The city of Newark is about to start an ambitious energy efficiency project that will more than quadruple its solar power generation, reduce its electricity needs and ultimately save money.
The nearly $10 million project will be financed with a loan, and savings from the upgrades will pay for the entire project over 20 years.
“It’s at no real cost to the city,” explained Jeff Martindale, assistant to the city manager. “While this is a pretty big price sticker, it’s not quite as hefty on the city or quite as burdensome as it may look on paper.”
Last month, city council approved an energy savings performance contract (ESPC) with Seiberlich Trane Energy Services, which has been working with the city since last fall to identify energy efficiency projects.
The work will be done in stages and is expected to be complete by the end of 2021.
A major part of the project is the installation of solar panels on the roof of the municipal building, the George Wilson Center and two buildings at the city maintenance yard off Phillips Avenue. Solar panels will also be installed in a vacant field near the Newark Reservoir, and the existing McKees Solar Park off Cleveland Avenue will be expanded.
The project will add between 1,000 and 1,376 kW of solar generation to the city’s inventory. The city operates its own electric utility, so the solar power will reduce the amount of wholesale power the city needs to purchase, saving more than $130,000 each year. The city will also generate more than $65,000 each year by selling solar renewable energy certificates to the Delaware Municipal Electric Corporation.
Other items include the installation of LED lighting in city buildings and parking lots, new LED pedestrian lights around Newark, new high-efficiency transformers and a waste oil generator.
The project also includes installation of a new HVAC system at the George Wilson Center, a retrofit of the HVAC system at the municipal building and roof repairs on several buildings.
The HVAC and roofing projects, all badly needed, would have cost the city upward of $4 million, Martindale said. However, by rolling them into the ESPC, they are essentially paid for with the savings generated from the other items rather than the city having to pay for them out of its capital budget.
In total, the ESPC will cost approximately $9.7 million. The city received a $1 million grant from the state, used $175,000 from the McKees Solar Fund and received an $8.5 million loan from Bank of America.
The upgrades will save or generate more than $500,000 each year, which will be used to fund the loan payments. The loan will be paid off by 2040.
Martindale said the estimates were conservative, and it’s possible the projects will save even more money than stated. Seiberlich Trane guarantees the savings, meaning the company is taking on the risk, not the city.
Because the project is essentially paying for itself, the city was able to borrow money without going out to referendum, as it had to do for the Rodney stormwater pond in 2018.
“By definition, ESCO projects are self-funded, as energy savings/new revenue generated from the project will fully cover the cost of the project, so no bonded debt is required,” Finance Director David Del Grande said. “It’s a very stringent program, with verification requirements to ensure future energy savings will meet/exceed the debt incurred to fund the project over the project’s useful life.”