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US airforce: Solar 'leccy is too cheap to meter

Can you say 'innovative tax credit debt equity financing'?

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A US Air Force base is bringing on stream America's "largest solar photovoltaic system", according to reports. Nellis airforce base is in the middle of powering up a 140-acre facility covered in solar arrays which swivel flower-fashion to follow the sun.

Wired magazine quoted William Anderson, the USAF chief of installations, environment and logistics, last week.

"We would act as a host for alternative energy projects," said the Pentagon bigwig. "We wouldn’t build them, we wouldn’t operate them, we wouldn’t finance them, but we would provide the land and we provide the ability to sell affordable power to a big user."

"We think that we can get ourselves very close to a zero carbon footprint."

He doesn't mean the whole USAF, at least not yet. There are plans to fuel the planes on coal-based synthetic fuel by 2011, but this would not be carbon neutral. Presumably Anderson means merely the electricity used by US airbases.

The Nellis media department is enthusiastic, saying that the array, provided by contractor SunPower, "will ultimately provide 15 megawatts of power and save the base $1 million annually upon completion".

That clashes slightly with the SunPower release, which said the facility will provide 25 million kilowatt-hours of clean electricity annually, equating to provision of 2.8 megawatts, or 20kW per acre. The 15MW figure appears to be the rated maximum output.

Average wholesale electricity prices in the US run at around 4-5 cents per kilowatt-hour (according to the Department of Energy). Thus, the 25 million solar kilowatt-hours each year would normally have cost the USAF, erm, from one to 1.25 million dollars. Presumably they buy wholesale.

If we believe the Nellis AFB press department, then, the USAF are getting something close to a 100 per cent discount by using solar, which seems very remarkable indeed. Especially as they don't own or operate the machinery.

The company which does own and operate it is MMA Renewable Ventures. How on earth can they deliver free electricity - clean, green, renewable electricity for FREE - and still make a profit?

"The Nellis project demonstrates how a carefully crafted third-party finance solution can effectively meet the needs of even the largest federal and municipal energy consumers," said Matt Cheney, CEO of MMA.

"As other organisations follow Nellis' lead, MMA Renewable Ventures is very well positioned to leverage our industry-leading position in sponsoring tax credit equity investment opportunities in arranging innovative debt and equity financings for these projects," said Michael Falcone, CEO of MMA Renewable's parent company.

Ah - so that's how. Tax credits. Or in other words, MMA will collect the cash from the government before it even gets to the IRS.

Painless, sort of; but it might make it a trifle hard to find out the price. And ultimately other parts of the US government might get a bit cheesed off at being made to share an almost certainly enlarged USAF electricity bill. ®

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