Isle au Haut Electric Power Company
Solar Project Update –– February 20, 2019
- Last week we concluded an agreement to purchase 1 megawatt hour (1,000 kWh) of super capacitors (batteries) from Kilowatt Labs (KWL). [1,000 kWh is the equivalent of nearly 2,000 marine batteries.] The first 500 kWh, other equipment and software will be purchased for $371,000. We will purchase the second half within four years or when the cable fails, whichever comes first, for ~$180,000. Total project cost – solar panels, super capacitors, etc. – is estimated at ~$1,560,000.
- Our plan is to install the system late this spring. When the system is fully installed, the island will have 300 kW of solar panels and 1,000 kWh of super capacitors. 90%-92% of the island’s electrical power will come from solar and 8% to 10% from a diesel generator. The diesel will require about 2,500 gallons of fuel. But, installing 6 to 8 heat pumps in public buildings and homes will eliminate 4,000 to 6,000 gallons of fuel used to heat these buildings. The heat pumps will use ‘excess’, otherwise wasted, electricity that is generated when the super capacitors are full. Consequently, the net fossil fuel energy used by the project makes it ‘better than 100% renewable’ and much cheaper than our alternatives.
- We will probably convert the company to a standard non-profit, electric utility co-operative with equally distributed ownership. This will convey significant tax advantages, saving us the equivalent of 6% to 8% of our annual revenues; and it will make the search for investors much easier. The conversion decision will be discussed by the board and, ultimately, will be subject to a vote of our membership.
- In addition to the co-op conversion, we will form a new company, an LLC; the LLC will purchase and own the solar project equipment for five years. The co-op will pay the LLC for the electricity produced by the solar project. In the sixth-year ownership will transfer to the co-op and the co-op will assume the obligations of the LLC. The LLC will obtain investment funds from several sources:
- Passive income investors a – total of ~$750,000.
- ’Island investors’ who will be asked to loan the co-op ~$700,000 at an annual rate of ~5%. We expect these individuals will come mostly from the island summer community.
- The power company will expend ~$250,000 of our reserves on the project.
- We will increase our monthly fee by ~$16 to a total of ~$32, or about $200/yr. (Compared with a fee that is proportionate to kWh use, a meter fee reduces the costs to year around residents.) These fees and our normal revenues will be used to pay off the loan from island investors. Other rates will remain the same.
- Reduced meter fees are the target of our effort at this time. This spring we will apply for a USDA grant which, if successful, will contribute $100,000 — $200,000 to the project and significantly reduce the monthly contribution from each meter. We will pursue other funding possibilities.
- Total project costs, including the costs of financing, will be around $1,700,000. We will be able to reduce these costs somewhat through the Federal tax credit for investments in renewables and accelerated depreciation.
For a more detailed update, please see the full announcement on the town website (under the community resources tab) and/or on the Iah Electric Power Company Facebook page.
Jim Wilson, President (with thanks to Molly Siegel for her significant editorial contributions)