Left Out in the Sun

City solar panels involved in complex finance plan are generating far less power than expected

The first thing to know about the solar panels on top of the Santa Fe Community Convention Center is that they’re not just solar panels but also a sort of complex financial instrument.

That, and they’re about to cost the city a chunk of money.

Installed about a decade ago as part of a bid to cut the city’s greenhouse gas emissions, the array and another like it at a compost facility off Airport Road have been generating far less power than anticipated, according to an assessment from city staff that found the arrays haven’t been maintained.

But while maintenance could boost the output of these solar panels, neither array belongs to the municipal government. Instead, the city has to untangle an arrangement that has left the government paying a California-based company for electricity from the arrays on city buildings at the same time the company has declined to maintain the systems it owns.

The solar arrays went up in 2012 and 2013 at a time when the city was tacking several new solar arrays onto municipal buildings, including at the Buckman Direct Diversion, Fire Station No. 3 and the Genoveva Chavez Community Center.

For the systems at the convention center and the compost facility, the city made an arrangement with a private, San Francisco-based company, MLH Cripple Creek Solar.

The city loaned the company more than $300,000 to build the array on top of the convention center, which it agreed to repay over 20 years with 2% interest. The company would own the solar panels and reap the tax credits that come from them. The city would pay the company for power generated by the solar panels through at least 2026, getting a rate subsidized by those tax credits.

“Tax credit makes the array cheaper, which makes the power cheaper,” Public Works Director Regina Wheeler tells SFR, explaining the thinking of the time, which was before she took the job.

With the arrays, Santa Fe would take a step towards cutting carbon emissions. And as part of the deal, the company would be responsible for maintaining the equipment. But MLH Cripple Creek Solar sold off the solar arrays to a firm based in Mill Valley, California—Dissigno Holdings—around 2016.

What would that company want with a couple of solar arrays in Santa Fe? Dissigno Holdings didn’t respond to a message from SFR. And its website doesn’t exactly spell out its interests in arrays like this one. Instead, it only describes the outfit as “a ‘slingshot’ advisory firm advancing climate ventures.”

Wheeler likens the situation to the way mortgages are bought and sold, turning these solar panels into a financial instrument that’s supposed to be attractive to investors for the revenue the arrays generate.

In this case, the revenue for investors is the money the city has contractually agreed to pay for power generated by the solar panels.

But Wheeler tells SFR the company isn’t situated to actually maintain the arrays.

“They just kind of abandoned these arrays and [took] whatever revenue it’s generating,” she says.

There’s another wrinkle, according to city staff: The panels have not been putting out as much power as expected.

The city initially promoted the system as producing over 170,000 kilowatt-hours per year—about 11% of the convention center’s energy needs. The power would offset more than 3,675 tons of greenhouse gasses over 20 years.

In 2022, the solar panels on top of the convention center were only producing 19% of the energy anticipated. That’s about $20,000 of lost value, according to a city assessment. The solar panels on top of the compost facility were faring even worse, putting out less than 1% of the anticipated power. That’s nearly $23,000 in lost value, the city says.

City staff report in a memo to councilors that they contacted Dissigno Holdings in January 2022, asking the company to repair the systems. But the company said it could not, according to the memo. So the city stopped paying Dissigno for power from the solar arrays.

Dissigno is now offering to turn over ownership of the arrays to the city in a proposed deal that started wending through City Council committees this week. Even so, repairs are expected to cost nearly $95,000, according to city staff.

Councilor Carol Romero-Wirth, chair of the council’s Finance Committee, said Tuesday morning she was not familiar with the matter.

The memo says repairs would bring the arrays up to generating 154,000 kilowatt-hours, with an estimated value of $45,000 a year combined. Agreements for generating the power would also bring in a combined $40,000 a year in value.

The wrangling is the legacy of a convoluted deal in the push to get more of the city’s power from solar energy. But even if attractive at the time, such deals may lose their luster in the future as Mayor Alan Webber pushes for more solar energy at city facilities. The sort of tax credit that was available for building the array a decade ago wasn’t available to the city government, making it more attractive to contract with a private business. The Inflation Reduction Act passed last year, however, gives cities new financial incentives for building such solar arrays, potentially making such deals unnecessary.

Letters to the Editor

Mail letters to PO Box 4910 Santa Fe, NM 87502 or email them to editor[at] Letters (no more than 200 words) should refer to specific articles in the Reporter. Letters will be edited for space and clarity.

We also welcome you to follow SFR on social media (on Facebook, Instagram and Twitter) and comment there. You can also email specific staff members from our contact page.