WINCHESTER - The town spends roughly $2M annually on energy costs, which include all fuels - buildings, vehicles and lights - according to Energy Conservation Commissioner Susan McPhee. Out of that, Winchester spends the most on electricity, at around $1.2M in FY19 or about 60 percent of the total energy spent each year.
To save both the town and residents money, Winchester went solar recently on buildings like the high school and Vinson-Owen Elementary School. Part of the savings come from competitively bidding with a broker every few years to purchase competitively priced power.
“When the town enters into a PPA (Power Purchase Agreement),” said McPhee, “the primary savings are here - we are generating our own power. Therefore, we purchase less.”
That’s supply; however, like every good story, there are two sides. Besides supply, solar also brings demand, distribution, peak charges, and fees from Eversource (the company who does the billing). McPhee said this is a “steadily rising cost, roughly 62 percent these days.”
She added, “the utility charges us what they can get approved by DPU (Department of Public Utilities),” such as for wires, poles, billing, the grid, etc.
Until now, McPhee acknowledged, there had been no way to lower these costs for the town. Now, thanks to a vote of the Select Board, and conditioned on final approval by Town Counsel, Winchester can join community solar through a deal with Clearway Community Solar and receive a 10 percent discount on this portion of the town’s power bills, the Eversource portion (roughly $60,000 per year).
“Because we are helping Eversource put more renewable power on the grid,” McPhee noted, “we are rewarded with the ‘on the bill credit.’”
She also pointed out the credit won’t change, as Eversource is committed to increase renewable energy every year, in order to meet the state’s required clean energy standard. That standard, McPhee noted, is required to increase by two percent every year.
“We are committing to use X amount of power from Eversource for the next 20 years. We are committing to the ‘demand’ portion of the bill,” according to the Energy Conservation Commissioner.
McPhee informed the board how the town’s electricity will only rise as it moves away from fossil fuels and towards electricity for heating and cooling. And, as the deal requires the town to supply a certain amount of energy, McPhee stated she’s “comfortable committing that our demand will not drop below the level committed in this project.”
She admitted the town has been trying to use less energy, “but there’s no magic bullet to make that happen.”
This program is a part of the state’s SMART solar program, as Governor Charlie Baker retooled all solar incentives. SMART is tariff based, with the utility paying the developer. It is a solar “adder” that allows the developer to apply for a higher incentive rate.
McPhee called community solar “a piece of ‘value stack’ created with large scale renewable projects” and said other “value stacks” include selling the power to Eversource, an investment tax credit, a state tax credit, and SMART incentive payments from Eversource.
When creating projects under SMART, McPhee said, developers assign demand (the town) at least three per project, and Winchester receives a 10 percent incentive for being the off-taker listed on their projects.
If the town terminates its agreement with Clearway, which McPhee doesn’t anticipate, it would incur a $1.1M termination fee. According to Town Counsel, there are two ways that can happen: default on behalf of the town (i.e. the town isn’t credit worthy or goes bankrupt) or for convenience (not interested in going further).
Originally, the termination fees were much higher, which was the biggest issue for the town, said Select Board member Mariano Goluboff. However, Town Counsel worked with the company to lower the potential cost if the town pulled out or defaulted.