The Martha’s Vineyard Airport Commission voted unanimously on Thursday, Nov. 10, to sign the contract with Syncarpha Capital that they approved in September. Syncarpha is a New York–based private equity firm that operates solar farms throughout the Northeast. The airport will purchase power from the company’s off-Island solar farm in Freetown, near Fall River.
Beth Greenblatt, managing director of Boston-based energy management firm Beacon Integrated Solutions, and solar consultant to the airport, along with municipal law attorney and aviation specialist Kevin Batt of Anderson & Kreiger LLP in Boston, met with the commission to walk them through the complexities of the contract.
After some discussion between the commission and its consultants, commissioner Clarence “Trip” Barnes made a motion to move forward with the contract. Commissioner Christine Todd seconded the motion, and the commission voted unanimously in approval.
“These kinds of contracts are all over [in Massachusetts],” Mr. Batt said. “Almost every one of the 351 towns and cities have benefits coming from net-metering credits.”
The airport now spends about $130,000 a year on its electric bill. The solar deal, through a net-metering arrangement, is calculated to shave approximately $31,000 per year off that bill and ultimately save the airport an estimated $825,000 over the course of 25 years. The savings are in the form of credits from Syncarpha that can be applied toward the airport’s utility bill. Mr. Batt said they are still negotiating whether they could cash out the value of those credits instead of applying them to their energy bill.
Net metering credits
The airport agrees to purchase a 13 percent share of the power generated by Marie’s Way Solar One, a 5.3-megawatt solar farm in Freetown owned by Syncarpha. That 13 percent will meet about 85 percent of the airport’s power needs, according to airport officials.
In the complicated world of state and federal renewable energy tax incentives and credits, government entities that purchase solar power earn higher tax credits than private institutions. The airport, which is a tax-exempt entity, would then sell those tax credits to Syncarpha.
In a conversation with The Times on Wednesday, Ms. Greenblatt said that because the airport is a public entity, both Syncarpha and the airport stand to benefit from the solar deal.
“Under the current net-metering rules for projects of this size, there is more net-metering credit benefit to public entities than to private ones,” Ms. Greenblatt said. “There’s an economic advantage to everyone.”
The airport would pay Syncarpha, the energy producer, 77.5 percent of the value of the credits it receives back from Eversource, the energy distributor, getting a little less than a 25 percent return on their money. Essentially, for every dollar of net metering credits that comes from the project, Syncarpha keeps 77.5 cents and the airport gets 22.5 cents.
Syncarpha will have a number of revenue streams, from the airport and from other off-takers (purchasers of future production) who have entered into similar contracts, and from the sale of renewable energy certificates.
Syncarpha has agreed to give the airport approximately $825,000 — over the course of its 25-year energy contract with the airport — in return for the tax credits. In the first year, the airport would receive $31,000 plus a $25,000 signing bonus, totalling $56,000. After that, the airport would receive approximately $31,000 for the next 24 years.
What the airport saves cannot be precisely predicted because of how energy rates fluctuate. If rates increase one percent, the airport will save a total of $825,000. If they go up 1.5 percent, then the total increases to $877,000. If energy rates stay the same, the airport will save $732,000.
Looking ahead
Mr. Batt told the commission there were risks to the contract, but that they were “remote.” The biggest risk the airport could face was a state-imposed retroactive change. If the net metering program was canceled by legislature, causing a change in law or market conditions, then it would reduce the value of credits to a “wholesale rate,” rendering the deal uneconomical.
But Mr. Batt said he didn’t foresee the current cost of electricity dropping that significantly, and he didn’t think the legislature would make changes in such a way that they wouldn’t honor existing contracts. He tried to have this part of the contract negotiated with Syncarpha, protecting the airport from a retroactive change in law, but Syncarpha wouldn’t budge. Mr. Batt explained to the commission that the investment for them was up-front, while the airport stands to benefit without having to do anything.
Airport manager Ann Crook told The Times on Monday that the airport had been looking into reducing their energy costs, and that they have been talking about putting their own solar installation on airport property.
The Syncarpha deal, Ms. Crook said, gives the airport “the opportunity to reduce our energy costs without having to put a solar installation on airport property, but still leaves our options open, so if we want to do that in the future, we can.”
