The country's largest plastic produce bag maker is spending more than $3 million to install solar panels to provide a significant portion of the firm's energy needs in California.
Emerald Packaging Inc., which operates out of a pair of buildings in Union City, expects installation to begin this spring, 10 years after the company began considering the potential.
The decision to install solar panels on Emerald's two buildings comes after a significant price increase for electricity in 2022 and another expected this year, CEO Kevin Kelly said.
"We've looked at solar for years and priced it out and it's really never penciled out. In the last year, PG&E has raised rates 20 percent and there's another 30-percent increase on the table for 2023. We're in the plastics business. The margins aren't such that you can take a $20,000, $30,000, $40,000 increase on your electric bill a month," he said.
"It's under three years at this point in terms of payback, which is utterly remarkable," Kelly said. "So it finally penciled out."
With a total cost of $3.25 million, the project qualifies for about $1.7 million in state and federal incentives, the CEO said. That leaves a net project cost of $1.55 million.
Work is being delayed due to the wet weather in California and is now expected to begin in March. A first phase will involve installation of solar panels on the roof a 100,000-square-foot building followed by installation on an adjacent 90,000-square-foot building later this year, Kelly said.
There is more room to install panels on the 100,000-square-foot building than on the 90,000-square-foot structure. Emerald expects solar to provide about 50 percent of the larger building's energy needs and about 25 percent for the smaller building.
"The money is down, the money is in. But the panels aren't here. They will get here. I think everybody is waiting to dry out," Kelly said.
The solar power project comes at a time when the company, which mostly makes linear low density polyethylene bags for the produce industry, considers growth opportunities largely driven by the expansion of its largest customer, Taylor Farms.
"Certainly within the next year, year-and-a-half we need a second facility. I mean a real second facility. Our business has grown, particularly with our largest customer," Kelly said.
"We're looking at expansion. And we're not looking here. We're looking at Arizona. We're looking at Northern Mexico. We're not going to look in California. I wouldn't dare look in California," due to the rising costs of doing business there. "I don't really know what becomes of California long term. And what becomes to folks like us in California."
Emerald expects to decide within the next six months, Kelly said.