Newport council poised to join Middletown in renewable energy plan
NEWPORT — The city is proposing to join forces with Middletown to purchase renewable electricity that would result in significant savings for both communities.
The city of Newport now uses a total of about 13.93 million kilowatts of electricity per year while Middletown uses almost 5 million kilowatts of electricity each year. Both communities are planning to cover 50 percent of their electricity needs through credits received through the use of solar energy.
The City Council will take up on Wednesday the award of a 20-year contract to NRG Energy of San Francisco to receive “fixed net-metered credits” that would represent approximately a 35 percent discount on today’s National Grid electric rates.
The Middletown Town Council approved the contract with NRG last September.
Under the agreement, NRG Energy will develop a solar farm in Warwick whose energy will feed into National Grid’s electric grid. National Grid would give the city and town bill credits based on the amount of kilowatt hours produced, and the town will pay NRG for the credits it receives.
Under the agreement, Newport is expected to receive $381,000 in savings during the first year of the project, savings of $2.07 million after five years, and savings of $14.87 million during the life of the contract.
Middletown would achieve savings of $152,000 during the first year of the project, savings of $835,000 after five years and about $4.4 million during the life of the contract.
The projected savings from the communities represent both municipal and school department facilities. These projections assume a 1.73 percent increase in rates over the next 20 years and some degradation in the solar production.
Public entities are allowed to enter into virtual net metering arrangements with renewable energy developers.
“I would characterize the virtual arrangement as receiving all of the benefits in this case of owning our own solar array energy project without having to own the project nor build it or finance its construction,” City Manager Joseph R. Nicholson Jr. wrote in a memorandum to City Council members.
The project and the terms of the contract were presented to City Council members Thursday night by Julian Dash, managing partner of Clean Economy Development, LLC, of Providence.
Newport and Middletown hired the company as a consultant at the end of 2017 to explore net metering energy opportunities to achieve savings on utility bills. Net metering allows customers with eligible renewal energy systems like solar power and wind power to receive credits on their electricity bills.
Clean Economy put out a request for proposals in early 2018 that eight firms responded to. Besides NRG Energy, they included Energy Development Partners of Providence; Green Energy Development of North Kingstown; NuGen Capital of Bristol; Southern Sky Renewables of Warwick; Nexamp, Inc., of Boston, Massachusetts; Sol Systems, LLC, of Washington, D.C.; and Turning Point Energy of Denver, Colorado.
NRG was deemed to provide the best value to the communities, since it will pay all capital and development costs to bring the project online and will be responsible for the ongoing operating, maintenance and system performance.
So, during the first year of the contract, NRG Energy will have a contract volume of 6.96 million kilowatts provided to the city by National Grid, according to Dash’s presentation. The net meter credit rate set by the state Public Utilities Commission is 15.47 cents per kilowatt.
The value of the bill credits on the city’s electric bills in the first year would be $1.08 million. The city would pay NRG $696,688 for those credits it received. Thus, the city’s savings would be $381,005 for the first year.
Newport and Middletown could have sought to cover a greater percentage of their electricity needs under the contract, but agreeing to 50 percent gives the communities flexibility if they want to enter a second agreement with another company in the future, Dash said.
The name on the contract and supporting documents is NRG Energy, but Dash pointed out the company recently sold its renewable energy business, assets and obligations to Clearway Energy Partners. This new company will retain NRG Renewables President Craig Cornelius as CEO at its headquarters in San Francisco, California, according to online reports.
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