San Francisco’s Board of Supervisors approved a deal to install a 5-megawatts (MW) solar power plant atop the city’s largest reservoir.
Renewable energy developer Recurrent Energy will build and own the system and sell the electricity to the city at a cost of 23.5 cents per kilowatt-hour, plus 3% per year–or roughly $2 million a year, according to the San Francisco Examiner.
If completed, the project will be one of the nation’s largest municipal solar projects and will expand the city’s solar capacity to 7 MW.
The city will have the option to purchase the Sunset Rerservoir power plant outright after 7, 15 or 15 years at fair market value or $33 million–whichever is higher, the New York Times reported.
Four supervisors voted against approval. And opponents have suggested the city could have gotten a better deal, or will end up paying above market prices for the electricity in the future.
Mayor Gavin Newsom supported the approval decision.
Had the city chosen to build the power plant, it would not have been eligible for the 30% federal tax credit that Recurrent Energy will receive, significantly raising the installation cost. The city estimated that Recurrent’s construction costs will reach $40 million.
Construction is expected to begin this summer an be completed by 2010.
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