NORWALK, Conn. - The prospects for a combined ground-mounted and rooftop solar installation at the South Norwalk (SONO) Elementary School have diminished.

“It’s not going to happen,” according to Alan Lo, Norwalk Building and Facilities Manager. 

Despite possibly generating over a million kilowatt-hours annually, the ground-mount project is financially impractical due to South Norwalk Electric and Water’s (SNEW) low electric rates. The city believes that it would take decades for the project to be profitable, if at all. “After we look at all the financial aspects of it, all the risk involved, they don't think this is cost-effective to do this project as a combined ground-mounted and rooftop project,” said Lo. 

Because SNEW is a municipal utility company, they charge customers just over the wholesale price. If built as planned, the solar installation would raise customer rates.

“SNEW has been working with the City for over a year to accommodate the City’s desire for a large solar installation at the new SONO school and presented a way to make it happen. As it turns out though, our electric rates are so much lower than those in Eversource territory that the cost of the solar electricity is not competitive with our costs,“ Alan E. Huth, SNEW CEO & General Manager said.

According to Huth, SNEW is willing to contribute $25,000 annually to combat the increased operational costs, though it would mean an increase for their ratepayers. The city would need to cover any costs beyond the $25,000.

“I don't think it's a big liability, but it's still, we will be responsible for any overages if we go beyond $25,000. So I really don't feel that this is a financial position the city wants to take for a solar project,” stated Lo.

Barbara Smyth, Land Use and Building Commission Chair, said that she would like the green initiative to succeed, but she was concerned about the cost, “I want to use green energy and solar wherever we can, and everywhere we can. However, if it's going to burden the taxpayer, then we have to balance it out.” 

Land Use and Building Commission Member James Frayer suggested attracting a third party to solve the financial troubles. “I would also think there would be a tremendous opportunity if this is going to generate more power than what the school is going to need over the course of a year. That would mean you have surplus power that, maybe, there would be other entrepreneurs that would possibly come in and look at this as a great opportunity.“

With SONO Elementary’s location within the municipal electric district, third-party companies aren’t an option. “It's kind of a really weird situation here,” said Lo. 

Connecticut Municipal Electric Energy Cooperative (CMEEC) CEO Dave Meisinger explained that municipal electric companies aren’t held to the same rules as for-profit companies are. “The law works now, basically, that as long as the municipal electric utilities stay within their service territories, which are pretty much municipal boundaries, they still get to have what you could call a monopoly, or an exclusive right to be the retail provider to sell energy at retail in those service territories.”

Schools outside the SONO municipal boundary, like Jefferson Elementary School, can more easily work with third-party suppliers. 

“If the school is in Eversource territory, anybody can compete with Eversource on a retail sale of energy. Then when the solar developer comes in and obviously wants to make as much money as they can on the project, the solar developer is competing against the Eversource retail price for energy,” Meisinger explained. “So it's a lot easier to compete as a solar developer when you just have to beat Eversource’s retail rate that would apply to the school, but in SNEW territory… that developer, instead of competing with Eversource’s retail price, would have to basically sell SNEW or really CMEEC, that energy at a wholesale rate that's competitive, that we agree to, that we're comfortable paying, which is going to be a whole lot less than the retail rate for Eversource.” 

This doesn’t mean the project is dead. The Inflation Reduction Act of 2022 created a direct pay option from the IRS for tax credits, like the Investment Tax Credit (ITC), opening the door for organizations like state and local governments, nonprofits, public power entities, and schools. Tax credits could cover between 30 and 40 percent of the project's total cost, according to Lo. The city could pivot towards a rooftop-only solar project that would generate up to 70% of the school's usage and would be more economically viable. 

Lo suggested building the rooftop solar independently from SNEW with a solar developer, using any leftover funds in the South Norwalk School Construction Account and tax credits. During the Nov. 6 Land Use and Building meeting, Lo asked the Commission to approve his decision to move away from a partnership with SNEW. The commission decided to wait until next month, asking the Building and Facilities Department to create an official strategy for the next steps.