Terminated, reassigned contracts delay $65M WAPA solar projects
Published: February 27, 2014
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ST. THOMAS - Though the territory was promised the completion of $65 million in solar projects on St. Thomas and St. Croix by December, the V.I. Water and Power Authority still is in the midst of the contract bidding process, and the projects are only partially finished. The new projected completion date is December 2014, according to WAPA spokeswoman Jerain Fleming.
WAPA's plans were thwarted by the dissolution of agreements with two of the three companies, Sun Edison LLC and Lanco Virgin Islands I LLC, with which the utility had contracts to integrate 18 megawatts into WAPA's electrical grid.
The other company involved in the solar power project is Toshiba International Corporation, whose agreements regarding the 18-megawatt effort with WAPA remain intact.
Sun Edison, which had four separate contracts with WAPA, terminated two of its contracts already with the utility and currently is in dispute with WAPA about the other two, Fleming said Wednesday after conferring with WAPA's legal counsel.
According to WAPA officials, the decision to terminate the two former contracts was a mutual one on behalf of Sun Edison and WAPA in October 2013. The two parties are in a dispute resolution process on the remaining two, according to Fleming.
"The projects on St. Thomas were to use rooftop space at the mall for the solar panels. The mall, however, reneged on its promise to allow the use of that space," Fleming said in an email responding to questions from The Daily News. "Since this was not the fault of Sun Edison, the parties mutually agreed to end the agreement."
The terminated contracts are for 9 megawatts that would be produced at the Gasparie site on the east end of St. Croix and Hogensborg on the west end, as well as the roof top of Tutu Park Mall on St. Thomas, Fleming said.
From those sites, 3 megawatts would be produced on St. Thomas and 6 megawatts on St. Croix. While WAPA is not going to be penalized for the terminated contracts, it still is possible that Sun Edison could be, Fleming said.
WAPA on Jan. 21 issued a request for proposals from companies interested in bidding for the megawatts now unaccounted for that previously would have been in Sun Edison's terminated agreements.
The deadline for responses to the request is Friday, according to WAPA.
Additionally, another set of agreements with WAPA regarding the solar projects changed hands.
The contracts that WAPA originally had with Lanco Virgin Islands, a subsidiary of Lanco Solar International, were reassigned, according to V.I. Energy Office Director Karl Knight.
"The terms and conditions don't change," he said, noting that the office still is keeping close watch over WAPA's activity on the solar project.
As of May 30, 2013, the contracts formerly held by Lanco were transferred to Main Street Power Inc., a power purchase agreement provider based in Boulder, Colo.
"No new RFP was necessary because the contract contained language that allowed for its assignment to another party as long as the Authority agreed," Fleming said.
Lanco, which is based in Delaware, is closing its North America operations, Fleming said.
While WAPA officials have been silent about the issues it had with the solar project contracts in the last year, the utility has not been delayed in boasting the potential benefits that the solar projects territory-wide.
"There's no cost for WAPA," WAPA Executive Director Hugo Hodge Jr. said in June 2012, when he announced the agreements with the initial three companies. "The companies bear all the cost and all the risk."
The companies bear the burden of building, installing and maintaining their solar systems, including upgrading the technologies and equipment as it ages, Hodge said at the time.
Each solar array is expected to sell power to WAPA at a different rate, based on the cost to produce the electricity.
The cost to purchase the solar power will be between 14 and 24 cents per kilowatt hour, with a weighted average of between 16 and 17 cents per kilowatt hour, Hodge said at the time. The rates represent the average terms for the approximate 20-year life of the power purchase agreements.
Hodge also touted WAPA would be less dependent on fossil fuel, and 15 percent of the territory's peak load would be produced by solar energy - a benefit to ratepayers that, once again, is apparently a year away.
- Contact Jenny Kane at 714-9102 or email email@example.com.