Solar farm a green leap of faith
November 2, 2007
CARBONDALE ” The Aspen Skiing Co. has pledged to invest more than $1 million in a proposed solar farm in Carbondale, Vice President and Chief Financial Officer Matt Jones said Thursday.
Although the project won’t have any direct benefit to its ski business and the potential return on investment is relatively low, the solar farm appealed to the staff and, more important, the ownership, according to Jones.
“This is probably something we would not have pursued if it was not an environmental initiative,” he said.
The Skico was approached by Carbondale town government officials and the valley-based Community Office for Resource Efficiency to consider the project. The proposal is to install solar panel arrays on one-half acre at the campus of Colorado Rocky Mountain School in Carbondale. Garfield County officials will review the application in November and December and determine if it can proceed.
Randy Udall, executive director of the Community Office for Resource Efficiency, said the project is an outgrowth of a groundbreaking decision in 2004. Colorado was the first state where voters required utility companies to include renewable energy sources in their portfolio. In other states, the legislatures had dictated that direction.
As a result of the vote, Xcel Energy needs to add alternative energy sources. Therefore, it is willing to sign a long-term contract to pay providers a solar renewable energy credit that essentially helps subsidize projects, Udall said.
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The mandate by Colorado voters combined with tax incentives in the federal Energy Policy Act of 2005 pave the way for projects like the Carbondale solar farm, said Udall, a widely-recognized expert on energy issues. The federal government allows operators of solar farms to accelerate depreciation on the solar electric facilities as well as reap solar tax credits.
The tax credits and financial incentives by utility companies provide an annual return on investment of between 6 and 10 percent for investors in solar farms, according to Udall. He said the Skico is on the low end of that range.
“The ski company is not making a ton of money on this thing,” said Udall. “It’s not a charitable thing, either.”
Jones estimated the annual return at 6.5 percent “if everything goes well.” It’s that caveat that makes the deal somewhat risky, because sometimes everything doesn’t go well. Businesses generally look for a greater return on investment.
He credited the Crown family, owners of the Skico, for committing to the project even though “the cold, hard math” might work against it.
CRMS is doing more than supplying the land to make the deal work. It pledged to buy what amounts to between 30 and 40 percent of the electricity that will be produced by the 147-kilowatt solar electric system, Udall said. The remaining electricity will be purchased from the Skico by Xcel and resold to its customers.
Udall said projects like this are becoming more financially viable and attracting investment companies into Colorado. Solar energy powers the international space station and is starting to play a larger role on the planet.
“We’re bringing it down from space to the suburbs,” Udall said.
Solar is the only renewable energy source that can realistically “run the world” and decrease dependence on burning fossil fuels, he said. It is widely available and democratically available, so it has the greatest potential of solving world energy needs. Udall said breakthroughs in solar technology and storage are required and “appear to be on the horizon.”
If the Carbondale solar farm is built, it will produce about 215,000 kilowatt-hours per year, about as much as 20 “average” U.S. households, according to Scott Ely, president of Sunsense, a Carbondale firm working with the Skico and CRMS on the project.
Udall said the facility would prevent the release of about 200 tons of CO2 emissions each year. Carbon emissions contribute to global warming.
Scott Condon’s e-mail address is email@example.com.