The first major initiative of The Solar Initiative was to put solar panels on the roofs of the Block Island Power Company facility. The intent was to reduce the need for local diesel generation and/or decrease electricity purchase from mainland non-renewable suppliers. This has been accomplished to a significant degree with enough electricity being produced to power 17 island homes year-round.
But there is another benefit to this panel array. It has added about $300,000 to the capital of the Block Island Utility District. Is this just a paper valuation or does it have real significance for our utility district and its ratepayers — that is, you and me?
And the answer is: Real significance!
Here is how. When any business goes to borrow money, the lending institution considers a number of factors in determining the interest rate to be charged. One key factor in the rural electric utility industry is what is known as the Capital Ratio. This is defined as capital as a percentage of assets. Sounds like math, but it is really just common sense. Supposing you were the bank, would you be more comfortable lending money to Business A, which has assets of $1 million and wants a loan of $100,000 or Business B, which has assets of $100,000 and wants a loan of $100,000? Unless you’re Santa Claus, Business A would get a more favorable rate.
Now when the Block Island Utility District purchased the assets of BIPCo in 2019, the Capital Ratio was zero. This is bad news for any business which may need to borrow funds, obtain a line of credit, etc. (BIUD’s target is to build the Capital Ratio to 20 percent in the next five years — and long term up to 40 percent.) So, with the addition of the solar panels, not only is the environment enhanced by using solar energy, but so also is BIUD’s borrowing position. BIUD can now negotiate for a better interest rate on any borrowing it may need over the next 25 years.
Jeffery Wright, the President of BIPCo, has said, “We really needed the additional equity. These panels really helped our net equity.”
And now the Solar Initiative is subsidizing (at 50 percent, with BIPCo paying the other half in kind) the installation of small pole-mounted solar panels as a pilot program to test their durability and effectiveness. Plans are to install 20 panels on power company poles as a test for possible future use. So: more equity, less pollution, higher environment-care, lower interest rates! A win for Block Island rate payers and the environment.
The Solar Initiative is also offering roof-mounted solar systems, heat pump discounts, and/or Electric Vehicle subsidies to Block Island residents.
Contact Tony Pappas (508) 272-8822 or email the blockislandsolarproject@gmail. com for more information.