SUBJECT:
Title
A Resolution of the Town Council of the Town of Erie Approving the First Amendment to the Energy Performance Contract with Iconergy, Ltd. for the Erie North Water Reclamation Facility Floating Solar Project
Department
DEPARTMENT: Public Works
Presenter
PRESENTER(S): David Pasic, Public Works Director
Chad Alexander, Facilities Manager
end
Time
TIME ESTIMATE: 30 minutes
end
Fiscal
FISCAL SUMMARY:
Cost as Recommended: $4,276,673
Balance Available: $5,000,000
Fund Wastewater Fund
Line Item Number: 510-75-110-605000-247013
New Appropriation Required: No
Policy
POLICY ISSUES:
The policy issue here is whether the overall benefits of this project are worth the costs. If we consider the total project cost without additional grants or credits, the payback period for this NWRF floating solar project is 24.9 years. This is longer than staff would normally accept to proceed with a project. However, with regular maintenance, staff expects the equipment to last longer than 25 years and continue to contribute multiple benefits, including offsetting costs for electricity, reduced greenhouse gas emissions, cooler effluent in the Town’s reuse water reservoir, and experience/information that will help determine whether additional floating solar panels should be added to completely offset the NWRF’s electricity demand. Further, this project is already partially Grant funded with a $900,000 grant from DOLA. Finally, unless Congress changes current law, this project is eligible for a $1.3 million reimbursement credit through the Federal Inflation Reduction Act/Investment Tax Credit (ITC) program. This would reduce the payback period to 17 years when considering the Town’s net investment.
Recommendation
STAFF RECOMMENDATION:
Approve the resolution
Body
SUMMARY/KEY POINTS
• As noted above, this project has multiple benefits for the Town, which are covered in more detail in the attached presentation and which staff will review during the Council meeting.
• The Town was awarded a $900,000 Energy and Mineral Impact Fund (EIAF) Grant from the Department of Local Affairs (DOLA) on March 18, 2025, after the Jan. 21, 2025, study session where this capital project was discussed with Council.
• The current federal budget bill includes provisions that will require projects to be started within 60 days of the passage of the bill AND will sunset the ITC at the end of 2028, 4 years sooner than originally legislated. The budget bill provisions also stipulate that projects must be complete by the end of 2028. The budget bill could be passed as early as the 1st week in July. If Council approves proceeding at this meeting, staff can procure 5% of the materials prior to the 60 days, which qualifies as starting the project. Further, we can complete the project in 2026. Thus, barring other changes to the IRA/ITC, the project qualifies for the ITC reimbursement of $1.3 million. The Town would apply for this funding after the project is completed and producing electricity.
• Finally, the Town requested just over $4.5 million from FY 26’ Congressionally Directed Spending (CDS) grants for a second phase (1.9MW to achieve 100% offset of the admin and process buildings) since the project is scalable. Due to submission limits set by the Congressional Committee, each Senate office could only advance a limited number of proposals. The Town’s request was included by Senators Hickenlooper and Bennet in their CDS requests. The CDS process is contingent on the passage of the federal budget, and thus funding through that process is uncertain, but the Senators including this project in their requests demonstrates their support for the project.
• The Contract Amendment currently before the Council exceeds $100,000, and thus requires Council approval to proceed
BACKGROUND OF SUBJECT MATTER:
On Oct. 26, 2021, the Town executed a Consultant Agreement with Iconergy, Ltd., pre-qualified by the Colorado Energy Office as an Energy Service Company (ESCO), to conduct technical assessments, energy audits and preliminary design for facility energy efficiency improvements, solar PV, and infrastructure improvements for Town facilities. Iconergy’s analysis produced a list of projects and cost estimates.
Based on that initial work, on May 23, 2023, the Board of Trustees approved the award of an Agreement with Iconergy, Ltd. for an Energy Performance Contract to implement utility cost savings measures, operation and maintenance cost saving measures, and facility improvement measures for multiple Town of Erie Facilities.
Reflecting additional facilities, new technologies, and cost reductions in equipment, the Town approved amendments to the Agreement with Iconergy, Ltd. to study additional utility cost savings measures, operation and maintenance cost saving measures, and facility improvement measures for Town facilities. Based on and using information from that review, Town staff submitted the Energy Impact Assistance Fund grant application, and in March 2025 was awarded a $900,000 grant. The overall cost of the project is just under $4.3 million. The Town needs to budget the full amount of the project and then submit Progress Reports to DOLA quarterly, with proof of payment for contractor invoices during that quarter, for reimbursement up to the $900K that was awarded.
The Inflation Reduction Act included provisions that allow local governments to get the equivalent of tax credits as direct reimbursements of eligible project costs. As noted above, barring other changes to the IRA/ITC, the project qualifies for the ITC reimbursement of $1.3 million. The Town would apply for this funding after the project is completed and producing electricity. Considering the $900,000 EIAF grant and the $1.3 million federal reimbursements, the Town’s net cost for this $4.3 million project would be $2.1 million. The electricity generated by this solar PV system would reduce the Town’s cost for electricity at the NWRF so the project would pay for itself in 17 years. After that, the project will continue to generate savings.
On Oct. 26, 2021, the Town executed a Consultant Agreement with Iconergy, Ltd., pre-qualified by the Colorado Energy Office as an Energy Service Company (ESCO), to conduct technical assessments, energy audits and preliminary design for facility energy efficiency improvements, solar PV, and infrastructure improvements for Town facilities. Iconergy’s analysis produced a list of projects and cost estimates.
Based on that initial work, on May 23, 2023, the Board of Trustees approved the award of an Agreement with Iconergy, Ltd. for an Energy Performance Contract to implement utility cost savings measures, operation and maintenance cost saving measures, and facility improvement measures for multiple Town of Erie Facilities.
Reflecting additional facilities, new technologies, and cost reductions in equipment, the Town approved amendments to the Agreement with Iconergy, Ltd. to study additional utility cost savings measures, operation and maintenance cost saving measures, and facility improvement measures for Town facilities. Based on and using information from that review, Town staff submitted the Energy Impact Assistance Fund grant application, and in March 2025 was awarded a $900,000 grant. The overall cost of the project is just under $4.3 million. The Town needs to budget the full amount of the project and then submit Progress Reports to DOLA quarterly, with proof of payment for contractor invoices during that quarter, for reimbursement up to the $900K that was awarded.
The Inflation Reduction Act included provisions that allow local governments to get the equivalent of tax credits as direct reimbursements of eligible project costs. As noted above, barring other changes to the IRA/ITC, the project qualifies for the ITC reimbursement of $1.3 million. The Town would apply for this funding after the project is completed and producing electricity. Considering the $900,000 EIAF grant and the $1.3 million federal reimbursements, the Town’s net cost for this $4.3 million project would be $2.1 million. The electricity generated by this solar PV system would reduce the Town’s cost for electricity at the NWRF so the project would pay for itself in 17 years. After that, the project will continue to generate savings.
In addition to the cost savings and reducing green house gas (GHG) emissions associated with fossil fuel generated electricity shading a portion of the Town’s reuse water reservoir will reduce light reaching this nutrient rich water body, which reduces the propensity for algae development in the reservoir that would adversely affect operations and require control measures. Many utilities use various floating systems (balls, small panels) to create shade in effluent reservoirs for this reason. Additionally, while the Town is not currently required to monitor temperature for discharge into Boulder Creek, Town staff will likely be required to report this data at some point. New permits generally have temperature limits, which can be very hard to meet. The shade created by these, and future, panels will help reduce water temperature in the reservoir. This solar array will have a relatively small footprint, but it would be installed near the reservoir outfall, which is helpful. If the Town is awarded the requested CDS funding and are able to expand the system over time the reservoir will achieve cooler temperatures which will help with future permitting.
Additional electrical utility savings and reduction of GHG emissions will be realized if this floating solar system is expanded in the future to offset electrical usage of the North Water Treatment Facility, which is currently under design. The Town’s water and wastewater facilities are the largest electrical consumers in the Town of Erie. The Town has a history of looking for ways to reduce those costs including projects like the hydro-turbine at the Lynn R Morgan Water Treatment Facility and managing pumping schemes to avoid peaking factors. These efforts also benefit residents by offsetting costs on utility bills.
priorities
TOWN COUNCIL PRIORITY(S) ADDRESSED:
☐ Attractive Community Amenities
☐ Engaged and Diverse Community
☐ Prosperous Economy
☐ Well-Maintained Transportation Infrastructure
☐ Small Town Feel
☒ Safe and Healthy Community
☒ Effective Governance
☒ Environmentally Sustainable
☒ Fiscally Responsible
attachments
ATTACHMENT(S):
1. Resolution 25-119
2. First Amendment
3. Presentation