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

Savings Through Solar

September 12, 2018 FREMONT UNIFIED

S C H O O L D I S T R I C T

Agenda: 1. Procurement Options 2. Project Savings 3. Non-Financial Benefits 4. Project Scope and Schedule 5. Recommendations

2

Procurement Options

Cash Purchase Power Purchase Agreement (PPA) System Owner

Fremont Unified School District Vendor

Payment

Full project cost by completion of construction Per kWh consumed (example terms: $0.12 @ 0% escalation)

Payee

Installer/Contractor Vendor Vendor / PPA Owner

Typical Duration

Upfront payment or financing if desired 25 years

After 25 years

District ownership Vendor removes system (purchase option also available)

Performance Guarantee

Separate agreement to protect system performance (typically at an additional cost) Rolled into PPA cost, vendor is incentivized to maximize system performance

Operations & Maintenance

Separate agreement to ensure ideal system performance and equipment warranties (may be an additional cost) Rolled into PPA cost, vendor is incentivized to maximize system performance

3

Comparing Solar Bill Savings Over 25 Years

$73.6 M $36.0 M $36.0 M $22.3 M $24.5 M

$0 $10 $20 $30 $40 $50 $60 $70 $80

Before Solar After Solar (Cash Purchase) After Solar (PPA)

Millions

Bill Savings! $15.3M Payable over 25 yrs to PPA Provider Remaining PG&E Bill (PG&E Bill) Bill Savings! $13.1M Up front payment to Solar Construction Vendor Remaining PG&E Bill

4

Year Costs PG&E Bill Savings General Fund Savings Cumulative Net-Benefit Year Costs PG&E Bill Savings General Fund Savings Cumulative 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) 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) 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 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 (Years 6-8) (Years 6-8) (Years 11-14) (Years 11-14) (Years 18-22) (Years 18-22)

General Fund Savings

PPA Scenario ($0.12/kWh, 0% Escalation)

Cash Purchase Scenario ($3.75/W)

Z Z Z Z Z Z Z Z Z Z Z Z

5

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

*Assumes 0.49 lbs of CO2 per kWh of electricity (per CoF 2015 Carbon Inventory)

6

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

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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

Questions?

Thank you!

Newcomb | Anderson | McCormick 201 Mission Street, Suite 2000 San Francisco, CA 94105

Ann McCormick, PE Vice President

ann_mccormick@newcomb.cc 415-230-8403

Steve Clarke, PE Director

steve_clarke@newcomb.cc 415-699-9310

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REFERENCE SLIDES

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Lower Bills + Generation Credits = Savings

• Solar production < facility consumption = lower bill
• Solar production > facility consumption = export to grid for bill credit

How Net Metering Works

1 4 2 3

Solar Generation

Panels convert energy from the sun into electricity

Inverter

Converts electricity from DC to AC to be used in your school

Energy Use

Energy is used in your school

Bi-Directional Meter

Measures energy used and excess energy exported to the grid

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$0.12 $0.14 $0.16 $0.18 $0.20 $0.22 $0.24 $0.26

• 100

200 300 400 500 600 700 12:00 AM 6:00 AM 12:00 PM 6:00 PM 12:00 AM

Cost of Energy ($/kWh) Energy (kWh)

Time of Day

Site Load (kWh) Solar Production Curve (kWh) Existing Rate Structure (A10) New Rate Structure (A10 TOU Shifted)

Time of Use (TOU) Rate Impact on Solar Value

Current Credit Value: $0.218/kWh Current Credit Value: $0.163/kWh

12 $15.3 M $13.1 M

• $2.4 M
• $25 M
• $20 M
• $15 M
• $10 M
• $5 M

$0 M $5 M $10 M $15 M $20 M 5 10 15 20 25

US Dollars (Millions)

Year

Solar PV Portfolio Fremont USD (5.24MW)

Ownership PPA Cost of Doing Nothing

General Fund Savings

Grandfathering Period Ends

*General Fund Savings figures updated to reflect currently available PG&E rates

Upfront $22.3M investment 16+ Yrs before general fund savings realized with Ownership PPA generates $5M in general fund savings in 16 yrs

13

City of Fremont Climate Goals & Solar Installations

2012: City of Fremont Climate Action Plan

• Goal: Reduce community-wide GHG emissions 25% from 2005-20
• 25% come from the commercial energy sector (electricity + gas)
• FUSD facilities represent 1.73% of commercial energy sector emissions

2015: 1.5 MW of solar carports across 4 facilities through PPAs 2017: “We Are Still In” and “Mayors for 100% Clean Energy” declarations 2017-18: Installing microgrids at three fire stations for clean energy & resiliency with grant from CEC 2018: Climate Action Plan update

Transportation 59% Residential Energy 14% Commercial & Industrial Energy 25% Waste 1% Water 1%

2015 Communitywide GHG Emissions

FUSD planned solar installation would contribute to City of Fremont’s overall carbon reduction targets and help meet overall sustainability goals!

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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

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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)

1American and Mission San Jose High load to be verified 2Including American and Mission San Jose modelled benefits

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Modeling Assumptions (cont’d)

• PPA Rate: $0.12 / kWh w. 0% annual escalator
• System performance modeled utilizing local

weather data

• Savings Guarantee Cost – priced to guarantee

95% of solar bill savings payable to vendor

Solar System Assumptions Panels Trina 310W Inverters Fronius 24kW Panel tilt 7o Solar panel degradation 0.5% Useful life 25 years Total Installed Cost Construction Costs (4) $3.75 per Watt Project management & contingency 8% (ownership) 5% (PPA) O&M Costs $50 per kW per year (3% annual escalation) Guarantee Costs $0.12 per Watt

4Division of the State Architect (DSA) pre-check solutions assumed