HomeMy WebLinkAboutA035 - Update to proposed Solar Farm Project at the AirportITEM #:38
DEPT:CMO
May 26, 2026
Staff Report
IMPORTANT UPDATE REGARDING PROPOSED SOLAR PROJECT AT AMES
MUNICIPAL AIRPORT
BACKGROUND:
At a workshop on April 21, the City Council discussed the potential for a solar energy
development on property owned by the City at the James Herman Banning Ames Municipal
Airport. Subsequently, on May 12, the City Council clarified its intent to avoid pursuing
installation of solar equipment on property designated for future development at the Airport. In
accordance with this direction, City staff worked with the solar developer to describe 15
separate areas totaling 149.74 acres, which were then incorporated into a lease option
agreement with the developer approved by the City Council on May 19.
While the elimination of future developable Airport property from the lease sought to protect
the future development of the Airport as a top priority, this direction is having an unintended
impact on the economic feasibility of the solar project. The developer received preliminary
engineering information on May 20 indicating that, after excluding the area designated
in the Airport Master Plan for future development, the amount of buildable acreage
available for the proposed solar project has been reduced to approximately 80 acres.
The capacity of the solar generation would therefore reduce from the original goal of
24.9 MW to between 15-18 MW.
The 80 remaining buildable acres present less-than-optimal economics for a solar
project. Several of the areas are small and would not be able to support many panels in a
single area. Others require long cable runs to connect to inverters or to the electric grid,
increasing costs. At best within the current lease boundaries, the developer estimates a
price-per-MWh in the mid-$90s, a substantial increase from the originally projected
pricing in the mid- to upper $70s per MWh. As a reminder for comparison purposes, the
City's 2.2 MW community solar project commissioned in 2020 is priced at $59 per MWh.
The explanation for this anticipated cost change is that the original pricing projections
assumed a larger solar-developable area would be made available on the west side of
the Airport. That area, now excluded from the lease, accounts for approximately 10 MW
of highly efficient buildable area, which would lower the average cost of the project.
With the Council's instruction on May 12 to exclude future Airport development areas,
this large, solar-efficient area has been excluded from the lease.
At the time of the May 12 report, it was emphasized that the approval of a revocable
lease by the City Council would allow the developer to meet the "safe harbor" deadline,
1
thereby qualifying the project for federal tax credits. However, the agreement is written
so the lease of City Airport property will terminate should either party decide not to
enter into a subsequent NTP Amendment (Power Purchase Agreement), which will
reflect the final details of the transaction.
If the developer was to proceed with the "safe harbor" work, it would need to expend
approximately $300,000 within the next several days to perform that work, with another
$250,000 to $400,000 in expenses anticipated before the end of the calendar year to
develop the project.
Realizing that the anticipated cost of energy from the current lease area configuration
is well above the market rate for other solar projects, the developer is now expressing
hesitation about proceeding to commit to further development expenditures necessary
to achieve “safe harbor” status. The developer has told City staff that the rate at which
the power would be produced under the current footprint is not economical, and that
the developer is in the business of providing economical power.
The best path to accomplish a solar project that is economically priced is to commit the
City's 53-acre property on the west side of the Airport to the solar project. This property
is currently leased to John Deere for a spray testing operation based out of John
Deere's ISU Research Park facility.
Approximately two-thirds of the area leased to John Deere is designated in the Airport Master
Plan for future T-hangar and commercial hangar developments, while the remaining one-third
is designated for future non-aeronautical land use. The solar developer has indicated that if
the 53-acre property is included in the solar lease, it would be possible to shorten the
Purchase Power Agreement (PPA) duration from 25 years to 20 to allow for the land to be
"locked up" for less time, or to provide for early removal of portions of the solar project for a
predetermined cost to the City if a hangar or non-aeronautical development project comes to
fruition prior to the end of the PPA.
The City entered into the lease with John Deere in 2019. Its initial term is for 10 years. John
Deere has the option to extend the lease for up to five additional five-year extension terms.
The City may cancel the lease with 360 days' notice if the lease must be terminated to
accommodate a development on Airport property.
City staff has not had discussion with John Deere about the prospect of canceling the
lease of the impacts it would have on the company. Therefore, it is unknown at this time
whether it would be possible to accommodate John Deere's needs in another portion of
Airport property.
OPTIONS:
1. The City Council could decide to return a portion of the acreage removed from
consideration for the solar the project in order to improve project economics and, if
necessary, attempt to identify alternative property in the area suitable to the displaced
user.
The most attractive area for the solar facility would be the current land that is leased to
John Deere for its sprayer testing. The current lease with the company has a
2
cancellation clause, but it is unknown if this option would be supported by John Deere.
2. If equipment or materials that the developer is contemplating to purchase in order to
meet the "Safe Harbor" expenditure requirement can be used by Electric Services for
some other project, the City could commit to buy that item from the developer should City
ultimately decide not to sign the NTP Agreement.
3. While not binding, the City Council could indicate to the developer that an anticipated
cost in excess of $95 per MWh will not prevent the City from continuing consideration of
the project.
The developer has indicated to staff that it does not support pursuing the project if the
costs are uneconomical to this degree.
4. Discontinue further consideration of the project.
STAFF COMMENTS:
This project requires a difficult balance between the City Council's goals related to sustainable
electrical energy, future development of the Airport, the interests of existing Airport tenants,
and the costs for the benefits of the project. It is clear that the solar project becomes
uneconomical without additional cost-effective property on which to install solar. The
developer does not expect the City to accept the energy pricing that would result from the
current proposed lease area.
The developer has identified the John Deere lease area on Airport property as the best
option to include in the solar lease in order to deliver a cost-effective solar project.
This, however, results in impacts to John Deere that may be difficult to completely
mitigate. Additionally, development of solar in this area is not consistent with the long-
term uses reflected in the Airport Master Plan.
Unfortunately, there is little time remaining to appropriately consult with John Deere
about this situation. The solar developer has indicated that it must make a decision to
pursue "safe harbor" financial obligations by Thursday, May 28, 2026.
It should be emphasized that even if this lease area issue is resolved, there remain
other interconnection challenges that must later be overcome to make this project
viable. Additionally, the NTP Amendment, including the energy pricing, must still be
negotiated to the Council's satisfaction.
ATTACHMENT(S):
EMAIL From Recall Strategies.pdf
Solar Lease Areas with Aiport Master Plan.pdf
MAP7.pdf
3
1
Phillips, Brian
Subject:RE: Council meeting - 4:30
Attachments:AMW Solar - Buildable Subsets 260521.pdf
From: Eric Bergstrom <eric@recallstrategies.com>
Sent: Thursday, May 21, 2026 4:48 PM
To: Kom, Don <donald.kom@cityofames.org>; Phillips, Brian <brian.phillips@cityofames.org>
Cc: Robert Bergstrom <bob@recallstrategies.com>; Chad Little <chad@recallstrategies.com>; Andrew Moore
<aj@recallstrategies.com>
Subject: Re: Council meeting - 4:30
[External Email]
Brian,
2pm CT tomorrow works. Should you have time yet today, it might be productive to have a quick chat yet this afternoon.
Tomorrow morning is a bit challenging for me (pre-planned PTO), however the team is available tomorrow and
tomorrow afternoon works for all.
Bottom line here - the updated layout without John Deere is now confirmed to drive costs up notably and is likely a
"Spruce Goose" that likely can't fly under its own economics.
Regardless of the conversation timing, I wanted to layout a few of the challenges we're seeing as of now, so you have all
the background and decisions at your disposal.
1. CHANGE TO LAYOUT — Following last week's May 12th hearing, we learned (on May 13th) that the council voted
to remove airport areas designated as future development areas (including 20+year plans) and non-aeronautical
use areas.
a. At the time, we mentioned this could cause a price increase in the range of $10-15/MWh, but we
needed to perform engineering & design work to determine the actual impacts.
a. We immediately began an engineering exercise on the 13th-15th to recalibrate layout scenarios with
this new wrinkle. (Previously we expected a temporary removal of such areas pursuant to previous
discussions).
b. Background — the 53-acre John Deere property, which is listed in the master plan as non-aeronautical
land use and 20+year plans for hangar space.
i. Of these 53 acres, as many as all 53 are buildable from an FAA/environmental/setback/design
perspective, with as few as 48 buildable in our worst-case scenario.
2. BUILDABLE AREA — Quick Math on agreement area as reduced by FAA:
a. 149.74 acres — area in legal description in agreement, which is further reduced by the following
constraints:
i. 137 acres — areas identified by FAA consultant as either High or Low likelihood of receiving FAA
approval (12 acres are below low likelihood and very likely non-permittable)
ii. 88 acres — acres identified by FAA consultant as High likelihood for FAA approval (we feel,
following detailed review, a bit more is possible).
iii. 99 acres — acres we believe are likely to be permitting by FAA in coordination with FAA
consultant (who has been working this in detail since September 2025).
4
2
2. Of the 99 acres above:
i. Roughly 85 acres are able to be built economically
ii. Roughly 13 acres (split into areas of 1.2 acres, 1.67, 2.28, 2.6, 2.61, and 3.15 acres) are actually
more expensive such that they increase the cost of energy to include them - it's more expensive
to run cabling and infrastructure to these small areas than the benefit derived from keeping
them in.
3. 85 acres of buildable area per FAA, but subject to further constraints due to their shape, north-south
alignment, setbacks, and environmental factors.
i. About 80 acres of buildable area is likely remaining to be used.
4. ENGINEERING & DESIGN RESULTS - Delivered Tuesday/Wednesday 5/19-5/20.
i. Preliminary Update on New Reduced Area Layout — BEST-CASE scenario is this area holds up to
18 MW, but may be as low as 14-15 MW.
ii. Assuming 18 MW, we are seeing a price in the mid-$90's (rather the upper/mid-$70's for our
layout and prior quotes that had all previously included in the John Deere area.) Lower MW
would drive this up further.
1. We simply do not believe it likely that such a rate is marketable in the near future, and
we are in the business of providing economical power.
a. Perhaps the council disagrees?
5. Please see the attached PDF that shows the areas in the lease in turquoise, the High-likelihood FAA
areas in yellow, and the non-economically viable areas in pink.
3. JOHN DEERE LOSS - 100% FAA "high likelihood" - AREA NOT ABLE TO BE REPLACED
a. The John Deere area accounts for 40% of the nameplate of the project at 25MW and would be the last
portion we would remove from our perspective.
i. This property does 2/3rd's of the work on bolstering project economics in making the original
scenarios economically viable relative to market rates.
b. The remaining areas available are materially full, thus, John Deere removal is a loss of 10 MW, and 100%
buildable 48-53 acres, and none of the additional areas provide any reasonable path to certain approval
(which we certainly would try).
i. The remaining 2-3 acre areas actually increase the price when included, as they are more
expensive on the margin.
c. NOTE — We intend to file MANY times into the FAA to push the envelope here, being mindful of all items
safety-related first and foremost. It's in our collective interest to file good property that is suitable for
solar development into the FAA and have them deem it acceptable or otherwise. Absent such approvals,
in which we expect to file many iterations over the next several months with denials likely along the way,
we'll get the maximum area allowed. From an investment perspective, we can only bank on what is firm
right now.
4. POSSIBLE NEXT STEPS:
a. After the redesign data came back yesterday, we began conversations on the real challenge this scenario
now poses.
i. The safe harbor commitment is about $250,000 due out no-later than May 28 th, Thursday of
next week (with another $50k execution and design fees), but this kicks off a workflow of
engineering & design of an additional $250-400k to firm up pricing over the next several months
before fall, with substantial equipment deposits coming due in Q1 2027, if not earlier at the end
of this year (8-figure sums).
5
3
1. Given this fact pattern, Recall doesn't have our ownership's support for such a spend
curve for safe harbor and follow-on engineering when the new layout (without John
Deere) is now delivering a price that is above market that we don't ultimately or
reasonably expect to be accepted by the City of Ames. We'd need to pursue alternative
paths to safe harbor, which also likely come at a cost, or may ultimately require us all to
pass on the opportunity.
b. OPTION 1 — Add John Deere property back into lease agreement, with commitment/amendment to
agreement from council/mayor Tuesday to include land. Removal of facilities from the portions of the
>20-year Airport Master Plan can be accommodated via PPA term (set at 20 years rather than 25, for
instance, or removal at pre-set date). Removal at earlier dates can also be addressed via the terminal
value removal schedule, as is in the agreement with the existing solar project at the airport.
c. OPTION 2 — Backstop safe harbor spend in near term while we sort through more iterations of design in
the coming months. (We view this as unlikely given the mutual risks)
d. OPTION 3 — General acceptance of price above market rates (into upper $90's) as acceptable in public
forum that justifies our $750k near-term spend. (We don't expect this to occur)
e. OPTION 4 — Mutually walk.
f. (above are just ideas for options - open to others).
Thanks for your patience with the long email!
Eric
Eric Bergstrom
Managing Director
(904) 826.6005 | eric@recallstrategies.com
www.recallstrategies.com
CONFIDENTIALITY NOTICE: This email and any attachments may contain confidential or proprietary information intended only for the
named recipient(s). If you are not the intended recipient, please notify the sender immediately and delete all copies. Any
unauthorized use, disclosure, or distribution is strictly prohibited.
6
7
8