Special Bd. of Aldermen — 08/06/2019 Page 20
President Wilshire
Anyone else? Thank you very much gentlemen, appreciate you being here. Oh you still have more
presentation. The financials.
Mr. Weeks | will move swiftly through this, naturally we certainly invite questions and appreciate the chance to
answer them as you’ve given us so far. Let me just briefly preface, I’m fortunate to be a local citizen and tax
payer here in Nashua. We deeply appreciate and respect, speaking on behalf of a company whose mission it is
to accelerate this transition from fossil fuel dependence to clean energy. We deeply appreciate and respect that
the Energy Committee here in Nashua has proposed to the Aldermen and | believe the Aldermen have
accepted their recommendation that the City move toward 100% clean energy. A very exciting goal that now
many communities across New Hampshire and the Nation have adopted.
Naturally, we are always thrilled to work with communities that have environmental goals as their primary
motivator but the financials matter too; speaking as a local citizen as well. So at the outset, when we are
approaching a project of this sort and frankly 9 out of 10 projects that we develop, we want to ensure at the
outset that this will provide a financial return to the community and to the business, whoever it may be. The
primary mechanism to achieve that with a municipality or any other non-profit, tax-exempt entity is what is called
a power purchase agreement. To give a couple of the kind of summary facts on power purchase agreements,
the challenge that we are seeking to overcome with PPA’s is that in their wisdom the Federal Government has
chosen to direct all incentives for solar, federal incentives, through the tax code. That means if you are
homeowner or a business owner and have a tax bill to the IRS you can take the 30% investment tax credit that
the Mayor alluded to, which steps down at the end of this year. You can depreciate the asset if you are a
business, but if you are a non-federal tax payer, such as a municipality, you have no access to that directly.
The solution which was developed, in fact, by the Federal Government, the National Renewable Energy Labs at
the Department of Energy over a decade ago and has been blessed by the IRS which is, in fact, the primary
mechanism by which large-scale solar has been implemented in the United States is this power purchase
agreement. As the name suggests, the City is not purchasing the array, the capital expense for the panels, the
inverters, the racking, etc., the City is purchasing the power that the array produces and feeds to its facilities at a
rate below the current utility rate. What this looks like is you have investors on the one hand who are providing
the capital to finance these projects and I'll show you what those specific numbers are on the next slide. They
are owning and operating the array, contracting with ReVision with James’ team to provide the O & M once we
have fully installed the system and permitted it. They are recouping their investment through that Federal
Investment Tax Credit and depreciation and some very modest environmental attributes renewable energy
credits and crucially from the sale of the electricity it produces to the City at that below market rate.
For the City’s part, the City is licensing the use of those two roofs and potentially future roofs or ground areas for
the purpose of installing solar. It is committing to buy the power from the array at the rate schedule set out in
that PPA contract. In order to maximize its long term savings, after 5 years, which is the minimum period of time
the investor must own the asset, it is the IRS recapture period on that tax credit; short of five years the investor
must return those tax incentives on a pro rata basis. But once we reach Day 1 of Year 6, the City may and is in
fact encouraged to for its financial benefit, acquire the array at a substantial discount and then generate its own
power going forward for the next 30 to 40 years.
The specifics for these two projects would be an initial cost to the investor of just over $500,000.00 and upfront
cost to the City of $0 because again you are not owning the array, you are simply purchasing the power from the
array. In order to make the investor whole and I'll say a word about the investors that we are fortunate to work
with, the City would be purchasing that power at a starting rate of 8.8 cents per kilowatt hour, rising 2% annually
