Most people think solar saves money in the long run but costs up front. However, a massive solar project orchestrated by facility maintenance company ABM proves that with savvy finance and intelligent design, installing solar can be a viable financial solution from year one.
The 1.2 MW, 4,150 panel ground-mount array spans 6.5 acres on the campus of the nonprofit Glen Meadows Retirement Community north of Baltimore MD. It is projected to save the facility over $700,000 over the course of 20 years. What’s more, the senior living facility was able to begin realizing the cost savings of solar immediately with virtually no upfront expense.
It all began with an epiphany on the part of Jeff Davis, chief financial officer for Presbyterian Senor Living (PSL), which manages Glen Meadows. After being forced to lay off staff due to the economic crisis of 2009, Davis became convinced that improving the energy efficiency of PSL’s properties would help improve financial resiliency. He spearheaded a “green team” for the corporation, and on its recommendation, began pursuing solar as an option.
It soon became clear to Davis and his staff that while solar was a sound idea, they would need assistance in making it financially viable.
ABM’s two-pronged budget-cutting strategy
A vertically integrated solar services company, ABM offers solutions in all areas, including engineering, procurement, and construction; operations and maintenance; and finance.
The biggest obstacle for the Glen Meadows project was that the capital expense was too high relative to the amount of production. With the assistance of other companies including Building Energy and Sol Systems, ABM set out to solve this problem simultaneously from engineering and financial perspectives.
Shaving costs on the project side
One way to make a project more affordable is to lower project costs. ABM did this by analyzing the soil conditions on-site, designing a more cost-effective racking system. ABM engineers also redesigned the layout to maximize output relative to the capacity of the system’s inverter.
Another key cost-shaving area was procurement. “Sixty percent or more of the capital budget of any solar project goes into equipment, so procurement is very important,” says Ted O’Shea, vice president of energy. “We have a lot of buying power that helped with cost reduction. Because we control all the links in the solar services value chain, we can offer an integrated approach that takes advantage of in-house engineering, management and procurement staff that leverage ABM’s purchasing power, and a highly trained labor force. Our goal is to drive the price per watt down as low as possible.”
Buttoning down the financials with win-win-win negotiation
The Glen Meadows project qualified for the 30-percent federal solar tax credit and accelerated depreciation, but Maryland’s policy of Solar Renewable Energy Credits (SREC) combined with the lowered project costs made it possible to enter into a power purchase agreement with a local utility company.
“There are pros and cons to the SREC model. I think it works well but it does requires a high level of sophistication in marketplace interaction. We are very familiar with the process, so we were able to find a buyer relatively quickly,” comments O’Shea.
The project is the largest solar array in the Baltimore metro area and has been embraced by community residents proud to be part of a clean energy future. ABM will continue to maintain the system over the next 20 years.