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Home My WebLink About6/4/2014 - STAFF REPORTS - 5.A. N LM sp9 iy V N S 0• . M..' c'`'F°"`'�P CITY COUNCIL STAFF REPORT DATE: June 4, 2014 NEW BUSINESS SUBJECT: SOLAR FEASIBILITY — PRESENTATION AND DISCUSSION FROM: David H. Ready, City Manager BY: Special Projects Coordinator SUMMARY The City Council will receive a presentation from Newcomb/Andersen/McCormick regarding solar alternatives for City facilities for consideration by the City Council. RECOMMENDATION: Direct staff as appropriate. STAFF ANALYSIS: The City hired Newcomb/Andersen/McCormick (NAM) to take a second look at the feasibility of installing Photo Voltaic (PV) Solar on many of the City facilities. More specifically NAM was to review the option of taking advantage of a seldom utilized SCE program (RES-BCT) that would allow the City to build a large PV array and have the power distributed to other facilities via bill credit and debit. (Copy of the report on file in the office of the City Clerk) The California solar regulatory environment is constantly in a state of flux and as such the report goes into great detail on the current environment and programs that exist that the City could avail itself of. The one program that was of specific interest to the City was the RES-BCT self-generation bill-credit transfer program. This tariff program on the surface looks quite promising until one realizes that the credit transfer portion of the tariff only allows for offset of the "generation component charges" it does not allow for demand charges to be offset, thus the financial benefit is greatly reduced and in the instance of the City's facilities it does not pencil out. Any project that the City were to undertake will qualify for the California Solar Initiative Incentive Program, which is more thoroughly described in the study document. The most promising current SCE tariff rrW NO.S_ City Council Staff Report June 4, 2014- Page 2 NAM Solar Feasibility Study program is the Net Energy Metering (NEM) program which gives credit to customers for excess energy that is produced. The study document details how NAM goes about conducting a feasibility study, including all the parameters and assumptions that they utilize; all being very conservative. NAM reviewed numerous City sites for possible solar installations and narrowed down the possibilities to eleven (11) specific sites. Each site was modeled and evaluated based on three approaches to financing for the projects: 1) Cash Purchase, 2) Power Purchase Agreement (PPA) (Third Party Financing), or 3) Simple Loan (Bond Financing). The study recommends that the City consider bidding all eleven sites under both a financing and PPA approach in an attempt to drive down the overall price with competition. Staff believes that the study provides an excellent base for a decision making process to follow and the data provided will be invaluable in developing and evaluating any future RFP process that might occur. The decision making process must include discussions of such items as roof mounted vs carport mounted systems; what a carport might look like; what about the need to remove trees; as well as discussions on the use of currently owned City acreage for a ground mounted system. Once these policy type decisions are made the list of sites can be narrowed and an RFP process can be developed. The study clearly indicates that a ground mounted system at the Animal Shelter would be a good investment as would the possibility of a ground mounted system for the Wastewater Treatment Plant if acreage could be utilized for this purpose. The Convention Center parking lot with carports is also a good possibility, however, the location of the permanent parking for the Convention Center is in a state of flux currently. The other sites, as stand-alone sites, are not as viable. FISCAL IMPACT: The NAM report reveals that the best results are achieved if the City were able to purchase the systems with cash. The analysis reveals that the 25 year net benefit of the financing and the PPA approaches are essentially the same. AIAX- Allen Smoot, Special Projects Coordinator David H. Ready, City er 02 ipALM City of Palm Springs • a - . • , 5 e Newcomb Anderson McCofmick 03 i Agenda • Background • Analysis Methodology & Assumptions • Results • Next Steps - z 1 Nar.ccmi.,A :]w son,McG c.m•c\ 04 i . • • u nd • Investigation of solar across 11 sites ❖ Downtown Parking Structure ❖ Demuth Park ❖ Fire Station #1 ❖ Fire Station #2 ❖ Jaycee Frey ❖ Tahquitz Creek Golf Course ❖ Demuth Community Center ❖ Convention Center ❖ Sunrise Plaza ❖ Wastewater Treatment Plant ❖ Animal Shelter • Procurement Strategies: PPA vs. Direct Purchase • Interconnection Strategies: NEM, NEMA, or RES- BCT 3 .,omb l Andoroon,Mcr_orm.-- . 05 Analysis Methodology • Review of energy use across City facilities • Use of aerial imagery to determine best locations for solar arrays • Review of current and developing legal, regulatory, and program rules • Development of three scenarios for analysis • Estimation of energy project costs and savings over the project lifecycle • Project Management and contingency incorporated into costs 4 Newcomb I Ando r son,McCormick 06 Critical Financial Analysis Assumptions • The price of energy purchased from SCE and annual escalation rate.- The analysis considers an annual escalation rate of 4.5%. • The amount of energy consumed and the profile of that consumption: The models assume the load pattern observed so far is a good indication of future load patterns. • The cost of the solar system: Considering recent procurement experience at other public institutions, we use conservative estimate for system cost assumptions: — $4.00 per Watt dc, which includes O&M, inverter replacement, and performance guarantees — $0.125 per kilo-Watt hour, for Power Purchase Agreements — $3.25 per Watt dc, for centralized installations a 541, .._.0 omh�Mitlerscn;McLorm¢k 07 Results • Of the 11 sites investigated: — Solar at two sites were estimated to create bill savings of over $7 million over a 25 year timeline for each site (Convention Center & Waste Water Plant) — Solar at two sites were estimated to create bill savings of over $2 million over a 25 year timeline for each site (Animal Shelter & Sunrise Plaza) — Solar at four of the sites produce marginal benefits with conservative cost estimates • Net Benefit for entire portfolio is over $2 million over a 25 year timeline — Net Benefit includes all costs: Construction, Performance Guarantee, Operation & Maintenance, Project Management, Simple Financing, etc. Q cg Recommendation • Distributed NEM provides the highest value to the City — Both PPA and Purchase scenarios are viable • RES- BCT scenario less viable • Determine City's aesthetic requirement — Carports in parking lots — Visible roof systems • Move forward with competitive bids — Capture both PPA and Purchase pricing — Ensure Performance Guarantee, Warranties, and Operation & Maintenance of system are in place 5/28/2014 7 09 Next Steps • Develop and issue an RFP to the vendor community — Provide site details — Outline contractual obligations — Produce refined system layouts — Finalize system costs — Identify the best value solar vendor • Secure project financing if proceeding with direct purchase scenario • Contract Negotiations • Construction Period Services 8 1 omb,Ar�tle rson,McC.,m,:k 10 questions ? Parking Lot Tracking SolarSystem a. P Photos Playground Fix Tilt Solar System .._:.mmb�Mtlerson,McCom:<k 12 Photos Solar System :. Photos rage Fix Tilt SParking olar System 14 4 Photos Alt' � S FP z Photos NoParking n- traditional. Tilt Solar n r II y 4 k 4 Photos Parking Lot Non- traditional Fix Tilt Solar System S�OMIEV _ _ 5/28/2014 Newcomb�Andurso� McCorm:: 17 Reference: L-ilkely Benefits 25 Yr Utility CSI 25 Yr Net Site System Type Total Costs Bill Savings Incentive Benefit Downtown Parking Structure Shade Structure $616,388 ($528,484) $56,000 $143,903 Demuth Park Shade Structure $265,197 ($276,126) $24,889 $13,960 Fire Station1* Shade Structure $306,465 ($404,327) $36,444 ($61,418) Fire Station 4 Ground Mount and/or Roof Mount $298,155 ($296,266) $35,555 $37,445 Jaycee Frey Roof Mount $68,808 ($68,008) $5,333 $6,134 Tahquitz Creek Golf Course* Shade Structure and/or Roof Mount $516,748 ($631,145) $56,889 ($57,508) Demuth Community Center* Roof Mount and/or Shade Structure $334,692 ($394,266) $41,778 ($17,796) Animal Shelter Ground Mount $2,317,801 ($2,109,271) $271,110 $479,639 Convention Center-Roof Roof Mount $3,668,511 ($3,790,868) $426,665 $304,307 Convention Center-Carport Shade Structure $3,976,734 ($4,320,150) $457,776 $114,359 Sunrise Plaza Roof and/or Shade Structure $2,653,287 ($2,724,686) $306,665 $235,266 Wastewater Treatment Plant-Fixed Ground Mount $8,274,607 ($8,471,663) $1,157,231 $960,175 TOTAL $23,297,393 1 ($24,015,260)1$2,876,334 1 $2,158,467 Selective TOTAL* $22,139,487 1 (522,585,522)1$2,741,223 1 $2,295,199 *Marginal sites removed 5/28/2014 16 I Nowcomb�An dcesunlMcCorm;,--:. 18 Reference: Svstem Information Potential System Year One Estimated Year One Estimate Solar Site System Type Percent Offset Size (kW DC) Energy Usage (kWh) Generation(kWh) Downtown Parking Structure Shade Structure 63 133,495 100,230 75% Demuth Park Shade Structure 28 59,795 44,547 74% Fi re Station Shade Structure 41 86,475 65,229 75% Fire Station 4 Ground Mount and/or Roof Mount 40 83,581 63,638 76% Jaycee Frey Roof Mount 6 12,603 9,546 76% Tahquitz Creek Golf Course Shade Structure and/or Roof Mount 64 134,898 101,821 75% Demuth Community Center Roof Mount and/or Shade Structure 47 112,452 74,775 66% Animal Shelter Ground Mount 305 646,102 485,239 75% Convention Center(Roof) Roof Mount 480 1,113,998 763,656 69% Convention Center(Lot) Shade Structure 515 1,091,374 819,339 75% Sunrise Plaza Roof and/or Shade Structure 345 2,773,670 2,071,242 75% Wastewater Treatment Plant Ground Mount 1225 2,773,670 2,068,234 75% 5/28/2014 Nowcorr b I Mdarson 1 MCCwMrck 19 Reference : Scenario Comparison Scenario Total Life 25 Year Net 25 Year Payback Cycle Cost Benefit NPV Period NEM Purchase ($13,739,918) $12,433,809 $4,705,714 14 NEMSimple Loan ($24,015,260) $2,158,467 $1,358,369 Term NEM PPA ($21,119,024) $2,178,369 $947,544 16 RES-BCT Purchase ($13,882,239) $6,062,458 $644,636 18 RES-BCT Simple Loan ($24,092,413) ($4,147,716) ($2,681,478) Term RES-BCT PPA ($23,843,507) ($7,441,354) ($5,496,615) 5/28/2014 Neaco.nb I Mdcnon McCo,m4k 20