The City Council is being asked to approve an energy services agreement and authorize a lease purchase finance agreement to implement Phase 1 of the Chelsea Microgrid Project.
“The project seeks to provide emergency power to ensure continuity of public services, while promoting energy resilience and reducing greenhouse gas emissions through new energy (battery) storage facilities at City Hall and the police station, coupled with solar panels on the DPW City Yard,” stated Interim City Manager Ned Keefe.
Keefe is requesting that the council approve an energy services agreement (ESA) with Ameresco, Inc. in accordance with Massachusetts General Laws and authorize a lease purchase finance agreement for the borrowing of funds in the amount of $3,615,699 for the first phase of the microgrid project.
The microgrid project has been in discussion for more than five years, particularly since the advent of Hurricane Maria in Puerto Rico in 2017, according to Keefe. The goals of the project are to increase energy resilience, provide clean back-up energy to power critical city operations during outages, reduce emissions, and empower residents to guide the adoption of clean energy technologies, according to Keefe.
“Alongside community partners, grant funding was secured to conduct a feasibility study to implement a cloud-based microgrid project in June 2020, where it was demonstrated that a project of this nature would be possible and beneficial,” stated Keefe. “The microgrid team moved forward and secured $965,500 in grant funding from the Municipal Vulnerability Preparedness program, Green Communities Program, and the Metropolitan Area Planning Council to design and install Phase 1 of the project.”
The city hired Ameresco to design, construct, and maintain the project. Phase 1 includes battery energy storage systems at City Hall/911 Emergency Communications Center and the Chelsea Police Department, which will collectively provide back-up power for essential government services, as well as the solar panels at the DPW yard.
As is customary for energy projects, Keefe said municipalities will frequently design projects that recoup the initial investment through cost savings achieved through the energy efficiency upgrades, Keefe stated.
The approximately $3.6 million not covered by the grants will be borrowed through a 15-year Tax-Exempt Lease/Purchase if approved by the city council.
“Notably, the project will generate sufficient revenue to cover the costs of repayment, culminating with a surplus of approximately $1 million from energy cost savings over the 20 year life of the project,” Keefe stated.
Construction for the project is expected to get underway in the fall of 2023, with an estimated commercial operation date in the spring of 2024.