What the Dover Sun Park Will Really Cost You

Caesar Rodney Institute
by David T. Stevenson, Director
Read Original Article Here

It is astonishing you are not allowed to know what the Dover Sun Park is costing you. The total added cost of the Sun Park compared to using conventional power over the twenty year contract will be $93 million or almost $5 million a year! The total generation cost for power will average about three and a half times the cost of conventional power or thirty six and a half cents a kilowatt-hour. But, you say, won’t the savings in greenhouse gas generation be worth it? Using the current value of carbon dioxide emission permits in the regional cap and trade market the Dover Sun Park carbon offsets are worth less than $25 thousand a year. Calpine switched from coal to natural gas at the Edge Moor electric generating plant saving money and a years’ worth of sun park carbon emissions every five days.
The City of Dover refuses to release the price they will pay for power from the park citing confidentiality agreement restrictions. Comments made a year ago about the added average net cost to a consumer allowed us to estimate the City of Dover will pay about eighteen cents a kilowatt-hour. For comparison, generation now costs ten cents a kilowatt-hour from conventional sources.
The city also gets to use 15% of the Solar Renewable Energy Credits (SREC) generated by the park to offset the cost of purchasing SREC’s. When the contract was signed SREC value was about $270 for every one thousand kilowatt-hours of power produced which would have offset about half the solar price premium. However, the current spot market value is only about $100 and is expected to drop further. These SREC’s only have value because the state requires power companies to buy them. The cost is passed on to each of us in our electric bills.
The city also assumed the cost of conventional power would increase dramatically but the U.S. Energy Information Agency now expects electric prices to be stable. The city will pay about $20 million extra for power over the twenty years.
Delmarva Power and the Delaware Municipal Electric Cooperative will buy the rest of the SREC’s at a cost of $50 million. Delmarva Power contracted to buy 70% of the SREC’s at $216.70 each and will wind up paying a $28 million premium over the spot market SREC price.
In addition, White Oak Solar Energy, LLC, who owns the park, will receive a $13.5 million federal tax credit paid for with deficit spending. This will add another $9.5 million in interest (at 3%) over the twenty years. We pay for the credit and the interest in our tax bills. White Oak will make a 14% a year return on their investment. The only risk to White Oak was the risk of falling SREC value. The risk was shifted to residential and small commercial customers through long term utility contracts.
Press releases praised the creation of 200 “green” constructions jobs to complete the second largest solar park east of the Mississippi. Also released were the actual hours worked. Those hours convert to each person working about seven weeks or the annualized equivalent of 28 jobs. Those very temporary 28 jobs will cost us $3.3 million each over the next twenty years.
David T. Stevenson, Director