other parts of the country. By demonstrating a workable model, we can help bring that momentum to this area”, Bass said.

The project is being funded with part of a $2 million Energy Efficiency & Conservation Block Grant the city received last year from the U.S. Department of Energy. The EECBG grant is part of the American Recovery and Reinvestment Act funds the City received, and is commonly referred to as federal stimulus money.

More information about financing, electricity output, and pay-back

Projected system size (actual size TBD): 100 kW
Average daily electricity output: 450 kWh
Average annual electricity output: 164,250 kWh
Value of produced electricity via TVA’s Generation Partners (Good for 10 years):
GSA 1 rate + .12 = $0.205/ kWh in 2010.
Average annual value of electricity: $33,700 in 2010.

Estimated total cost of system: $1,000,000
City contribution: $250,000
Leveraged funds: $750,000
Net cost after tax credit for 30% of non-city funded system value: $525,000
Net cost after MACRS Depreciation tax benefits (conservatively valued at 5% of system cost):
$475,000

Assuming annual GSA 1 rate increase of 3%, estimated pay-back time: Less than 16 years
Net system cost after Tax Benefits: $475,000
Total value of produced electricity via TVA’s Generation Partners (10-yr program): $357,490
Assuming value of produced electricity equals GSA 1 rate, additional years necessary for system pay-back: Less than 6 years