Cost of police station solar canopies 35% over budget 

The solar project at the police station continues to move forward — but the cost has gone up. 

The updated budget and options for a path forward were discussed at Select Board meetings on April 3, 10 and 24. The budget presented by Town staff showed that the project would now cost $4.6 million — 35% more than funded at Town Meeting with much fanfare in 2023. In fact, the preferred configuration, which includes larger battery storage equipment, will cost even more — $4.9 million or 46% over the currently funded amount. Remember, the solar project was cobbled on to the police station later in the design phase to meet the Town’s onsite sustainability facility goals for Town buildings. Integrating this renewable energy project into the overall construction has thus resulted in more work, especially electrical, eroding contingencies in the police station budget. The cost of the police station building itself is on budget and still expected to be about $35.2 million.

The Board voted unanimously to continue with the solar project. If cost saving measures or alternative funding initiatives falter, Fall Town Meeting will include a new article to fund any balance above $3.4 million to finish the project.   

The reasons for the cost increase are primarily: 1) the design and resultant cost of the steel structure that will house the solar equipment to comply with Historic Districts Commission requirements and 2) higher cost than budgeted for the solar panels and batteries from the current equipment vendor.

“For me, this is the cost that the design has imposed on us. This has always been troubling to me and seeing the actual numbers for the steel is just mind boggling”, concluded Joe Pato, Chair of the Select Board, after listening to the budget update presentation. 

The project may still make a lot of sense. Most importantly and critically, the project will allow fast charging for the police department’s future electric vehicle fleet at all times, which the Town has committed to. It also meets the Town’s commitment to use sustainable energy in Town buildings. The energy system also provides facility resilience in the event of power outages. On the other side, the revised cost equates to over $13.50 per watt of solar generating capacity, far greater than market benchmarks.

“To be frank, these are such big numbers right now, it seems astronomical that we spend $4.6 million that generate a decent amount of kilowatt hours but not as much as you would expect for $4.6 million,” remarked Select Board Member Doug Lucente.

In terms of economics, the project will result in peak demand savings since the battery storage system can help reduce charges from Eversource. The project also will also generate revenue from a range of incentive programs established by the Commonwealth to encourage solar development. Under a range of scenarios, the project is expected to generate millions of dollars of positive net cash flow over its expected 30-year life to repay the debt and contribute to the Town’s operating budget. From a return-on-investment perspective, the simple payback is estimated to be in the 13- to 15-year range, probably about double the time expected from similar, but more commercial and simpler, projects. However, the longer expected payback might not be that bad for a public sector investment when considering the long-time horizon for a police station (maybe as long as 50 years).        

Realistically, the solar canopy project needs to be finished. Foundational work has begun. Delay most likely will bring only higher costs, which has happened with the police station building itself. The Board considered a number of options. The first option was to pause the project, restore Fletcher Field, and complete the rest at a later date. Under this option, the cost of the steel structure is a big risk: discussion focused on the potential of further cost increases for the custom design. The second option was to erect the steel, finish the parking areas and sidewalks, and restore Fletcher Field. Under this option, the Town would rebid the solar canopies and battery storage. Town staff believe that current pricing for this equipment from the vendor is well above market and a new competitive procurement would reduce cost. Ultimately, the Board voted unanimously to adopt this second option, erecting the steel structure and undertaking the new equipment procurement initiative.

Lower final costs on the police station might offset some of the higher costs on the solar project. The Town has also appealed to Senators Markey and Warren and Congresswomen Clark to utilize “earmarks” to fund some or all of the project. In the end, Fall Town Meeting would have to approve funding for any overrun that is left.

Final statements by Board Members included discussion on how residents might react to the higher cost in light of the initial planning steps for the new high school. Select Board Member Suzie Barry added, “If we go with [rebidding the panels and batteries], we have structural steel sitting there without solar on it. Depending how quickly that happens, it’s going to be within the window of trying to get the high school done. And when the community finds out that a $3.4 million dollar project has blossomed to a $4.6 million dollar project and it’s not complete with solar on it and we’re trying to get a $500- or $600 million-dollar project through Town Meeting and through a debt exclusion vote, it speaks to our abilities as elected officials,” she said.
“It’s the elephant that’s in the room with us on almost everything we do moving forward.”

The construction of the solar canopies surfaces several interesting questions for Town-wide discussion on Lexington’s projects, such as the high school or other Town buildings in the historic districts. Clearly planning should incorporate sustainability investments from the beginning. Town Meeting has spoken loudly and often about the importance of sustainability, but how should cost issues impact decision-making? What are the economic or return hurdles that need to be met for long-term public investment? How should historic district, sustainability, and cost issues be weighted in making decisions? What HDC policies or processes might be altered to achieve a better balance with future projects? Of course, Lexington must confront the classic concerns on siting: how should issues raised by abutters be considered? More broadly, how should the voices of residents who do not participate in Town Meeting or on single-issue committees be heard?

The process and ultimate decision-making with the high school may raise a number of these interesting questions.