What does it mean to say “the Hotel at Oberlin is solar powered?”

The Hotel at Oberlin, also called the Peter Lewis Gateway Hotel, opened two weeks ago just in time for Oberlin College graduation.  This hotel replaces the Oberlin Inn and has been put forward as the corner stone of what will become a sustainable block of buildings — called the green arts district.  As the budget for this building continues to swell it is unlikely the College will make further headway on the “green arts district” for some time to come.

In multiple venues (Oberlin Alumni Magazine, Cleveland City Club, Cleveland Plain Dealer, etc.) the Special Assistant to the Oberlin College President on Sustainability and the Environment, has described the Hotel at Oberlin as “100% solar powered.”  Here I address the credibility of this claim.  I find the claim to be lacking in substance, yet very costly to the College.

The Hotel at Oberlin will use both electricity and natural gas.  100% of its electricity will be purchased from the local utility, Oberlin Municipal Light & Power Systems (OMLPS), as is the case for nearly all Oberlin College buildings.  In addition, the hotel will use natural gas to produce all of its hot water and, if necessary, for additional winter heating should its ground source heat pumps be unable to meet the demand.  This is a likely situation since the hotel, which is eight times the size of the Lewis Environmental Center, has a ground-well field that is less than four times the size of that building’s well field.  The building includes no on-site renewable power generation, whatsoever.  Based on equipment size the utility estimates a 1,000,000 kWh increase in annual electric use.  That means the new, “energy efficient” hotel will use nearly 2,000,000 kWh of electric energy — more than double that used by the Oberlin Inn it replaces.

What then, could be the basis of the solar power claim?  The President’s Office would have people believe the solar energy for the hotel is coming from the 2.2 MW photovoltaic (PV) array constructed four years ago north of the athletic fields, the so-called OSSO array.  Apparently the College is trying to convince the US Green Building Council (USGBC) that this array provides “on-site renewable energy” to the hotel – worth as many as 8 points towards its coveted LEED certification.

But what is on-site solar electricity?  On-site solar, such as that provided by the two photovoltaic (PV) arrays at the Adam Joseph Lewis Center, furnish electric power directly to a building, avoiding the transmission losses that occur when power passes through multiple high-voltage transformers and transmission lines.  On-site solar generation, added to an existing building,  lowers the building’s fossil energy and carbon footprint.  And, by avoiding transmission losses, the benefits of on-site solar are greater than those achievable through off-site renewable sources.  It should be noted that the converse – adding a building to an existing solar array – increases total greenhouse gas emission!

It is not possible for the OSSO PV array to provide on-site electricity to the Hotel at Oberlin.  First, it is located a mile away from the Hotel — not exactly “on-site.”  Second, the College entered into the OSSO project long before the hotel was conceived. When the OSSO array was constructed in 2012 the College chose to connect it directly to the OMLPS electric grid.  Transmission losses are not avoided.  Third, the City takes all of the array’s electric energy and, in turn, pays the College a premium rate (above the City’s average wholesale generation cost) of $0.085 per kWh.  This arrangement has zero impact on electric sales to College buildings – each building continues to purchase retail electric energy from OMLPS as if the array did not exist.  The City sends the College a monthly check in exchange for this energy which, to date, total more than $800,000.  OMLPS includes the OSSO PV array in its power portfolio.  Once electrons enter the OMLPS grid they go everywhere; they are not “special electrons” that only go to the Hotel or other College buildings.

And finally, even if the College now chose to construct a dedicated, mile-long cable to connect the OSSO array to the Hotel it would be of no use because the College signed a 25-year contract to deliver 100% of the array’s energy to the City in exchange for $85/MWh.  Off-site renewable energy is a good thing, too.  A building can obtain off-site energy by purchasing Renewable Energy Credits or RECs.  The USGBC provides up to 3 points towards LEED certification if a building uses RECs to offset a large fraction of its electric use.  In principle, the RECs produced by the OSSO array make the Hotel at Oberlin eligible for these points.  In fact, OMLPS already holds RECs (mostly wind and hydro) to cover about 85% of its electricity.  That means that any building purchasing energy from the OMLPS grid can claim RECs for 85% of its electric energy.

The College receives all of the RECs associated with OSSO’s energy and does not sell these to the City.  The day OSSO went on-line these RECs made Oberlin College a greener place – and that is a good thing!  The credit is entirely due to the OSSO array.  In principal these RECs may be “assigned” to any College building.  They could, for instance, be assigned to Finney Chapel, built more than 100 years ago.  Does this assignment now make Finney Chapel “100% solar powered?”  Perhaps – but Finney Chapel remains the same energy hog it has always been.  And no one would be fooled by this association into believing that Finney Chapel is now worthy of architectural design awards.  Assigning these RECs to Finney Chapel does not make Oberlin College any greener than it was in 2012 the day the OSSO array began producing its green energy.

And so calling the Gateway Hotel “solar powered” tells us nothing about the hotel or its design; it is nothing more than a cheap marketing trick.

But, as it turns out, it isn’t cheap at all – it is an expensive marketing trick.

The financial model that justified the OSSO array called for the College to sell these solar RECs into Ohio’s REC market and replace them with cheaper wind RECs — adopting a strategy similar to that used by the City of Oberlin to generate its now famous REC revenue.  Put simply, the College would sell its solar RECs into the Ohio REC market at a high price (perhaps $50/MWh) and replace them with cheaper wind RECs (perhaps $5/MWh).  This strategy provided the College with more than $200,000 additional revenue during OSSO’s first two years of operation.

But after the first two years the College stopped selling its solar RECs  – foregoing tens of thousands of dollars in revenue.  During this time Ohio REC prices dropped significantly.  Yet even today solar RECs generated by OSSO have an estimated annual value of $45,000.

Perhaps this lost revenue represents incompetence of the Oberlin College Finance Office.  In addition, this office has remained silent while the City debates whether to return REC revenues to electric customers – of which the College portion would be $200,000 per year!  These are strange financial decisions at a time when the College is desperately seeking to close a huge budget deficit and threatening to downsize its work force.

I believe Oberlin College’s decision not to sell RECs is more calculated.  I believe the decision not to sell OSSO’s solar RECs was made to bolster the narrative that this array provides on-site solar energy to the Hotel at Oberlin.  In 2014 when designers of the Hotel at Oberlin came up with this scheme — it was too late.  The College had already connected the array directly to the City grid, entered a 25-year contract with the City, and it had already sold off two years of its solar RECs.  But why let facts get in the way way?  I believe that the President’s Office decided to stop selling the RECs and pushed the USGBC to accept the idea that the OSSO array provides on-site solar energy to the Hotel at Oberlin — facts be damned!

What is the cost of this decision?  It appears the College failed to honor the third year of its contract to sell solar RECs at $50/MWh.  No doubt the purchasing party in that contract did not object — since the market value for these RECs have fallen to $15/MWh.  The array is expected to produce 3,000 MWh per year.  The lost revenue from REC sales for 2015 is probably $100,000, and at current REC prices, continued failure to sell these RECs represents an additional $30,000 per year in lost net-revenue.  (Note that out-of-state wind RECs purchased to replace solar RECs cost $5/MWh.)

LEED certification is known to add to the cost of design and construction.  But in this case the College is looking to pay an annual fee of $20,000 (in lost REC revenue) to buy 5 LEED points towards its Hotel certification!  (The Hotel’s estimated electric use is 2/3 the amount produced by the OSSO array).  Is LEED certification really worth such an ongoing expense — a kind of franchise fee?

The more disturbing question in all this has to do with the fiscal responsibility of these kinds of decisions.  It is pretty clear that the President of Oberlin College pays more attention to his Special Assistant on Sustainability and the Environment than he does to his own V.P. of Finance.  How long will the Oberlin College Board of Trustees allow this insanity to go on?

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