A solar array at Princeton’s sewer plant could save the city money on utility bills. Or it could lock the city into payments on a loan unlikely to outprice the cost of energy.
Several facts will determine whether the project would yield savings or avoidable costs. The model below allows you to adjust those variables to evaluate costs and savings in real time.
Early estimates put project cost at $250–300,000, but revisions raised that figure earlier this month. An engineer told the council April 9 that costs could be “less than $350,00, but I’m not comfortable making any promises.”
The project is now out for bid, with a public hearing scheduled for this Thursday, April 23. The council expects to open bids during its regular meeting May 7.
If the project breaks ground by July, it is guaranteed a federal rebate—called an “investment tax credit”—totaling 30% of the project cost.
Princeton will have to borrow funds to cover the bulk of the project cost. General obligation (GO) debt could carry market interest rates as high as 6%. A state revolving fund loan, intended to finance water infrastructure improvements, could drop that figure to 3.25%.
City grant writer Angie Bloomfield said last week that she was working to determine whether the solar project was eligible for an SRF loan.
The cost of energy may outweigh the cost of debt. The council will need to decide whether they expect energy prices to maintain an aggressive upward trend. Energy prices have risen 43% in Iowa since 2021, or about 7% annually.
With a continued climb in energy prices, the solar array would post savings against market energy bills early in its lifetime. But if prices deflate, the city could be stuck with interest payments above the cost of energy.
Early estimates put the energy bill for the sewer treatment plant at $15,300 next year. The current draft of the city budget has raised that sum to $17,000.
The model below allows you adjust each of the variables described above.
It assumes a 15-year mortgage with a fixed annual payment split between interest and principal. It totals savings at the end of those 15 years—although most solar fields are warrantied out to 25–30 years.
Try it for yourself.
This model was built using coding assistance from artificial intelligence.
| Year | Energy cost | Debt service | Principal | Interest | Outstanding | Savings |
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