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HomeMy WebLinkAbout2024-04-18-AC-min-att 1 To: Joe Pato, Chair, Lexington Select Board From: Glenn P. Parker, Chair, Lexington Appropriation Committee Date: April 22, 2024 Subject: Police Station Solar Canopy Project The Appropriation Committee met jointly with the Capital Expenditures Committee and the Select Board on Wednesday, April 10, at which time Mike Cronin gave a presentation discussing the budget shortfall for the proposed solar canopy project at the new Police Station Headquarters. The shortfall is roughly $1.2 million, which reflects unexpectedly high prices for the solar panels and battery storage system, and the additional cost of using welded construction for the steel canopy. Mr. Cronin’s presentation offered three options: (1) defer the entire project, (2) erect the steel canopy and put the solar panels and battery system out to bid again, or (3) erect the steel canopy and install the solar panels without a battery system (at least for the time being). The Appropriation Committee met remotely on Thursday, April 18, to discuss this project and to generate recommendations to the Select Board. Four members of the Capital Expenditures Committee also at- tended but did not participate in the discussion because their committee had not posted an agenda. While our Committee did not vote on any of the recommendations below, this memorandum summarizes our thoughts and indicates areas where we reached consensus. Our discussion focused on the financial aspects of the project. The desire to set a leading example of envi- ronmentally responsible construction should be moderated by our obligation to make prudent choices for capital investment. One clear metric for evaluating investments in solar power systems is the ROI (return on investment) period, which is discussed in more detail below. Members of the committee expressed two major concerns regarding the current state of the Police Station solar canopy project. First, the decision to implement the project as a change order under the general con- tractor for the Police Station suggests that the Town received pricing that was less favorable than would result from a competitive public bidding process. This change order approach may have been the most feasible path to completing the entire project in advance of the Lex250 celebrations, but the bids received by the general contractor for both the solar panels and the battery system were much higher than estimates based on prevailing market prices. Furthermore, it is unclear whether the bid for the erection of the steel canopy is truly competitive. Our second concern is that the cost of this project, which began with good intentions and clear-cut engi- neering goals, has increased quite significantly due to aesthetic changes made at the behest of the Historic Districts Commission, as well as neighborhood feedback. The added requirements to use welded con- struction with buried footings, and to relocate major electronic components to reduce their visibility, have added significantly to project costs compared with more typical construction techniques. The currently proposed system also has a lower generating and storage capacity than originally intended. One member of our committee asserts, based on professional experience with solar array projects, that a solar panel system project should generally aim for an ROI of no more than 8 years. However, under the current pricing, the ROI for this project would be much higher, i.e., likely in the range of 12 to 14 years. Rebidding the solar array/battery storage would likely shorten the ROI, but there is no guarantee that the final ROI would satisfy all members of our committee. Nonetheless, some members of the Committee in- dicated that option (2) would be acceptable. Another possible option, which Mr. Cronin did not propose, would be to defer the solar canopy project but proceed with installing solar panels only on the rooftop, as the Town has done on other recently con- structed buildings. Under this option (which we nicknamed “(1.5)”), the power generating capacity would be roughly 12% of the currently proposed system, which would help offset the cost of electricity and Appropriation Committee — Police Station Solar Canopy Project 2 easily satisfy our expectations for the ROI. Roughly half of our committee indicated that this option was acceptable ahead of option (2), although it is obviously a significant downgrade to the overall project. There was no support from any members for either option (1) or option (3). Finally, the Committee asserts that a battery system is not a key requirement for the function of the Police Station since it will still have to rely on generator backup during major power outages. Therefore, if the Town pursues option (2), the Committee suggests that the RFP should incorporate bid alternates with at least three battery storage options: (a) no battery, (b) 2-hour battery, and (c) 4-hour battery. If a bidder thought it was feasible, they could also include future upgrade paths across these alternatives. This as- sumes that the electric power utility would approve a large solar array installation without battery storage. The primary criterion for evaluating the battery storage alternatives should be the impact on the ROI. The Committee is prepared to discuss this with the Select Board if requested.