Cost Savings or Boondoggle?

Morristown, New Jersey is installing a significant solar power array at its sewage treatment facility to power the facility and to reduce costs. At least that's how they're selling it to the public. The reality isn't quite as sunny.

The project cost $4.6 million, and state taxpayers kicked in a $1.5 million incentive, bringing the cost down to $3.1 million (the story notes the cost was reduced to $3.2 million).

Rows of solar panels lined what had been unused space next to several buildings at the facility. More panels also soon will be put on the roofs of four buildings, with a total of at least 640,000 kilowatt hours of power to be produced annually by the solar farm, officials said.

That should provide at least 40 percent or more of the energy needed to run the sewer operation, saving the town a minimum of $90,000 to $130,000 a year, according to town engineer Jeffrey Hartke.

Total cost of the project is $4.6 million, but the town has received a $1.5 million New Jersey Clean Energy Program rebate, bringing its cost down to $3.2 million, said Cresitello. In addition, he said other improvements are being done at the sewer plant to make it more energy and cost-efficient.

The solar project, said Cresitello, was the idea of town sewer superintendent John Dean and the plant's supervising laboratory technician, Manu Patel.

So, is this a cost effective project? It certainly would fit the whole notion of green energy and reducing carbon footprint by using alternative energy sources instead of standard power generating facilities.

The problem is that the costs and the savings don't justify the project.

Assuming that the project cost $3.2 million (as per the article) and assuming an even greater cost savings of $150,000 per year, it would take more than 20 years to recoup the initial investment. The problem is that it actually would take longer than that to break even once you realize the true cost to taxpayers was $4.6 million and it would take 30 years if the cost savings from the solar power was $150,000 per year.

If the power generated falls short of the high end, it would take far longer than that - decades longer if they reach only $90,000 per year. It would take 51 years if the savings totaled $90,000 a year, and that doesn't begin to cover carrying costs and lost opportunity costs resulting from using money on other projects. These systems generally have a lifespan of 20-30 years, which means that this project makes little sense.

So, why is this seen as a good way to spend money? It might make people feel good, but it isn't good for the wallet, at least in this application and in this instance. New Jersey isn't the optimum location for power generation, and the costs for the solar systems still haven't come down to where they need to be to really generate the cost savings people are looking for.