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Home My WebLink About05.a. Public Hearing re 3 solar power purchase agreements with Sun Edison, LLCSCLO CENTRAL CONTRA COSTA SANITARY DISTRICT PUBLIC HEARING TO RECEIVE COMMENTS ON THE AWARD OF THREE POWER PURCHASE AGREEMENTS TO SUN EDISON, LLC AND AUTHORIZE THE GENERAL MANAGER TO EXECUTE POWER PURCHASE AGREEMENTS WITH SUN EDISON, LLC FOR SOLAR POWER AT THREE DISTRICT -OWNED LOCATIONS AS PART OF THE REGIONAL RENEWABLE ENERGY PROJECT SUGGESTED AGENDA FEBRUARY 19, 2015 Request staff report. 2. Public hearing to consider authorizing the General Manager to execute three power purchase agreements with Sun Edison, LLC to supply power generated by solar photovoltaic panels to the District's Household Hazardous Waste Facility, Collection System Operations Building, and Vehicle Maintenance Shop as part of the Regional Renewable Energy Project (R -REP); and make associated findings: A. Open public hearing B. Receive public comment, if any C. Close public hearing 3. Discussion. 4. Recommended Action: A. As required by California Government Code Section 4217.12: a. Conduct a public hearing to consider award of three power purchase agreements to Sun Edison, LLC. b. Find that the notice of this public hearing held pursuant to Government Code Section 4217.12 was given at least two weeks in advance of this public hearing. c. Find that the terms of the three power purchase agreements with Sun Edison, LLC are in the best interest of the District; d. Find that the anticipated costs to the District for electrical energy provided by the power purchase agreements will be less than the anticipated marginal cost to the District for other energy that would have been consumed by the District in the absence of the power purchase agreements; and e. Find that Government Code Section 4217.12 (a) (2) is not applicable to these agreements. B. Authorize the General Manager to execute three power purchase agreements with Sun Edison, LLC to supply power generated by solar photovoltaic panels to the District's Household Hazardous Waste Facility, Collection System Operations Building, and Vehicle Maintenance Shop. Central Contra Costa Sanitary District BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: February 19, 2015 Subject: CONDUCT A PUBLIC HEARING TO CONSIDER AWARD OF THREE POWER PURCHASE AGREEMENTS TO SUN EDISON, LLC AND AUTHORIZE THE GENERAL MANAGER TO EXECUTE POWER PURCHASE AGREEMENTS WITH SUN EDISON, LLC FOR SOLAR POWER AT THREE DISTRICT -OWNED LOCATIONS AS PART OF THE REGIONAL RENEWABLE ENERGY PROJECT Submitted By. Initiating Dept. /Div.: Dan Frost, Associate Engineer Engineering / Environmental Services REVIEWED AND RECOMMENDED FOR BOARD ACTION: N. Hodges — Provisional Senior Engineer / �,& X, D. Gemmell — Environmental Services Division Manager `'J JIM. Alm Roger S. Bailey . Petit — Director Of Engineering Counsel for the Distric General Manager ISSUE: 1) California Government Code Section 4217.12 requires public agencies to hold a public hearing when considering award of energy services contracts; 2) Board of Directors' authorization is requested for the General Manager to execute the proposed power purchase agreements (PPA); and 3) Board of Directors' approval is required prior to the filing of a Notice of Exemption under the District's California Environmental Quality Act (CEQA) Guidelines. RECOMMENDATION: 1. As required by California Government Code Section 4217.12: a. Conduct a public hearing to consider award of three power purchase agreements to Sun Edison, LLC; b. Find that the notice of this public hearing held pursuant to Government Code Section 4217.12 was given at least two weeks in advance of this public hearing; c. Find that the terms of the three power purchase agreements with Sun Edison, LLC are in the best interest of the District; d. Find that the anticipated costs to the District for electrical energy provided by the power purchase agreements will be less than the anticipated marginal cost to the District for other energy that would have been consumed by the District in the absence of the power purchase agreements; and e. Find that Government Code Section 4217.12 (a) (2) is not applicable to these agreements. 2. Authorize the General Manager to execute three power purchase agreements with Sun Edison, LLC to supply power generated by solar photovoltaic panels to C:\ Users \dandersonWppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \PP to Conduct PH for Sun Edison PPAs 02 -19 -15 Final.docx Page 1 of 5 POSITION PAPER Board Meeting Date: February 19, 2015 Subject., CONDUCT A PUBLIC HEARING TO CONSIDER AWARD OF THREE POWER PURCHASE AGREEMENTS TO SUN EDISON, LLC AND AUTHORIZE THE GENERAL MANAGER TO EXECUTE POWER PURCHASE AGREEMENTS WITH SUN EDISON, LLC FOR SOLAR POWER AT THREE DISTRICT -OWNED LOCATIONS AS PART OF THE REGIONAL RENEWABLE ENERGY PROJECT the District's Household Hazardous Waste Facility, Collection System Operations Building, and Vehicle Maintenance Shop. FINANCIAL IMPACTS: The power purchase agreements will provide approximately $300,000 in energy savings [(20 -year Net Present Value (NPV)] over the 20 -year PPA term when compared to continued import of PG &E grid power. STRATEGIC PLAN IMPACTS: The power purchase agreements for solar power align with Goal Four, Strategy One of the District's 2014 -2016 Strategic Plan to be a leader in the wastewater industry by using "...sustainable practices that minimize waste, maximize resources, protect the ratepayer, improve the community, and embrace innovation." ALTERNATIVES /CONSIDERATIONS: The District could choose not to enter into power purchase agreements with Sun Edison, LLC. By not executing the power purchase agreements, the District would continue to import PG &E grid power for each of the three District facilities. BACKGROUND: R -REP Program: In January 2013, the Board of Directors authorized the General Manager to execute a Memorandum of Understanding (MOU) for participation in the Regional Renewable Energy Procurement (R -REP) program, which included 18 other public agencies. The R -REP process is led by Alameda County and modeled after the Silicon Valley Collaborative Renewable Energy Procurement Project (SV -REP), which took place 2009 -2011 and demonstrated that collaborative procurement leads to a reduction in both administrative and installation costs for solar. In preparation for the R- REP project, the District conducted a Solar Feasibility Study in 2012 with Optony, Inc., which indicated solar power to be cost - effective for the following three District sites: Household Hazardous Waste Facility (HHW), Collection System Operations Building (CSOB), and Vehicle Maintenance Shop (VMS). In 2013 -2014, Alameda County (Lead Agency on behalf of the R -REP participating agencies) completed an RFQ /RFP process, that was structured as an indefinite quantity, multiple award, best -value solicitation. California Government Code Section 4217.10, et seq. authorizes public agencies to solicit proposals from qualified persons and award a contract on the basis of the experience of the firm, the type of technology employed by the firm, the cost to the local agency, and any other relevant considerations, provided that the projects deliver net cost savings to the public agency. C:\ Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \PP to Conduct PH for Sun Edison PPAs 02 -19 -15 Final.docx Page 2 of 5 POSITION PAPER Board Meeting Date: February 19, 2015 Subject-' CONDUCT A PUBLIC HEARING TO CONSIDER AWARD OF THREE POWER PURCHASE AGREEMENTS TO SUN EDISON, LLC AND AUTHORIZE THE GENERAL MANAGER TO EXECUTE POWER PURCHASE AGREEMENTS WITH SUN EDISON, LLC FOR SOLAR POWER AT THREE DISTRICT -OWNED LOCATIONS AS PART OF THE REGIONAL RENEWABLE ENERGY PROJECT The solicitation included 186 sites that were grouped into 11 bid bundles. Sun Edison, LLC was ultimately recommended for award of the District's three proposed sites for solar photovoltaic systems. Sun Edison, LLC's bid included pricing for both direct purchase and a power purchase agreement. The District opted to pursue the power purchase agreement, where Sun Edison, LLC would design, install, own, and maintain the solar arrays at the District's facilities and the District would enter into a long -term contract to purchase electricity generated by the solar installation. Proposed Facilities: Sun Edison, LLC will install the following solar panels: 144.5 kW at CSOB; 25 kW at VMS; and 25 kW at HHW for a total of 194.5 kW. See Exhibit A for locations at each site. Key PPA Terms: Below are some of the key terms from the PPA contract: • Agreement Length: 20 -year term with optional 5 -year extension at mutually agreed upon terms. • Purchase Option: The District can purchase the solar systems for fair market value approximately six years and three months after the commercial operation date. • Production Guarantee: Includes minimum delivery of at least 90% of the expected annual power output. • Early Termination Fees: If the District decides to terminate a PPA without cause prior to completion of the 20 -year term, the District would be responsible for paying an early termination fee (ranges from $5.82- $6.68/W during the 1St contract year to $1.18- $1.29M during the 20th contract year). • Removal Fund: Sun Edison, LLC is required to establish a reserve fund in an interest - bearing escrow account to be used for removal of the solar systems and restoration of the facilities to pre - project conditions. • Project Management Funding: Sun Edison, LLC is required to provide approximately $30,000 to the District to cover project management costs. • Maintenance: Sun Edison, LLC is responsible for all maintenance related to the systems, including routine cleaning of the panels. • Energy Pricing: Each PPA includes a base price based on site - specific requirements and includes a 2 percent per year fixed escalator. Project Triple Bottom Line Benefits: Financial Benefits: Based on analyses performed by Optony, Inc., the power purchase agreements will provide approximately $300,000 in C:\ Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \PP to Conduct PH for Sun Edison PPAs 02 -19 -15 Final.docx Page 3 of 5 POSITION PAPER Board Meeting Date: February 19, 2015 Subject CONDUCT A PUBLIC HEARING TO CONSIDER AWARD OF THREE POWER PURCHASE AGREEMENTS TO SUN EDISON, LLC AND AUTHORIZE THE GENERAL MANAGER TO EXECUTE POWER PURCHASE AGREEMENTS WITH SUN EDISON, LLC FOR SOLAR POWER AT THREE DISTRICT -OWNED LOCATIONS AS PART OF THE REGIONAL RENEWABLE ENERGY PROJECT NPV energy savings for all three sites over the 20 -year PPA term when compared to continued import of PG &E grid power. The 20 -year levelized cost of electricity (LCOE) for the three sites with the PPAs ranges from $0.152 /kWh to $0.187 /kWh. Currently the District's LCOE ranges from $0.199 /kWh to $0.229 /kWh. According to the R -REP bid analysis, the bids average between 17% and 45% below comparable market pricing. Environmental Benefits: Based on first year solar production estimates, the solar sites will offset 74 percent of the annual grid demand for CSOB, 71 percent of the annual grid demand for HHW, and 85% of the annual grid demand for VMS. The three systems are expected to produce over 280,000 kWh of electricity in the first year, resulting in an estimated greenhouse gas reduction equivalent to 200 metric tons of CO2. Social Benefits: The proposed sites will increase public awareness of solar as a viable energy generation alternative that provides energy savings, stability for the District's long -term power costs for the three sites, and diversity to the District's energy portfolio. A viewing "kiosk" will be provided for each site for the District and the general public to view real -time solar energy production. Environmental Review: Staff has concluded that this project is exempt from the California Environmental Quality Act (CEQA) under the following: 1) District CEQA Guidelines Section 21080.35, since the project involves installation of solar energy facilities that are located on the roof of either an existing building or an existing parking lot; 2) District CEQA Guidelines Section 15301 since it involves minor alterations to an existing public facility; 3) District CEQA Guidelines Section 15303 since it consists of construction of small structures; and 4) District CEQA Guidelines Section 15061(b)(3), since it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. This certainty is based on the District's past experience with numerous construction projects and the relatively small areas involved. Authorizing the General Manager to execute the power purchase agreements will establish the Board of Directors' independent finding that this project is exempt from CEQA. COMMITTEE RECOMMENDATION: The Engineering & Operations Committee reviewed this project at its December 9, 2014 meeting and recommended the Board move forward with setting and conducting the public hearing on this matter. C:\ Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \PP to Conduct PH for Sun Edison PPAs 02 -19 -15 Final.docx Page 4 of 5 POSITION PAPER Board Meeting Date: February 19, 2015 Subject: CONDUCT A PUBLIC HEARING TO CONSIDER AWARD OF THREE POWER PURCHASE AGREEMENTS TO SUN EDISON, LLC AND AUTHORIZE THE GENERAL MANAGER TO EXECUTE POWER PURCHASE AGREEMENTS WITH SUN EDISON, LLC FOR SOLAR POWER AT THREE DISTRICT -OWNED LOCATIONS AS PART OF THE REGIONAL RENEWABLE ENERGY PROJECT RECOMMENDED BOARD ACTION: 1. As required by California Government Code Section 4217.12: a. Conduct a public hearing to consider award of three power purchase agreements to Sun Edison, LLC. b. Find that the notice of this public hearing held pursuant to Government Code Section 4217.12 was given at least two weeks in advance of this public hearing. c. Find that the terms of the three power purchase agreements with Sun Edison, LLC are in the best interest of the District; d. Find that the anticipated costs to the District for electrical energy provided by the power purchase agreements will be less than the anticipated marginal cost to the District for other energy that would have been consumed by the District in the absence of the power purchase agreements; and e. Find that Government Code Section 4217.12 (a) (2) is not applicable to these agreements. 2. Authorize the General Manager to execute three power purchase agreements with Sun Edison, LLC to supply power generated by solar photovoltaic panels to the District's Household Hazardous Waste Facility, Collection System Operations Building, and Vehicle Maintenance Shop. Attached Supporting Documents: 1. Exhibit A: Proposed Solar Layouts (3 pages) C:\ Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \PP to Conduct PH for Sun Edison PPAs 02 -19 -15 Final.docx Page 5 of 5 New solar carport structure over r r � , • 1 Household Hazardous Waste Facility t j