Despite a decrease in anticipated revenue due to increased costs, Tisbury town leaders said they will move ahead with a solar panel project planned for the former town landfill. The town was originally expected to earn $60,000 a year from the project, but now is expected to earn around $45,000 because interconnection costs are higher than original estimates, said Bill Straw, the town representative on the Cape and Vineyard Electric Cooperative.

The cooperative has worked with towns across the Cape and Islands since 2009 to develop solar projects.

The Tisbury project began two years ago.

The town plans to lease space at its capped landfill land to American Capital Energy for 20 years. Tisbury selectman and board chairman Tristan Israel said the town will not pay for installation of the project, but is simply providing the land.

The project is estimated to cost $5 million to build, said Mr. Straw said, and will include 5,000 solar panels that will generate 1.2 megawatts per year. The electricity produced will go directly into the regional electric grid; the town will benefit by receiving either a check or energy credit from the power company NStar. Contract negotiations are still in progress.

Mr. Straw said ACE will pay the town for the land which will be combined with the payment from NStar.

But before construction can begin, contractors must have an interconnection agreement with NStar to connect the project to the grid. ACE had originally estimated $10,000 as the interconnection cost. But in early October following the completion of an impact study, NStar engineers determined the cost to be about $145,000, said spokesman Michael Durand.

“We had to determine the impact on the area and what upgrades have to be done to mitigate that,” Mr. Durand told the Gazette this week. “I’m not sure where the developer got the initial $10,000, because the cost to do any upgrade work through our grid to accommodate a renewable energy generator is based strictly on an impact study that our engineering group does.”

He said necessary equipment could include new poles and high-voltage wires. The cost includes purchases as well as installation of equipment.

“If the developer is not responsible for that cost, the customers of the utility would ultimately be the ones who pay for it,” said Mr. Durand. “It would not be right to have the customers absorb those costs when the grid as it stands is fine for its current purpose.”

At their meeting last Thursday, the selectmen were presented with a formula for ACE to absorb the interconnection costs by increasing the price per kilowatt hour from $.085 to $.091.

The price per kilowatt hour will be subtracted from the amount of money the town will receive from ACE and NStar each year, Mr. Straw said.

“We won’t take money out of our pocket to pay for it,” he explained. “The solar array is generating electricity on our property and we are getting paid for having that solar array there.”

Selectmen signed the agreement.

“Forty-five or 50 grand a year for 20 years is significant for the town,” said Mr. Israel. “It would have been nice to get more though.”

Mr. Straw said the next step is for NStar and ACE to sign an interconnection agreement. After that, construction can begin, which is expected to take three months.

In other business, the selectmen continued two public hearings due to lack of attendance. The hearings are for proposed stop signs and crosswalks at Skiff avenue and Causeway Road, and at Franklin street and Woodlawn avenue. The hearings have been rescheduled for the next selectmen’s meeting on Nov. 13, where there will also be a hearing on the tax rate classification.