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Receive an update regarding the landfill solar farm project.
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BACKGROUND:
The City owns a closed landfill at 1399 Valley View Lane and the George Bush Turnpike. The landfill closed in 1987, and various ideas for the site have not materialized due to the regulatory and cost restrictions of building on a former landfill. The landfill was identified as a potential site for installing solar panels in the 2020 Solar Feasibility Study.
The Sustainability Plan aims to increase renewable energy and recommends that the City pursue a 100% renewable electricity contract for municipal operations. In November 2021, City staff released an RFP to lease the site for solar development with the intent of entering a power purchase agreement to source electricity from the site.
On March 22, 2022, the City Council authorized the City Manager to negotiate and execute an option agreement with BQ Energy Development, LLC, to lease the former landfill at 1399 Valley View Lane to develop a solar farm and a related power purchase agreement. The option agreement went into effect on June 1, 2022, granting BQ Energy (now Clean Capital) the option to lease the site for an annual fee of $10,000 while developing the project and meeting regulatory requirements.
On March 1, 2024, Clean Capital provided written notice that they desired to terminate the project's development. Clean Capital cited a decreased system size from the original estimate and increased construction and interconnection costs. Clean Capital stated they would not be able to move forward with the lease and subsequent power purchase agreement at the previously proposed electricity rate of $0.044/kilowatt-hour. Clean Capital’s updated electricity rate to continue with the project was a 75% increase from the initially proposed amount and over two cents more per kilowatt-hour than the City currently pays for electricity.
DISCUSSION:
The City’s current electricity contract expires February 28, 2025. The City will request bids for electricity rates consistent with its traditional electricity procurement.
In the past, there have been several proposed projects to develop the landfill, but due to additional design and construction costs to develop on a landfill, none came to fruition. Because the City owned and operated the landfill and transported waste to the facility, the City maintains liability for the site in perpetuity even if the property is sold to another party. Liability can be removed only if the waste on-site is dug up and removed. Full remediation of the site to remove liability would likely cost tens of millions of dollars. Currently, the City pays for the maintenance and mowing of the site while it remains vacant.
Leasing the site for the development of a solar farm does not require remediation of the site, passes on maintenance costs to the developer, and maintains city ownership of the land. It also provides a significant sustainability benefit to the city. Therefore, City staff plans to release a new request for proposals to construct a solar farm on the closed landfill. Responses will be analyzed to determine if another vendor can build a solar project in a financially feasible manner. If not, the site could be studied for other potential uses allowed under state regulations.
FISCAL IMPACT:
The lower rate of electricity anticipated from the solar farm construction would not have taken effect until the current contract expires in the next fiscal year. Budget impact cannot be determined until bids are received for the city’s next electricity contract but will be accounted for in the development of the FY 24/25 budget.
DISTRICT:
District 3
ATTACHMENT(S):
1. Presentation
2. Landfill Solar Lease
3. Landfill Solar Project Timeline