Lakeland officials are being asked to consider a 25-year contract to purchase renewable solar energy without having to make any upfront investments.
City commissioners are expected to vote Monday in favor of a power purchase agreement with Edge Solar LLC, a subsidiary of the Williams Corp., for exclusive rights to purchase power produced by the solar farm.
In December 2023, the commission previously approved a conditional use permit to allow Williams to develop a nearly 1,400-acre solar power generation facility near Florida Polytechnic University. Built on former phosphate mining land east of State Road 33 and south of I-4, it would be capable of producing up to 74.8 megawatts.
However, Lakeland Electric and Williams hadn't hammered out the fine details of how things would work.
"The ultimate goal here was a mutually beneficial agreement that serves both Lakeland Electric and Williams," said Mike Dammer, LE's manager of emerging technology. "We feel we've really gotten to that point. We have truly hit that sweet spot of a win-win."
Under the proposed contract, Edge Solar will develop, build, own and operate the 74.8-megawatt solar farm. It will agree to sell all power generated by the facility to Lakeland Electric at a rate of $45.50 per megawatt-hour.
"We will only pay for the energy generated and sent to us," Dammer said.
Dammer said a study of the utility's historic operating costs show it has on average cost more than $47 to produce a megawatt-hour of energy.
"It's under our average fuel rate," he said. "This is the right deal at the right time."
Lakeland Electric predicts the solar farm will produce about 180,000 megawatt-hours in its first year. To put it in perspective, Dammer said the municipal-owned utility sold about 3.3 million megawatt-hours in 2023. The solar energy would be approximately 5% of the utility's total energy consumption today.
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If LE's estimates are right, the contract will cost an estimated $8.19 million in 2027.
Under the agreement, Williams agrees to have the solar farm running and operational by March 2027. If not, it may be responsible for paying the city up to $2.5 million in compensation.
Lakeland Electric will be able to add 37.4 megawatts from the plant toward its power generation capacity in the summer, but 0 megawatts in the winter. This is important as the utility is required to have 15% production capacity above its peak loads, which are rapidly rising given the area's growth.
Tory Bombard, LE's assistant general manager of production, said the goal is to have the solar plant up and operating to replace the city's current power purchase agreement with Orlando Utilities Commission. That agreement is expected to cost Lakeland Electric around $4.8 million in 2025.
Commissioner Guy LaLonde asked why Lakeland Electric did not negotiate a lower cost than $45.50 per megawatt-hour, particularly because the agreement gives LE the option to prepay $2.5 million starting in year 6 to purchase power at $44.50.
The city's negotiations had to consider Edge Solar, and by extension Williams, must be able to justify its roughly $120 million investment in the project.
"My concern is (it's a) great deal now; 25 years out are we still looking at the same thing?" LaLonde said.
In order for Williams and Edge Solar to receive the federal tax benefits of building the solar farm, Dammer said the company must prove it has taken on financial risks.
The utility committee, which includes all city commissioners, voted overwhelmingly in favor of the contract on Friday morning. LaLonde was the sole vote of opposition.
