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Home My WebLink About04.a. Review Draft Position Paper to authorize General Manager to execute a professional engineering services agreement with Black & Veatch Corporation (BV) not to exceed $2,400,000 for energy management, District Project 100055Page 1 of 14 Item 4.a. DCENTRALSAN MEETING DATE: JANUARY23, 2025 BOARD OF DIRECTORS POSITION PAPER DRAFT SUBJECT: REVIEW DRAFT POSITION PAPER TO AUTHORIZE THE GENERAL MANAGER TO EXECUTE A PROFESSIONAL ENGINEERING SERVICES AGREEMENT WITH BLACK & VEATCH CORPORATION (BV) IN AN AMOUNT NOT TO EXCEED $2,400,000 FOR THE ENERGY MANAGEMENT, DISTRICT PROJECT 100055 (PROJECT)AND FIND THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITYACT (CEQA) SUBMITTED BY: INITIATING DEPARTMENT: NATHAN HODGES, SENIOR ENGINEER OPERATIONS -PLANT OPERATIONS NITIN GOEL, OPTIMIZATION DIVISION MANAGER REVIEWED BY: GREG NORBY, DEPUTY GM - ENGINEERING & OPERATIONS ROGER S. BAILEY, GENERAL MANAGER ISSUE The Board of Directors' (Board) authorization is required for the General Manager to execute a professional engineering services agreement in an amount greater than $200,000. BACKGROUND I n recent years, various projects and policy discussions have highlighted the need for a thorough assessment of energy usage and generation, and the associated greenhouse gas (GHG) emissions. These efforts have underscored the complexity of addressing both short-term demands and long-term energy optimization opportunities. To navigate these multifaceted issues and opportunities and establish a resilient energy system, Central San issued a request for proposal (RFP) to engage a consultant team. This team will provide the expertise needed to guide Central San in developing a comprehensive and sustainable energy strategy. Some of the recent project work and policy ideas behind this effort are summarized below: • The Steam and Aeration Blower Systems Renovation, District Project (DP) 7349 (Steam Project), has paved the way for numerous projects imperative to implementing energy -efficient technologies and infrastructure improvements, aligning with Central San's strategic goals. • Under the scope of Electric Blower Improvements -Phase 1, DP 7377, new electric blowers were installed to provide redundancy for the steam -driven turbine blowers. This enhancement ensures January 23, 2025 REEP Committee Meeting Agenda Packet - Page 9 of 25 Page 2 of 14 greater reliability and operational flexibility, contributing to Central San's efforts to modernize and optimize its systems for a sustainable operation. The ongoing renovation of the aeration basins within the Aeration Basins Diffuser Replacement - Phase 1, DP 100019, including upgrades to the diffusers, is expected to result in reduced aeration demands. This reduction raises important questions about the optimal utilization of steam energy, as it will create a surplus of steam. Preliminary feasibility studies have been conducted to assess whether a Steam Turbine Generator (STG) could effectively harness this excess steam, providing additional value by improving energy efficiency and potentially generating power for Central San's operations. The use of a STG would enable Central Santo utilize excess steam efficiently, allowing the new electric blowers to operate in the lead position. The Steam Project performed a detailed condition assessment of Central San's electrical system, which revealed that the electrical distribution network has evolved over decades to support new processes and enhance redundancy and reliability. However, this gradual evolution has introduced operational complexities that need to be addressed through the Electrical Infrastructure Sub 55 (previously Sub 90), DP 100040 (Sub 55 Project). The assessment highlighted the critical need to simplify the 12 kV distribution system to enhance operational efficiency, reliability, and maintainability. It also underscored the importance of designing the new substation to integrate seamlessly with the existing infrastructure while remaining flexible to accommodate future energy -related upgrades. These energy -related upgrades, to be evaluated as part of this Project, include potential new generation sources such as STGs and solar panels. This approach ensures the electrical system's readiness to meet Central San's evolving energy demands and sustainability goals. At the direction of the Board, an initial assessment of Central San's agency -wide GHG emissions was completed to establish a baseline that would assist the Board in considering a future commitment to Net Zero. This effort also included a high-level evaluation of GHG emissions reductions that can be anticipated with Central San's planned capital projects, and some suggestions on approaches for Central San to reduce GHG emissions in the future. Recently completed evaluations as part of the Solids Handling Facility Improvements - Phase 2, DP 100030 confirmed that thermal processes for solids handling will continue into the future. There are also considerations concerning decarbonization of power production, reduction of GHG emissions and Net Zero emissions that will impact future plant improvements, and Board policies concerning Energy and Climate Change. This Project will support Central San staff and policymakers by assessing both current and projected energy demands and creating an Energy Management plan. This plan will serve as a strategic guide, enabling Central San to establish and maintain an adequate and sustainable portfolio of energy sources and supplies. It will ensure Central San's operational needs are met effectively over the next 20 years, aligning with sustainability goals and long-term planning objectives. Additionally, the Project will evaluate GHG reduction scenarios and their associated costs to assist the Board in determining whether a Net Zero commitment or an alternative GHG reduction target is most appropriate for Central San. This analysis will provide the Board with the necessary insights to align its policies with sustainability goals and regulatory requirements. The key scope of work elements that will be addressed include: 1. Project Management: Besides the administrative elements of managing the Project, this task will ensure that appropriate effort has been assigned to complete identified tasks and that deliverables are provided. 2. Existing Energy Data and Future Demands: To plan for improvements in energy management, it is fundamental to establish an energy baseline pertaining to implemented or planned District projects. The central element for this task is to identify key energy sources and define the baseline energy capacity and demands over the planning horizon. 3. Cogen and Standby Power Condition Assessment: This task will perform the comprehensive January 23, 2025 REEP Committee Meeting Agenda Packet - Page 10 of 25 Page 3 of 14 assessment of the existing Solar Centaur T-4700 gas turbine/generator, the standby emergency generator engine, and generator paralleling gear. The assessment will also identify potential triggering events that would necessitate adding a third standby power generator, such as operating electric blowers in lead, modification of the existing Cogen system, or additional treatment plant demand due to new infrastructure from nutrients removal projects. 4. New Electric Generation Feasibility: This task will coordinate with the Sub 55 Project to understand if and how potential new generation sources such as STGs, solar panels, etc. would be implemented and connected to the plant's electrical infrastructure. This task will narrow the many generation options to a suite of likely alternatives. 5. Alternatives Evaluation: This task will investigate the many different strategies, technologies, and opportunities to optimize renewable energy sources without compromising the reliability and resiliency needs of the treatment plant. Evaluation criteria will be developed and applied to each alternative to select feasible technologies that will be further evaluated for life cycle costs. To be included in this evaluation is an analysis of alternatives for GHG reductions that will be used to update Board policies on Energy and Climate Change. 6. Regulatory and GHG Assessment: This task will utilize existing GHG work to evaluate approaches for further reductions that will inform the feasibility of Net Zero and what may be the next steps. This task is connected to other tasks listed above and a comprehensive approach will be developed incorporating GHG reductions and Net Zero goals while maintaining treatment plant reliability and resiliency. This task will also evaluate regulatory and permitting requirements in effect or expected that would impact emissions reduction strategies at Central San. 7. Net Zero Strategy and Board Policy Update: This task will incorporate work completed in above tasks with the goal of updating the Board's policies on Energy and Climate Change. 8. Financing Assessment: Opportunities will be explored for funding and partnership options to support the recommendations that will be presented in the Energy Management plan. This task will identify a list of federal, state, and local incentives, grants, and loan programs. 9. Pre -Design Report (PDR): A comprehensive PDR developed to a 10% level of design, will be prepared to serve as the foundation for the final design and construction phases. This PDR will outline the improvements identified for implementation, ensuring a clear and actionable roadmap for subsequent Project stages. 10. Final Design and Engineering Services During Construction (ESDC): This task was included in the RFP as an optional item and is not part of the current scope of work or associated fees. The intent is that, following the completion and acceptance of the PDR, negotiations for the final design phase will proceed. However, including this task as optional provides Central San with the flexibility to pause and seek new proposals for the final design phase to ensure the best alignment with its needs. Upon completion of planning and pre -design phase of the Project, Central San will receive: 1. An Energy Management Plan: This plan will outline proposed improvements and strategies to achieve them, along with key milestones or indicators to guide the timing of implementation or confirm the necessity of specific actions. 2. Pre -Design Report: A comprehensive PDR, developed to a 10% level of design. 3. Updated Key Board Policies: These updates will provide clear policy direction on Energy, GHG emissions, and achieving Net Zero goals. Consultant Selection: On August 5, 2024, a RFP was publicly advertised, resulting in submissions from six consulting firms. After evaluating the proposals based on qualifications and scope, staff shortlisted firms BV, Stantec, and Jacobs to participate in interviews on November 14, 2024. Following the interviews, BV was selected as the top proposer and is, therefore, recommended for the Project. January 23, 2025 REEP Committee Meeting Agenda Packet - Page 11 of 25 Page 4 of 14 Following the selection of BV, staff conducted a meeting with the BV team to confirm their readiness to undertake this Project. During this discussion, the BV team affirmed their commitment to successfully delivering the Project to its conclusion and expressed their preparedness to proceed with scope and fee negotiations. California Environmental Quality Act (CEQA) Staff has concluded that this Project is exempt from CEQA under Section 15262 of Central San's CEQA Guidelines, since it allows for further planning and feasibility studies for possible future actions which Central San has not approved, adopted, or funded, and the outcome of these tasks will not have a legally binding effect on later activities. Central San will conduct an environmental evaluation of any capital project that is proposed in the future as a result of the tasks authorized herein to determine the need for any additional CEQA documentation. ALTERNATIVES/CONSIDERATIONS The Board may choose to defer or postpone this work to the future fiscal year. However, this approach is not recommended, as upcoming projects will significantly impact the treatment plant's energy demands. Establishing a clear vision for future energy usage and generation is essential to ensure that subsequent projects align with Board policy and support the provision of reliable and resilient power. FINANCIAL IMPACTS BV's total agreement fee for the proposed scope of work is $2,400,000. The total Project allocation in the Capital Improvement Budget is $3,200,000, which is intended to provide funds for the planning work associated with the Project. There are sufficient funds available to complete work identified for the current Fiscal Year (FY) 2024-25. The Capital Improvement Program for FY2025-26 will be updated to fund the remaining planning work. Improvement projects identified will be budgeted for in the fiscal year these project(s) are scheduled to begin. COMMITTEE RECOMMENDATION The Real Estate, Environmental and Planning Committee reviewed this Project at its meeting on January 23, 2025 and recommended RECOMMENDED BOARD ACTION Staff recommends the following Board actions: 1. Find the Project is exempt from CEQA. 2. Authorize the General Manager to execute a professional engineering services agreement with Black & Veatch in an amount not to exceed $2,400,000 for Energy Management, District Project 100055. Strategic Plan Tie -In GOAL TWO: Environmental Stewardship Strategy 1 - Achieve compliance in all regulations GOAL SIX. Infrastructure Reliability Strategy 1 - Manage assets optimally, Strategy 2 - Execute long-term capital renewal and replacement program January 23, 2025 REEP Committee Meeting Agenda Packet - Page 12 of 25 Page 5 of 14 GOAL SEVEN: Innovation and Agility Strategy 2 - Implement organization -wide optimization ATTACHMENTS: 1. Presentation January 23, 2025 REEP Committee Meeting Agenda Packet - Page 13 of 25 Page 6 of 14 Attachment 1 January 23, 2025 Energy Management, � District Project 100055 Real Estate, Environmental & Planning Committee Meeting Nitin Goel, Optimization Division Manager Melody LaBella, Resource Recovery Program Manager Nathan Hodges, Senior Engineer Overview 1. Background 2. Ongoing Projects Impacts 3. Energy Management Project Objective 4. Task List 5. Consultant Selection 6. Financial Impacts, Alternatives, and Recommendation 7. Questions 2 January 23, 2025 REEP Committee Meeting Agenda Packet - Page 14 of 25 Page 7 of 14 Existing Treatment Plant Energy Sources Primary & ® Secondary Sludge Exhaust Steam Heat t Electrical Grid [t r F I '—' —' Multiple Waste Heat Auxiliary Cogeneration Hearth Furnace Boilers Boilers Gas Turbine Landfill Gas Natural Gas 3 4 Standby Generators Electricity SSteam -Turbine Blowers Misc. Steam Uses ®Plant Power Demands 2023 Treatment Plant Solids & Steam Energy Sankey* Diagram � nmrel Gas 29 NMB>v/hr** Snan gWt Landfill Gas UMN GM lO MMBfy/hr Pawa � Baler ti Ash Energy Con of Solid: Natural Gas A nepto wantG LBNW*** LaM9IIGat LBV:49S Bola FadwhterTenp: l00 F SMam Brgem P149,7 Vu D"ficiew;ies nrsue of E,., Mwoes Miff Lo Waste Heat Boiler immed/m Steam Driven Bfowers II hMBW/k 319 h1V 23 MMBtu, M1r SNNah hr tx Boller aMewr Total 3MWWW Steam Misc steam Users Waste Heat Bailer 3'INIBI, h, M A. la lava Plant Electrical ]e MM6a/hr e Demand zhs/hr NIls/M (Y.5759AakV0 Cotan ErrIIinv 'A Sankey diagram is a visualization tool that shows the Flow of resources, energy, or data from one set of categories to another, using arrows or lines whose widths are proportional to the magnitude of the Flow, this Sankey Diagram represents 2023 Energy Flow developed by Brown and Caldwell for Solids Handling Facility Improvements- Phase 2, District Project (DPI 100030 " MMBtu/hr: Million British Thermal Units per hour is a unit of power often used in the energy and heating industries representing the rate at which energy is consumed or produced; I BTU is the amount of energy required to raise the temperature of I pound of water by 1'F "' LHV: Lower Heating Value January 23, 2025 REEP Committee Meeting Agenda Packet - Page 15 of 25 Page 8 of 14 Current and Future Projects Impacting Energy 1i Sub 55, DP 100040 U Solids -Phase 2, DP 300030 Solids - Phase 1A, DP 7348 - II� January 23, 2025 REEP Committee Meeting Agenda Packet - Page 16 of 25 Page 9 of 14 Anticipated Greenhouse Gas Emissions Reduction ze.ovo 25,000 ze.VM fi E21 000 w 20 000 arctx 10,000 17,000 2019 Baseline (26,500 =2elyr) 1 1 Grid greening (2% reduction) Flexible work schedules (0.5%) Solar panels (7%) Fleet electrification (2%) New centrifuges (2%) Diffuser replacement (10%) UV replacement (7%) 18,600 tco2elyr remaining M1°ef1p11tiI'll eeee*111, IPry°,,°41"1',ee11Pry°,y°lee11. ry°°°rye,Ii,ry°Pryaldy�� 11� 11:P I°p f P NoteEmissiwrs are based - estimates provided from lbe best.vadable dal. fu the pu,p s ofNus visu.trratiort al the time afdrafring. 7 Sour- Developed by GHD as part of the "GHG Baseline Assessment Net zero Evaluation 2023"project tCOie: metric tons of corb,, dioxide equivalent Project Objective Evaluate Central San's current and future energy demands and identify an adequate and sustainable portfolio of energy sources and supplies to support Central San's operation for the next 20+ years Consider greenhouse gas (GHG) reduction scenarios (50%, 75%, and 100%) to aid the Board of Directors (Board) in determining if a Net Zero commitment or some other GHG reduction target is appropriate for Central San Provide a pre -design for the optimal alternative(s) that aligns with policy goals January 23, 2025 REEP Committee Meeting Agenda Packet - Page 17 of 25 Page 10 of 14 Project Approach, Draft Schedule, and Tasks Dmfi Flnxncing I P,,o,—hips ❑ran Regelaimy and GHG GppanuWes AssessmersTM Reduction Assessment TM Orafl Lifecycle Grad E7ec1rka1 AS.M Graft Power Generation Due Evaluation Coat and GHG Evaluation and Condition Froslbllky, Assessment TM gitetia TM Redectiene TM Grad PGR Assessment TM 2a25 2026 FF. PR V 1 JNN JUL AUGISEP OCT GY IDEC AN :FES MAR APR h1AY I JUN IJUL I AUG] ISEP GCT START FINISH 213125 13/29/26 D:ta and Estimate rulum Task 5. Alternatives Evaluation Task 9. Pre. Design Repo" (FDR) Demands Generation - Ex Plant Re dBeTship Grid Feasibil Ity Opportunities L ogy Alternative Preliminary Regulatory SIte VIaX1 She VNd2 Grad PDR Kickoff Mvet g Energy Pmrile Evaluation Goals and and GRG Review Meeting Pr—rdatimop ResuXs Slrategtes Reduction Perform Workshop Workshop( Workshop Board sirs/ Cogen an Stand- Imerviews Priisemetlor Energy Audits By Power Generator Lill-ycle Condition Evaluation CrRerieCostand GNG Assessment Development Flnancing/ Reductions LEGEND Power Generation Workshop partnership% Workshop 9 Feaslhility Assessment Gpportunities O Meeting/W.dohi 03ite VisR Deliverable Review Meeting Review Meeting TM: technical memorandum 1 I Cogen Boiler Furnace Waste Heat Boilers Auxiliary Boilers Steam Turbine Power Generator Example SST 200 Siemens Turbine New Electric Blowers* Generator Steam produced 27,000 to 38,000 lbs. Steam of 27,000 to 38,000 lbs. pe 1.5 MW of power produced can per hour by three hour can produce power up to y meet average aeration air boilers 1.5 megawatts (MW) de 1 January 23, 2025 REEP Committee Meeting Agenda Packet - Page 18 of 25 Page 11 of 14 Energy Alternatives Evaluation is a Key Task r— *nsite Meat --tne-rgy Mn6Af0-.iii-.)aVL I AlternativeA Renewables PowerI Thermal Systems StorageGeneration A Fleet Strategies Solar Arrays Steam Waste Heat Fuel Cells Landfrll Gas Compressed Carbon (pole- Turbine to Power Natural Gas Offsets mounted) Generators Technology (WHP) Electro- Chemical Green/Blue Hydrogen (CNG) Power Rooftop or Micro- turbines Batteries Fuel Vehicle Purchase Agreements Carport Solar t Electrification Recovery Other (e.g., Renewable Combined Advanced Natural Gas Wind Heat &Power Compressed Hybrid Fleet On/Offsite (CHP) Air Biodiesel (Turbines) Fuel Biodiesel Organic Rankine Cycle MCIE Power Hydrogen Fleet Linear Generators Narrow Options to a Reasonable List for Detailed Evaluation and Ultimately Select Preferred Alternatives Alternatives Screening (TBL) Evaluation & Analysis of Alternatives Lifecycle Prajwc Elemenfs - ■ • Cost & GHG Scenario Modeling Energy ai Lifecycle '— Management Cost & GHG Goals Alternatives Reductions a, Development Evaluation Workshop.} Q.N' Workshop &Technology i �o Options Alternatives Evaluation u �, Workshopsr,�0 Criteria Workshop oho} moo` �S1 Cn oil January 23, 2025 REEP Committee Meeting Agenda Packet - Page 19 of 25 Page 12 of 14 Consultant Selection On August 5, 2024, a request for proposals was publicly advertised, resulting in submissions from six consulting firms A panel was established to select a firm; panelists included: Nathan Hodges, Senior Engineer Melody La Bella, Resource Recovery Program Manager Edgar Lopez, Capital Projects Division Manager Rita Cheng, Senior Engineer After evaluating the proposals based on qualifications and scope, the selection panel shortlisted firms Black & Veatch, Stantec, and Jacobs to participate in interviews on November 14, 2024 Following the interviews, Black & Veatch was selected as the top proposer and is, therefore, recommended for the project Black & Veatch's Commitment Presented by Kevin Davis Kevin Davis Entirely new team with local and Principal -In -Charge national Subject Matter Experts (SME) Principal -In -Charge will be actively involved Project Manager is also Energy Derek Wurst Management SME Project Manager/ Energy g Management SME ArcSine will perform electrical work ArcSine Engineering Doug McHaney and Team Electrical Engineering January 23, 2025 REEP Committee Meeting Agenda Packet - Page 20 of 25 Page 13 of 14 Financial Impacts Consultant agreement cost not to exceed $2,400,000 Final design services and engineering services during construction are not currently budgeted under this agreement; which project elements continue to final design will be determined after the pre -design report is completed Current total project budget is $3,200,000 including staff time; there are sufficient funds to complete work in the current Fiscal Year (FY) The FY 2025-26 Capital Improvement Program will be updated to include budgeting for the completion of this work Alternatives/Considerations The Board may choose to defer or postpone this work to the future fiscal year; however, this approach is not recommended as upcoming projects will significantly impact the treatment plant's energy demands Establishing a clear vision for future energy usage and generation is essential to ensure that subsequent projects align with Board policy and support the provision of reliable and resilient power January 23, 2025 REEP Committee Meeting Agenda Packet - Page 21 of 25 Page 14 of 14 Recommended Board Action 1. Find the project is exempt from the California Environmental Quality Act (CEQA) 2. Authorize the General Manager to execute a professional engineering services agreement with Black & Veatch in an amount not to exceed $2,400,000 for the Energy Management, District Project 100055 January 23, 2025 REEP Committee Meeting Agenda Packet - Page 22 of 25