Sustainability, stability and economic feasibility
Harold Edwards says the time was finally right for the Limoneira Co. to be powered by the sun.“That all falls nicely into the concept of sustainability,” says Edwards, CEO and president of Limoneira, a corporate farm of about 7,000 acres headquartered in Santa Paula, Calif. It also falls into the concept of doing the right thing for shareholders, because the $8 million solar project has secured a low electricity rate for the company for at least the next couple of decades.
Edwards explains that the solar project, which came online late in summer of 2008, is a 1-megawatt installation of solar panels that ties into the existing Southern California Edison grid. It will supply about a third of the power used annually at Limoneira’s 200,000-square-foot facility in Santa Paula, which boasts enough cold storage for about 500 rail cars of fruit and features a large packinghouse for lemons. That amount of electricity could power 200 single-family homes for a year, so the farm is saving that amount of electricity for the community.
As Edwards points out, the company has answered one of the “great unknowns” of the modern farm: the question of how high rising electricity prices will go. Its investment has solidified electricity prices for that section of the farm at 9 cents per kilowatt over a period of 20 years, and 7 cents per kilowatt if the project lasts for 30 years.
“Today, we’re paying 13 cents per kilowatt,” Edwards says of his Edison charges, and the utility is talking about price increases. The solar array not only lowers his prices, it takes away the uncertainty to some degree. He says that the company had talked about the possibility of a solar installation several times in the six years he has been the CEO, but costs were not advantageous until recently. Increased incentives and tax breaks made the project not only feasible, but imperative.
“The key part of the making-sense part is that it had to be economically viable,” Edwards says, and there were several elements that made it work. First, it required no capital outlay from Limoneira. The $8 million was borrowed from Farm Credit Systems in a special alternative energy lending program, where Farm Credit actually owns the system for the first 10 years, with Limoneira leasing it. In year 11, Limoneira could buy the system for $1 million, with a 15-month payback on the solar system. Edwards estimates that the arrangement will cut $250,000 a year from the company’s electric bill for the first 10 years, and $750,000 a year from year 11 on.
Mark Palamountain, CEO of Perpetual Power, the San Francisco company that built the Limoneira system, says the incentives right now are tremendous, both from the federal government and the state of California. Other states have similar, and even better, programs. The IRS allows a one-time, up-front, federal tax credit of 30 percent on this type of investment, and that credit has just been renewed and is in place for the next eight years. California offers a rebate program funded by ratepayers and paid through local utilities through its California Solar Initiative. The rebate is a tiered system for every kilowatt produced through solar, and for Limoneira it means the company is paid 26 cents per kilowatt for every kilowatt produced up to 1-megawatt for the first five years. In addition, the company sells back every kilowatt it doesn’t use to the utility, realized as a credit on its bill.
Edwards notes that the company could have built more solar generation, but didn’t because of the 1 megawatt limit per site. In addition, a company can only sell back to Edison the amount of energy that it uses, which makes the size of the generation plant crucial to its economics. Some states do not have this limitation, and there is a movement to have it changed in California.
Limoneira has another orchard in the San Joaquin Valley where it is building another 1-megawatt solar array, which also will qualify for both state and federal programs. That site will feature a different kind of panel arrangement, and will power four electric pumps for irrigation purposes, Edwards says. That San Joaquin Valley farm grows navel oranges and specialty citrus varieties. He says that based on current projections, the company’s 2-megawatts of generation make it the largest solar power producer in the state, though that could change quickly as other entities take advantage of incentives.
Palamountain says that the physical plants are pretty standard, with this technology being well-known for decades. Limoneira’s Santa Paula site has 6,400 solar panels mounted on fixed platforms with an adjustment that allows the operator to manually move the panels to a winter or summer setting that improves the angle to the sun. The San Joaquin Valley site will also feature 6,400 panels, but will be on an automatic tracking system.
The Mitsubishi Electric & Electronics USA poly-silicon photovoltaic panels are industrial-grade and withstand 1-inch hail and 120 mph winds, Palamountain says. Limoneira put its panels on the ground rather than on the roof of its packinghouse because of the age of the roof. The panels are tied into the utility grid in a new building where two 500-kilowatt inverters change it from DC to AC. It then goes to a transformer that will boost or reduce power according to the facility’s needs. What isn’t used goes into the grid for a credit.
“The expected life is 30 to 40 years,” Palamountain says of the solar system (the silicon is projected to degrade about .5 percent annually). Since payback through the incentive program is much earlier than that, the company should have really cheap electricity for a long time. “With the incentives and financial mechanisms out there, it makes sense to do it.”
Perpetual Power has a contract to maintain the Limoneira system for 10 years, Palamountain says. The inverters are warranted for 10 years, and the transformer is on the utility’s side (though Limoneira had to pay for it). Maintenance of the panels consists of setting them to winter and summer settings, as well as monitoring output and washing dust and grime off the panels three times a year. Native vegetation was planted close to the panels to reduce dust.
Edwards notes that the company’s mission statement is all about “stewardship of resource,” and the company aims to achieve sustainability in all of its operations. As the nation’s largest grower of avocados and North America’s largest grower of lemons, the company wants to maintain a green image both for goodwill in the community and marketing leverage in the global marketplace.
With its commitment to community interaction, Limoneira added an observation room with a deck above the solar array so that visitors could tour the installation. It has a restroom and a weather station, and the building has LEED Gold certification—reportedly, the only solar installation in the world with that standard for environmental construction.
“The point is that as we begin to be known as a solar producer we will be able to distinguish ourselves in the marketplace,” Edwards says, nd ultimately there may be a way to garner premium prices for fruit packed in a solar facility. It isn’t a stretch to foresee fruit labeling that notes a farm’s “green” credentials, especially for Limoneira’s organic produce, he says.
Edwards notes that farms are a natural situation for solar generation because they have the land and often have high-use electric needs. This investment does not pay off as well if the farm has only low-use facilities. He notes that the San Joaquin Valley, with its hundreds of electric pumps and processing facilities, could turn out to be the most solar-intensive region of the world if the farmers there catch on to the incentive programs. Palamountain has calculations to determine whether a facility could use solar to its advantage, and he can be contacted through the company’s Web site at www.p2solarsolutions.com.
The final selling point for Edwards was the security aspect. In an era when there are periodic electrical outages, it lowers a company’s risk to have its own solar facility always producing power. He says that Santa Paula and this entire valley are a natural for solar power, and he is working with municipal officials to look at alternative energy resources that would make the entire area energy independent.
To check out the company’s extensive operations, and its commitment to sustainability, visit its Web site at www.limoneira.com. For a look at some of the equipment used in constructing a solar array, go to www.mitsubishielectricsolar.com, which also offers a solar calculator to roughly determine whether solar will work for specific situations.
“I think we all need to be paying attention to this field,” Edwards says.
Don Dale is a freelance writer and a frequent contributor. He resides in Altadena, Calif.