Las Vegas Sun

March 19, 2024

Council to vote on lease for solar power project

The Boulder City Council is set to vote in two weeks on a more than 40-year lease for 350 acres in Eldorado Valley for what officials have said would be the first large solar power plant built in the past decade.

The proposed lease would bring in $550,000 in each of the first eight years the plant is in operation. Then annual increases would raise the rent to a minimum of about $620,000 annually for the last 20 years of the lease.

The proposed lease between the city and Solargenix, a Raleigh, N.C.-based company formerly known as Duke Solar, was introduced Tuesday night, but the specifics of the proposal were not discussed.

The council is scheduled to vote on the terms Aug. 26, City Manager John Sullard said. The council will also consider water use and development agreements for the project that day. The development agreement would specify what the project will look like, as well as a time line for construction and operation of the proposed plant, he said.

Mayor Bob Ferraro said he thinks the solar plant is well on its way to becoming a reality.

"I think it's a go. It's something we'll be very receptive of and the community supports it," Ferraro said. "They like the idea of green power."

Last month Solargenix Western Area Manager Gary Bailey said that once in operation the plant will consist of a sea of crescent-shaped mirrors covering 300 acres plus 50 acres for buildings and power generation facilities.

The facility, which Bailey said could cost more than $120 million, would use parabolic mirrors to focus heat on a glass tube filled with a special liquid that can stand temperatures above 700 degrees. The fluid is used to create steam, which turns a turbine to create electricity, Bailey said.

A similar facility has been in operation since the mid-1980s in Kramer Junction, Calif., in the Mojave Desert, he said.

The Boulder City plant would create 50 megawatts of electricity, or enough for 50,000 homes. As of last month Solargenix already had 20-year contracts with Nevada Power and Sierra Pacific Power for the electricity, Bailey said.

Bailey said construction could begin in October and the plant could be generating electricity in March 2005. It would be the first solar power plant generating more than 20 megawatts built in the last 11 years worldwide, he said.

Under the terms of the proposed lease Solargenix's rent would be $50,000 for the first year and $100,000 a year afterward until it is generating electricity.

Once the plant is operating, Solargenix would pay $550,000 annually for eight years. The rent would increase 1 percent a year for the next six years, then 2 percent a year for the following six years. With these increases the rent would be $619,571 annually in the plant's 20th year of operation.

During the remaining 20 years of the contract the rent would be increased annually by the consumer price index, capped at 7 percent.

In addition, after 20 years in operation, Solargenix would be required to give Boulder City 10,000 megawatts of electricity a year for eight years or pay the city $4 million.

The proposed contract includes options to extend the lease for three additional 10-year terms.

The contract also would have Solargenix pay $40,000 a year for five years to have an option on leasing an additional 320 acres. If the contract is approved and Solargenix exercises that option, the city and company would have to negotiate a price for that additional land, Sullard said.

City Attorney Dave Olsen said the last remaining significant sticking point in the negotiations is that the company wants to have an option to lease an additional 1,800 acres instead of 320 acres. But such an agreement would essentially tie up all of the remaining land in the city's special zone restricted for solar-power generation, recreation and a desert tortoise preserve.

Last month some were concerned the lease was endangered by an earlier appraisal of the property that valued the land at about $34,000 an acre.

However, that appraisal did not take into account the development restrictions of the special zone, which cut the appraised value of the land in half, City Finance Director Bob Kenney said.

The City Charter generally prohibits the council from leasing property for less than its appraised value.

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