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Wednesday, July 29, 2009

Green for Green

Posted By on 07.29.09 at 07:29 PM

With today’s blessing from the City Council, the city and Exelon are moving ahead with plans to create the largest urban solar power plant in the country on the polluted site of a former factory. If successful, the project is likely to serve as a model for how rust belt cities can develop green jobs and infrastructure, and how it takes an outlay of taxpayer money and a promise of corporate profits to make it happen.

It’s not every day that environmentalists, government officials, and power company executives are of like minds, but just about everybody seems to be excited about the prospect of a solar farm on the south side of Chicago. It will reuse land that’s sat vacant and contaminated for 30 years while generating clean power for as many as 1,500 homes a year.

There’s little doubt that West Pullman, the neighborhood that includes the property (click here for a map), could use the economic boost—it’s rife with empty lots and the clutter and pollution of a century of heavy industry. This morning wreckers were busy demolishing the remnants of the Ingersoll manufacturing plant across 120th Street from the solar site ...

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while dozens of nearby acres have already become quiet prairie land again.

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Behind a chain-link fence and signs warning of toxic dangers within, crews are already working on the 40 acres that will be used for the solar facility. Much of the property is covered in concrete and old building foundations, even where thickets have sprung up.

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Seeing it in person made me realize that Carrie Austin wasn’t engaging in the usual aldermanic hyperbole when she’d said, “I’m grateful to God that Exelon chose this site.” It’s been a long time since anything good was happening there.

Still, what is happening now is a publicly financed development project whose direct benefits will be reaped by the for-profit company that holds an energy monopoly in Illinois.

Building the facility is expected to cost nearly $64 million. The company says it plans to pitch in a little more than $13 million. The other $50 million-plus will come in the form of guaranteed loans from the federal government’s stimulus program.

Exelon will pay the city $110,000 annually for the next 25 years to lease the property—an obvious good thing compared with the land sitting empty. But city officials didn’t try to sell the property to Exelon because the company wasn’t interested, and the lease agreement is dead if the feds don’t come through with the stimulus funds. “The project is contingent on that loan guarantee,” Exelon executive Tom O’Neill told the Community Development Commission a couple weeks back.

O’Neill argued that Exelon was taking a significant risk in attempting to reuse polluted land, since cleanup costs could still climb. But barring any bizarre new discoveries, taxpayers will be responsible for paying those bills. The lease agreement requires that the city commit up to $1.3 million to deal with known environmental problems (asbestos-contaminated soil and underground storage tanks). If other tanks are discovered the city will pay for half the cost of cleaning them up. Other issues would be Exelon’s problem—but the city is conducting site testing to make sure there aren’t any.

The city and Exelon hail the project as a jobs producer, estimating that 200 people will be hired for the construction work. But when the facility is up and running, it will only require one worker on-site.

Beyond the great PR it’s generating, Exelon is almost certain to make good money from the solar farm. Technically the farm will be operated by an entity called Exelon Solar Chicago LLC, a partnership between Exelon and solar panel manufacturer SunPower. Once the facility is operating, Exelon Solar will sell the power back to Exelon proper for a fixed price.

O’Neill told the CDC that the company will probably make less money on this energy than it usually does. But it will still make money.

And what he didn’t mention is that Congress will probably pass some sort of cap and trade legislation within the year that will make power generated from burning fossil fuels far more expensive than it is now—and make renewable energy cheaper (and more profitable) by comparison.

Alderman Anthony Beale, who’s trying to recycle empty industrial land in his own ward, has expressed skepticism that city taxpayers will get their money’s worth out of the solar deal. “One of the concerns I had was that if we’re going to be giving city land away, whether it was going to affect residents’ energy costs, and their answers were vague,” he said.

Beale decided to support the project anyway. “We’ll have to see what happens,” he said.

Which beneath the promises and bluster is actually the view of just about everyone involved right now—a hope that this ends up convincing companies that renewable energy is a profitable business that they can afford to invest in on their own. For now it certainly bears watching closely to see if they’re right.

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