Arizona Western College Solar Array Checkup

The 4.82 MegaWatt Arizona Western College (AWC) Solar Array had an installed cost of $26.67 million or almost $5.75 per Watt. Or did it?
On the front lines of the solar industry shakeout.

Last year when I was researching the Arizona Western College Solar Array post, Main Street Power, the owner and operator of the AWC Solar Array, declined to comment or have any dialog whatsoever about the project. Taking up the challenge, I initiated FOIA (Freedom of Information Act) requests with the U.S. Department of Treasury for two Main Street Power project companies (special purpose entities) in Arizona receiving 1603 TGP (Treasury Grant Program) awards:

MFP CO III, LLC
AZ Solar I, LLC

As it turned out, MFP CO III, LLC was the only project company associated with the AWC Solar Array. However, as can be seen in the embedded six (6) part Application for Section 1603 documents, the Qualified cost basis and the Amount of request for payment were both redacted. As in the case of eSolar, I filed an appeal:

The FAS final response to my FOIA request for the Main Street Power Co. Inc. 1603 TGP Applications via two SPEs in Arizona, AZ Solar I, LLC and MFP CO III, LLC unjustifiably redacted minimal information in Section 5 regarding the qualified cost basis and request for payment.

In order to verify the Treasury Grants issued in total to MFP CO III, LLC for the Arizona Western College property, please release the following information from the six (6) 1603 TGP Applications:

Section 5
5A. Qualified cost basis
5B. Request for Payment
Amount of request for payment

Previously, the same information was released for my FOIA request 2011-06-019 regarding a GreenVolts 1603 TGP Application as a matter of routine.

However, the Office of the Fiscal Assistant Secretary (FAS) rejected my appeal and said:

Please note that Main Street Power Co. Inc. objected to the release of the information in question, and provided proper justification for the withholding of that information.

After benefiting from an $8,301,644 Treasury Grant award on March 8, 2012, Main Street Power was so intent on quashing the FOIA request they forgot about the routine redaction of contact phone numbers. I almost appealed a second time using a procedural argument but decided to let the action stand.

From the Treasury Grant award, the AWC Solar Array had a qualified cost basis of $26.67 million or almost $5.75 per Watt for the actual 4.82 MegaWatt (MW) nameplate capacity.

At the AWC Solar Array “Flip the Switch” ceremony, then Main Street Power Senior Vice President, Business Development Jonathan (J.W.) Postal said “we pay back the roughly, let’s call it 30 million dollars, to Morgan Stanley who fronted the money.” It’s unclear if the $30 million figure was the approximate total project cost, the amount financed, or a mere example. MS Solar Solutions (MSSS) Corp., an indirect wholly owned subsidiary of Morgan Stanley (NYSE: MS), provided long term project financing for the AWC Solar Array.

Morgan Stanley will be repaid using revenues from the PPA (Power Purchase Agreement) with the AWC and the PBI (Performance Based Incentive) from Arizona Public Service Company (APS), a wholly owned subsidiary of Pinnacle West Capital Corporation (NYSE:PNW), over the next 20 years. The terms of the AWC PPA have never been disclosed.

Per “AWC’s solar project on track to be completed in the fall” by Sarah Womer for the YumaSun.com, AWC Director of Facilities Management and Planning Bill Smith said: “the project is estimated to cost $30-40 million.

However, according to “A Lesson in Solar” by Steve Leone for Renewable Energy World:

The incentives available from APS totaling $23 million — about half the cost of the project — made it more attractive for MS Solar Solutions, a fully owned subsidiary of Morgan Stanley, to sign off on the concept and the technologies involved.

The Renewable Energy World sound byte implied an AWC Solar Array project cost of almost $46 Million! The Lesson gets a big incomplete on telling the full story.

So how can these disparate sums be reconciled? After due consideration, I believe all are correct though the definition of costs vary. The $26.67 million qualified cost basis for Treasury reflects the direct project costs for the 4.82 MW project or the traditional solar PV (photovoltaic) installed cost metric.

The actual ($30-40 million?) AWC project cost may also have included unqualified costs or those well in excess of established Treasury cost basis benchmarks for commercial or large commercial market segments. These unqualified costs may have included the 240 some additional parking spots, a solar canopy structure covering 420 parking spots, technology demonstration and incubator sites, and aspects of the new solar and renewable energy curriculum.

For the implied project cost of $46 million, the APS definition of Real Project Costs for Production Based Incentives (PBI) is crucial. Per an APS Renewable Energy Incentive Program presentation from 2009:

The structure for incentive payments to the customer is up to 20 years or a cap of 60% of the Real Project Cost (including acceptable financing charges), whichever comes first.

So for the $46 million project cost implied by the Renewable Energy World Lesson, I believe the sum includes the Morgan Stanley long term financing costs over the 20-year term.

Reviewing the Arizona Public Service Residential and Non-Residential APS Installations data at Arizona Goes Solar, I recognize reservations that appear related to the AWC Solar Array from 2009 and 2010 tracking the evolution of the project. APS told me the 2010 maximum PBI for a 20-year contract was $0.162 per kiloWatt-hour (kWh). Since the AWC Solar Array is expected to generate 10,500,000 kWh per year, the annual incentives from APS total about $1.7 million using the above 2010 PBI rate without factoring in degradation effects. If it should apply to some of the capacity reservations, the 2009 maximum PBI for a 20-year contract was $0.180 per kWh.

I do not know if APS used the same 2011 PBI bidding competition approach (page 24, Figure D) for application ranking in 2009 or 2010.

Capacity and Performance
Here is the capacity breakdown of the five (5) solar PV technologies totaling 4.817 MegaWatt-peak deployed at the Arizona Western College Solar Array in kiloWatt-peak (kWp) based on the Treasury Grant Program applications:

PV/CPV Supplier kiloWatt-peak (kWp)
GreenVolts 1024 (2 x 512)
SolFocus, Inc. 974.4
Suntech Power 942.48
SolarWorld AG 934.83
Sharp Corporation 940.9

 

The GreenVolts Concentrating PhotoVoltaic (CPV) installation submitted as two (2) 512 kWp TGP applications was sized about 5% to 9.5% larger than the other technology installations. Therefore, if the initial performance data previously discussed for GreenVolts was not adjusted for system size, GreenVolts underperformed SolFocus CPV by more than 25% from Monday, June 11, 2012, to Tuesday, July 10, 2012.

AWC Solar shakeout blues
Almost all of the technologies deployed at the AWC Solar Array are under threat or have already been impacted by the global solar industry shakeout. Here is a chronological review and status check.

GreenVolts shutdown in September 2012 and auctioned the headquarter assets. In a rare comment, Main Street Power said:

Are far as the GreenVolts products go, we have made contingencies in the form of ordering additional spare parts prior to the insolvency. We’ve also shifted O&M and support to a confidential third party.

SatCon Technology Corporation, the supplier of 4 MegaWatts of inverters for the AWC Solar Array, filed for Chapter 11 bankruptcy protection in October 2012 and moved to Chapter 7 liquidation in February 2013. Per “Lessons From Satcon: Keeping Inverters Alive When Vendors Collapse” by Jessica Lillian for Solar Industry, of all publications, former Satcon employees are jumping into the operations and maintenance (O&M) service opportunity created by Satcon’s demise.

In November 2012, SolFocus laid off about half of its employees and began searching for a buyer. With audacious media relations spin, the CPV Intelligence Brief 7 – 19 March 2013 at PV Insider said:

SolFocus, is closing in on its selection for a buyer for the business with a decision likely to take place within the next 60 days, it was confirmed to PV Insider.

Wuxi Suntech, the main manufacturing subsidiary of Suntech Power Holdings Co., Ltd. (NYSE:STP), entered the apparent equivalent of Chapter 11 bankruptcy reorganization in March 2013.

SolarWorld AG (ETR:SWV) appears to be headed for bankruptcy reorganization or even liquidation if the company cannot restructure existing debt or find a so-called White Knight.

Sharp Corporation (TYO:6753) is restructuring at the corporate level and could conceivably shutter or sell less profitable units or factories such as those related to the amorphous silicon/microcrystalline silicon thin film solar modules used at the AWC Solar Array.

Only the single-axis trackers from SunEdison, an MEMC Electronic Materials, Inc. (NYSE:WFR) company, appear safe. MEMC does plan to change the company name to SunEdison, Inc.

While these developments will contribute to an industry leading Arizona Western College PV O&M curriculum, the AWC Solar Array seems less than worthy in hindsight of the 2012 Photovoltaic Projects of Distinction Award presented at PV America West.

I just successfully completed my second Online Solar Training Course at Solar Energy International so I am now eligible to take the North American Board of Certified Energy Practitioners (NABCEP) Entry Level Exam. I better get studying!

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