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10/19/2016 - STAFF REPORTS - 5.A.
A. iy c V N • c .e City Council Staff Report DATE: October 19, 2016 NEW BUSINESS SUBJECT: AUTHORIZATION TO PURSUE CLEAN WATER STATE REVOLVING FUND LOAN FOR DEVELOPMENT AND CONSTRUCTION OF A BIOGAS-TO-ENERGY PROJECT AT THE WASTEWATER TREATMENT PLANT, CITY PROJECT NO. 15-26 FROM: David H. Ready, City Manager BY: Marcus L. Fuller, Assistant City Manager/City Engineer SUMMARY: Over the last year, staff has coordinated with Veolia Water West Operating Services, Inc., ("Veolia"), on the preliminary analysis of a biogas-to-energy project at the City's Wastewater Treatment Plant ("WWTP"). This action will authorize staff to pursue a Clean Water State Revolving Fund Loan ("SRFL") to finance the capital cost of the Biogas-to-Energy Project at the Wastewater Treatment Plant, City Project No. 15-26, (the 'Project'), which, given the sustainable nature of the Project, is eligible of receiving up to a 50% ($2 Million maximum) grant. This action does not commit the City Council to funding the Project, but will allow staff to formally submit applications to the state to confirm grant eligibility; future review and approval of a SRFL financial agreement will be required by the City Council RECOMMENDATION: 1 . Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AUTHORIZING THE REIMBURSEMENT OF FUNDS REQUESTED FROM THE STATE WATER RESOURCES CONTROL BOARD UNDER THE CLEAN WATER STATE REVOLVING FUND FOR THE CITY OF PALM SPRINGS BIOGAS-TO-ENERGY PROJECT AT THE WASTEWATER TREATMENT PLANT, CITY PROJECT NO. 15-26;" and 2. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO ACT ON ITS BEHALF TO SIGN, FILE AND EXECUTE A FINANCIAL ASSISTANCE APPLICATION FOR A FINANCING AGREEMENT FROM THE STATE WATER RESOURCES CONTROL BOARD UNDER THE CLEAN WATER STATE REVOLVING FUND FOR THE CITY OF PALM SPRINGS BIOGAS-TO- ENERGY PROJECT AT THE WASTEWATER TREATMENT PLANT, CITY ITEM NO. City Council Staff Report October 19, 2016-- Page 2 WWTP Biogas-to-Energy Project, CP15-26 PROJECT NO. 15-26." STAFF ANALYSIS: In 2011 , the City completed a greenhouse gas ("GHG") emission inventory as an initial step in meeting its Path to Sustainable Communities objectives. According to the GHG inventory, the City (through its governmental activities and operation of its various facilities) generated 31,738 metric tons of carbon dioxide equivalents (MTCO2e) in 2012, which was estimated to increase to 33,234 MTCO2e by 2020. The City is subject to state legislation (Assembly Bill 32), the California Global Warming Solutions Act of 2006, which created a program to reduce GHG emissions to 1990 levels (estimated at 26,812 MTCO2e) by the year 2020. GHGs have varying global warming potential and atmospheric lifetimes. Carbon dioxide, the reference gas for global warming potential, has a global warming potential of 1. The calculation of the carbon dioxide equivalent (CO2e) is a consistent methodology for comparing GHG emissions, since it normalizes various GHG emissions to a consistent metric. Methane's warming potential of 21 indicates that methane has 21 times greater warming affect than carbon dioxide on a molecule per molecule basis. A carbon dioxide equivalent is the mass emissions of an individual GHG multiplied by its global warming potential. The City's GHG Inventory identified a significant source of GHG emissions at the Wastewater Treatment Plant ("WWTP"). The Palm Springs WWTP was originally constructed in 1960 to treat 4.15 million gallons per day (mgd). Two facility expansions were completed in 1979 and 1983, bringing the total design capacity to 10.9 mgd for average annual flow. The treatment processes consist of preliminary screening, grit removal, primary clarification, trickling filters, and secondary clarification. Treated effluent is disposed of onsite in percolation ponds or is supplied to the Desert Water Agency for further treatment to meet reuse standards for offsite irrigation. Biosolids from the treatment process are thickened, then stabilized by anaerobic digestion and dried with sludge drying beds before final disposal. According to the GHG Inventory, the City's WWTP is the single largest source of GHG emissions, as shown in Table 1 on the next page. In 2012, the City's WWTP generated an estimated 15,957 of the 31,738 MTCO2e by all City activities and operations, equivalent to 50% of GHG emissions City-wide, primarily due to the fact that the methane produced by the WWTP is flared to the atmosphere at and not currently reused for a beneficial purpose. Identifying a cost-effective method to reuse the methane for production of energy at the WWTP has been an item investigated by staff for many years, however, the technology required to adequately process methane to operate fuel cells or a cogeneration engine to generate electricity has historically been prohibitively expensive. 02 City Council Staff Report October 19, 2016-- Page 3 WWTP Biogas-to-Energy Project, CP15-26 Emissions(MTCO2e per year) Category 1990 2000 2005 2008 2012 2020 2005 Former Palm.Springs Landfill' 1811 1,482 1.311 1253 L IJ6 917 6.32 Wastewater treatment plant(fugitive)' 13236 14,028 14,847 15,282 15,957 173178 19,841 Co-gerieratiun plants 6.646 '1 10,020 1 9,112 8,746 - 8,746 ' 8,746 8,746 AirponTueluse L 53 79 86 i 109 115 133 162 Cty vehicle fleet' 1.687 1,495 1,450 1,559 1,628 1,767 Z026 .Ozone-depleting substance substitutes' 99 99 99 99 99 99 99 Electricity-municipal' 8.34 734 1,809 2.2M 2,302 2,467 2,716 ElectncrN-streeflights' 741 652 633 681 710 761 898 Employee commute 1,705 1,312 1 1,216 - L280 1,036 1,036 1,036 Total 26,812 129,901130,593 131M7' 31,730 33,M 36,086 Notes. 2012. 242C,,and 2C38 are projections based on business as usual MTCO,e=metric Ions of carbon dioxide equivalents Scope I emissions 2 Scope 2 emissions ' Scope 3 emissions Source_ Appendix A_ Table 1 Recent events have changed the dynamics by which the City may realize on an opportunity to reuse the methane produced at the WWTP, which is an abundantly free energy source, and significantly reduce the City's carbon footprint by preventing its release into the atmosphere. Senate Bill 1122: Bioenergy Feed-in Tariff In September 2012, Gov. Brown signed SB 1122 (Rubio, 2012) into law, requiring an incremental 250 MW of renewable Feed-in Tariff ("FiT") procurement from small-scale bioenergy projects that commence operation on or after June 1, 2013. SB1122 requires that each of California's three large investor owned utilities (PG&E, SCE, and SDG&E) must procure a share of the 250 MW requirement based on the ratio of each utility's peak demand to statewide peak demand. Additionally, the statute orders the CPUC to allocate the 250 MW procurement requirement among the following categories: (i) For biogas from wastewater treatment, municipal organic waste diversion, food processing, and codigestion, 110 megawatts. (ii) For dairy and other agricultural bioenergy, 90 megawatts. (iii)For bioenergy using byproducts of sustainable forest management, 50 megawatts. In December 2014, the California Public Utilities Commission ("PUC") issued a proposed decision on implementing SB 1122, which identified a requirement for SCE to purchase 114.53 MW of the 250 MW of renewable energy generated by bioenergy 03 City Council Staff Report October 19, 2016 -- Page 4 WWTP Biogas-to-Energy Project, CP15-26 projects (46%). The most important issue to be determined by the PUC is the price set for the FiT to be paid by SCE to operators of bioenergy projects that generate renewable energy and feed it into SCE's grid. The PUC has proposed a decision where the initial FiT starting price will be $127.27 per MWh (megawatt-hours) or $0.127 per kWh (kilowatt-hours) of energy produced. A final ruling on the implementation of SB 1122 setting the price for the FIT at $0.127 per kWh was adopted by the PUC on September 22, 2015. As of September 30, 2016, SCE reported fewer than 3 applicants requesting Power Purchase Agreements with SCE to take advantage of the PUC mandated purchase of renewable energy via the FiT. 2015 Veolia Non-Binding Letter ofInterest On September 2, 2015, the City Council approved a non-binding Letter of Interest ('LOI") with Veolia to develop a biogas-to-energy project for the City. The LOI was established with two phases, with Phase 1 including feasibility and conceptual development, at 100% Veolia's cost. The intention at that time was for Veolia to partner with Biogas & Electric, LLC, ("ME"), who was awarded a grant of $2,249,322 by the California Energy Commission, ("CEC"), for "installation of a lean burn biogas engine with emissions control at a wastewater treatment plant in South Coast Air Quality." As part of the biogas-to-energy project envisioned by Veolia in partnership with B&E, B&E would deploy their "wet scrubbing technology" to clean the methane produced by the WWTP for fuel to operate a cogeneration system at the City's WWTP, with the cogeneration plant generating electricity to sell to SCE at the FiT rate adopted by the PUC. Following City Council's approval of the LOI, Veolia completed the feasibility and conceptual development of the biogas-to-energy project, and determined that due to the experimental nature of B&E's technology, there remained uncertainty regarding the ability for B&E to deliver a fully functioning, reliable product. Therefore, Veolia recommended that a second, more traditional system of cleaning methane for the cogeneration plant's operation would be required in addition to the system to be deployed by ME as part of the project. Veolia estimated the simple payback at 10.9 years including the CEC grant awarded to B&E; a copy of Veolia's feasibility study is included as Attachment 1. Staff requested that its on-call wastewater services engineer, West Yost Associates, review Veolia's feasibility study and determine the degree of risk associated with proceeding with the project. Based on its review, West Yost Associates identified high risks with the following elements of the proposed project: • B&E's technology — having only been deployed at one WWTP in Bakersfield with limited performance, it is an unproven technology • Project structure — project delivery selection and structure was not clear, with multiple parties including the City, Veolia, B&E, and the CEC 04 City Council Staff Report October 19, 2016-- Page 5 WWTP Biogas-to-Energy Project, CP15-26 • Grant and schedule — the CEC grant was awarded specifically by CEC to ME in January 2015, with a requirement to be deployed within 3 years, leaving insufficient time to complete design, construction and commissioning • Process output estimates — assumptions on biogas production require further review, and uncertainty with elements of the CEC grant local match requirements had the potential to increase simple payback to over 20 years A copy of the City's third party review of Veolia's feasibility study is included as Attachment 2. On the basis of this review, staff advised Veolia that the City would not proceed with Phase 2 of the LOI approved by the City Council. However, there is an alternative to implementing the Project, with the City pursuing development and construction of it directly. Clean Water State Revolving Fund Loan — Green Project Reserve Given the uncertainties related to B&E's technology and its grant awarded by the CEC, staff recommends eliminating these elements from the project, utilizing generally available methane gas cleaning technology, and directly pursuing financing of the project through a low interest loan through the Clean Water Sate Revolving Fund Loan, (or "SRFL"). What makes the SRFL attractive for the biogas-to-energy project is the state's "Green Project Reserve" which sets aside grants to local agencies in the form of loan forgiveness, or "capitalization grants", on eligible projects funded through the SRFL program. The SRFL is funded by the state in part with federal funds it receives, and the state is required to apply certain funding requirements through the SRFL as adopted by Congress. The Green Project Reserve ("GPR") was enacted based on Congress' intent to direct State investment practices in the water sector to guide funding toward projects that: • adopt practices that reduce the environmental footprint of water and wastewater treatment, collection, and distribution; • utilize green or soft-path practices to complement and augment hard or gray infrastructure; • adapt to climate change; • enhance water and energy conservation; • help utilize more sustainable solutions to wet weather flows; and • promote innovative approaches to water management problems. GPR Guidance describes projects and activities that fit the four specific categories listed in Congress' Fiscal Year 2012 Appropriations Act, that include Energy Efficiency, Green Infrastructure, Water Efficiency, and Environmentally Innovative projects. This guidance further defines each category of GPR projects and lists projects that are clearly eligible under the GPR. The U.S. Environmental Protection Agency ("EPA") Fiscal Year 2012 Appropriation includes the details for determining GPR eligibility for the state's SRFL program, and requires that not less than 10% of the funds made available to the state 05 City Council Staff Report October 19, 2016 -- Page 6 WWTP Biogas-to-Energy Project, CP15-26 for SRFL capitalization grants shall be used by the state for projects "...that address energy efficiency, green infrastructure, water or improvements, or other environmentally innovative activities." The energy efficiency category is defined as the use of improved technologies and practices to reduce the energy consumption of water quality projects, use energy in a more efficient way, and/or produce/utilize renewable energy. Renewable energy projects such as wind, solar, geothermal, micro-hydroelectric, and biogas combined heat and power systems ("CHIP") that provide power are some of the examples of projects eligible to receive capitalization grants through the GPR. Based on these criteria, the biogas-to-energy project at the City's WWTP is clearly eligible for a capitalization grant through the GPR, which can be used for development, design, and construction phase costs. Entire projects, or the appropriate discrete components of projects, may be eligible for a capitalization grant of up to 50% of the total project cost with a maximum grant of $2 Million. To initiate the process with the state to pursue the SRFL and confirm the GPR capitalization grant available to the Project, staff recommends that the City Council adopt the Resolutions required by the state in authorizing staff to submit funding applications, and make eligible reimbursement of costs incurred from any SRFL ultimately approved by the City Council There is no commitment by the City Council at this time to actually fund the Project. ENVIRONMENTAL IMPACT: Aside from the potential financial benefit of the Project, the Project will result in a significant improvement to the environment. As identified in the City's 2011 GHG Emissions Inventory, in 2012, the City's WWTP generated an estimated 15,957 of the 31,738 MTCO2e by all City activities and operations, equivalent to 50% of GHG emissions City-wide, primarily due to the fact that the methane produced by the WWTP is flared to the atmosphere and not currently reused for a beneficial purpose. Capturing the 15,957 MTCO2e of methane flared to the atmosphere annually at the WWTP would have the effect of eliminating GHG's generated from the following equivalent activities: 06 City Council Staff Report October 19, 2016-- Page 7 WWTP Biogas-to-Energy Project, CP15-26 Greenhouse gas erissions from 3,371 38,243,434 5,064 723 Passenger Mfles driven by Tons of waste ` Garbage vehKies driven L. an average � recycled .W t�� trucks of forone year passenger p mcycle of waste vehicle landfilled recycled instead of landfilled OR COZ emissions from 1,795,544 17,027.636 211 1,685 ga0ons of Pounds of coal tanker trucks' homes'energy gasoline bumed worth of use for one consumed `� 'ODD' gasoline year 4 2,356 85 565,650 Wind turbines Formes' railcars'worth Incandescent instadfed electricity use JM v of coal burned lamps switched for one year to LEDs 36,944 652,318 0.005 �� parse$c propane ,M coal-fired consamed cyli�Mers used power plants for home in one year = barbeques Carbon sequestered by 413,544 15,105 127 `f, tree seed)rigs acres of U.S. acres of U.S. grown for le b. ye[s m one v forests years ors year w preserved from conversion to cropland in one year 07 City Council Staff Report October 19, 2016-- Page 8 VVVVTP Biogas-to-Energy Project, CP15-26 Section 21084 of the California Public Resources Code requires Guidelines for Implementation of the California Environmental Quality Act (CEQA). The Guidelines are required to include a list of classes of projects which have been determined not to have a significant effect on the environment and which are exempt from the provisions of CEQA. In response to that mandate, the Secretary for Resources identified classes of projects that do not have a significant effect on the environment, and are declared to be categorically exempt from the requirement for the preparation of environmental documents. In accordance with Section 15329 "Cogeneration projects at existing facilities," Class 29 consists of the installation of cogeneration equipment with a capacity of 50 megawatts or less at existing industrial facilities resulting in no net increases in air emissions from the industrial facility, or resulting in the production of emissions lower than the amount that would require review under the new source review rules applicable in Riverside County. Therefore, in accordance with Section 15329, staff has determined that the Biogas-to-Energy Project at the Wastewater Treatment Plant, City Project No. 15-26, is considered categorically exempt from CEQA and a Notice of Exemption will be prepared and filed with the Riverside County Clerk. FISCAL IMPACT: The estimated total cost for the Project is identified in Table 1. Estimated Project Costs Amount Design $438,000 Construction $3,262,120 Construction Management $375,000 Start U / Commissioning $47,000 Contingency $224,500 Total Cost $4,346,620 Table 1 If funded through the SRFL program, the Project is likely eligible for a capitalization grant through the GPR of $2 Million, reducing the City's capital cost to $2.3 Million. Veolia has prepared a revised financial proforma for the Project on the basis of the City pursuing financing of the Project itself, with a net capital cost of $2.3 Million. A copy of the 20-Year Proforma Cash Flow Summary is included as Attachment 3. The City's WWTP generates an estimated total volume of 33 Million cubic feet of methane gas annually, which when processed to operate a cogeneration plant can generate electricity which will be fed into SCE's electrical grid and purchased by SCE at the PUC mandated FiT of $0.127 per kWh. The electricity generated by the cogeneration plant may produce a gross revenue stream of $331,576 annually. The waste heat generated by the cogeneration plant will also offset the City's need to 08 City Council Staff Report October 19, 2016-- Page 9 WWTP Biogas-to-Energy Project, CP15-26 purchase natural gas for heating, resulting in an estimated savings of $19,186 in Year 1, for a total gross revenue of $350,762 in Year 1. Operation and maintenance costs of the cogeneration plant are currently estimated at $85,409 in Year 1 resulting in a net positive revenue stream of$265,353 to the City. Assuming a 20-year loan (at 4%) on the net capital cost of $2,346,620 (less the $2 Million GPR capitalization grant), would result in an annual debt service payment of $153,577 leaving a final net positive revenue stream of$111,776 in Year 1. The final terms of the SRFL would be subject to future review and approval by the City Council, and is anticipated to have an interest rate below 2%; at that time, staff will review the funding commitments of the City's Wastewater Enterprise Fund, and may recommend the City Council enter into a shorter term loan. The simple payback assuming a 20-year loan at 4% is 8.8 years. Of other relevance, the "California Carbon Dashboard" identified the current carbon price at $12.95 per Ton of MTCO2e — eliminating 15,957 MTCO2e produced annually at the City's WWTP would have the equivalent value of over $200,000 as would otherwise be applicable on the Cap and Trade Program. SUBMITTED Ma�IFur, M A, P.E., .S. David H. Ready, Esq., Assistant City Manager/City Engineer City Manager Attachments 1. Veolia Feasibility Study 2. West Yost Associates Review 3. Veolia 20-Year Proforma 4. Resolutions (2) 09 ATTACHMENT 1 10 0,) SourceOne A Veolia Energy Company City of Palm Springs Biogas to Energy Project Investment Grade Assessment PREPARED FOR: Veolia North America PROJECT NUMBER: 15627 PREPARED ON: March 23, 2016 PREPARED BY: John Wiley, PE REVIEWED BY: Reid Sprite, PE SourceOne, Inc. 53 State Street Boston,MA02109 Phone:(617)399.6100 www.sourceone-energy.com 11 Q Veolio North America ��/� f� Biogas to Energy Project Investment Grade Assessment O L A City of Palm Springs Wastewater Treatment Plant TABLE OF CONTENTS 1. EXECUTIVE SUMMARY...................................................................................................................................3 1.1. GRANT............................................................................................................................................................3 1.2. FINANCIALS......................................................................................................................................................4 1.3. ENGINEERING EQUIPMENT..................................................................................................................................4 1.4. NEXT STEPS.....................................................................................................................................................4 2. BACKGROUND...............................................................................................................................................5 2.1. ANAEROBIC DIGESTION&DOGAS........................................................................................................................5 2.2. STUDY AND RESEARCH INTO UTILIZING BIOGAS FOR ELECTRICITY PRODUCTION.............................................................5 2.3. GRANT OPPORTUNITY........................................................................................................................................5 3. FATAL FLAWS AND RISKS...............................................................................................................................7 3.1. GAS CONDITIONING PACKAGE[No RISK]...............................................................................................................7 3.2. NOXRX®EMISSIONS CONTROL PACKAGE[LIMITED RISK] .........................................................................................7 3.3. BIQMAT FEED-IN TARIFF[Low RISK]...................................................................................................................8 3.4. AIR PERMIT[LIMITED RISK].................................................................................................................................8 ',p... 3.5. CAPITAL EXPENDITURE[LIMITED RISK]..................................................................................................................9 3.6. PROJECT STRUCTURE[MODERATE RISK]................................................................................................................9 3.7. GRANT AND SCHEDULE[Low RISK].....................................................................................................................;9 4. TECHNICAL EVALUATION.............................................................................................................................10 4.1. OVERVIEW.....................................................................................................................................................10 4.2. PROCESS FLOW...............................................................................................................................................10 4.3. PRIME MOVER...............................................................................................................................................10 4.4. HEAT RECOVERY AND TRANSFER........................................................................................................................10 4.5. CHP PLANT CONFIGURATION AND LOCATION.......................................................................................................12 4.6. BIOGAS.........................................................................................................................................................14 4.7. GAS COMPRESSION..........................................................................................................................................15 4.9. FUEL SUPPLY..................................................................................................................................................15 4.9. CYCLE EFFICIENCY............................................................................................................................................15 4.10. ELECTRICAL INTERCONNECTION..........................................................................................................................16 4.11. DIGESTERS.............................................................................:.......................................................................18 4.12. WARRANTIES AND SERVICE AGREEMENTS............................................................................................................18 4.13. SITE CONDITIONS............................................................................................................................................18 S. ECONOMICS................................................................................................................................................19 5.1. REVENUE.................................................................................................. ..........19 ........................................... 5.2. OPERATIONS EXPENSES....................................................................................................................................19 5.3. CAPITAL EXPENSES..........................................................................................................................................20 5.4. PROFORMA....................................................................................................................................................21 SourceOne Page 1 of 27 A Vael n PhiotVy C=OAny 12 QVEOLIA Veolio North America BiogastoEnergyProjectInvestmentGradeAssessment City of Palm Springs Wastewater Treatment Plant 6. EMISSIONS CONTROL OVERVIEW................................................................................................................22 TYPICALCOMBUSTION..........................................................................................................................................22 6.1. EMISSIONS.....................................................................................................................................................22 6.2. BIOGAS CONDITIONING(FRONT END'.................................................................................................................22 6.3. EMISSIONS CONTROL(BACK END)......................................................................................................................22 6.4. AIR EMISSIONS...............................................................................................................................................24 6.5. EMISSIONS SYSTEMS........................................................................................................................................24 0 SoumeOne Page 2 of 27 H Vbd kneel;COG�ciiy 13 QVEOLIA Veolia North America Biogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant 1. EXECUTIVE SUMMARY At the direction of Veolia North America, SourceOne Inc. has prepared this investment grade assessment of the proposed combined heat and power (CHP) plant at the City of Palm Springs Wastewater Treatment Facility located at 4375 E. Mesquite Ave. in Palm Springs, California. As part of this study, SourceOne developed a fatal flaw analysis, technical and financial evaluations, and a review of the benefits and risks that a $2.25 million state-funded grant would have on the financial feasibility of the project. As part of this assessment, Source0ne: • Obtained and reviewed all available documentation pertinent to the digester gas-fueled CHIP plant proposed by Biogas& Electric, LLC. • Performed on-site walkthroughs of the City of Palm Springs Waste Water Treatment Plant (W WTP). • Participated in extensive discussions with plant management, Biogas and Electric LLC(B&E) management,Veolia,the City of Palm Springs(the City), and other stakeholders. • Developed a 20-year proforma using the specific energy requirements of the existing facility, the performance metrics of the proposed equipment,the estimated capital expenditure required, and estimated operating costs. • Critically assessed B&E's capital budget. • Identified principle risks.to the successful completion of this project. • Provided an assessment of the proposed system and advised Veolia as to whether the project as described has merit for pursuing. • Provided guidance on appropriate next steps. 1.1. Grant Biogas and Electric was awarded a$2.25 million grant by the California Energy Commission(CEC) as incentive to deploy and test a new emissions reduction technology geared for biogas-to- energy applications. Biogas and Electric's patented NOxRx® technology can reportedly significantly reduce NO,without the conventional use of a biogas conditioning skid or a selective catalytic reduction (SCR) system. Per the grant, the purpose of the grant agreement is to "fund a project designed to leverage and build upon the previously obtained pilot results in order to establish NoxRxO asthe best available control technology(BACT)for all biogas engines operating at municipal WWTPs within SCAQMD where Rule 1110.2 is limiting Biogas project development through Nox, CO and VOC emissions regulation." Though B&E claims that the technology is capable of reducing NO, emissions on its own, they also recommended that a supplementary biogas conditioning skid and SCR system should be installed in the application to reduce project risk. Based on the grant agreement, if the NoxRxO system does not function as intended, the vast majority, if not all,of the grant will still be awarded. OSourceOne Page 3 of 27 ra Leclia dner�y Cump')g14 QVEOLIA Veolia North America Biogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant 1.2. Financials Based on the current project criteria, which calls for the installation of a biogas conditioning skid, 400-kW reciprocating engine, B&E's NoxRX® system, and an SCR system, the project is expected to have a net annual savings of over$200,000 and a simple payback of ten years.The full financials forthe project are shown in Table 1 and Table 2. Table 1: Biogas-to-Energy Project Revenues and Expenses(Year 1) 'Revenue/Expense Value Capital Cost(With Grant) $2,371,000 j Revenue $350,800 Expenses $133,400 Net Savings $217,400 j Table 2: Biogas-to-Energy Project Key Financials Return on Investment 68% '.. Internal Rate of Return 6% Net Present Value(4%) $351,000 Cash Flow Positive Year 12 Simple Payback 10.9 Years '.. 1.3. Engineering Equipment The equipment included in this technical and financial evaluation is listed in Table 3 below. Table 3:Biogas-to-Energy Project Equipment Summary Equipment Category Equipment Selected Prime Mover 400-kW biogas-fired reciprocating engine Gas Conditioning Skid Clean Methane Systems @ 100 SCFM Jacket Heat Recovery Heat exchanger to provide hot water to ':. supplement on-site boilers ....... . Exhaust Heat Recovery None Emissions Control Systems Selective Catalytic Reduction(SCR) '.. ':. Biogas&Electric NoxRx®System 1.4. Next Steps If the decision is made to advance the project to a design phase, the City and Veolia should convene a design basis development session with all stakeholders and retain an engineer of record to begin the design process. Source0ne recommends that the engineer of record be experienced in State of California regulations, biogas utilization,and combined heat and power plant design. Ov SoureeOne Page 4 of 27 i 5 A Veda Lnea9Y Company Veolia North America ( � ] {� /� Biogas to Energy Project Investment Grade Assessment V A City of Palm Springs Wastewater Treatment Plant 2. BACKGROUND 2.1. Anaerobic Digestion & Biogas The City of Palm Springs' WWTP utilizes a process called anaerobic digestion in its treatment of wastewater. The purpose of the process is to breakdown organic solids that are removed from the treated wastewater.The process itself,on a basic level,involves placing the sludge waste in an airtight container called a digester and then heating the air inside the digester so that organisms go through a natural process of breaking down the organic materials. One of the waste products from this process is called biogas. Biogas is primarily composed of methane and carbon dioxide. The release of methane into the air is a regulated activity, and thus must be flared into the atmosphere if it is not used for any other processes. Currently, the WWTP produces roughly 33 million standard cubic feet of biogas per year. All of the methane is not utilized and burned with a flare. By-products of the flared biogas are released into the atmosphere. 2.2. Study and Research into Utilizing Biogas for Electricity Production Biogas can also be utilized as a fuel source.Veolia Energy North America,as the operator of the Plant, has previously explored potential uses for the biogas produced at the plant. In 2007, Veolia conducted a cogeneration feasibility study that explored the technical and economic benefits and risks to the utilization of various electricity generation technologies by way of utilizing the biogas produced in the anaerobic digestion process at the WWTP. This included looking at micro-turbines, fuel cells and other generating technologies. One of the primary conclusions of the study was that cogeneration was not economically feasible, with simple paybacks ranging from 12 years on up.This was due to the expense of constructing an electricity generation plant versus the amount of electricity that could be produced by the available biogas production. Cogeneration continued to be looked at every few years at the WWTP, including recently as part of the Capital Improvement Program. Unfortunately the biogas produced from the plant was never enough by itself to provide an economically attractive payback,even when accounting for the State of California's Self-Generation Incentive Program (SGIP). While the economic payback has haunted the potential for cogeneration at the WWTP, such a payback would be available if additional funds were made available through grants, rebates or other incentives. 2.3. Grant Opportunity In early 2014, Veolia was introduced to a start-up firm, Biogas and Electric, LLC. (B&E), which brought a new possibility to how to utilize the biogas at the WWTP. B&E claimed to have developed a low cost NO, and SO, reduction wet scrubbing technology called NoxRx' which could be used in conjunction with all biogas engines and anaerobic digesters on the market Qr SourceOne Page 5 of 27 r .., om .,,.. Veolia North America ( � ] � � /�, Siogos to Energy Project Investment Grade Assessment \/ 1► A City of Palm Springs Wastewater Treatment Plant today.NoxRx'has a patented method of utilizing the effluent stream from an anaerobic digester to reportedly reduce emissions from biogas engines. Furthermore, unlike the traditionally used selective catalytic reduction (SCRs) for cleaning engine exhaust, B&E claimed that NoxRx9 removes NO, and would not require hydrogen sulfide removal or biogas conditioning prior to combustion.Therefore, NoxRx1 would represent a significant cost savings over competing NO. reduction solutions. NoxRx1 is also reported to be more effective at reducing NOx emissions than other solutions. Combustion of biogas in a low-cost, lean-burn, reciprocating engine-based CHP plant is more economical than alternatives such as fuel cells, micro-turbines, or conditioning biogas to pipeline quality. However, biogas fired internal combustion engines generate NO, and SO„ emissions making it cost prohibitive for biogas projects to obtain air permits for biogas fired CHIP plants.The best available control technology (BACT)for biogas fired engines is urea injected or ammonia injected selective catalytic reduction (SCR) which also requires biogas conditioning (removal of HzS and siloxanes) prior to combustion due to poisoning of the catalytic process. If sized appropriately, SCR systems are capable of reducing NO, emissions in a biogas fired CHIP plant's exhaust stream by 90%. At present, the California Air Resource Board (CARE) standard requires 0.07 lbs. of N0, per MWh or 2-3 ppm. If the SCR and the gas conditioning skid are installed,air permitting will be granted. However,the state still wishes to invest in technologies to assist to drive down the emissions of NO, and these levels of 2-3 ppm are difficult to reach with SCRs. B&E claimed to have engineered a solution to this problem and approached Veolia to provide them with the opportunity to use this technology. They informed Veolia of a grant opportunity that was coming in the fall of 2014 by the California Energy Commission (CEC). The CEC grant would be funded by the Electric Program Investment Charge (EPIC), which is a state funded program to promote the development of clean energy technologies.The technology developed by B&E would qualify under this grant, but to apply they would need a host project. Both Veolia and City staff agreed to non-binding support of the grant application and in January 2015,the CEC awarded a grant in the amount of$2,249,322 to B&E for use at the City of Palm Springs WWTP within three years of grant award. The grant agreement was officially executed on May 81", 2015 by the California Energy Commission.This grant would help partially fund the new technology to be utilized in a cogeneration plant,as well as the design and construction of the cogeneration plant itself. This report is an evaluation of the technologies and financial feasibility of proceeding with the installation of this reciprocating engine-based CHIP plant with NoxRxO technology. Two separate 20 year proformas are available at the end of this document which represent financials both with and without the NoxRxl and grant. ASourceOne Page 6 of 27 1 A Vooha E-C�y Can?pen, /^� p Veolia North America L'M - Biogas to Energy Project Investment Grade Assessment YV City of Palm Springs Wastewater Treatment Plant 3. FATAL FLAWS AND RISKS To uncover potential project terminating issues, a fatal flaw analysis was conducted early on in the assessment process.The following areas were investigated for their higher potential for these issues. Much of this section was issued in a memorandum dated December4,2015. Since that time,changes have been made to the areas of this project of highest concern. No major fatal flaws have been identified as a result of these investigations and evaluations. The hurdles identified below with the emissions controls package, at most, present a potential financial impact to the capital costs of the project if an alternative emissions solution should be necessary. 3.1. Gas Conditioning Package[No Risk] This equipment skid,developed by Clean Methane Systems LLC, removes sulfur(SO.), hydrogen sulfide (1-12S), and siloxanes. This developer and their technology have years of proven success and reliability.There is very limited risk in utilizing this equipment skid. 3.2. NoxRxO Emissions Control Package[Limited Risk] This equipment skid, known as NoxRxO was developed by Biogas&Electric LLC and removes NO, from the exhaust stream.At present,a wastewater treatment facility in Bakersfield,CA(WWTP #3) is the only end user of this technology.An engineer on-site at the Bakersfield facility stated that the skid has been in place since 2014 but has had only several days of operation. The operations staff does not have sufficient experience with the skid and, therefore, chooses to bypass the skid while the engine is in operation unless a representative from Biogas&Electric is present, which has only taken place on several days. Infrequent use of the equipment does not provide a reliable baseline from which to draw conclusions about the performance of this technology. Despite the ability to overcome technical hurdles, there remains uncertainty regarding the ability for Biogas&Electric to deliver a fully functioning, reliable product. In order to remove the risk of this unproven technology, an additional NO,reduction system,an SCR, will be included in the system design. The SCR will be sized to meet emissions standards exclusive of the NoxRx® system. With the SCR equipment selection and sizing, as it is the best available control technology (BACT) currently commercially available for NOx. The NoxRx® system will not be required to reduce emissions. Conditions of the grant held by Biogas&Electric for use on this project state that reimbursement for capital expenses is contingent on the manufacturers of the equipment provided on the NoxRx8 skid be based in California. Biogas& Electric has located a sufficient number of vendors to meet this requirement. J SourceOne Page 7 of 27 18 QVEOLIA Veolia North America Biogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant 3.3. BioMAT Feed-in Tariff[Cow Risk] The feed-in tariff known as BioMAT was made available November 18, 2015 and holds a total statewide program cap of 250 M W,of which,Edison has been allocated 114.5 M W.This program has sufficient capacity and is not likely to be filled for several years. Per the tariff, "To the extent the cast of transmission system Network Upgrades incurred in connection with the Project exceed $300,000,the Applicant will bear the actual costs in excess of $300,000 in accordance with the BioMAT PPA." If interconnection costs are significant, a larger capital cost could be incurred. The plant will be eligible to apply for both BioMAT (Bioenergy Market Adjusting Tariff) and ReMAT (Renewable Market Adjusting Tariff)tariffs to capitalize on the proposed cogeneration plant and proposed solar plant respectively. This will be done using separate metering and a dedicated electric service for the new cogeneration plant. However, per the Edison BioMAT tariff, "An Applicant may not submit a PPR or maintain a position in the queue for the same Project in both the Renewable Market Adjusting Tariff (Re-MAT) program and the BioMAT program. For the purposes of this Section D.11 [ELIGIBILITY] only, projects that are eligible for Re-MAT or BioMAT and that share, utilize, or are based on the same interconnection request, study, or agreement will be considered the same Project." It should be made clear during the application preparation process that the cogeneration plant and proposed solar plant are separate projects. 3.4. Permitting[limited Risk] Air and effluent permits will need to be revised following the installation of the cogeneration facility.This does not pose a significant risk. Though the performance of the NoxRx* system is expected to be inconsequential, Veolia and the City should enter into an agreement with Biogas & Electric which outlines clear emissions and performance requirements to protect themselves from the failure of the emissions controls skid to meet state emissions requirements.This contract should include any penalties that the state might impart on Veolia orthe City for not meeting these requirements.Additionally,Veolia and the City should ensure that the contract require that these criteria be met before Biogas& Electric is paid for monthly consulting services. Nitric Acid (HNO3) is a by-product of the Nox removal process of the NoxRxO system and will be sent within the absorber effluent to the aerated channel. At sufficient flow rates, it is expected that the concentration of nitrogen within the effluent will remain well below 10 mg/I. SoumeOne Page 8 of 27 n ..c.nnoai erv,,p company J QVEOLIA Veolia North America Biogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant 3.5. Capital Expenditure[Limited Risk] The capital costs of this project are based on both industry averages and budgetary quotes and carry with them only a certain level of accuracy. With the exception of the Biogas & Electric emissions equipment, all costs in the estimate are based on many existing applications in the industry and are reliable. 3.6. Project Structure[Moderate Risk] Project structure is a significant but controllable risk, but at this time there is no formal project structure. Areas of concern for this project include: • Defining contractual relationships between major stakeholders inclusive of the City of Palm Springs,Veolia,B&E,the California Energy Commission, and others. • Defining project requirements definition inclusive of schedule, cost,and quality. 3.7. Grant and Schedule[Low Risk] The grand total of$2,249,322 will be paid to Biogas & Electric once the equipment is installed. Because the grant was awarded in January of 2015, and the window for receiving the grant is only three years, there are only 23 months in which to complete design, construction, and commissioning. If system design and long lead time procurement begins within the next few months,there will be sufficient time to complete construction and receive the grant. Source0ne Page 9 of 27 O , igoln",cnr�P(a :Vaay C) VIEOLIA Veolia North America biogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant 4. TECHNICAL EVALUATION 4.1. Overview Presently, the Veolia uses anaerobic digestion in its treatment of wastewater at the City's WWTP. Veolia uses two natural gas hot water boilers to heat two digesters which produce a considerable amount of biogas. Based on Source0ne's analysis,the energy content of this biogas is more than sufficient to satisfy the heat requirements of the digesters,and excess biogas could be used to generate power. This design will allow for an engine-generator to burn the biogas and for the waste heat from the engine to be captured to regulate the temperature of the digesters.The generated power will be exported exclusively to the grid to capitalize on a feed- in tariff known as BioMAT which is offered by the State of California for power generated from a biogas fuel source.This tariff offers to the applicant$127.00 per MWh exported to the grid. 4.2. Process flow Biogas will be sent from the outlet of the shared biogas piping generated in the anaerobic digesters to a gas blower. From the gas blower, the biogas will enter a biogas conditioning skid and will then enter the prime mover. From there, the flue gases will be sent to an SCR system and then cooled before entering the NoxRxO emissions skid. 4.3. Prime Mover A reciprocating engine generator set has been selected as the prime mover for its higher electrical efficiency when compared to a gas turbine. In addition, the thermal requirements of the facility are relatively low and pair better with the heat recovery availability in a reciprocating engine over a turbine. Likewise, due to the low thermal requirements,the waste heat from the exhaust stream will not need to be recovered. The thermal requirements of the digesters will be completely satisfied by the jacket water heat recovery system. Source0ne evaluated reciprocating engines from multiple manufacturers including (but not limited to)Cummins,CAT/MWM,and GE/Jenbacher.Although other manufacturers and models would also be suitable, Source0ne ultimately selected and modeled a CAT CG132-8 400-kW engine for this analysis. The CAT engine has peak fuel consumption of 3.28 MMBTU/hr and an electrical efficiency of 42%. 4.4. Heat Recovery and Transfer The digesters,which generate biogas, require supplementary heat during the colder months of the year to assist in the digestion process. The heat is presently delivered to the digesters by a hot water loop from two hot water boilers each with a capacity of 1.5 MMBTU/hr. The digesters require the highest amount of heat during the shoulder seasons and there are several months during the summer when heat requirements of the digesters drop to zero. Figure 1 displays the energy content of the gas that was consumed by the boilers exclusively to heat OSoureeOne Page 10 of 27 . `' OI M/� Veolia North America Y 8iogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant the hot water loop. The data in the figure was obtained from the natural gas meter for the boilers for 2013. Both 2014 and 2015 energy consumption profiles closely match this profile. Though 2014 and 2015 data was available, data for 2013 was used to more closely align with previous analysis. Figure 1:Hourly Energy Consumption of Boilers in 2013,2014,and 2015 0.700 i 0.600 ---------- -__ ------- ---- _._ ---------- 0.500 L m —^2013 0.300 —2014 0.200 i _.. —2015 F 0.100 f 0.000 it1111I11OtaO i nnm J F M A M J J A S O N D Month of the Year The graph above displays the energy requirement profile of the boilers which has remained relatively consistent over the past three years. Energy consumption by the boilers reached a peak of 0.65 MMBTU/hr in 2014.The boilers have an efficiency of 85%, and this amount of gas equates to approximately 0.56 MMBTU/hr of heat transfer to the hot water in the digester heating loop.This amount of heat is available to be recovered from the engine. The engine selected for modeling purposes provides 0.88 MMBTU/hr of recoverable heat from the exhaust stream, 0.648 MMBTU/hr from the high temperature engine jacket water cooling loop, and 0.092 MMBTU/hr from the low temperature intercooler. Table 4 displays this information. Table 4:Thermal Sources from Engine,Energy Content and Temperature Thermal Source Energy Content Outlet Temperature Exhaust Stream 0.88 MMBTU/hr 921'F Jacket Water 0.648 MMBTU/hr 198°F Intercooler 0.092 MMBTU/hr 109°F The heat recovery available from the jacket water loop exceeds the heat requirements of the digesters even after energy loss by a heat exchanger is considered. Because of this, the heat OSourceOne Page 11 of 27 \ Veolia North America - ' V O�� i� Biogas to Energy Project Investment Grade Assessment /""�l City of Palm Springs Wastewater Treatment Plant recovery available from the exhaust will not be necessary and exhaust heat recovery equipment will not be required. The energy loss in the jacket water heat exchanger will be approximately 10%and will leave 0.616 MMBTU/hr available at the hot water loop. Likewise,the temperature of the jacket water loop matches closely with the current temperature set-point of the hot water boilers at 200°F.The hot water loop temperature set-point is 140°F.The heat exchanger should be sized for these flows and temperatures. Supplemental heating, provided by the existing hot water boilers, shall only be necessary when the engine is down. 4.5. CHP Plant Configuration and Location The site offers a section of land considered the ideal location for the CHP plant located just south of the digesters, maintenance building, and energy recovery building. This area provides sufficient space for the gas conditioning skid, engine, and emissions control skid. The maintenance building contains the existing hot water boilers and is adjacent to the energy recovery building. Figure 2 is oriented North-South and shows a central portion of the site with labels indicating the CHP plant location. The engine will be tied into the existing hot water loop upstream of the hot water boilers. This will allow for detection of low temperatures within the loop and an opportunity for the hot water boilers to supply additional heat to the system when the engine is shut down. Figure 3 is a flow diagram and displays the location of the additions to the existing thermal system in bold. SourceOne Page 12 of 27 23,.b4difl E rsr;9y Canpany_ Veolia North America V �/E O 1 Biogos to Energy Project Investment Grade Assessment 1J`f City of Polm Springs Wastewater Treatment Plant Figure 2:Site Configuration and CHP Plant Location Inc I Main Switchpyr BuildiFl{ B11110d n Maintenanm Building ti En*W Recovery Building Pnapwad CNP FMane taeatlwl Figure 3:Thermal System Configuration Engine IxtMWrtM ,. Grculanon Pump suppkm ntai � dBe�f BD.l Float Eiuhanger at Boiler Nat Bdkr No.l Neat uf,an a Eadi Hot Water „ clamwing Pumps HM water wop O/Source0ne Page 13 of 27 24 Veolia North America ( ! , !� I f /l Biogas to Energy Project Investment Grade Assessment Y O L. M City of Palm Springs Wastewater Treatment Plant A heat exchanger will allow for the jacket water heat to be transferred to the hot water loop and should be set up to match the controls systems for the existing boilers. For most of the year, the supplemental heat exchanger will run, at least in some capacity,to remove additional heat from the jacket water loop to satisfy the jacket water return temperature to the engine. The manner in which this will take place should be evaluated further. Either an air-cooled or water- cooled heat exchanger could serve this purpose. An air-cooled heat exchanger carries with it electrical costs to power fans but if a water source is available,it could reduce operational costs. If utilized prior to injection into the emissions control skid, the water used to cool the exhaust stream may provide supplemental cooling to the jacket water system. 4.6. Biogas The existing anaerobic digesters produce biogas all year with a total volume of 33 MMSCF annually.The total energy content of the biogas is 657 BTU/CF and equates to an annual energy content of 21,600 MMBTU. Figure 4 shows the total MMBTU produced by the digester in 2013, 2014 and 2015. Figure 4:MMBTU per hour of Biogas Production in 2013,2014,and 2015 4 3.5 3 2.5 m2 .. .--- --- —2013 1.5 ........._..............._..-...-------- -......... —2014 —2015 0.5 -0.5 F M A M J J _._A S O N D _1 Month of the Year There are three areas within Figure 4 in January,July, and November that display zero or near zero values. These values are recorded manually and read zero if the production is not recorded. Biogas production is continuous and fluctuates only slightly over time as long as the digesters remain warm. Data was not available for the month of December 2015. The engine will run at sufficient part load to burn all of the biogas available to it. Because the biogas available does not exceed the maximum energy input of the engine,the powergenerated will be limited by biogas production. OSourceOne Page 14 of 27 A Veolia Energy Comoany 25 Veolia North America ( � ] \ E O L I A Biogas to Energy Project Investment Grade Assessment �r City of Palm Springs Wastewater Treatment Plant 4.7. Gas compression Biogas produced in the digesters will exit at 9.2 inch WC above atmospheric pressure and will enter a gas blower to further increase pressure. Pressure will be increased such that it can overcome the pressure drop of the gas conditioning skid and enter the engine within the appropriate range. The outlet pressure of the gas booster will be such that the pressure at the inlet of the engine is in the range of 3-5 psig. Biogas and Electric recommends a gas conditioning skid by Clean Methane Systems that includes a gas booster that can be used for this purpose. 4A Fuel Supply The engine will exclusively run on biogas generated by the existing anaerobic digesters and unit will not be connected to a natural gas supply line. Maximum biogas production ranges from 90- 100 SUM (3.58-3.68 MMBTU/hr). 4.9. Cycle Efficiency Cycle efficiency,which is a ratio of energy output to energy input,is traditionally a good indicator of the value that is offered by the CHIP plant. However, in this case,the availability of zero cost biogas makes this parameter a much less significant indicator of value. The cycle efficiency, for the engine selected is around 42%, and the estimated actual electrical efficiency of the engine selected is around 40%. Although 7% of the heat generated by the engine is recovered, approximately 5% of the electric power output is spent on electrical parasitic loads,decreasing total cycle efficiency. Figure 5 shows an energy recovery summary of the total energy input to the engine. Figure 5:Engine Energy Recovery Summary LT Hot Water \ \❑nreEcn�oevrgerYa ble\Dumpetl `HTHotWater dumped 12% ``V����� Net Electricity GenerateDuff \ N \ JJ! High Temp Hot j\ Water j/ ,✓ 796 j/ Electrical Parasitics 5% OSoumeOne Page 15 of 27 III AVehe Energy Company 26 QVIIEOLIA Veolia North America Biogos to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant 4.10.Electrical Interconnection 4.10.1. Existing Electrical System The WWTP is provided electricity through a secondary voltage electrical service from Southern California Edison ("Edison"). Medium voltage electricity enters the site through underground primary cables fed from Edison's overhead system.Voltage is then stepped down to 277/480 Volts through a single 2 MVA transformer. Electricity is then distributed throughout the facility via customer-owned underground secondary cables. 4.10.2. Electrical Import and Export Because of the constraints of the Edison BioMAT tariff,Source0ne proposes that the new CHP plant be served by a separate dedicated electrical service from Edison. Power will be stepped up to Edison's distribution voltage level through a 500-KVA transformer.As such, electrical load at the facility is of no concern for this application because the power generated will be exported to the grid. No modifications will need to be made to the facility's existing secondary distribution infrastructure.Station service loads for the plant will also be fed from this new service. 4,10.3.Proposed Electrical System Modifications Ultimately, Southern California Edison retains control and design authority over any new service or modifications to the existing service that will be used to serve the proposed CHP plant. These requirements will be better understood as the project progresses through the Edison interconnection process. Nevertheless, Source0ne has developed a conceptual design based on standard utility practices and distributed generation interconnection requirements. To minimize cost, Source0ne recommends that the new service to the CHP plant be fed from the primary side of the existing Edison transformer using the transformer's integral loop-feed bushings.At present, it is not clear whether the existing transformer has radial or loop-feed capability. However, the transformer is expected to be upgraded as part of the Headworks/Primary Clarifier Upgrade Project at the WWTP.At that time, a loop-feed transformer can be requested from Edison in anticipation of the CHP project. As shown in Figure 6, a medium voltage cable will looped out of the existing transformer and routed through a duct bank to an abandoned transformer pad the formerly served a previous cogeneration installation. There is an existing abandoned duct bank in this location, but it is not clear if it can be reused. For purposes of cost estimating,Source0ne assumed that a new duct bank will be required. The abandoned transformer pad is in good condition and can be reused for a new customer-owned 500 KVA transformerto serve the CHP plant.It is important to note that a new pad-mounted primary metering enclosure and primary switch will also need to be OSourceOne Page 16 of 27 ..beck'c ri9Y Campanr Veolia North Americo ( � ] VE O L f A Biogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant installed upstream of the new transformer for metering, control, and protection purposes.Secondary cables will be run from the new transformer to the CHP plant's new switchgear. Figure 6:Proposed Electrical Distribution System Modifications Exlstln�SCE Tnrnform�r } P"gwwd Transformer ier+�rvnur 'far` 4,10.4.Photovoltaic Project Impacts Unrelated to the CHP plant scope, but still considered during this assessment, Solar City has an agreement with the City to supply a photovoltaic system of 1.11 MIN of DC SourceOne Page 17 of 27 9 O -,Na Energy Company R O Veolio North Americo "►/'C/�1 1 A Biogas to Energy Project Investment Grade Assessment Y Gam,/ 1M City of Palm Springs Wastewater Treatment Plant generation.The DC system will be on separate switchgear and its operation will not affect the CHP plant. 4.10.5. Outage5 Both planned and unplanned outages, when they occur, will require the use of the facilities existing hot water boilers to supply thermal energy to the heating loop that warms the digesters. Two outages of one week each and two outages of two days each were considered when evaluating the revenue stream and costs for this application.The proposed dual membrane cover on Digester#2 will take advantage of these outages and will store biogas for later use. 4.11.Digesters Two digesters(primary: 748,000 gallons, secondary: 1,270,000 gallons)exist at the WWTP, and both anaerobically produce biogas. Presently,the biogas produced flows through shared piping to a flare where all of the biogas is burned.The secondary digester, referred to as Digester#2, will receive a new dual membrane cover to store gas and maintain an operating pressure of 9.2 inches WC in the digester. The digester's current fixed cover is not able to maintain a set pressure and is not an acceptable cover to serve biogas to a prime mover.The current cover is in disrepair and must be replaced regardless of this CHIP project.Because of this,the differential cost to install the dual membrane cover was carried in the cost estimate. 4.12.Warranties and Service Agreements Clean Methane Systems, LLC (Robinson Group) provides a 12-month warranty from equipment delivery.The cost of this warranty is included with the purchase.An 18-month warranty can be purchased for an additional $5,000. Clean Methane Systems also offers a 10 year gas quality guarantee with a signed service agreement. Caterpillar provides a 24-month warranty from equipment delivery on the gen-set. The cost of this warranty is included in the cost of the equipment.Caterpillar typically provides a long term service agreement (LTSA) of about three years. The cost is typically$20-$30 per hour per year. This is equates to a range from $500,000 to $800,000 for three years. Because this LTSA price does not scale well for smaller machines, it is not recommended that an LTSA be purchased for this application.However,Source0ne has carried annual costs in the included proforma to cover regular maintenance and one major overhaul over the life of the equipment. 4.13.Site Conditions Palm Springs has a hot desert climate and receives only several inches of rain annually. Temperatures can reach as high as 120°F in the summer and can fall as low as 20°F in the winter. Typical summer days are over 100`F, average winter days are around 707, and mean annual temperature is 757.The city sits at around 500 feet above sea level. OSoureeOne Page 1g of 27 n r.,c;.;Oa Ere;g;Co^.?e•.:.: J Q VE Veolio North America /"", Jtl Biogas to Energy Project Investment Grade Assessment V A City of Palm Springs Wastewater Treatment Plant S. ECONOMICS 5.1. Revenue As mentioned, the biogas produced at the digesters will be burned in the engine and will generate electricity to be exported exclusively to Edison to capitalize on the BioMAT feed-in tariff. This tariff offers $127 per MWh or 12.7Q per kWh exported to the grid and a Power Purchase Agreement ("PPA") will be put in place with Edison to lock in the rate for 20 years. Based on the amount of biogas produced on average over the past few years, this equates to $330,000 in revenue annually. Additionally,there will be an expense offset forthe natural gas that would otherwise be used in the hot water boilers to heat the hot water loop. This cost is presently around $20,000 and is expected to increase by 3%every three years and was included in the financial modeling. Additional revenue may be acquired through the use of budding power generating technologies which utilize the relatively high percentage of heat that is proposed to be dumped to atmosphere at present. These technologies could be considered when the project reaches the design phase. 5.1. Operations Expenses It is expected that additional operations costs will not be incurred as a result of the installation of this CHP plant. Maintenance costs, however, do exist for all of the installed equipment including the engine,gas conditioning skid, SCR system, and NoxRxl. These costs are described in Table 5. Table 5:Expense Descriptions,Values,and Sources Description Engine Maintenance $39,000 SourceOne estimate Gas Conditioning Skid $16,000 Clean Methane Systems SCR $10,000 Source0ne estimate Veolia Ops $20,000 Veolia estimate Emissions Skid $48,000 Biogas& Electric _.... .... ...... . _. _.. ..... ............. ..1 '.. TOTAL $133,000 Various Sources These costs are expected to increase due to inflation by 1.5%per year and this rate was included in the financial modeling. OSourceOne Page 19 of 27 QO Veolia North America V A Biogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant 5.3. Capital Expenses Table 6 illustrates the budget that ME presented to the CEC within the grant application. This is the cost estimate on which the grant value was established. Table 6:Biogas&Electric Project Summary Task Budget Recipient Subcontractor commission Task item Reimbursable Reimbursable.. Reimbursable Matching Grand Funding Totals Totals costs comit costs Project Administration $136,855 $136,855 $136,855 AD Effluent,Emissions and Site Analysis $11,687 _ j $11,687 i $11,687 NOxBx®Test Plan Preparation $16,213 $16,213 : $16,233 NOxRx®Design Phase I/II $20,800 $20,800 $20,800 Site Preparation $150,000 $150,000 $150,000 Equipment Manufacturing,Purchasing, r 1 and Installation Phase 1/11 $1,809,448 $50,000 $1,859,448 $450000�$2,309,448 Project operation:Data Collection and Analysis $41,520 $41,520 $41,52.0 Evaluation of Project Benefits $2,133 $2,133 $2,133 Production Readiness Plan $2,133 $2,133 $2,133 .. ..... Technology/Knowledge Transfer $g,533 $8,533 $8,533 Activities 1 Grand Totals $2,049,322 $200,000 $2,249,322 $450,000 $2,699,322 SourceOne evaluated the budget as presented and performed a parallel costing exercise based the specific attributes of the B&E systems and SourceOne's knowledge base of system costs and project delivery approaches. ME provided Veolia additional supporting documentation including budgetary quotes from the gas pretreatment vendor,engine generator manufacturer, and back-end processing equipment vendors.Those figures are shown in Table 7. O SourceOn@ Page 20 of 27 31 A'dcoiaa 6cergp cc.^cant' QVIEOLIA Veolia North America Biogas to Energy Project Investment Grade Assessment City of Palm Springs Wastewater Treatment Plant Table 7:Capital Cost Estimates Prime Movers _._ _ _._ _.. _._ ._. $500,000 '.. Front-End Gas Cleaning System $450,000 j Back-End Exhaust Cleaning System(NOxRx•) $5001000 Back-End Exhaust Cleaning System(SCR) $250,000 Electrical Scope of Work $450,000 '.. Mechanical Scope of Work $290,000 '.. Civil/Structural Scope of Work - $150,000 Control System Scope of Work $200,000 Plant Enclosure/Building $100,001) ..-....... ....... -..... _. _._ _. __.. _ .. Engineering $231,200 I Construction,Project Management,and Consulting _. $675,000 Start-Up and Commissioning $57,800 Permit and Permissions $14,450 Contingency $202,300 Digester Cover(Differential:Base Case to Business case) $550,000 Project Subtotal $4,620,750 Less California Energy Commission Grant j ($2,250,000) Total Capital Expenditure($) $2,370,750 Source0ne estimated that at $4.6 million, the total project cost will be more than 65% higher than B&E's estimate when all factors are appropriately considered. 5.4. Projorma Source0ne has developed an evaluation tool specifically designed to evaluate distributed generation plant options. This tool utilizes information ranging from performance inputs, environmental conditions, capital expenditures, localized utility rates, energy consumption metrics,and other pertinent information.The tool then develops the energy requirements map, and applies the performance metrics of selected CHP system arrangements to derive the quantities and financial value of generated energy put to useful work. In other words,the tool models the annual operation of the plant given the basic assumptions in the model and the energy requirements from the facility.The tool then calculates the estimated benefit to the end user, in this case, the City of Palm Springs WWTP. Attached to this report is a series of output documents from the tool. 32 A SOUCCQOne Page 21 of 27 Veolia North America ( � ] �� Biogas to Energy Project Investment Grade Assessment / r O City of Palm Springs Wastewater Treatment Plant 6. EMISSIONS CONTROL OVERVIEW 6.1. Typical Combustion Emissions 6,1.1. NO, Nitric Oxide and Nitrogen Dioxide(NO and NO2), referred to as NOx emissions, result from combustion, are harmful to the environment, and are restricted by the EPA. NO,, when combined with volatile organic compounds (VOCs) can create smog and can irritate and damage lung tissue. In addition, when present in the upper atmosphere, it can produce acid rain. 6.1.2. SOx Sulfur oxides (SO, S02, S03, SOa, S20, S202), referred to as SO, emissions, result from combustion,are harmful to the environment, and are restricted by the EPA. 6.13. Siloxanes Although siloxanes are virtually non-toxic, they can be detrimental to equipment when subjected to high temperatures causing a coating on inner surfaces. This coating decreases heat transfer and increases internal temperatures. 6.1. Biogas Conditioning (Front End) The proposed biogas conditioning skid from Clean Methane Systems(Robinson Group)will clean the biogas for use in the engine by removing sulfur,hydrogen sulfide(H2S), moisture,odors,and Siloxanes. The system quoted consists of the following subsystems: BioStrip'"Sulfur Removal System,SulfrPack""ST Sulfur Polish System, and SAGPack""Gas Conditioning System. Clean Methane Systems will provide a system capable of processing 100 SUM of biogas with a pressure range from 6 to 12 inches WC above atmospheric pressure: This meets the outlet pressure set-point determined by the proposed digester cover of 9.2 inches WC.The proposed skid will include a gas blower which will increase biogas pressure. Biogas outlet pressure shall be set to meet the requirements of the proposed engine of 3 to 5 psig. 6.3. Emissions Control(Back End) 6.3.1. Selective Catalytic Reduction A proven NO,control technology is an SCR system and is the industry standard.This NO, reduction process requires a reductant of either ammonia (NH3)or urea (CO(NH2)2) and a catalyst, a grid on which the chemical reaction takes place. Reductant is injected into the high temperature exhaust flow of the engine upstream of the catalyst which reacts with the NO,. This results in the production of water vapor as well as nitrogen gas and in the case of urea, carbon dioxide. Soume0ne Page 22 of 27 q g ., ,..aa Ena,pzCpan., J J Veolia North America VOE / ' /�A Biogas to Energy Project Investment Grade Assessment L 7► c City of Palm Springs Wastewater Treatment Plant 6.12. Biogas & Electric NOxRx® A patented technology, known as NOxRx®, offered by Biogas& Electric LLC, will remove N0,(nitrogen oxides)and CO(carbon monoxide)from the exhaust stream. Flue gases will exit the engine above 900OF and will need to be cooled down to less than 110°F before entering the emissions control skid. Approximately 50 gpm of water supplied by the facility's reclaimed water system will be utilized to cool the exhaust stream to the appropriate temperature. The reclaimed water supply line is 4" with a pressure of 100 psig and is ambient temperature.It runs through the plant and is supplied by the reclaimed water pump station. After cooling, the water will be returned to the aerated channel for processing which is just north of the CHIP plant. Figure 7:Proposed Absorber Water Piping Seoondery Effluent n E Aerated Channel i,. O SourceOne Page 23 of 27 A VeoOa Energy Company 34 Q Veolia North America \/'�"©C /� Biogas to Energy Project Investment Grade Assessment �r IE A City of Palm Springs Wastewater Treatment Plant NO. will be removed from the exhaust stream with approximately 200 gpm of effluent supplied by the facility's secondary effluent stream. A new set of pumps, a primary and backup, will be located at the secondary clarifiers and approximately 500 feet of piping will be installed to send the secondary effluent to the NOxRx®system. Figure 7 shows the proposed routing for this piping system. After NO, is absorbed, the water will be dumped to the aerated channel for processing which is just north of the CHP plant. Power requirements for the NOxRx®skid are 36 kW at peak loads and are expected to be reduced to 15 kW during operation. 6.4. Air Emissions The current air permits, issued by the South Coast Air Quality Management District (SCAQMD), do not cover the operation of a biogas or natural gas fired engine for any length of time. The City will have to apply for a permit to operate this equipment. Per the Code of Federal Regulations, there are minimum maintenance requirements for new, spark ignition, reciprocating internal combustion engines (RICE) that are greater than 500 hp which also run on digestergas. From 40 CFR Part 60 Subpart JJJJ: If the facility is considered an "Area Source',the following is required: Change ail/filter, inspect spark plugs, & inspect hoses/belts every 1,440 hours of operation or annually. 6.5. Emissions Systems The SCR system will be put in place to serve as the primary NO, reduction technology and will reduce NO,to limits by approximately 90%. Additional NO, reduction shall occur with NOxRxa system but will not be required to meet emissions. The following pieces of equipment will be installed to remove emissions from the exhaust stream: 6.5.1, Biogas Conditioning Skid This skid will be installed upstream of the engine to remove SO„,CO,Siloxanes,VOCs, and Halides. This includes a BioStrip'" Sulfur Removal System, SulfrPack'" ST Sulfur Polish System, and SAGPack" Gas Conditioning System. 6.5.2. Oxidation catalyst This unit will oxidize CO to CO2 and will be placed such that the temperature of the exhaust stream will be within the range of the oxidation catalyst. Oe SOUrcGOhe Page 24 of 27 3 5 A.s-i-a Eir¢rg,Co^oa,, Veolio North America /i Biogas to Energy Project Investment Grade Assessment \J l► A City of Palm Springs Wastewater Treatment Plant 6.5.3. SCR System As mentioned in the section above, this unit will use ammonia injection on a catalyst to reduce NOx and will be placed such that the temperature of the exhaust stream will be within the range of the SCR system. 6.5.4. NOxRx®System • Cooler:A 50 gpm flow rate of reclaimed water will be used to cool the exhaust stream down to less than 110°F.There is a 4" line of reclaimed water near the installation site that will be used to provide water to cool the exhaust stream. • Ozone production and injection:Ozone will be produced onsite and injected into the exhaust stream to oxidize NO to NO2 and will be either water or air cooled.Sufficient water from the 4" reclaimed water line is available to cool the ozone generator. It is anticipated that the ozone production unit will need to be placed in an enclosure protecting it from the elements. • Blower:A blower will be placed in the cooled exhaust stream to alleviate exhaust back pressure on the engine. • Absorber(s): Fiberglass absorbers will be placed in a series to absorb NO2 into the liquid waste streams onsite.A 200 gpm flow rate of secondary effluent is required to absorb NO2.The source of the secondary effluent is 1000 feet from the NOxRx® skid on the eastern side of the site. • Sump:The cooler and absorbers will drain into a sump area.A sump pump will be used to drain the liquid waste into the aerated channel adjacent to the site location. • Control Panel:A control panel will be designed to control emissions equipment, and will work in conjunction with the biogas engine's control panel. It is likely the control panel will need to be placed in a climate controlled room (quite possibly with the ozone generator). Ov SourceOne Page 25 of 27 36 n'i�olia Ece=qr Company vaolla—Palm Springs W W March 23,2016 Cogen Feasibility Study Attachment A—With Grant—20 Year Proforma Analysis 20,Year Prefimma C rhfl vjVmvry 0.4 MW CoMJneE Hem&P Leer Want Prge6 fmthbooaJ Flnantlal Pafamxtn[e I Panel,Maumvd.ns bf alfonj[he"e aW LW - unleve/N Y.�nY Lwnierm: l0 V<ars FkNInK: ..Z, pryrI sham na< X.Imlaaa: ].m wery]ixrlsl igrrr lvp enr-fartiv]nsulwr lime vear. I] a Lwotavalue Rauo-.90% � Po nay ShpnCK4 n Em M1% E IMomm..e: a% a,—wrP Wl c,mtm:. 1.50%nerylaarls Ore Pe[Ipmwtlrg FrBlre Pfl:nv 6% l]Y E pb[anl Rao: ax 0.envadeFmgY CreOu: O.W%everylaads ea[Pe[w We: HeamaM lM' 3)s�]9] 4vual Pa $IS5.156 O nl MarMef: pNl4 ax t Chll I I mv[lOn ^ IJpFraM Casty enC llxentives Blantlatl 4tllhy Pates 5 %Mlaa0 jer9etl <MINw Wunl n. rvo ( a {AW SkerLM SerM�IM pu xHenl6r [eW[ 9xx CM1 II K N/a Gplu fal $13A,15p j5,9CO ywl're Nn: Il]C/ WA S9.16/➢e[a1Mrm Saam. Olf Phapum CAY4ryae. 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I6u.6u1 I1sr.Wl I.a1Aur1 11.Qa.�N1 I%I5aM9i Il,nal91 II,pl Y14 11.[a)6li II5fM01 5,539.9161 41]lMl1 n.]wR]n Cumulpjim Cash Flow Cogeneration Value Streams 7liwi� So.sa� F mamlwr. usvun = y,3tieTae Benefitl1iP1I _ fl pedir PaRrIona,u(irve Enefgy Amud Upn Coats 503$ CretlhPaW[e.m5eae U"r ! WM fl Capacity Market Pamem5 ....._ _.. .. ElttNolY'. $33y5M s $0.35WChip Pan: $30A 13 se $0.33.._.. PDYSNPPWI'. $O.il Pates W!]I G3s Offset dttmmr b la _.. lawn ca. 5E11 mix $o uraNaineR : $0 5o)x" flElertrid Generation I51 - - - --- ---- --" '-'- iON UXhFSM[IFa: $35P,]@ 1 3 3 6 5 fi l a 9 10 I] Il 13 24 15 I6 11 ]p 19 20 O SeurceOne PW 2]of 2) ATTACHMENT 2 39 WEST YOST �� 'o 2 YEARS ASSOCIATES 1990-2035 April 6, 2016 Project No.: 638-20-15-01 SENT VIA: EMAIL Mr. Marcus Fuller Asst. City Manager/Director of Public Works City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 SUBJECT: Review of the Investment Grade Assessment (IGA) Dear Mr. Fuller: At the request of the City of Palm Springs (City) West Yost Associates (West Yost) performed a review of the Investment Grade Assessment (IGA). This letter discusses our review and recommendations. Key Findings The following is a summary of our findings based on our high level review of the Investment Grade Assessment (IGA)', prepared by SourceOne, Inc., dated March 23, 2016. Co-generation and anaerobic digester gas reuse at the Water Reclamation Facility (WRF) is an attractive possibility for the City and is consistent with many other municipalities that beneficially utilize biogas for electrical energy production and heat. However, there are several factors that we have identified in IGA that should be investigated further to clearly evaluate and fully justify the SourceOne, Inc. stated benefits: • Simple Payback Horizon: The payback of twelve(12) years that was identified in the IGA was not economically feasible in past cogeneration feasibility studies. Several key factors are identified that could significantly influence a twelve(12) year simple payback. It will be important to further assess and optimize factors such as gas production, gas quality, prime mover options,prime mover uptime, and parasitic loads to better understand project viability. Also,project risks should be evaluated further in conjunction with the ability to obtain full value of the grant. • Biogas Production Confidence: Digester biogas production reported in the IGA appears to be within the industry standards. Solids production data should be updated to confirm solids quantity and volatile solids content. This could vary the simple payback by five(5)years. • Understanding Gas Quality: Digester gas energy content of 657 BTU/CF is on the high side of a typical range of 550 to 650 BTU/CF and should be verified with additional data. It is recommended that gas quality(methane content and hydrogen sulfide content) be checked monthly to get a larger data set of gas quality information. It is also SourceOne,Investment Grade Assessment(IGA),March 2016 3n==,ir, .,.u�� Mr. Marcus Fuller. PE April 6, 2016 Page 2 important to have the siloxane level verified in the digester gas. This could vary the simple payback by five (5) years. • Understanding Variability of Energy Value: Parasitic loads should be considered and clearly stated in an economic analysis. Parasitic loads could increase the simple payback by roughly two (2) years. Engine outages indicated in the IGA result in an engine uptime of roughly 95 percent. It is important to understand what steps will be taken to help ensure this uptime is achieved. Varying engine uptime by 10 percent would impact the simple payback for the project between two (2) and three(3) years. • Project risks (Ability to Obtain Full Value of Grant): The financial benefit of the project is driven heavily by the ability to receive the California Energy Commission grant that Biogas and Electric LLC (B&E) has been awarded. It is not clear what commitment B&E has to delivering the full grant amount to the project but this will be an important factor to the success of the project. Biogas Production Estimate and Energy Potential Biogas Production The digester gas production estimate of thirty-three(33)million standard cubic feet of biogas per year indicated in the IGA appears to be reasonable. An independent estimation of biogas production was developed using two different methods. One method used influent and effluent wastewater characteristics to estimate solids production to the digester. The second method used digester feed solids data from the facility that was collected between 2004 and 2006. The results of the independent estimation of digester gas production are listed in Table 1. Table 1.Table Biogas Estimation Estimated Digest Estimation Method (Total Solids) Digester Gas Produced Influent and Effluent Wastewater Characteristics 16,300 Ibs/d 27 x 106 scf/year Prepare Preliminary Design Report Solids Flow Data 20,320 Ibs/d 34 x 106scf/year Field Investigations Reported Gas Production in IGA Not Reported 33 x 106scf/year Notes: Influent wastewater characteristics,digester feed sludge Flow, and volatile solids fraction information based on data collected from 2004 to 2006.Source:City of Palm Spring Wastewater Treatment Plant Capital Rehabilitation and Repair Plan,October 20102. Effluent wastewater characteristics information from Palm Springs W W Operations and Maintenance Performance Review', October 2013. Volatile solids destruction in the digester was assumed to be 45% Carollo Engineering City of Palm Spring Wastewater Treatment Plant Capital Rehabilitation and Repair Plan,2009 }SAIC,City of Palm Springs Wastewater Operations and Maintenance Performance Review,2013 41 WEST YOST ASSOCIATES I\c\638 PS\20-15-01\wp\040616_IGA Mr. Marcus Fuller. PE April 6, 2016 Page 3 The difference in a simple pay back between the lower gas estimate and the higher gas estimate is roughly five (5) years. As the project moves forward, it is recommended that feed solids flow and volatile fraction information to the digester be updated to confirm that gas potential from solids is based on reliable solids flow information. Gas Quality Energy content of the digester gas was reported as 657 BTU/CF in the IGA. This energy content is considered to be on the high end for anaerobic digester gas and would be expected if the City were co-digesting high strength organic wastes such as fats, oils, and grease along with biosolids. Typically, energy content in anaerobic digester biogas can range from 550 BTU/CF to 650 BTU/CF. For this range of energy content the simple payback for the facility could vary by roughly 3.5 years. It is recommended that the City start regularly testing digester gas to obtain a longer data set for methane content so that there can be higher confidence in the methane content information. Hydrogen sulfide (H2S) content in the digester gas was not reported in the IGA. H2S content in the digester gas can vary widely in municipal wastewater treatment plants due to factors such as industrial discharges and detention time in the sewer collection system. A historical trend of H2S concentrations should be developed to better understand the potential impacts on gas conditioning capital, operation, and maintenance costs. It will be important to understand media change out frequency and potential downtime impacts if hydrogen sulfide concentrations are high. For similar reasons to H2S, siloxane concentrations in the digester gas should be understood. Siloxanes should be removed prior to combustion in a reciprocating engine to prevent issues associated with accelerated wear as a result of silica or silicates deposits that can form inside of the engine. It is important to clarify that the gas conditioning system should be a requirement to clean the gas prior to combustion regardless of whether or not the NOxRx is used for exhaust cleaning. A statement on page six (6)of the IGA indicated that biogas and electric claimed that"hydrogen sulfide removal or biogas conditioning prior to combustion" would not be needed if there system was used. Gas condition should be used to protect the engine from damage that could be caused by constituents such as siloxanes entering the engine. Gas Usage. Storage, and Engine Uptime In section 4.5 of the IGA, it is indicated that natural gas will not be connected to the cogeneration engine. However, at gas production rates and energy content presented in the IGA, the proposed engine generator would be roughly 77 percent utilized on average. At the current cost of natural gas and BioMAT tariff rate, it would seem that being able to use the engine at full capacity by blending natural gas would be advantageous. If this is not possible due to conditions of the tariff, that should be indicated. Gas storage has been recommended in the IGA as a way to store gas during times when the engine is out of service for maintenance. Gas storage using an inflatable membrane cover has been used successfully at other treatment facilities but is not a requirement for implementation of a digester gas 42 WEST YOST ASSOCIATES I\c\638 PS\30-15-01\wp\040616 IGA Mr. Marcus Fuller. PE April 6, 2016 Page 4 cogeneration system. Many wastewater treatment plants have cogeneration systems that do not require the use of gas storage. There are additional operating costs associated with a membrane cover such as the blower to keep the dome inflated and typically the membrane will be replaced sooner than a fixed dome. It is unclear whether or not the added operating costs for the inflatable dome were included in the project economic analysis. It is recommended that a cost benefit analysis be performed between a fixed digester cover and a membrane gas storage cover to determine,which would be more beneficial to the City. Assumed engine uptime is roughly 95 percent based on the outage information presented in the IGA (paragraph 4.10.5). This uptime assumption is possible but is dependent on many factors such as consistency of gas production, gas quality, gas conditioning skid performance and maintenance, engine performance and maintenance, and emissions control technology performance. Varying engine uptime by 10 percent would impact the simple payback for the project between two (2) and three (3) years. Parasitic Loads It is not clearly stated if parasitic loads were considered in the simple payback calculations. Parasitic loads are additional electrical loads that are the result of the implementation of the cogeneration project. In particular,the load from the gas condition system and NOxRx. The power requirement for the NOxRx system were identified in the IGA as being 15 kW to 36 kW. To understand the impact of inclusion of the parasitic loads in the payback analysis it was assumed that the up-front gas condition skid would have a power demand of 12 kW in addition to the demand of the NOxRx system, for a total parasitic load of 27 kW. Also, parasitic loads of flexible gas storage equipment air blower should be added at about 3 kW and hot water recirculation pumps at about 2 kW. Parasitic loads increase the simple payback period by roughly two (2) years. IGA Review Evaluation of IGA assumptions Facility specific assumptions IGA is not explicitly providing updated process parameters,hydraulic and organic loading and solids production at the Palm Springs WWTP. The Palm Springs WWTP influent flow, solids production and wastewater influent/effluent characteristic concentrations are summarized in Table 1, compiled from Veolia operating records from 2004 to 2013. The process understanding summary is adopted from the WWTP Capital Rehabilitation & Repair Plan 20102 prepared by Carollo Engineering and the City of Palm Springs WW Operations and Performance Review Report 20133 prepared by SAIC and is included in the assumptions. Anaerobic Digesters The Palm Springs WWTP anaerobic digesters provide initial stabilization of the organic solids. Thickened solids are pumped to two anaerobic digesters for stabilization. Digester No. 1 has a diameter of sixty-five (65) feet, with a depth of thirty (30) feet, and has a fixed concrete cover. Digester No.2 is eighty-five(85)feet in diameter and thirty(30)feet deep, with a floating gas-holding 43 W E S T YOST ASSOCIATES i\c\638 as\20-1 s-01\wp\040616 IGA Mr. Marcus Fuller. PE April 6, 2016 Page 5 cover. The digesters are designed to be maintained at ninety-five (95) degrees, as conventional mesophilic anaerobic digesters. Historically, only Digester No. 2 was heated and mixed, but new heating and mixing systems was designed for Digester No. I and recently could have been fully implemented. When the upgrades are complete, both digesters will have pump mixing and spiral heat exchangers. In general, the EPA criteria require a fifteen (15) day hydraulic retention time in the conventional mesophilic digesters at ninety-five (95) degrees Fahrenheit. At the current flows, approximately 30 days of hydraulic retention time is provided. At the design flow with both digesters in service, nineteen (19) days of hydraulic retention time is provided, which meets the EPA criteria. If a digester must be taken out of service, hydraulic retention time will be reduced to between twelve (12) to seven (7) days, depending which tank requires maintenance or cleaning and also depending on the time of year(summer sludge flows are lowest). Either of the anaerobic digesters can be taken out of service for cleaning or maintenance during the summer months, when ambient temperatures can dry the solids within thirty (30) days, without impacting the final quality. IGA stated that the secondary digester, referred to as Digester#2, will receive a new dual membrane cover to store gas and maintain an operating pressure of 9.2 inches WC in the digester. The digester's current fixed cover is not able to maintain a set pressure and is in disrepair and must be replaced regardless of this Co-generation Heating Plant (CHP) project. Because of this, the differential cost to install the dual membrane cover was carried in the cost estimate. Digester Gas Utilization Digester gas is collected from both digesters and is piped for beneficial use in a number of locations. However, digester gas use is limited to the boiler for digester heating, but is not currently used for this purpose due to the moisture content of the gas, which is damaging to the boiler. Excess gas is flared.The City has engine-driven pumps and a reciprocating gas engine,which could also potentially use digester gas, but are not permitted by AQMD, so now operate on natural gas. The City also has two micro turbines, which also operate on natural gas,but these are not currently in use. The City and Veolia have plans to reduce the plant's electrical energy requirements, through the use of a gas treatment system and prime mover for electrical generation. IGA biogas generation data was collected in 2013, 2014 and 2015. The existing anaerobic digesters produce biogas all year with a total volume 33 MMSCF annually. IGA refers to "The total energy content of the biogas of 657 BTU/CF and equates to an annual energy content of 21,600 MMBTU". Higher heat value of the energy is reported on a dry sample (HHV) and lower heat value (LLV) is a net energy released on combustion. LLV could be significantly lower than HHV,therefore this two values should be distinguished and relevant numbers used in energy balance calculations. The January, July, and November values in biogas production graph on figure 4 of IGA displays zero or near zero bio gas production values. These values are recorded manually and read zero if the production is not recorded. They could be considered outliers due to the operator's error. Biogas production is continuous and fluctuates only slightly over time as long as the digesters remain warm. The prime mover will run at sufficient part load to burn all of the biogas available to it. Because the biogas available does not exceed the maximum energy input of the engine, the power output of the co-generation plant will be limited by biogas production. 44 WEST Y O $ T ASSOCIATES I\c\638 PS\20-15-01\wp\040616_IGA Mr. Marcus Fuller. PE April 6, 2016 Page 6 Electrical Power Distribution System Existing Electrical System The plant's electrical power distribution system includes a main utility power service switchboard; a diesel engine standby generator, and other electrical equipment in the maintenance building, as well as underground duct banks and other motor control centers and equipment throughout the plant. The WWTP power feed is provided by a secondary voltage electrical service from Southern California Edison (Edison). Medium voltage electricity enters the site through underground primary cables fed from Edison's overhead system. Voltage is then stepped down to 277/480 Volts through a single 2 MVA transformer. Electricity is then distributed throughout the facility via customer-owned underground secondary cables. Electrical Import and Export Because of the constraints of the Edison BioMAT tariff, SourceOne proposes that the new CHP plant be served by a separate dedicated electrical service from Edison.Power will be stepped up to Edison's distribution voltage level through a 500-KVA transformer. As such, electrical load at the facility is of no concern for this application because the power generated will be exported to the grid. No modifications will need to be made to the facility's existing secondary distribution infrastructure. Station service loads for the plant will also be fed from this new service. IGA recommends that the new service to the CHP plant be fed from the primary side of the existing Edison transformer using the transformer's integral loop-feed bushings. At present, it is not clear whether the existing transformer has radial or loop-feed capability. However, the transformer is expected to be upgraded as part of the Headworks/Primary Clarifier Upgrade Project at the WWTP. At that time, a loop-feed transformer can be requested from Edison in anticipation of the CHP project. A medium voltage cable will be looped out of the existing transformer and routed through a duct bank to an abandoned transformer pad that formerly served a previous cogeneration installation. There is an existing abandoned duct bank in this location, but it is not clear if it can be reused. For purposes of cost estimating, SourceOne assumed that a new duct bank will be required. The abandoned transformer pad is in good condition and can be reused for a new customer-owned 500 KVA transformer to serve the CHP plant. IGA noted that a new pad-mounted primary metering enclosure and primary switch will also need to be installed upstream of the new transformer for metering, control, and protection purposes. Secondary cables will be run from the new transformer to the CHP plants new MCC and switchgear. O&M Staff A new co-generation plant is not expected to add elements that would require new O&M skills to plant staff. O&M would include prime mover, gas storage, gas treatment skid and regular preventive and corrective maintenance items. However, co-generation processes includes common process elements typical to most WRF facilities except for the new and unproven treatment skid NOxRx technology. Processes (except for NoxRx) are common to most WRF facilities and well known to most O&M staff. Also, support from the equipment manufacturer is expected to expedite learning curve. 45 'NEST YOST ASSOCIATES \c\638 PS\20-15-01\wp\040616_IGA Mr. Marcus Fuller. PE April 6, 2016 Page 7 Evaluation of Project Risks 1. Gas Conditioning Package [Low Risk] This equipment skid, developed by Clean Methane Systems LLC, removes sulfur(SOx), hydrogen sulfide (H2S),and siloxanes. This developer and their technology have years of proven success and reliability. There is a medium risk in utilizing this equipment skid because it would be new technology to plant O&M staff. 2. NOxRx®Emissions Control Package [High Risk] This equipment skid, known as NOxRx® was developed by B&E and removes NOx from the exhaust stream. At present, a wastewater treatment facility in Bakersfield, CA (WWTP#3) is the only end user of this technology. An on-site engineer at the Bakersfield facility stated that the skid has been in place since 2014 but has had only several days of operation. Based on the performance of this skid the grant will be assessed. Unproven technology is used for securing the grant that is justifying the project. 3. BioMAT Feed-in Tariff[Medium Risk] The feed-in tariff known as BioMAT was made available November 18, 2015 and holds a total statewide program cap of 250 MW, of which, Edison has been allocated 114.5 MW. This program has sufficient capacity and is not likely to be filled for several years. SourceOne proposes Edison BioMAT power export tariff fixed at 0.127 $/kWh fixed over 20 years. Imported power tariff is much higher from 12 noon to 6 pm, so plant power reuse could significantly reduce base load requirement, plant operation expenses and justify the proposed co-generation project. Plant power re use was not considered in the IGA. 4. Permitting [Limited Risk] Air and effluent permits will need to be revised following the installation of the cogeneration facility. This item will depend on the operator's ability to secure a permit with provided equipment and pose a limited risk. 5. Capital Expenditure [Limited Risk] The capital costs of this project are based on both industry averages and budgetary quotes and carry with them only a certain level of accuracy. Capital cost estimates Table 7 (IGA Page 21/27) seems to be reasonable. Reviewer would suggest to show separate capital cost and soft cost amounts. IGA is using 7 percent for Engineering costs, 19 percent for the Construction, PM and consulting and 5 percent for the Contingency, Total of 32 percent for the soft costs. At this level costs are just budgetary and further cost refinement could result in project cost differential. 6. Project Structure [High Risk] Project delivery selection and structure is a significant risk. There is no decision on project delivery and formal project structure. Areas of concern for this project include: • Defining contractual relationships between major stakeholders inclusive of the City, Veolia, B&E, the California Energy Commission(CEC), and others. 46 W E S T YOST ASSOCIATES 1\c\638 P5\20-15-01\wp\040616_IGA Mr. Marcus Fuller. PE April 6, 2016 Page 8 • Defining project requirements definition inclusive of schedule, cost, and quality. • Defining liability for the Grant funds in the case project is not meeting grant program requirements. • Defining project delivery—Design, Bid, Build (DBB) vs alternative delivery, Design, Build(DB). The level of planning required for the project construction phase would be significantly different. For instance, for DBB alternative a full set of approved final drawings and specs would be required and for DB approximately 30 percent design completion would be required before the start of construction. Considering time constraints DB could be the only feasible alternative. 7. Grant and Schedule [High Risk] IGA stated the following: "The grand total of$2,249,322 will be paid to Biogas & Electric (B&E) once the equipment is installed. Because the grant was awarded in January of 2015, and the window for receiving the grant is only three years, there are only 23 months in which to complete design, construction, and commissioning. If system design and long lead time procurement begins within the next few months, there will be sufficient time to complete construction and receive the grant." In the case project is delayed and not completed in time the grant may not be awarded. In that case IGA identified a simple payout of twelve(12) years would double and project would not be feasible. Based on the current project status, project delivery selection and lack of scheduling 23 months for project completion may not be sufficient for the projects timely completion. 8. Process output estimates [High Risk] IGA of planning is not offering level of planning detail that would allow reliable process parameter selection. Available data is providing some insight however the level of uncertainty is high. The following is a list of uncertainties that would require a more detailed investigation for this particular application: • Prime mover efficiency in the IGA was estimated at 42 percent. However, the net electricity generated presented in the Figure 5 of the IGA report is 40 percent with a 5 percent parasitic load. The resulting net prime mover efficiency would be 35 percent. Reduced prime mover efficiency would increase payback period for four(4) years rendering the project non-feasible. • The project economics are based on the "amount of the biogas produced on average over the past five (5) years, this equates to $330,000 in revenue annually." (IGA pg. 19/27). The CHP wide parasitic loads are described in various IGA sections but were not included in the economic model. Parasitic loads at various co-generation processes could amount to 15 percent of power output. Therefore, annual revenues could be reduced to $280,500. The inclusion of parasitic loads would increase pay back for four (4) years, rendering the project non-feasible. • The California Energy Commission(CEC) grant may affect co-generation projects eligibility to qualify for the SGIP grant. For 400 kW IC engine SGIP grant would amount to $400,000 and for gas turbine $520,000. WEST YOST ASSOCIATES - 1\c\638 P5\20-15-01\wp\040616 IGA 47 Mr. Marcus Fuller. PE April 6, 2016 Page 9 • CEC grant is $2.25 million, however B&E would charge $550,000 for their NOxRx system. Also, there is a$450,000 requirement in matching funds (Table 6 in IGA Page 20/27). Matching funds were not elaborated in the economic analysis. If B&E charge, matching funds and SGIP grant would be deducted from the CEC grant, project grant contribution would be $850,000. This net grant value would result in project cost of$3,770,750. This project cost would not be feasible, with a simple payback over 20 years. RECOMMENDATIONS Based on our high level review of the IGA, prepared by SourceOne, Inc., dated March 23, 2016 we are providing a summary of our recommendations: The review of the risk analysis offered in IGA resulted in four(4)high risk,three(3)medium-limited risk items and one (1) low risk item. Based on the risk assessment this project may be qualified as predominantly high risk on an IGA review level. Project implementation would require additional data refinement and implementation assessment. Energy reuse at the WRF is common practice in California and public utilities should be actively pursuing it in the future. In order to successfully implement co-generation at the WRY the City should look in to options to manage identified high risk items. In order to fully control risk items several recommendations could be made: • Define process parameters in more detail for the future IGA assessment. • Commission CHP feasibility desk top study in order to define process parameters in consistent manner. • Select optimal delivery method and commission planning and design assistance for the co-generation plant. Thank you very much for the opportunity to offer our IGA high level review comments and recommendations. Sincerely, WEST YOST ASSOCIATES r/ Greg Chung, P.E. RCE# C58710 GC:clp 48 W E S T Y O S T ASS O C I A T E $ I\c\638 PS\20-15-01\wp\040616_IGA ATTACHMENT 3 49 iry,SoumeOne Palm Springs W WTP _ �-r 4375 East MesTuite Aeenne `•EOI.a E-.,__... Palm 5pripgs,CA 92264 K i it mlu 20-Year Proforma Cash♦llow Summary }, s� I............ 0.4 MW Combined Heat S,Power Plant Project Dashboard Financial Performance Financing Assumptions inftation Schedule System Size: 400 kW Unlevered LeveredI Loan Term: 20 Years Electricity: 0.00%every 20 year(s) Project Type: CHP-Combined Heat&Power [ash Positive Year: 9 3 Loan-To-Value Ratio: 90% Natural Gas: 3.00%every 3year(s) Palm Springs Simple-Cycle ROI: 117% 757% t o Interest Rate: 4% Operations&Maintenance: 1.50%awry 1 year(s) CA One Reciprocating Engine IRR: 995 47% t Discount Rah: d% Renewable Energy Credits: 0.00%every lyeahs) Heat Recovery Use: Steam and HW NPV 4%: $1,085,751 $1,109,599 Annual Payment. $151577 Capacity Market: 0.00%every 1yearls) Chiller Information .Ujo-Front Costs and incentives - Blended Utility Rates %of load Served Chilled Water Production: No S Slkw - Electricity SewaxeAzndtill Gas Natural Gas Electric: 92% Chiller Priority: N/A &�Net al Cost $2,346,620 $5,900 Baseline Rate: 12.7 C/kWh N/A $9.16/Decatherm Steam: 0% Steam Absorpton Chiller Size: N/A tives $0 SO Proposed Rate: 0-Ot/kWh $0.00/MMBTU $9.16/Decatherm Hot Water: 95% HW Absorption Chiller Sixe: N/A ost $2,346,620 $5,900 CHP Electric Rate: 3.1 C/kWh N/A N/A Chill.Wat: 046 YNr a 1 2 3 4 S 6 7 a 9 10 11 12 13 14 15 16 17 Il 19 M (Al Rer.. Ekmtr lGeneration $ MU76 331,576 331,576 331,576 331,576 331,576 331,SM 331,576 331,576 331,576 331,576 M2,576 331,516 332,576 331,S76 331,576 331,576 331,576 331,576 331,576 Natural Gas Onset $ 19,386 19,762 19,762 19,762 20,355 20,355 20,355 W,965 20,965 20,%5 21,5% 21,5% 21S% 22,241 22,242 22,242 22,910 22,910 22y20 23,597 Capacity Marken Payments $ - - - - - - - - - - - - - - - - - - RenewaNe/Akernative Energy Credit Payments $ Tmzl Reve nue $ 3S0,762 351,338 351.338 351,3M 3SL931 351,932 351,9m 34,S 352,542 352,542 353,170 353,170 353,170 353,818 353.818 353bxe 354,486 354,486 354A86 355,173 (6) Ewe. Natural Gas Sewage/landfill Gas - OpentionsandMaintenan,e $ 85,409 86,690 87,"1 89,311 90,650 92,010 93'aw %,791 96,213 97,656 99,121 imeca 102,127 103,649 105,2W 106]81 ioa,363 120AN 313,e59 113,334 taxes pn bcentivc Payments 5 Tmai Fapenses 5 85,409 86,690 97"1 99,311 9Q650 92A10 93,390 M,791 M.213 97,656 99,121 lce6 102,117 103,M9 105,203 106,781 108,30 310,ta19 111bs9 113,M4 (C) Ne eP4ntNr54NMf w/4 Tax eii rni 5 265,353 264,648 263,347 262.027 261,291 259,921 258,541 257,751 256,329 254,885 254,050 252,563 251,054 250,170 248,615 247,1137 246,103 2M,477 242A27 241,839 (D) Tao 9enefni, Investment Tax Credk $ - - - - - - - - - - - - - - - - - - - - MAC85(Depreciztbni $ - - TotelTarRene6b 5 _ _ _ _ _ _ _ _ _ _ _ _ . (E) Net 09erenM Sawrp w/Tee amefRa $ 20,353 264,648 263,M7 262,027 261,281 259,921 258,543 257,751 256,329 254,885 254,050 252,563 251,054 250,110 2481615 247A37 246,10 2M,477 242,827 241,839 Unlevered hahCash (F) Annual Cash Row $ (],346,fi201 265,353 264,648 263,37 262,027 261,281 259,921 258,541 257,751 256,329 254,885 254,050 252,563 253,054 250,170 249,615 247,037 246,303 244,477 242,917 241,839 (G) Cumulative Cash Lbw S Q.M,5,6201 (2,081,267) 11,816,6197 11,553,272) (1,291,344) (1,029,964) (770,043) (511,502) 1253,]52) 2,577 257,462 s11,512 764,075 1,015,129 1,265,298 1,51$913 1,760,950 2,0117,053 2,251,5M 2,494,356 2,7M,195 levered Cnh Bows (H) Annual Cash How S i2346621 111,777 111,071 109,771 108,451 107,704 106,344 104,%a 104,174 102,752 101,309 300,473 9&986 97,477 96,593 9%,038 93,460 92,526 90,9 89,250 88,262 p) C.mWatiw Cash rbw S 113n,6§21 (122,885) (11,814) 97356 205,407 314,111 420,455 525,4M 529,594 732,346 833,654 934,127 1,033,114 1,13os91 1,227,184 1,322,222 1,615,683 1,508,2M 1,599,1% 1,688,359 1,776,621 Cumulative Cash Flow Cogeneration Value Streams 3 ._-. -_. _..--. ------ ----.___. Simple Payback c $036 ............. ...._... --_ _-- ■Tax Benefits With Incentives: 8.8 Years = $0.36 p $0.35 LL $0.3$ - ■Renewable/Alternative Energy r 1 ....... ........... -_. -_. -..-... Credit Payments A w Annual Utility Costs v $0.3a - Y m ° Base Line: C ■Capacity Market Payments 14M Electricity: $331,576 $0.34 - 9 10 11 12 13 14 IS 16 17 IS 19 20 Natural Gas: $20,013 c $0.33 O (11 ■Natural Gas Offset Post-CHP Plant: $0.33 u Electricity: $D RI Natural Gas: $827 $0.32 - Sewage/Landfill Gas: $D $0.32 ■Electrical Generation (3) Total Utility Savings: $350,762 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Year Year 50 ATTACHMENT 4 51 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AUTHORIZING THE REIMBURSEMENT OF FUNDS REQUESTED FROM THE STATE WATER RESOURCES CONTROL BOARD UNDER THE CLEAN WATER STATE REVOLVING FUND FOR THE CITY OF PALM SPRINGS BIOGAS-TO-ENERGY PROJECT AT THE WASTEWATER TREATMENT PLANT, CITY PROJECT NO. 15-26 WHEREAS, the City of Palm Springs, (the "City"), desires to finance the costs of developing and constructing a renewable biogas fired cogeneration plant to convert methane generated by the City's Wastewater Treatment Plant into electricity, identified as the Biogas-to-Energy Project at the Wastewater Treatment Plant, City Project No. 15-26, (the "Project"); and WHEREAS, the City intends to finance the development, design and construction of the Project or portions of the Project with moneys ("Project Funds") provided by the State of California, acting by and through the State Water Resources Control Board (the "State Water Board"); and WHEREAS, the State Water Board may fund the Project Funds with proceeds from the sale of obligations the interest upon which is excluded from gross income for federal income tax purposes, (the "Obligations"), and WHEREAS, prior to either the issuance of the Obligations or the approval by the State Water Board of the Project Funds, the City desires to incur certain capital expenditures, (the "Expenditures') with respect to the Project from available moneys of the City; and WHEREAS, the City has determined that those moneys to be advanced on and after the date hereof to pay the Expenditures are available only for a temporary period and it is necessary to reimburse the City for the Expenditures from the proceeds of the Obligations. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City hereby states its intention and reasonably expects to reimburse Expenditures paid prior to the issuance of the Obligations or the approval by the State Water Board of the Project Funds. SECTION 2. The reasonably expected maximum principal amount of the Project Funds is $5,000,000. 52 Resolution No. Page 2 SECTION 3. This resolution is being adopted no later than 60 days after the date on which the City will expend moneys for the construction portion of the Project costs to be reimbursed with Project Funds. SECTION 4. Each City expenditure will be of a type properly chargeable to a capital account under general federal income tax principles. SECTION 5. To the best of our knowledge, this City is not aware of the previous adoption of official intents by the City that have been made as a matter of course for the purpose of reimbursing expenditures and for which tax-exempt obligations have not been issued. SECTION 6. This resolution is adopted as official intent of the City in order to comply with Treasury Regulation §1.150-2 and any other regulations of the Internal Revenue Service relating to the qualification for reimbursement of Project costs. SECTION 7. All the recitals in this Resolution are true and correct and this City so finds, determines and represents. ADOPTED THIS 19th day of October, 2016. David H. Ready, City Manager ATTEST: James Thompson, City Clerk 53 Resolution No. Page 3 CERTIFICATION STATE OF CALIFORNIA ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on October 19, 2016, by the following vote: AYES: NOES: ABSENT: ABSTAIN: James Thompson, City Clerk 54 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO ACT ON ITS BEHALF TO SIGN, FILE AND EXECUTE A FINANCIAL ASSISTANCE APPLICATION FOR A FINANCING AGREEMENT FROM THE STATE WATER RESOURCES CONTROL BOARD UNDER THE CLEAN WATER STATE REVOLVING FUND FOR THE CITY OF PALM SPRINGS BIOGAS-TO-ENERGY PROJECT AT THE WASTEWATER TREATMENT PLANT, CITY PROJECT NO. 15-26 WHEREAS, the City of Palm Springs, (the "City"), desires to finance the costs of developing and constructing a renewable biogas fired cogeneration plant to convert methane generated by the City's Wastewater Treatment Plant into electricity, identified as the Biogas-to-Energy Project at the Wastewater Treatment Plant, City Project No. 15-26, (the "Project'); and WHEREAS, the City intends to finance the development, design and construction of the Project or portions of the Project with moneys ('Project Funds") provided by the State of California, acting by and through the State Water Resources Control Board (the "State Water Board"); and WHEREAS, the State Water Board may fund the Project Funds through its Clean Water State Revolving Fund ("CWSRF), and WHEREAS, the CWSRF can provide a very low interest loan to the City for Project Funds necessary to fund the Project; and WHEREAS, it is necessary to designate and authorize the City Manager to act on behalf of the City Council to sign, execute and file all required applications and to execute all required agreements necessary to secure the Project Funds made available to the City by the State Water Board through the CWSRF. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City Council hereby authorizes the City Manager, (the "Authorized Representative"), or his designee, to sign and file, for and on behalf of the City, a Financial Assistance Application for a financing agreement from the State Water Resources Control Board for the planning, design, and construction of the Project. 55 Resolution No. Page 2 SECTION 2. The City Council hereby authorizes the Authorized Representative, or his designee, to provide the assurances, certifications, and commitments required for the financial assistance application, including executing a financial assistance agreement from the State Water Resources Control Board and any amendments or changes thereto. SECTION 3. The City Council hereby authorizes the Authorized Representative, or his designee, is designated to represent the City in carrying out the City's responsibilities under the financing agreement, including certifying disbursement requests on behalf of the City and compliance with applicable state and federal laws. ADOPTED THIS 19th day of October, 2016. David H. Ready, City Manager ATTEST: James Thompson, City Clerk CERTIFICATION STATE OF CALIFORNIA ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on October 19, 2016, by the following vote: AYES: NOES: ABSENT: ABSTAIN: James Thompson, City Clerk 56