June 25, 2013
FOR IMMEDIATE RELEASE
As more and more Sun City residents have chosen to lease photovoltaic (“PV”) solar systems for their private residences, they have become better informed about the process of doing so and how it works. However, RCSC would like to explain what it means for RCSC to go solar and how it works.
One way to help fund commercial PV [electric] solar projects is with Federal and State tax credits. As a non-profit organization, RCSC is not eligible for these credits. Therefore, an organization that was eligible purchased the PV solar systems and must maintain ownership of the solar systems for over 5 years in order to retain the credits. RCSC has entered into a 15-year lease agreement with the owner of the solar systems located on RCSC facilities.
The installation was also facilitated, in part, by the APS Renewable Energy Incentive Program. This Program offers financial incentives to customers who add Renewable Energy systems to their homes or businesses. The Program is funded by APS customers and approved by the Arizona Corporate Commission. The annual incentive on the 14 PV solar projects on RCSC property is estimated at $185,000 per year for the next 20 years, or $3.7M total.
The projected savings of electricity costs over the term of the lease averages $480,000 per year, while the lease expense averages $609,000 per year. With the APS incentive, this creates an average positive variance of $56,000 per year. So when RCSC Members ask, “What is the solar costing us?” and RCSC answers, “Nothing!” that’s a fact. The financial benefit provided from the solar systems is greater than the cost of the lease. And yes, all the parking structures are included with no additional costs to consider. What’s not included in the above are any costs for repairs and maintenance, which are expected to be minimal, and insurance on the solar panels, approximately $13k a year, which are also easily covered by the $56,000 per year overall savings.
This, however, is not the only opportunity for savings. The lease offers some options and opportunities for additional savings including the buyout of the lease at 66 months for $4.4M. The Board will update the long-range plan accordingly in the near future. The RCSC Board of Directors has unanimously agreed to use Preservation & Improvement Funds (“PIF”) and take advantage of these opportunities for additional savings of over $3M.
Currently RCSC has a lease for solar systems which are projected to provide with energy savings, incentives, lease payments, insurance and estimated repairs and maintenance expense a net benefit of approximately $40,000 per year to RCSC. At 66 months into the lease, RCSC will buyout the lease with PIF funds, creating an annual operating expense benefit of approximately $650,000 per year for the next 14½ years, at which time the incentive will end and RCSC will be left with a projected net $450,000 per year savings. RCSC believes that this investment in solar is not only good for the Sun City community, it is good for the greater Phoenix area as solar power helps abate pollution and additional infrastructure costs such as new natural gas plants used for providing electricity.
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