Regional Water Authority Begins Move to Renewable Energy

Penn State Extension's REMAP Program Brings Renewable Energy Cost Savings to Western PA
Regional Water Authority Begins Move to Renewable Energy - News

Updated: June 16, 2018

Regional Water Authority Begins Move to Renewable Energy

Proposed Solar Farm at Hunker Wastewater Treatment facility

As the name implies, the Municipal Authority of Westmoreland County (MAWC) is headquartered in the southwestern County of Westmoreland, PA. What many customers served by MAWC may not know is that it reaches into 4 neighboring counties and that it serves over 120,000 homes, business, industries and institutions. Supplying clean water from local resources and collecting and treating wastewater in a growing number of communities is what makes this large non-profit public authority tick. Something that goes along with treating and delivering 60 million gallons of water a day is a large electric bill. After all, water is heavy and moving it to homes and businesses across the region requires working against gravity much of the time.

With a monthly consumption of electricity in the millions of kWh it is not hard to understand that electricity is among MAWC’s greatest expenses. Paying that monthly cost of operation is overshadowed by the reality that most public authorities in southwestern PA face an aging population transitioning to fixed incomes, a more transient population, and a population that has employment challenges. All three factors make emphasizing energy efficiency and tapping into renewable energy opportunities an important matter when planning for the future.

Ed Johnstonbaugh, with Penn State Extension, Westmoreland, is working to address this challenge with the REMAP program. Developed in 2015 and supported by the R.K. Mellon Foundation, the Renewable Energy for Municipal Authorities Project (REMAP) focuses on developing Solar Photo Voltaic electric generation facilities for authorities like MAWC to control electrical costs of operating facilities so that water and sewer service can remain affordable without sacrificing quality of service.

In consultation with the REMAP project, MAWC has entered into a power purchase agreement for the development of a multi megawatt solar farm. The electricity produced will offset purchases of electricity from the grid by directly converting sunlight to AC current. Using an IRS approved financing model called Tax Equity Financing a developer will build, operate and sell electricity to the MAWC’s Hunker wastewater treatment plant at a fixed price below the current market price. It is estimated that this financial model, requiring no financial contribution from MAWC will save $27,000 a year in electrical expenses in the first five years. Beginning in Year 6 under the IRS rules, MAWC will have the option of purchasing the solar farm for the fair market value. The developer, under the terms of tax equity financing, is permitted to claim the 30% tax credit available for solar photo voltaic systems and also take accelerated depreciation on the equipment purchased for the project. The benefit to the developer derives from these two tax savings strategies that allow for a significant reduction the overall cost of the project.

With responsibility for an extensive treatment, distribution and growing collection network, MAWC is an ideal candidate to contract for additional solar photovoltaic systems to replicate the success of the Hunker wastewater treatment plant model. Doing so reduces the operating cost immediately once the solar array goes online. Should MAWC exercise its purchase option in year six or later, the price of kWh produced from the system immediately drops to zero, while the long term cost of financing the purchase would be charged at below market interest rates that municipal authorities can obtain.

The REMAP project is actively looking for other municipal authorities that would like to consider using this approach in their municipality. Removing the cost of developing the project from cash strapped Authorities makes these projects, provided adequate land is available to locate the project, a financial windfall. The benefit of offsetting electrical purchases from the grid using clean renewable solar energy goes straight to the bottom line-the ratepayers wallet. For more information, contact Ed Johnstonbaugh at exj11@psu.edu.

Prepared by Ed Johnstonbaugh, Penn State Extension, Westmoreland County

Authors

Agri-Energy Economic Development

More by Edward Johnstonbaugh