The Met Council’s effort to save energy in Shakopee gets helped and hurt by “dramatic” changes in cost.
One of the state’s largest solar panel arrays will soon go up along the highway near Valleyfair, where it will sit quietly baking in the sun’s rays.
It will change the landscape of the area, but it won’t begin to hint at the turbulence that lies behind its birth.
Over the past few years, the Metropolitan Council has been seeking to make the wastewater treatment plant those panels will help power, called Blue Lake, into an energy-saving showcase.
But the economics have been greatly altered both for good and for bad by some dizzying changes in cost:
• On the solar side, the project benefited from a 75 percent plunge in cost of materials.
• But the other big effort, to turn waste into biogas, is not producing anything like the payback once promised.
An annual savings once pegged at $1 million dropped to $600,000 by the time the council’s 2012 annual report was released, then to just $500,000 by the time the first year’s results were in.
What happened? “Natural gas prices went down dramatically,” said council spokeswoman Bonnie Kollodge.
The once-costly substance the biogas aims to replace got a whole lot cheaper. “Fracking,” adding new gas supplies from shale, has helped push prices down to a sliver of what they were in the mid-2000s — cheaper today than in decades.
Met Council officials stress that economics in the baldest, spreadsheet sense are not the only thing that counts in these kinds of projects.
“The most important thing for our customers is savings over the long term,” Jason Willett, finance director for the Met Council’s wastewater arm, told a council committee. “But it’s also social things, environmental things: It creates jobs, tax base, energy independence, security of supply, and it benefits the council’s image.”
If the solar array were to be built today, he said, it would be the second biggest in the state, after one in Slayton, in southwest Minnesota.
It actually won’t be built today, and given the need for construction permits and the like, and the fact that lots of big projects are in the works, it may not be No. 2 by the time it does go up — perhaps not beginning until 2014.
The Blue Lake plant treats an average of 28 million gallons of wastewater daily, the council says, from 285,000 people in 27 communities from the Lake Minnetonka area through Chaska and out to Prior Lake.
The biogas effort is back in the news this summer because it’s been going long enough — a 32-month construction period lasted from 2009 to April 2012 — to start seeing some tangible results. CenterPoint Energy wrote the council a check for $150,000 as a rebate for natural gas saved so far.
Officials say the $27.8 million cost was covered mainly by a $25.8 million state loan and a $2 million federal stimulus grant for “green” infrastructure.
The solar effort, on the other hand, is the result of prolonged negotiations with a private operator that will finance the project and accept any risk.
“We’ve long thought of creating our own energy using quite a few acres of buffer land that we own” around the metro area, Willett said. “This is the fifth approach we’ve tried to get solar done. In ’06, ’07, we tried a traditional capital project approach to build it ourselves, but that looked too expensive.”
Over the years, however, some changes made the private sector perk up its interest.
“Solar panels are 75 percent cheaper than when I put them on my own house,” Willett said. Electric rates rose, and could rise much more. And there are solar credits available to the private sector but not to government agencies.
DFL lawmakers in Minnesota also approved a solar mandate for some utilities, requiring large amounts of energy from solar by 2020. And the DFL-dominated Met Council itself has made its own push.
“I give you credit for your sustainability policy,” Willett told council members, “changing the definition of economic feasibility. The private sector looks to a payback of five years or less; it’s a good deal for us to look out longer.”
If he credited a more left-leaning sensibility, however, he also caught flak from DFL interest groups.
Council member Harry Melander, of Mahtomedi, president of the Minnesota State Building & Construction Trades Council, a labor group, pressed him hard on the wages to be paid to workers creating the solar array.
Willett had to shrug.
“It’s not our money,” he said.
Denver-based Oak Leaf Energy Partners will install the 1.25-megawatt facility on 10 acres, getting the land itself for nothing as part of a wider, extensively negotiated deal over many months to supply the plant’s needs.
“They are raising the money themselves,” he added. “I suppose we could have required [“prevailing wage” conditions] but we didn’t. They are working with bankers to raise funds.”
David Peterson • 952-746-3285