Primary versus secondary voltage discount at a 2 MW grow

Client is at 2.1 MW and taking service at secondary. Utility owns the transformer. Tariff offers a
primary voltage discount if the customer owns and maintains transformation.

Discount is roughly 4 percent on demand and a smaller amount on energy. At this facility that is
about 47,000 a year.

Cost side is where I need help. Customer-owned transformation at this size means buying the
transformer, the pad, the primary switchgear, and taking on maintenance and eventual replacement.
Quotes I am seeing are 180,000 to 240,000 installed. There is also the question of who owns the
outage risk when a customer-owned transformer fails, which at a cultivation facility is not a small
consideration since a long outage in flower is a lost crop.

Simple payback is four to five years. But the client has a 7 year lease with one 5 year option and
the transformer is a fixture.

Has anyone worked through a primary conversion with a tenant rather than an owner? The lease
interaction is the part I have no experience with.

On the lease, the fixture point is the real problem. Read who owns improvements at the end of term and whether the landlord has to consent to electrical work on the customer side of the meter. Some landlords will agree to own the transformer and recover the cost through rent, which changes who carries the outage risk and changes the payback. Also check how the tariff defines customer-owned transformation, since the wording on who qualifies for the discount is not the same in every tariff.

A four to five year payback against a seven year lease with one five year option is thinner than it looks once you add maintenance, a spare or a service contract, and eventual replacement. I would model it on the seven years only and treat the option as upside. Then put the outage exposure in dollars using the crop value in flower. If one failure costs more than a year of discount, that may settle it regardless of payback. It is also worth asking the utility for the outage history on that feeder before deciding.