Shaker Heights solar project secures ‘safe harbor’ amid federal budget cuts

SHAKER HEIGHTS, Ohio — Thanks to quick and evasive action taken by City Council, a long-anticipated public solar energy project remains docked in “safe harbor” amid puzzling federal budget cuts.

Council recently authorized up to $1.8 million for the solar installation on the rooftops of two buildings in the City Service Center on Chagrin Boulevard.

The work also required the replacement of both aging roofs, which council earlier approved at a cost of $2.4 million.

This brought the projected grand total to $4.2 million.

Shaker Heights Sustainability Coordinator Michael Peters pointed out that the cost would be lowered by federal energy-saving investment “tax” credits that should still apply through an Internal Revenue Service “direct pay” program.

Although they wouldn’t kick in until 2027, those reimbursements could add up to $638,000 — roughly 30 percent and possibly more — toward the solar panel acquisition and setup.

Council unanimously passed the ordinance May 27, with Peters’ memo citing “a reasonably high expectation that the project would qualify for the federal tax credits regardless of completion in 2025 or 2026.”

In a section titled “Timing,” Peters noted “some concern over the ongoing availability of that federal program.”

With that in mind, Peters requested first-reading emergency passage to “remain on schedule for meeting the requirements to qualify for the federal tax credits in the 2025 fiscal year.”

That still held true as of last week, when Peters provided an update.

“We do believe that as the law currently stands that we will qualify for the 30 percent Investment Tax Credit.”

That credit predates the Biden-era Inflation Reduction Act that actually extended the time frame.

But America’s growing renewable energy industry now finds itself up against what the Trump Administration calls its “One Big, Beautiful Bill,” which cuts out incentives previously offered.

Peters took issue with that “OBBB” billing, telling council at the time that it contained “many ill-conceived and reckless policy reversals that will inevitably harm our residents.”

That could all come further down the road.

“At this time, the key provisions that apply to our project — namely, the commencement of construction and funds expended — remain in place as we projected and analyzed them,” Peters said last week.

The “safe harbor” provisions apply as well, “because we are planning to start construction as soon as possible and within calendar year 2025.

A recent executive order is also being monitored closely.

Councilwoman Kim Bixenstine, who chairs the Sustainability Committee, remained a strong advocate for the solar proposal.

“We are facing accelerated climate change and extreme weather events, as well as increasing unreliability of energy supply, with a very old (electric power) grid in Ohio,” Bixenstine said.

She cited increased demand for data centers and artificial intelligence (AI).

She also pointed to a “narrow window of opportunity for green, renewable energy that we would be generating right on the rooftops of our service center at a fixed cost that is lower — perhaps substantially — to supply the city’s critical public works activities for 25 to 30 years.”

Bixenstine was referring to the expected life span of the solar panels, which Peters said will generate over 13 million kilowatt hours of emission-free electricity to reduce the city’s carbon footprint.

As for the “break-even point” in the contract, Peters said, “The period where the savings from offsetting our FirstEnergy electric bill would exceed the investment costs is between 17 and 20 years.”

In all, Peters estimates that the city will realize cost savings for electricity over the 25-year expected life of the project of between $450,000 and $800,000.

That’s in addition to reducing its dependence on fossil fuels.

While he remained “absolutely in favor” of a city solar project, Mayor David Weiss registered some concerns about this one back in May.

Shaker’s mayor does not have a vote on council, and Weiss further noted that he rarely disagrees with his colleagues.

The administration actually had a solar project listed in this year’s budget, he said.

“The disagreement is with the project size, the risk and the return on our investment,” Weiss said.

“It’s clear that the investment tax credit is critical to make this transaction a better return. But it’s still not a great return, to be honest, from my perspective.”

And without the tax credit, “three scenarios have a return of less than 1 percent,” Weiss added, “and one is actually negative.”

With the tax credits, those scenarios show two returns each of either 2.4 percent or 3.8 percent.

There may also be some additional costs to the project, which already more than doubled when the roof replacement went from $1 million for one building to $2.4 million for two, Weiss added.

“We also need to keep in mind that the tax credit, while not a major point, is not paid until 2027,” Weiss said.

“That will require us to advance 100 percent of the costs until we are reimbursed after the fact.”

As for the 814 solar panels on order, “while it is true that if costs continue to go up we might reduce that number — that reduces the return even further.”

Weiss also hopes that the cost of the solar installation will not impact funding for other transformational projects throughout the city, from recreation to the Lee Road Action Plan to the Doan Brook Restoration near Horseshoe Lake Park.

“Because of timing, this project came first,” Weiss said. “But we still have much to finance going forward, in particular recreation, coming from their strategic plan.”

A staunch supporter of recreational upgrades in the city, Councilman Sean Malone thanked everyone involved in the work — “spending seven to eight years trying to figure out a way to put solar panels somewhere on a city building.”

Malone also believes the city still “found a way to do this in an economical fashion.”

He believes this was also due to the Finance Committee, chaired by Councilwoman Nancy Moore, “who asked tough questions and made this project even better.”

And since passage, Peters said last week, “We are on schedule with the roof replacement work and working with our developer to be prepared to start installing the solar panels as soon as the roof is complete, which is scheduled for the early fall.”

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