SDCCD: Use Power Purchase Agreements to Cut Energy Costs and Go Green Without Upfront Capital

Let the Sun Shine!

Use Power Purchase Agreements to Cut Energy Costs, Go Green and Reduce Peak Grid Loads Without Upfront Capital

Let the Sun Shine…

Learning Outcomes • Learn what a Power Purchase Agreement (PPA) entails Learn what a Power Purchase Agreement (PPA) entails • Learn about the advantages of a PPA • Learn about the specific advantages of a PPA for public entities such as community college districts and other i i i institutions of higher learning f hi h l i • Learn what solar providers look for in an owner/client • Learn about different PPA scenarios

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Power Purchase Agreements (PPA)

Owner’s Perspective Wh t i P What is a Power Purchase Agreement?

P h A t?

• Agreement to purchase power from a third Agreement to purchase power from a third‐party party provider provider • Fixed term: 20 years for SDCCD Fixed term: 20 years for SDCCD • Pay only for what power is generated Pay only for what power is generated

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Power Purchase Agreements (PPA)

Owner’s Perspective Wh Ch Why Choose a Power Purchase Agreement?

P P h A t?

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No initial capital cost to implement, thus it allowed the District to retain bond funding for other programming needs.

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It reduced long‐term maintenance and ownership costs.

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It allowed us to take advantage of California and Federal tax incentives and accelerated depreciation schedules through third‐party financing and ownership that we as a public agency could not otherwise leverage. This ownership that we as a public agency could not otherwise leverage. This translates to lower electrical rates.

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Power Purchase Agreements (PPA)

Owner’s Perspective S l PPA St t Solar PPA Structure

Turnkey Construction Operation and Maintenance

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Power Purchase Agreements (PPA)

Owner’s Perspective What does a PPA include?

What does a PPA include?  Third party provides financing, design, permitting, construction, installation, maintenance and monitoring t ti i t ll ti i t d it i of system.  Net metering is also used to bank power not consumed.

N t t i i l dt b k t d

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Power Purchase Agreements (PPA)

Owner’s Perspective H How much power will be provided through the PPA? h ill b id d th h th PPA? • 2.445 MW AC – enough to power 650 homes for a year • 18 percent of current base electrical load • 26 percent of current peak electrical demand • Potential to add more Potential to add more

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Power Purchase Agreements (PPA)

Owner’s Perspective What will the PPA cost?

What will the PPA cost?

• PPA = $0.1274 per kWh • SDG&E = $0.155 per kWh (blended rate) $ ( ) • Savings = $0.0276 per kWh • 18 percent savings from current rates • $110,400 minimum saved annually • Rates increase four percent per year

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Power Purchase Agreements (PPA)

SDCCD Site Plans Site

Type

Production (kWh)

City LRC Roof y Roof Cityy Harryy West Gym District Office Parking Lot Carport District Office Building Roof Mid-City Roof Miramar Parking Lots Carport Mesa Parking Structure Carport Mesa Parking Lot #1 Carport Mesa Parking Lot #2 Carport

140,060 257,858 , 422,490 42,283 82,844 1 1,833,468 833 468 303,079 590,870 848,947

TOTAL

4,521,899

Estimated Start-up Date (2010) September October September September September September September September October

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Power Purchase Agreements (PPA)

SDCCD Site Plans City College SDCCD Site Plans – Learning Resource Center (LRC) ‐ 75 kW Learning Resource Center (LRC) ‐ 75 kW

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Power Purchase Agreements (PPA)

SDCCD Site Plans City College SDCCD Site Plans – Harry West Gymnasium ‐ 155 kW Harry West Gymnasium ‐ 155 kW

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Power Purchase Agreements (PPA)

SDCCD Site Plans Mesa College SDCCD Site Plans – P ki L t 1 386 kW Parking Lot 1 ‐ 386 kW

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Power Purchase Agreements (PPA)

SDCCD Site Plans Mesa College SDCCD Site Plans – Parking Lot 2 422 kW Parking Lot 2 ‐ 422 kW

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Power Purchase Agreements (PPA)

SDCCD Site Plans Mesa College SDCCD Site Plans – Parking Structure‐ 177 kW Parking Structure‐ 177 kW

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Power Purchase Agreements (PPA)

SDCCD Site Plans Miramar College SDCCD Site Plans – Parking Lot – 991 kW Parking Lot – 991 kW

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Power Purchase Agreements (PPA)

SDCCD Site Plans Continuing Ed SDCCD Site Plans – Mid‐City Roof ‐ 44 kW Mid‐City Roof ‐ 44 kW

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Power Purchase Agreements (PPA)

SDCCD Site Plans District Offices SDCCD Site Plans – District Office Building 23 kW District Office South Surface Parking 169 kW

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Power Purchase Agreements (PPA)

Top Things to Consider 1 Look 1.

Look carefully at your objectives. Weigh advantages and carefully at your objectives Weigh advantages and disadvantages of all options to determine what makes the most sense for your organization.

2. Identify sites prior ahead of time, factoring in long‐term facilities master plans and scheduled maintenance activities (e.g. roof replacements).

3. Understand and analyze current electrical loads to size your y y system appropriately.

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Power Purchase Agreements (PPA)

Top Things to Consider 4. Consider Consider selecting through competitive selecting through competitive process rather than direct sourcing or negotiating with a single entity.

5. Take advantage of net metering and bank kWh you don’t need for future consumption.

6. Develop clear terms/conditions of your PPA g and Site License Agreement and share at the time of proposal and selection.

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Power Purchase Agreements (PPA)

Top Things to Consider 7. Closely scrutinize the l l h financial backing of the PPA provider.

PPA provider.

8. Clearly identify how the system will be monitored system will be monitored and how billing will be performed.

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Power Purchase Agreements (PPA)

Environmental Benefits  By installing a solar system, we will be reducing global warming, y g y , gg g, mitigating natural disasters, and helping to preserve our planet.  Over the first 20 years of production: Over the first 20 years of production:      

Reduce Carbon Dioxide emissions by 111,747,343 pounds Equivalent to 176,169,816 vehicle miles not traveled Equivalent to planting 260 817 mature trees Equivalent to planting 260,817 mature trees Conserve 159,751 barrels of oil Reduce Nitrogen Oxide emissions by 28,501 pounds Reduce Nitrogen and Sulfur Oxide emissions by 31,351 pounds

 District retains renewable energy credits.

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Power Purchase Agreements (PPA)

About Borrego Solar  Founded in 1980  HQ in San Diego with offices in HQ in San Diego with offices in Berkeley and Boston  Leading provider of turnkey solar gp y photovoltaic systems p y  65 employees

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Power Purchase Agreements (PPA)

About Borrego Solar  Finance and Technology agnostic  Fully funded integrated PPA product  Commitment to excellence in solar design and construction  Current client list includes: schools (K‐12 & Higher Ed.), cities, water agencies and private corporations agencies and private corporations

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Power Purchase Agreements (PPA)

Solar Technology Decisions Solar Panels/Modules Crystalline Silicon • 40 year old technology • >80% of market • High efficiency • Many suppliers Thin Film • First Solar only viable • CdTe technology Lower efficiency • Lower efficiency • Ideal for large solar farms

Support Structures Roof Mount R fM t • Most common type • Cost effective • Few or no penetrations p Covered Parking • Dual benefit • DSA Pre‐Approved • Can be tracking Tracking • More energy per sq ft dd l • Additional maintenance • >500kW to pencil • Ground or Carport

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Power Purchase Agreements (PPA)

Solar Technology & Pricing • Crystalline technology is mature and efficient y gy • Improvements in efficiency are incremental • Prices are at historic lows h l • Prices stable since Q3 2009 • Roofs and carports most attractive locations for community colleges • Customer savings are driven by govt. incentives

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Power Purchase Agreements (PPA)

Factors Affecting Price Variable System Size Increase Annual Escalator Increase Tracking System Covered Parking Grading or ground prep Long Electrical Runs REC Ownership

Price of Energy ($/kWh)

      

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Power Purchase Agreements (PPA)

Factors Affecting Price Current Subsidies Factors Affecting Price – • State / Utility Rebates / y ‐ Decline over time ‐ C Come in different forms & values i diff tf & l depending on utility • Federal Tax Credit / Cash Grant Federal Ta Credit / Cash Grant ‐ 30% of the Gross System Cost

 All subsidies go to the PPA Provider  The benefit to the Educational Institution is a lower PPA Price / kWh

• Accelerated Depreciation

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Power Purchase Agreements (PPA)

Benefits  No capital costs

 Predictable energy costs

 Limited production risk Limited production risk

 LEED LEED Points (new building or Points (new building or retrofit)

 No O&M responsibility  Buy option

 Demonstrate Demonstrate commitment to commitment to sustainability

 Independence from fossil fuels p

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Power Purchase Agreements (PPA)

Challenges • 20 Year Terms 20 Y T • Unfamiliar Contracts • Ownership of REC’s and residual value • System insurance System insurance • Site characteristics • Control and flexibility

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Power Purchase Agreements (PPA)

Secrets to Success • Low PBIs Low PBIs = Big Systems & Trackers Big Systems & Trackers • Some locations qualify for more ta c ed ts tax credits • Some municipal utilities do not allow PPAs • Know what your energy costs (watch out for demand charges) • Do whatever works for you: GO Bonds, CREBs, QECB, PPA,….

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Power Purchase Agreements (PPA)

Secrets to Success Solar, when done right will save the right, will save the Institution money and reduce long and reduce long term risk.

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Power Purchase Agreements (PPA)

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Let the Sun Shine…

Let the Sun Shine It’s time to let the sun shine in…. `

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Questions?

David Umstot Umstot, PE Vice Chancellor g Facilities Management dumstot@sdccd.edu (619) 388-6546

Mark Pearson Sr. Project Developer j Group p Commercial Projects mpearson@borregosolar.com (619) 792-1166

Don’tt forget to let the Sun Shine In! Don forget to let the Sun Shine In! 34