Philadelphia-area transit agency expects six-figure annual savings from 44 MW solar project

The Southeastern Pennsylvania Transportation Authority projects savings “in the order of several hundred thousand dollars a year, on average, over the 20-year term” of a power purchase agreement (PPA) for a 43.8 MW solar farm, said SEPTA’s Director of Innovation Erik Johanson in a pv magazine interview.

The solar farm, to be owned and operated by Lightsource BP, will offset 20% of SEPTA’s annual electricity consumption.

SEPTA’s decision was driven by the agency’s greenhouse gas reduction goals outlined in its sustainability plan, while the timing reflected recent reductions in solar costs, Johanson said. The 20% target was chosen as it was large enough “that we could get a good proposal with good economies of scale, but small enough that we can continue to take advantage of the prospective cost decreases [for solar energy] as we go forward into the 2020s,” he said.

Johanson said that 40% of SEPTA’s greenhouse gas emissions come from electricity consumption.

SEPTA’s sustainability plan is “award-winning,” said Johanson, and “a hallmark of the plan is that much like this solar project, which is good for the environment, it’s also good for the bottom line. We spend a lot of time focused on making the business case for sustainability investments, such as energy reductions and greenhouse gas reductions. And what’s really exciting is that you’re starting to see a lot of these new forms of energy, like solar, start to be cost-competitive. And so we think that our sustainability program is actually a platform not just for environmental improvements, but for financial improvements.”

SEPTA worked with the law firm Blank Rome to help develop the solar RFP, and with energy consultant Source One to help evaluate the proposals, Johanson said.

SEPTA’s fixed price contract with Lightsource BP will give it price certainty for 20% of its electricity consumption, while allowing the agency to make progress toward its sustainability goals, as the agency will keep the renewable energy credits (RECs) that are created.

For SEPTA to achieve its projected annual cost savings, the fixed price paid by SEPTA will need to be below the price it would otherwise pay for electricity, on average. In regions with high and increasing amounts of solar generation, such as California, there is concern that solar power purchasers with a PPA contract may see market prices for electricity fall below the fixed price at which they have contracted for power. In Pennsylvania, and in the larger PJM grid region, however, there is currently little solar power on the grid.

The only challenge in securing a solar PPA, said Johanson, was the Federal Energy Regulatory Commission’s deliberations over a minimum offer price rule, which “created uncertainty in the renewable energy industry and made negotiating our contracts a bit more complex because of that uncertainty.”

SEPTA is governed by a 15-member board, with 10 members from the five Pennsylvania counties the system serves, and five from the state government. SEPTA also serves portions of New Jersey and Delaware through cost-sharing arrangements.