Solar contract causes friction: Hatfield co. questions Solarize Northampton for not buying local
Gregory Harrison, second from left, president of Northeast Solar, Andrew Cunningham, left, systems design and technology, Ann Bronner, vice president and treasurer, and Phillip Baunsgard, Jr., installation supervisor, at their office in Hatfield Monday. The local company questions the choice of a Colorado company for the new Solarize Northampton program.
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Gregory Harrison, left, president of Northeast Solar, Andrew Cunningham, top center, systems design and technology, Ann Bronner, vice president and treasurer, and Phillip Baunsgard, Jr., installation supervisor, at their office in Hatfield Monday. The firm says solar dollars should stay local.
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NORTHAMPTON — A Hatfield solar company questions why a state program that helps communities invest in solar is opting to work with out-of-state installers rather than qualified local companies within Massachusetts.
State officials, however, say the Solarize Mass program is attracting the most qualified bidders who give communities the best deals. That, in turn, has enabled the state to expand the number of homes with solar installations.
The debate is playing out as Northampton rolls out its Solarize Mass program this summer. Earlier this spring, the city was accepted as one of 10 communities to participate in the latest round of the state program, which helps homeowners buy small-scale solar photovoltaic systems at a discount.
A local committee recently chose Real Goods Solar of Colorado to install the solar panels for participating city residents and small business owners.
Gregory Garrison, president of Northeast Solar in Hatfield, argues this is a short-sighted decision that does not help the state’s Clean Energy Center meet its self-described mandate to create high-quality jobs and economic growth through its renewable energy programs.
He said these goals cannot be accomplished by selecting the lowest bidder within a Solarize community, whose intent is only to drive down costs and install as much solar as possible.
“Think of it as buying solar, which has a marginal economic benefit, compared to investing in solar, which has long-term and sustainable benefits,” said Garrison.
He argues the selection of Solarize installers should ensure that the jobs are local, the economics are local and that the program pays dividends beyond the simple installation process.
“This will have the greatest benefit to the communities and the state,” Garrison said.
Officials at the Clean Energy Center, which runs the three-year-old Solarize Mass program, counter that any out-of-state contractors selected meet all qualifications through a competitive bidding process. The companies also have local employees in the region, said Matthew Kakley, a center spokesman.
While the Clean Energy Center helps shepherd the bidding process through its initial phases, Kakley said local teams in each Solarize Mass community are responsible for deciding which installer best fits their community.
“It’s important for us to have that be a local decision,” Kakley said.
In Northampton, that task went to a committee that reviewed proposals from three finalists this spring and chose Real Goods, which is headquartered in Louisville, Colo. The company has an East Coast office in Wilton, Conn., and has done work in other Massachusetts communities for some time.
“This is a company that does have a track record here,” Kakley said.
The team also interviewed Garrison’s company, Northeast Solar, and an eastern Massachusetts firm called SunBug.
Committee members said Real Goods Solar presented a series of choices for homeowners that they simply could not refuse.
“We really like Northeast Solar and we really wanted to give them the nod,” said Christopher Mason, the city’s energy and sustainability officer and a member of the committee. “But what’s the reason for the program? To drive up the number of PVAs (photovoltaic arrays) in Northampton.”
The bottom line, he said, is that Real Goods offers a funding mechanism that makes it possible for more homes to add solar panels than the other offers the committee received. This is a priority for the community, he said.
But Mason said homeowners are not required to use Real Goods Solar if they feel a local contractor better fits their needs.
“It was just our judgment that getting more solar in right now was the high priority,” Mason said. “But if someone really wants to go local (outside the Solarize Northampton program) we support that, too.”
Garrison maintains that using an out-of-state company sends investment money to other parts of the country, leads to fewer jobs, and hurts long-term economic growth for the state.
“There’s so much pressure for the adoption of solar energy in large volumes to hit these big numbers that they don’t think about the local economy,” Garrison said.
How it works
The Solarize Mass program is designed to lower the cost of installing solar systems and save customers money on their electricity bills, depending on how many residents and businesses contract for solar. Prices would be tiered and would drop as more residents and businesses sign contracts.
Through Solarize Mass, homeowners and small businesses can buy a photovoltaic system outright or lease one through what’s known as a power purchase agreement, or PPA. The latter arrangement makes it easier for homeowners to take advantage of solar without the upfront costs. In this case, a homeowner leases roof space to an installer, who owns and maintains the system. Homeowners then purchase power at a rate lower than what they are paying through a utility.
The drawback to this arrangement is that the installer, not the homeowner, is able to sell solar renewable-energy certificates the system generates to utility companies that are required to buy them.
All of the finalists offered some form of a PPA agreement, but Real Goods’ proposal rose to the top because committee members thought it had the best chance of opening up a segment of the market that probably would not consider going solar right now.
That’s because Real Goods has promised to lock power prices at today’s rates for a 20-year period, which could amount to large savings for homeowners over the long run, Mason said.
As a further incentive, the company agreed to give home-owners a one-time signing bonus that could amount to $1,200 for entering into a PPA with its company, if a certain number of households opt in.
Real Goods’ second PPA proposal is more complicated, but essentially will allow a homeowner to put some money down, get a better energy price and take ownership of the system over time. This proposal also includes the bonus incentive, Mason said.
“Real Goods Solar will open the market and bring it to a wider audience,” Mason said.
Real Goods also won contracts to be the installer in Lee and Williamstown, sweeping western Massachusetts in the first round of the program this year. Northeast Solar, meanwhile, had earlier won a Solarize Mass bid in Montague.
Garrison believes the selection process is focused solely on price and number of solar panels that can be installed, and has little emphasis on offers from local companies.
He said this goes against the mission of the Clean Energy Center, which bills itself as dedicated to accelerating the success of clean-energy technologies, companies and projects in the state while creating high-quality jobs and long-term economic growth.
Northeast Solar believes its proposal will do more for the local economy in the long run, especially given that it has partnered with the Hampshire Council of Governments to offer its own PPA.
“Who are you enriching in this process? That’s where the disconnect is,” he said. “What are they doing for the economy in western Massachusetts?”
Through this agreement, the money a homeowner pays someone else for power would stay local, as would the tax benefits, solar renewable-energy certificates and other incentives, explained Todd Ford, executive director of the Hampshire Council.
A local installer would use the same funds to grow the business, create more jobs and purchase more goods and services from local companies, Ford said. Out-of-state companies, however, send the profit to investors throughout the country or back to their corporate headquarters.
Meanwhile, Garrison contends that 60 to 70 percent of the money his company receives for solar projects is spent in Massachusetts, while national installers spend less than 25 percent locally.
“It’s big box versus downtown,” Ford said. “These leases are the big boxes of the solar world.”
Northeast Solar would lose money and possibly go out of business if it made a pitch as attractive as the one Real Goods made this spring, Garrison said. He said Real Goods is a large company with access to capital through a large investor base, which gives it flexible and sophisticated financing, though the company is offering such a low installation rate that it should have raised red flags at the Clean Energy Center.
While he believes Garrison has a point, Mason said he doesn’t completely buy the argument that all of the money is leaving the state. He notes that a homeowner who is buying a system outright will typically choose a local bank to finance the project, employees who install the systems live and work in the area and manufacturing money is not leaving the state because the systems are designed elsewhere.