Gov. Janet Mills’ much-touted Blaine House solar project is a powerful symbol of the state’s new climate-change leadership and pledge to become carbon neutral by 2045. But as an energy investment, its value to taxpayers is debatable.

The $63,000 solar-electric installation wound up being so uneconomical as a business venture that only one vendor bid on the high-visibility but money-losing job, picking prestige over profit.

Special considerations at the Blaine House also precluded the state from negotiating a more beneficial agreement in which someone else would finance and own the project, as is common with solar installations at government and nonprofit institutions. To maintain security and access to equipment at Maine’s executive mansion, the state bought the system outright, with funds from the Bureau of Real Estate Management.

State ownership eliminated the opportunity to lower the purchase price by taking a key, 30 percent federal tax credit. It extended the project’s estimated investment payback to 29 years, nearly three times longer than for solar arrays at a typical business.

In addition, the project’s revised design generates only half as much power as initially specified, taking a smaller bite than expected out of the building’s $12,000 annual electric bill.

Despite these modifications, the Mills administration says the project’s economic benefits should be viewed in broader terms.

“The length of the payback period is not and should not be the only measure of the project,” said Lindsay Crete, the governor’s press secretary.

Crete noted that the project already has offset more than 1,400 pounds of carbon emissions, equal to planting 36 trees. Although the Blaine House isn’t heated with oil, Crete added that the panels will annually offset the equivalent of burning 43 barrels, or 1,806 gallons of oil, with clean, renewable energy.

“When all these factors – the reduced consumption of and reliance on fossil fuels, the increased consumption of homegrown clean, renewable energy and, additionally, the very real demonstration of Maine’s long-overdue embrace of renewable energy – are taken into consideration, the state is satisfied with this project and believes it is a sensible, forward-looking investment that moves Maine in the right direction,” Crete said.

SOLAR CONSTRAINTS

Installing solar panels at the Blaine House has been a priority for Mills, who first mentioned it during her inaugural address last January. They are seen as a high-profile way to signal that Maine plans to be a national leader in combating climate change, by reducing the fossil-fuel emissions associated with power generation.

Last month, Mills used the project as a backdrop to announce an executive order directing state agencies to develop a sustainability plan by February of 2021 to help meet aggressive carbon-reduction goals. Media coverage showed Mills, state officials and clean-energy supporters in front of a ground-mounted, 24-panel array, glimmering in the afternoon sun on the west lawn. In the background, 37 roof-mounted panels covered the carriage house.

Those two locations were the only places initially authorized for solar panels. No panels could be installed on the sprawling, historic mansion, which was built in 1883. That and other aesthetic and zoning limitations added to the cost and complexity of the project, which went out to bid last winter.

A site visit for bidders took place on Feb. 6, and four companies expressed interest. Proposals were due on Feb. 28. Only one company presented a bid, ReVision Energy of Portland, the state’s largest solar installer.

Constraints presented by the landscaped lot and historic restrictions made it a challenging project, said Fortunat Mueller, a co-founder of ReVision. In the end, the job probably wasn’t profitable, but it was still worthwhile, he said.

That’s in part because Maine’s small solar industry struggled for eight years under the anti-renewable policies favored by former Gov. Paul LePage and his Republican allies. The election of Mills and a Democratic majority in the Legislature last year ushered in a new era of growth and government support for solar energy.

“It’s not a money maker,” Mueller said. “The value of the project for us, and for the state, is the visible demonstration of leadership by the governor, which we are grateful for.”

Two other highly experienced solar installers looked at the project and decided not to bid.

“The economics were upside down,” said Danny Piper, co-owner of Sundog Solar in Searsport. “We were going to lose money.”

Piper said the $63,000 price tag was fair, but was too low for him to compete with. Roughly half the cost involves panels mounted on a dual-axis tracking array, which uses a motor and GPS technology to follow the sun’s movement. It’s more expensive, but produces more power in a smaller space.

Governments don’t pay taxes, so they can’t take advantage of the 30 percent federal tax credit for solar, an incentive that’s being phased down.

“The tax credit is really important,” Piper said. “If you don’t have it, it pushes the payback past 12 years.”

DIFFERING CRITERIA

Lacking the tax credit isn’t always deal breaker. Every project has three variables – how much space is available, how much energy can be produced and what the customer considers for value, said Vaughan Woodruff, founder of Insource Renewables in Pittsfield.

As an example, Insource’s Facebook page highlights a recent installation at the Mid-Maine Chamber of Commerce in Waterville. The roof has room for panels that will offset all the building’s annual electric needs, but no tax credit was taken. The simple payback is calculated at 12 years.

Woodruff went to the Blaine House bidder site visit, but didn’t offer a bid. He said that while he supports solar at the governor’s mansion, it wasn’t a priority for his company.

Both installers were asked if the investment seemed like a good one for taxpayers.

Piper said it appeared the state wanted to do the project and put out an RFP, but couldn’t get a competitive bid process.

“It could be that the chicken came before the egg,” he said.

Woodruff said that as long as the project pays for itself within the life span of the equipment, it’s an acceptable use of capital for state government, which will still be in business and using electricity in 29 years.

SHIFTING GOALS

The initial proposal request was for an installer to “design, install, finance, own, operate and maintain a photovoltaic (PV) system at the Blaine House property.” 

The state planned to score and select a winning bidder and enter into a power purchase agreement, a common contract in which a vendor installs and operates a project and a buyer purchases the electricity. In this instance, the project was to have a capacity of 35 to 45 kilowatts. It was sized to supply 50 percent of the Blaine House’s electric needs, or roughly 92,000 kilowatt hours a year.

The project ended up with a capacity of 20 kilowatts, sized to meet 25 percent of the mansion’s electric demand.

The initial goal was to make the project self-funding. That means the savings from reduced electrical expenses would offset the cost of purchasing the installation in six years. Failing that, bonds could be issued or other funds used for the buyout. Cash flow calculations were based on a 20-year project life.

Making those calculations is tricky, Mueller said. Maine state government pays a lower rate for electricity than a typical home or business. But it pays a steep demand charge, a fee tied to the highest amount of electric use annually. The lower rate means it takes longer to pay back the $63,000 investment, on one hand, but the solar panels might help lower the demand charge driven by air conditioning on a hot summer day.

Mueller agreed, however, that the projected 29-year payback, which estimates future electricity costs, wouldn’t be acceptable for a business. Six to 10 years is more typical today, he said.

That measure makes more sense to Sen. Dana Dow, the Republican leader in the Legislature. Dow owns a furniture store in Waldoboro and said he’d like to have solar panels, if he could afford them.

“I have to weigh the business value of everything,” he said. “I can see the symbolic gesture (at the Blaine House), but I can’t do that in my business. I have to have a return on my investment.”

Asked if he placed a value on climate leadership, Dow said that goal should be weighed against the impact on the state’s business climate and the ongoing struggle to attract young workers and families.

“I’ve always said, the state isn’t a business, but it needs to act more like one,” he said.

Crete, the governor’s spokeswoman, said that solar panels at the governor’s mansion can boost the economy by demonstrating support for the growing clean-energy economy and the jobs and investment that come with it.

“When children and visitors from across the world visit the home of the governor and see and learn about these solar panels,” she said, “we hope they will walk away knowing that clean, renewable energy is good for our environment and good for our future.”

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