PPA & GMP Finalized! (What does that mean?)
Power Purchase Agreement (PPA) Signed!
To address the Town’s sustainability goals for municipal buildings, the School Building Committee proposed, and the Town agreed, to design buildings and systems in the buildings that are powered entirely by electricity (Yes – there’s a back-up, gas-powered generator), and to provide enough solar photovoltaic (PV) panels to meet all of the building’s energy needs on an annual basis (to be net zero).
- The PPA was the best route for the project because: 1) It eliminated the need to provide upfront financing for the solar PV project, and 2) the Town, as a tax-exempt entity, cannot benefit from state and federal tax incentives.
- The SBC formed the PPA Subcommittee to pursue an agreement (Thank you to Buck Creel, Jim Hutchinson, Tim Christenfeld, Alex Chatfield, Ed Kern, Michael Haines, and Peter Watkinson who have been working tirelessly since the subcommittee’s formation in December 2018!).
- In 2019, the PPA Subcommittee recommended SunPower Corporation to provide the solar PV system through a non-profit solar program organized by PowerOptions, Inc. The program is administered under Massachusetts G.L. c 164. PowerOptions is a nonprofit organization that has negotiated low electric and natural gas rates for the Lincoln Public Schools for many years.
- Negotiations for the PPA were lengthy due to the complexity and unusually long timetable for the project, but on March 29, 2020 we signed a PPA agreement with SunPower and PowerOptions!
- The currently planned solar PV system will have approximately 1.4 MW of PV panels spread across the Smith and Brooks School roofs, as well as on canopies above both Smith and Brooks parking lots, and a 500 KW battery storage system.
- Collectively, the PV panels will produce approximately 1.6 million kW hours of electricity annually, meeting the electricity consumption needs projected by the school architects, and the annual cost to the town is expected to be within the current energy budget for the Smith and Brooks buildings.
- The Brooks parking lot canopy footings and some conduit work are scheduled for the summer of 2021, but most of the installation of the solar PV system is expected to occur in one deployment after the entire renovation is substantially complete.
The GMP (Guaranteed Maximum Price) is Finalized…
…and the project is a go! (Wait, what about the Special Town Meeting (STM)? I thought we had to vote?)
First let’s answer the STM question because it has come up a few times: Way back in February 2020, BC (Before COVID-19), the construction bids were received, they were over our budget, and the SBC cut $3.5M out the project to keep it within the approved $93.9M. We then had a school project that was both on time and on budget. However, to make that happen, we had to cut a bunch of items that are important educationally and to the community, and so the SBC requested a Special Town Meeting to ask residents if they would like to vote for additional funding to restore any or all of those aspects of the project. The SBC is still considering bringing items to the Town for a vote, but the $93.9M project goes on regardless of the outcome of the vote(s).
So why is the GMP just being finalized now? When the SBC met (virtually) on March 25, it was to approve the final costs, terms, and schedules that make up the GMP. New to the proposed language was a clause addressing possible costs and schedule impacts of COVID-19. Figuring out the full implications of COVID-19 on the project is difficult and we are working closely with our project team to understand what those impacts might be. The situation is evolving, and we will update the community as we learn more. In the meantime, after negotiations between our Town Counsel and Consigli, the GMP includes a COVID-19 clause that shares potential financial impacts between our general contractor, Consigli, and the Town. A key aspect of the agreement is that there is a cap on COVID-related expenses.
- Consigli has a construction contingency of $1.7M built into its contract. The new agreement allows them to use the contingency for COVID-related expenses. Any expenses Consigli identifies as being due to COVID-19 will be submitted for approval to Daedalus, our Owner’s Project Manager, and/or the SBC.
- If all of Consigli’s contingency is used, they may be reimbursed for COVID-related expenses for up to 25% of their contingency ($425K).
- The goal is to have these COVID expenses be covered either by Consigli’s construction contingency or by the owner’s (Town’s) contingency ($4.3M).