Savings Through Solar September 12, 2018 Agenda: 1. Procurement - PowerPoint PPT Presentation

FREMONT UNIFIED S C H O O L D I S T R I C T Savings Through Solar September 12, 2018 Agenda: 1. Procurement Options 2. Project Savings 3. Non-Financial Benefits 4. Project Scope and Schedule 5. Recommendations

Procurement Options Cash Purchase Power Purchase Agreement (PPA) Fremont Unified School District Vendor System Owner Payment Full project cost by completion of Per kWh consumed construction (example terms: $0.12 @ 0% escalation) Payee Installer/Contractor Vendor Vendor / PPA Owner Typical Duration Upfront payment or financing if desired 25 years District ownership Vendor removes system After 25 years (purchase option also available) Separate agreement to protect system Rolled into PPA cost, vendor is incentivized Performance Guarantee performance (typically at an additional to maximize system performance cost) Separate agreement to ensure ideal system Rolled into PPA cost, vendor is incentivized Operations & Maintenance performance and equipment warranties to maximize system performance (may be an additional cost) 2

Comparing Solar Bill Savings Over 25 Years $80 $70 Bill Savings! $13.1M Bill Savings! $15.3M $60 $50 Millions $24.5 M $22.3 M Up front payment to Payable over 25 Solar Construction yrs to PPA $40 Vendor Provider $73.6 M $30 Remaining PG&E Remaining PG&E $20 $36.0 M $36.0 M Bill Bill $10 $0 Before Solar After Solar (Cash Purchase) After Solar (PPA) (PG&E Bill) 3

General Fund Savings Cash Purchase Scenario ($3.75/W) PPA Scenario ($0.12/kWh, 0% Escalation) PG&E Bill General Fund Cumulative PG&E Bill General Fund Cumulative Year Costs Savings Savings Net-Benefit Year Costs Savings Savings Net-Benefit 0 ($1,013,882) $0 ($1,013,882) ($1,013,882) 0 ($21,899,850) $0 ($21,899,850) ($21,899,850) 1 ($998,651) $1,179,127 $180,475 ($833,406) 1 ($10,794) $1,179,127 $1,168,333 ($20,731,517) 2 ($993,658) $1,214,011 $220,353 ($613,054) 2 ($11,118) $1,214,011 $1,202,893 ($19,528,624) 3 ($988,690) $1,249,920 $261,230 ($351,824) 3 ($11,451) $1,249,920 $1,238,469 ($18,290,155) 4 ($983,746) $1,286,884 $303,137 ($48,686) 4 ($11,795) $1,286,884 $1,275,089 ($17,015,066) 5 ($978,828) $1,324,933 $346,106 $297,419 5 ($12,148) $1,324,933 $1,312,785 ($15,702,282) Z Z Z Z (Years 6-8) (Years 6-8) 9 ($959,397) $1,488,632 $529,235 $2,133,871 9 ($13,673) $1,488,632 $1,474,959 ($10,051,567) 10 ($954,600) $1,271,552 $316,951 $2,450,822 10 ($14,083) $1,271,552 $1,257,468 ($8,794,098) Z Z Z Z (Years 11-14) (Years 11-14) 15 ($930,973) $1,474,965 $543,992 $4,704,930 15 ($16,327) $1,474,965 $1,458,639 ($1,915,123) 16 ($926,318) $1,519,377 $593,059 $5,297,988 16 ($16,816) $1,519,377 $1,502,560 ($412,562) 17 ($921,686) $1,565,118 $643,432 $5,941,420 17 ($17,321) $1,565,118 $1,547,797 $1,135,235 Z Z Z Z (Years 18-22) (Years 18-22) 23 ($894,379) $1,869,790 $975,411 $10,938,160 23 ($20,682) $1,869,790 $1,849,108 $11,450,718 24 ($889,907) $1,926,014 $1,036,107 $11,974,267 24 ($21,302) $1,926,014 $1,904,712 $13,355,430 25 ($885,458) $1,983,918 $1,098,461 $13,072,727 25 ($21,942) $1,983,918 $1,961,977 $15,317,407 4

Environmental & Educational Benefits  Carbon reduction equivalent* to:  Removing 10,000 cars from the road for a year  Planting 1.2 Million trees  Predictable utility expenses  Shaded parking – carport PV structures  Demonstrates environmental stewardship  Educational program tie-ins  Supports City of Fremont’s sustainability goals 5 *Assumes 0.49 lbs of CO 2 per kWh of electricity (per CoF 2015 Carbon Inventory)

Proposed Scope and Schedule  Phase 1a: Solar PV  Walters Middle School  Horner Middle School  Phase 1b: Solar PV  Centerville Middle School  Thornton Middle School  Hopkins Middle School  Phase 2: Solar PV  Five High Schools 6

Recommendations & Next Steps  Issue RFP for Phase 1 to procure cash purchase and PPA pricing  Maximizes current favorable PG&E rate structure  Capitalizes on existing tax credits (PPA option only)  Evaluate proposals and select a vendor for recommendation to the Board  Coordinate proposals with middle school conversions and finalize scope  Negotiate contract with vendor and seek Board approval of contract 7

Questions? Thank you! Steve Clarke, PE Ann McCormick, PE Director Vice President steve_clarke@newcomb.cc ann_mccormick@newcomb.cc 415-699-9310 415-230-8403 Newcomb | Anderson | McCormick 201 Mission Street, Suite 2000 San Francisco, CA 94105

REFERENCE SLIDES 9

Lower Bills + Generation Credits = Savings How Net Metering Works Bi-Directional Meter 4 3 Energy Use Measures energy used and 1 Solar Generation excess energy exported to Energy is used in Panels convert energy the grid your school from the sun into electricity 2 Inverter Converts electricity from DC to AC to be used in your school • Solar production < facility consumption = lower bill • Solar production > facility consumption = export to grid for bill credit 10

Time of Use (TOU) Rate Impact on Solar Value 700 $0.26 Current Credit Current Credit Value: Value: $0.163/kWh $0.218/kWh 600 $0.24 500 $0.22 Cost of Energy ($/kWh) Energy (kWh) 400 $0.20 Site Load (kWh) Solar Production Curve (kWh) 300 $0.18 Existing Rate Structure (A10) New Rate Structure (A10 TOU Shifted) 200 $0.16 100 $0.14 - $0.12 12:00 AM 6:00 AM 12:00 PM 6:00 PM 12:00 AM Time of Day 11

General Fund Savings Solar PV Portfolio Fremont USD (5.24MW) $20 M $15.3 M PPA generates $5M Grandfathering $15 M in general fund Period Ends savings in 16 yrs $10 M US Dollars (Millions) $13.1 M $5 M $0 M 0 5 10 15 20 25 -$5 M -$2.4 M Upfront $22.3M -$10 M investment 16+ Yrs before general -$15 M fund savings realized -$20 M with Ownership -$25 M Year Ownership PPA Cost of Doing Nothing 12 *General Fund Savings figures updated to reflect currently available PG&E rates

City of Fremont Climate Goals & Solar Installations 2012: City of Fremont Climate Action Plan Water Waste  Goal: Reduce community-wide GHG emissions 25% from 2005-20 1% 1%  25% come from the commercial energy sector (electricity + gas)  FUSD facilities represent 1.73% of commercial energy sector emissions Commercial & Industrial 2015: 1.5 MW of solar carports across 4 facilities through PPAs Energy 25% 2017: “We Are Still In” and “Mayors for 100% Clean Energy” Transportation Residential declarations 59% Energy 14% 2017-18: Installing microgrids at three fire stations for clean energy & resiliency with grant from CEC 2018: Climate Action Plan update 2015 Communitywide GHG FUSD planned solar installation would contribute to City of Fremont’s overall Emissions carbon reduction targets and help meet overall sustainability goals! 13

Why Seek Pricing Now? Near term market factors maximize potential value of solar:  Grandfathering into solar friendly TOU rate periods through 2027  Aligning TOU rates with solar production increases NPV of Solar by $2.1M  Net Energy Metering (NEM) 2.0 allows for ~ full value of production exports  2019 regulatory changes expected to reduce value of production exports  Investment Tax Credits (ITC) still available  Phased reduction starting 2020  Vendors leverage ITC to offer better PPA pricing Actual bids from vendors allows evaluation of solar benefit in coordination with future modernization and construction plans 14

Modeling Assumptions  Solar arrays sized to off- set ~ 90% of site’s annual load  Utility rate escalation at 3.5% every year, based on PUC historical data  Without Solar, cumulative utility expenditure over 25 years is $73.6 million (1)  With solar, cumulative utility expenditure over 25 years is $36 million  Solar purchase creates $37.6 million in general fund savings  Assumed rate switch to solar friendly rate for all sites  Grandfather into current TOU period rates for 9 years  Resulted in $2.1 Million in additional Bill Savings (2) 1 American and Mission San Jose High load to be verified 15 2 Including American and Mission San Jose modelled benefits

Modeling Assumptions (cont’d)  PPA Rate: $0.12 / kWh w. 0% annual escalator Total Installed Cost  System performance modeled utilizing local weather data Construction Costs (4) $3.75 per Watt  Savings Guarantee Cost – priced to guarantee Project management & 8% (ownership) 95% of solar bill savings payable to vendor contingency 5% (PPA) Solar System Assumptions Panels Trina 310W O&M Costs $50 per kW per year Inverters Fronius 24kW (3% annual escalation) 7 o Panel tilt Solar panel degradation 0.5% Guarantee Costs $0.12 per Watt Useful life 25 years 16 4 Division of the State Architect (DSA) pre-check solutions assumed