HomeMy WebLinkAbout04.a. Receive update on the development of Central San's potential Solar Energy Project on the Lagiss Property Page 1 of 10
Item 4.a.
CENTRAL SAN
April 20, 2020
TO: REAL ESTATE, ENVIRONMENTAL AND PLANNING COMMITTEE
FROM: MELODY LABELLA, RESOURCE RECOVERY PROGRAM MANAGER
REVIEWED BY: JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL
SERVICES
ROGER S. BAILEY, GENERAL MANAGER
SUBJECT: RECEIVE UPDATE ON THE DEVELOPMENT OF CENTRAL SAN'S
POTENTIAL SOLAR ENERGY PROJECT ON THE LAGISS PROPERTY
At the February 10, 2020, Real Estate, Environmental and Planning (REEP) Committee meeting, Central
San staff and solar energy consultant, Russell Driver of ARC Alternatives, provided an update on the
development of Central San's potential solar energy project on the Lagiss Property. In response to this
new information, the REEP Committee members requested additional power demand and financing
analysis, in addition to information on the implementation schedule and financial commitment milestones
under various procurement options. ARC Alternatives has completed the additional analysis and will
participate with staff in the April 20, 2020 REEP Committee meeting to review the attached presentation.
Strategic Plan Tie-In
GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility
Strategy 2- Manage costs
GOAL SIX: Embrace Technology, Innovation and Environmental Sustainability
Strategy 2- Reduce reliance on non-renewable energy
ATTACHMENTS:
1. Presentation
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 4 of 22
Page 2 of 10
UPDATE ON DEVELOPMENT OF
CENTRAL SAN'S POTENTIAL
SOLAR ENERGY PROJECT
— Melody LaBella, P.E.
Resource Recovery Program Manager
Real Estate, Environmental and Planning
Committee Meeting
April 20, 2020
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Prepared for:
Central Contra Costa Sanitary District
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April 20, 2020 REEP Committee Meeting Agenda Packet- Page 5 of 22 1
Page 3 of 10
agenda n
m
Z
• Summary of February 2020 update D
r
Approach to environmental review under the California Environmental D
Quality Act (CEQA), permitting, and implementation L)
• Revised economic analysis D
Findings
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n
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v
0
D
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Page 3
Summary of February 2020 Update
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• Summarized energy f ��-618 �e lncremenwl E•Il y
efficient stud WW swAnu �"ll" "`°"" "M*d we
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lEDQ;hting Retroflt 715,833 - $74.5071 s0 1 $624,020 S624,020 6A D
Approach and results livaeuna Mt, 77,003 $9,376 5706,600 5166,900 595S-Soo tan Z
ppm atlpnal 1,062 so 5108 s0 S250 5250 2-3 L/)
Identified three project TOW 793,918 so $88,995 1 6786.6W J 6798,170 61.578.770 9A O
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types resulting in 793,918 Slmple"WO Caln4atedonlnuanmtalpmjmcmjl ,the costofthe eoew-relmedel8clet"uparaft D>
(kilowatt hours) kWh in
annual savings o
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• Presented updated
1.75 MW System Cumulative Benefit
financial analysis $°$ $4.171.852
accounting for energy D
efficiency projects and
Cash flow
updated utility data sz°°°,- positive from
year 1
su000ro
1.75 megawatt(MW) system
Modeled Power Purchase so
Agreement (PPA) price of s- ° , e a ,° 11 U „ 1° ,s ,6 11 18 „ N „ , 13 ° s Page4
$0.105 per kWh (a—rc
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 6 of 22 2
Page 4 of 10
Summary of February 2020 Update (continued) n
m
z
• Discussed project implementation D
and approaches to CEQA, D
permitting and land use actions z
0
• Based on information presented at _ s=»r
the last meeting, the REEP =_- --- = . _ _
_ _ z --
Committee requested the - _w ;- ="` ==' = = 0
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following:
Analysis of different financing
options
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Looking at the project with and TT��
without the Plant's electrical grid ■-����
demands
A schedule assessment identifying
District financial commitments over
Page 5
time
Update on Implementation Considerations
m
Z
• Central San staff conducted additional discussions with the County D
regarding land use and CEQA and the County made the following D
determinations: z
N
The County will not be making a land use finding and will simply issue a D
building permit for the project
Regardless of system ownership (PPA or District), Central San can be the lead o
agency for CEQA n
• As a result, the implementation path and project schedule are
simplified and accelerated D
M
Page 6
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 7 of 22 3
Page 5 of 10
Indicative Solar Project Schedule n
m
D Task Name Duration Start Rnish 2020 2021 2022
Irl r2 r3 tr4 rl 2 tri tr4 rl Q.2 .ZJ
1 Central San RFP Proceaa 79 days Fd 5/8/20 Wed 8/26/20 D
2 Develop Central San draft RFP 24 days Fd 5/8/20 Wed 6/10/20 to
documents D
3 Client review of draft RFP 10 days Thu 6111/20 Wed 6/24/20 Z
4 Revise and finalize RFP documents 4 days Thu 6/25/20 Tue 6/30/20 (n
5 Release Central San RFP 0 days Tue 6/30/20 Tue 6130/20 6/30 D
6 Conduct site walk S day Thu 7/9/20 Thu 7/9/20 �O
7 RFP questions due O days Wed 7/15/20 Wed 7/15/20 7/15
8 Proposals due S day Wed 7/29/20 Wed 7/29/20
9 Evaluate proposals 10 days Thu 7/30/20 Wed 8/12/20 M
10 Conduct interviews 5 days Thu 8113/20 Wed 8/19/20 h
11 Internal review and discussion 5 days Thu 8120/20 Wed 8/26/20 1
12 Award contract'" 0 days Wed 8/26/20 Wed 8/26/20 8/26
13 Contract negotiations 45 days Thu 8/27/20 Wed 10/28/20 Project has D
14 Execute Contract/Project NTP* 0 days Wed 10/28/20 Wed 10/28/20 10/28 approximately 7 m
15 Project Design 90 days Thu 10/29/20 Wed 3/3/21 months float
16 CECIA and Community Outreach* 255 days Thu 3/12/20 Wed 3/3/21 1 /
17 County Review and Approval of Permit 20 days Thu 3/4/21 Wed 3/31/21 1
Set
18 Solar PV Construction 113 days Thu 4/1/21 Mon 9/6/21
19 PG&E Interconnection Work 18 mons Thu 10/29/20 Wed 3/16/22
20 Project Complete 0days Wed 3/16/22 Wed 3/16/22 ♦3/26
Page 7
*Board action Critical path runs through
interconnection
District Financial Commitments n
rn
Z
District Purchase: The table below shows District financial commitments at key project D
milestones for consultant and vendor costs for a District purchased
project. z
L/)
The District has no financial commitments to the solar vendor until the 0
r
system is operational. However, the District would be liable for costs
incurred if the PPA were terminated.
0
District Financial Commitment n
Milestone/Board Decision Point Description Consultant Vendor Total
RFP Release Consultant support to develop and release RFP $ 181000 $ $ 18,000
Solar Contract Award Consultant support of evaluation and award process $ 24,000 $ $ 24,000
D
System Design Complete Vendor and consultant expenses for design effort $ 40,000 $ 517,175 $ 557,175 m
Construction Progress payments to vendor and consulting support $ 15,000 $ 4,447,705 $ 4,462,705
Acceptance Testing and Close-Out Final payment to vendor and consulting support $ 25,000 $ 206,870 $ 231,870
Total $ 122,000 $ 5,171,750 $ 5,293,750
Notes
• Vendor costs apply in the same way to both PPA and purchase contracts because the District would be responsible for
vendor expenses up to the point at which the project were canceled.
Page 8
The key decision-making milestones in terms of District financial liability are"Solar Contract Award"and"System
Design Complete."
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 8 of 22 4
Page 6 of 10
Economic Analysis Update n
m
Z
Examined six scenarios accounting for three different financing options (PPA, cash purchase, v
California Energy Commission (CEC) 1% loan financing) and two load targets (with and
without Treatment Plant grid demands) z
• Revenue generation (utility savings) rates stay the same as at $0.1089/kWh in the first year of to
0
operation for both system sizes D
Pricing assumptions are dependent on system size
z
0
System Size PPA Rate* M
C
With Treatment Plant p
G 1.75 $0.1050
Grid Demands D
m
Without Treatment Plant 1.10 $0.1150
Grid Demands
*Pricing assumes$500,000 for interconnection costs.Higher than assumed
interconnection costs will increase the PPA price or cost per Watt.Purchase pricing also
includes project contingency costs
Page 9
Economic Analysis Results
m
Cash Purchase
With Z
Treatment (/t
Plant Grid $11,059,193 $6,887,241 $4,171,952 $6,216,182 $4,843,011 $6,737,406 $4,321,787 O
Demands D
Without
Treatment �
$6,951,493 $4,741,420 $2,210,072 $4,127,314 $2,824,179 $4,478,768 $2,472,725
Plant Grid 0 O
Demands m
*Includes O&M and financing,if applicable.Cash and CEC Loan options based on construction cost of$2.75
per Wattfor the 1.75 MW system and$2.95 per Watt for the 1.1 MW system.
v
Cumulative Benefit of Systems Sized to Target Costs with and without Treatment Plant Grid Demands D
$6,000,000
M
$5,OOD,000 $4,843,011
$4,171,952 $4,321,]8]
$4,OOD,000
$3,OOD,000 $2,824,179
$2,210,072
$2,OOD,000
$1,000,000
$0 Page 10
With Treatment Plant Loads Without Treatment Plant Loads
■Cumulative Benefit PPA Firencing •Cumulative Benefit CEC Loan Purchase •Cumulative Benefit Upfront Purchase
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 9 of 22 5
Page 7 of 10
Cash Flow for System With Treatment Plant Electrical Grid Demands n
m
Z
• The cash purchase option has the highest net benefit because there are no financing costs v
Both the PPA and CEC loan are cash flow neutral or positive starting in year 1 �r„
• Simple payback for the cash purchase is just under 15 years z
L/)
0
r-
1.75
1.75 MW System for District Wide Costs assuming EE Project Implementation -Cumulative Benefit D
$s,oao,oao $4,843,011
$4,321,787
$4,171,952 O
$4,000,0W $4,171,952
$2,000,000 — C
O
D
0 1 2 3 4 5 6 7 8 9 10 11 12 4 15 16 17 18 19 20 21 22 23 24 25 M
$(2,000,000)
$(4,000,000)
$(6,000,000)
Page 11
-PPA -1%CECLoan -Upfront Cash
Cash Flow for System Without Treatment Plant Electrical Grid Demands r,
rn
Z
• Outcomes among the financing scenarios are similar to the larger system size D
• Net benefits are less due to higher system costs with a smaller system size
Cash purchase simple payback is now 16 years z
0
r
1.10
1.10 MW System for Non-Treatment Plant Costs -Cumulative Benefit >
$2,824,179
$4,00Q000
$2,472,725 7J
$3,000,000 O
$2,210,072 M
n
$2,000,000
C
$1,000,000
$ D
0 1 2 3 4 5 6 7 8 9 10 11 12 13 15 16 17 18 19 20 21 22 23 24 25 m
$11,0a0,o00)
$(2,000,000)
$(3,000,000)
$(4,000,000)
Page 12
-PPA -1%CECLoan -Upfront Cash
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 10 of 22 6
Page 8 of 10
Update on PG&E's Renewable Energy Self-Generation Bill Credit Transfer Program n
(RES-BCT) Z
• Focus on RES-BCT because it allows offsetting bills at remote pump stations and the benefits D
are not tied to plant operations v
• Unallocated program capacity has increased from 20.36 MW to 23.28 MW since May 2019 Z
Likely to be capacity in the program if Central San moves forward o
D
RES-BCT Program Summary,Effective as of May 31,2019(Total cap of 105.25)
O
Number ofMW 43.46MW(41.29%of cap) 20.36MW(19.35%of cap) M
n
■Total Counted Towards Cap[6] 0Total Pending Projects[5] ❑Total Unallocated Program Space(Estimated)
RES-BCT Program Summary,Effective as of November 30,2019(Total cap of 105.25MW)
D
M
M
Number ofMW 37.68MW(35.8%of cap) 24.15MW(22.95%of tap)
■Total Counted Towards Cap[6] 0Total Pending Projects[5] 0Total Unallocated Program Space(Es tim are d)
RES-BCT Program Summary,Effective as of Jan 31,2020(Total cap of 105.25MW)
Nu tuber of MW 38.54MW(36.62%of cap) I 23.28MW(22.12%of cap)
Page 13
■Total Counted Towards Cap[6] 0Total Pending Projects[5] ❑Total Unallocated Program Space(Estimated)
ARC Findings
m
Z
• A larger system, sized to offset conservative estimates of plant loads,yields the
best financial results. D
D
• The utility interconnection process extends the critical path of the project schedule. Z
It is important to conduct the procurement work that needs to be completed for o
the interconnection work to start.There is approximately seven months of float for
activities that are not on the critical path.
0
• Capacity in the RES-BCT program continues to hold steady and does not represent n
a significant project risk.
c
0
D
M
M
Page 14
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 11 of 22 7
Page 9 of 10
ARC Findings (continued) n
m
z
• A PPA is the most beneficial path forward for the District
D
• The relative advantages of PPA versus District ownership are highlighted in
the table below D
z
O
r
PPA
D
Ownership
z
Net Benefit • M
M
Performance Risk • C
v
O
Ease of Implementation O D
m
Contracting Mechanism O
0 Better O worse
Page 15
RECOMMENDED PROCUREMENT APPROACH
Staff recommends procuring the project via a PPA for
the following reasons:
Capital Budget dollars are in high demand
There is very little difference in financial benefit between
the PPA, cash purchase, and CEC 1 % loan pricing
There is no longer a difference in County Land Use
Permitting requirements or the assignment of the CEQA
lead agency, as it relates to procurement method
Central San already has experience with three solar PPAs
� 16
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 12 of 22 8
Page 10 of 10
BRING THE FOLLOWING RECOMMENDED
NEXT STEPS TO T- 1E FULL BOARD
Begin the environmental review (CEQA) _
process and community outreach
Amend ARC Alternatives' existing contract
(under staff authority) to develop a request for . . s• NILS • ►
proposals (RFP), support Central San through
the procurement process, and conduct a
performance audit of Central San's existing
solar arrays
Release an RFP for a PPA for a 1 .75 MW solar array on Central
San's Lagiss Property
Incorporate funding for the identified efficiency projects in Central
San's Capital Budget Arco
CFNTPAt.SAN
QUESTIONS OR FEEDBACK?
�r 118
April 20, 2020 REEP Committee Meeting Agenda Packet- Page 13 of 22 9