QUESTION
How do power purchase agreements benefit NYC solar installations?
0:35:26
·
3 min
Power Purchase Agreements (PPAs) significantly enhance the cost-efficiency and scalability of solar installations for NYC's public buildings.
- PPAs allow for faster project implementation and cost savings, with average capital costs reduced from $9 per watt to $4 per watt.
- They enable the city to undertake multiple projects simultaneously without upfront costs, as expenses are covered through energy bills.
- Union labor is used for direct procurement of solar installations, ensuring adherence to labor standards and prevailing wages.
- The approach helps the city navigate financial constraints, leveraging federal tax incentives through developers with tax equity interest.
Sandy Nurse
0:35:26
You mentioned the support for the intents of intro 353.
0:35:30
On solar power, but you have concerns.
0:35:32
Can you tell us how you utilize the power purchase agreement and how and how it helps decast increase the rate of installations.
Sanna Barakat
0:35:46
Yeah.
0:35:47
Like the like I mentioned in my testimony, the PPAs are a very important tool for us because it has helped us speed up, you know, the the the implementation of the project is much more cost effective and a much faster process, especially in our financial crisis and the capital constraints that we are capital budget constraints that we have.
0:36:11
It's been been good for us, and the one great advantage is that when you're doing a PPA, actually, the developer is taking ownership of the asset and also maintaining it, operating it, and maintaining it.
0:36:27
And they do a great job because there an incentive, right, to to do well with it.
0:36:31
So it's been a great tool for us.
0:36:33
And see if if you wanna add one.
Steven Caputo
0:36:35
If if you don't mind, so I got a follow-up on that.
0:36:37
I just historically, the reason why we gravitated towards power purchase agreements is that the city wasn't eligible for the federal tax incentives because we're not taxable.
0:36:46
So the excuse me.
0:36:48
The model of a PPA brought together a developer that had tax equity interest.
0:36:54
And then they monetize it.
0:36:55
So we get the savings.
0:36:57
That's changed since the NRA.
0:36:58
So we're very, very interested in preparing to issue some large scale procurements for capital funds.
0:37:06
The other reason that PPAs have been very helpful is it enable us to get to scale quickly.
0:37:12
Rather at the time, we only could do one project at a time through capital.
0:37:15
PPA has allowed us to do dozens at a time.
0:37:18
I also want to emphasize that we paid a lot of attention to labor standards and the PPAs.
0:37:24
They're all subject to prevailing wage.
0:37:26
Our first we've broadly speaking, we've now negotiated and entered into an agreement with the building trades for for Union Electricians.
0:37:37
And our current PPE has not subject to that actual agreement, but there it's all a union job.
0:37:43
So we're very tentative to that as well.
Sandy Nurse
0:37:45
I mean, you're saying cost effective, but could you just give me a little more detail, like Sure.
0:37:49
What how much by how much percent is it more expensive to do it in another fashion?
Steven Caputo
0:37:54
Sure.
0:37:55
I can on average, our capital costs are about $9 per watt and our PPA costs are about $4 a watt.
0:38:02
So it it is really extremely cost effective.
0:38:05
And the other thing and it's particularly valuable now with our capital constraints requires no upfront investment.
0:38:10
It's all paid for through our energy bills.
Sandy Nurse
0:38:14
And so the Decast solar installations on public buildings, are those completed with union labor?
Steven Caputo
0:38:21
By I mean, it it it would be case specific.
0:38:24
Some of them go back into the 19 nineties, but any procurement that we do directly is subject now to this to the project labor agreement that we directly entered into with with the with the Construction Trades Council and also Local 3, and it was really transformative because up until that point, there was a lot of tension and lack of being on the same page, and the industry has really developed since then as a result to this PLA.
0:38:48
So, yes, any of our direct procurements will be union labor.
Sandy Nurse
0:38:51
Okay.
0:38:53
I'd I'd love to request in the follow-up that you give us a breakdown of just how many have been done, how many union contractors have been used, so we could just have that