Anyone who has taken an introductory biology course might remember that in a symbiotic relationship, one organism lives on or near another organism so that both species benefit.
While McCormick & Company, Inc. and Constellation Energy are certainly not reminiscent of any creatures covered in Biology 101, their recent power purchasing agreement (PPA) is a reminder that in some cases, mutualism can work.
Under the companies' second PPA since 2008, the McCormick Distribution Center in Belcamp, Maryland, will host a 1.8-megawatt solar photovoltaic power system that Constellation Energy will install and maintain. In return, McCormick will purchase energy generated by the solar installation for the 20-year duration of the agreement.
"As an agriculturally-based company we are mindful of the environment and take measures to preserve and protect those resources," says Jim Lynn of McCormick & Company, Inc. "We continue to look for projects that support our sustainability focus and, in this case, reduce the amount of our fossil fuel electricity we buy from the utility company."
A mutually beneficial agreement
The solar power system, which Lynn says will generate 2.3 million kilowatt hours per year, is expected to save McCormick $3.4 million in electricity costs over the 20-year period of the agreement. The project is designed to include 8,372 crystalline photovoltaic solar panels on the building's 363,000 square foot rooftop.
Under the agreement, McCormick does not have to make a capital investment on the solar power system. Mark Kessler, a business development manager for Constellation Energy, says the PPA also offers budget certainty for McCormick since they know the amount they will pay for solar electricity for the next 20 years.
"Another benefit is that we strive to provide solar power at less cost to the host than what they would be paying for utility power," says Kessler. "Utility prices fluctuate pretty dramatically at times."
While Constellation Energy provides the capital to design, construct and operate the system on the host site, they benefit by receiving a federal investment tax credit, Kessler says. After the first 20 years, McCormick can decide whether to remove the solar power system, buy it or enter another short agreement to buy power from Constellation Energy.
"Solar panels have such a long life that there are one or two five-year options after the initial agreement," says Kessler.
While the project is currently in the design and engineering phase, construction will begin this summer and the goal is to complete it by the end of the year. Requiring 17,000 man-hours of labor during construction, it will also create new green jobs.
A multi-phase partnership
The size of this solar project is twice as large as the solar power system installed when the companies first collaborated in 2008. For this project, Constellation Energy installed a nearly 1-megawatt solar power system at McCormick's facilities in Hunt Valley, Md.
"We achieved the 30% reduction in electricity costs for the facility in year one," says Lynn. "From a public reaction standpoint, we received a positive response from the community as well as our shareholders and employees."
The panels for the 2008 project were made by SolarWorld, but the manufacturer for this current project has not yet been selected. Kessler says that Constellation Energy uses only top-tier manufacturers and has also only used U.S. manufacturers.
According to Kessler, the solar projects work well for each company's values and are the first steps in what he hopes is a multi-phase partnership.
"We see them as a great partner for this," says Kessler. "It fits right in with both corporations' philosophies and strategies for renewable energies."