Daniel provides strategic direction and content for AI’s electronic publication Higher Ed Impact, including market research and interviews with leading subject matter experts on critical issues. Since the publication’s launch in 2009, Daniel has written more than 200 articles on strategic issues ranging from student recruitment and retention to development and capital planning. If you have a question or a comment about this article, feel free to contact Daniel at email@example.com.
One campus sustainability trend emerging in early 2011 is that more institutions are considering larger solar installations. To cite a few major examples from the past few weeks, the University of Maryland at College Park recently announced its plans to install more than 2,600 solar panels on buildings across campus, and Princeton has announced plans to install a solar field featuring 16,500 panels on 27 acres of campus-owned land.
To assist other colleges and universities that are considering whether to add solar installations (either small or large), we turned this week to Jon Pietruszkiewicz, senior project manager for renewable energy and energy efficiency at Black & Veatch, to learn more about:
- How the solar market is changing
- What questions institutions need to address as they consider investments in solar energy
Trends in the Costs of Solar Power
Pietruszkiewicz notes that as recently as two or three years ago, the payback period on rooftop solar installations for institutions of higher education was uncertain or long enough to make it difficult for many colleges and universities to justify return on investment. However, two factors have contributed to making solar power much more affordable for colleges and universities:
- A swift decline in the cost of solar installations
- A rise in state incentives offered to help finance solar installations (among other renewable energy projects)
First, the cost of photovoltaic (PV) modules (which account for 40 percent of the total capital cost of the installation) has dropped, and is likely to continue to drop as more large installations are put in and the customer base for PV grows; to shed light on likely future trends in cost (and why the decline in cost is unlikely to level out in the near future), Pietruszkiewicz notes three factors:
- Continued improvements in the efficiency of PV modules
- As demand rises, the manufacturing facilities for PV modules are getting larger, allowing for economies of scale
- The handful of major players that have become dominant in the module supplier market are driving down the cost as they compete with one another
In the past few years, the percentage of the states that offer incentives for solar installations has climbed rapidly. For example, several northern states that don't have a reputation for being "sunny" locales now have subsidies and incentives that make solar panels much easier to finance.
To investigate the options in your state, Pietruszkiewicz recommends regularly reviewing the Database of State Incentives for Renewable Energy (DSIRE), an online resource managed by North Carolina State University.
What Questions to Ask
Jon Pietruszkiewicz, Black & Veatch
Pietruszkiewicz advises that special attention needs to be paid to the question of how vertically integrated your supplier is.
In other words, how many independent parties are there between you and the module supplier? To be assured of the quality of your installation over its projected life cycle, you need to be assured of the level of experience of those third parties, not just of the organization you are contracting with. There are very few organizations that can provide you with an engineering procurement contract supplying you with everything from the module to a completed installation, and it may not even in all cases be in your best interest to seek that option.
You may, for example, want to overlay that service and have it procured by an energy services company (ESCO) on your behalf (or by another entity that offers a performance contract or a power purchase agreement), so that the ESCO is actually buying the installation and you are buying the energy from it. In that scenario, you are ensuring that you trust the particular ESCO (based on its track record with projects like your own) to make the right purchasing decisions.
In such a case, Pietruszkiewicz emphasizes the importance of managing the contract with due diligence: "It could be that you structure the contract in such a way that the ESCO has responsibility for the complete installation and for its quality over the entire life cycle of the installation. A poorly constructed contract, on the other hand, may leave you thinking you are only buying the energy from the installation, when in fact you are left with the maintenance and the repair."
In this March 2010 article in Higher Ed Impact, Bruce Colburn (EPS Capital Corp.), who has both taken part on many college review committees selecting ESCOs and served at an ESCO, offers practical advice on how colleges can set up a successful partnership from the beginning -- including what to consider in the RFP, the selection process, and the contract.
Pietruszkiewicz offers this checklist of critical questions to consider at the outset, in order to ensure the successful implementation of a photovoltaic project:
- How long has the organization you are partnering with been in business?
- What is the organization's track record with projects of an equivalent size to yours?
- What, exactly, is the organization offering to supply? How vertically integrated is the supply?
- Whose module are you purchasing? Has this module been used in many places? What is its survivability likely to be? "If you are buying from one of the major players," Pietruszkiewicz remarks, "you're probably assured of buying quality. If you are buying at the lowest price and are looking at the latest thing in from China, you may not know if the supplier has even delivered in this country before, if you don't ask."
- Who will own the installation?
- Who will maintain the installation?
- If another organization is maintaining the installation, will they do remote monitoring to tell you when the installation needs maintenance? Or do they depend on a regular maintenance schedule? Or will they require you to monitor and then contact them when there's a problem?
Jon Pietruszkiewicz, Black & Veatch