FINAL REPORT
RENEWABLE ENERGY ASSESSMENT
PREPARED FOR
San Francisco Public Utilities Commission
10 JANUARY 2014
©Black & Veatch Holding Company 2014. A
ll rights reserved.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | i
Black & Veatch Principal Investigators ScottOlson,ProjectManager JonPietruszkiewicz,ProjectManager
SteveBlock
MarcCoats TrevorCurry
RobinDempsey
SeemaGhosh MonHong
KevinJoyce
RyanPletka AlfonsoTovar
ElizabethWaldren
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Table of Contents ii
Table of Contents Black&VeatchPrincipalInvestigators..........................................................................................................iLegalNotice..............................................................................................................................................................11.0 ExecutiveSummary............................................................................................................................1‐1
1.1 BackgroundandObjectives.............................................................................................................1‐11.2 ScopeandStudyArea.........................................................................................................................1‐11.3 ResourceAssessmentandSupplyCurves..................................................................................1‐1
1.3.1 SolarPhotovoltaicAssessmentandResults..........................................................1‐21.3.2 WindAssessmentandResults.....................................................................................1‐41.3.3 GeothermalAssessmentandResults........................................................................1‐51.3.4 IncentivesandFinancialStructures..........................................................................1‐61.3.5 SupplyCurve.......................................................................................................................1‐7
1.4 ConclusionsandRecommendations..........................................................................................1‐102.0 Introduction..........................................................................................................................................2‐1
2.1 Objective..................................................................................................................................................2‐12.2 Approach.................................................................................................................................................2‐1
3.0 Methodology.........................................................................................................................................3‐13.1 ResourceAssessmentandProjectIdentification...................................................................3‐1
3.1.1 SolarPhotovoltaicProjectAssessment....................................................................3‐23.1.2 WindProjectAssessment..............................................................................................3‐23.1.3 GeotechnicalProjectAssessment...............................................................................3‐2
3.2 TransmissionandInterconnection..............................................................................................3‐33.3 IncentivesandFinancialStructures.............................................................................................3‐43.4 ResourceValuation.............................................................................................................................3‐43.5 SupplyCurveDevelopment.............................................................................................................3‐4
4.0 SolarPhotovoltaicResourceAssessment...................................................................................4‐14.1 SolarResourceAnalysis....................................................................................................................4‐14.2 TechnologyDescription....................................................................................................................4‐4
4.2.1 ResidentialRooftopSystems........................................................................................4‐44.2.2 CommercialRooftopSystems......................................................................................4‐44.2.3 LargeRooftopSystemsforReservoirs.....................................................................4‐54.2.4 UtilityScaleGroundMountedSystems....................................................................4‐6
4.3 ResourceAvailability..........................................................................................................................4‐74.3.1 CaliforniaSolarResourcePotential...........................................................................4‐74.3.2 SanFranciscoSolarResourcePotential..................................................................4‐7
4.4 InCityCostandPerformanceCharacteristics..........................................................................4‐94.4.1 HuntersPointDevelopment.......................................................................................4‐114.4.2 SchoolBuildings..............................................................................................................4‐124.4.3 Reservoirs..........................................................................................................................4‐13
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BLACK & VEATCH | Table of Contents iii
4.5 UpcountryCostandPerformanceEstimates..........................................................................4‐214.5.1 TeslaPortal........................................................................................................................4‐224.5.2 SunolValley.......................................................................................................................4‐234.5.3 Warnerville........................................................................................................................4‐23
4.6 CostandPerformanceEstimatesforOtherIn‐StateLocations......................................4‐234.6.1 SystemParameters.........................................................................................................4‐244.6.2 SystemCosts.....................................................................................................................4‐244.6.3 ProjectLocations.............................................................................................................4‐254.6.4 SystemPerformance......................................................................................................4‐25
4.7 ComparisonBetweenLocations..................................................................................................4‐264.8 DevelopmentChallenges.................................................................................................................4‐27
5.0 WindResourceAssessment.............................................................................................................5‐15.1 TechnologyDescription....................................................................................................................5‐15.2 ResourceAvailability..........................................................................................................................5‐2
5.2.1 In‐City....................................................................................................................................5‐25.2.2 Statewide..............................................................................................................................5‐35.2.3 LocationalAnalysis...........................................................................................................5‐6
5.3 CostBasis.................................................................................................................................................5‐75.3.1 BaseCosts.............................................................................................................................5‐75.3.2 SlopeMultipliers...............................................................................................................5‐85.3.3 EconomiesofScale...........................................................................................................5‐85.3.4 OperationandMaintenancecosts..............................................................................5‐9
5.4 CostandPerformanceCharacteristics........................................................................................5‐95.4.1 SFPUCControlledLands(Oceanside,Sunol,Tesla)............................................5‐95.4.2 StatewideProjects..........................................................................................................5‐155.4.3 Conclusions........................................................................................................................5‐24
5.5 DevelopmentChallenges.................................................................................................................5‐256.0 GeothermalResourceAssessment................................................................................................6‐1
6.1 TechnologyDescription....................................................................................................................6‐16.2 ResourceAvailability..........................................................................................................................6‐16.3 CostandPerformanceCharacteristics........................................................................................6‐46.4 DevelopmentChallenges...................................................................................................................6‐4
7.0 EconomicAnalysis..............................................................................................................................7‐67.1 RenewableEnergyFinancialIncentives.....................................................................................7‐6
7.1.1 U.S.FederalGovernmentTaxIncentives.................................................................7‐67.1.2 U.S.FederalGovernmentNon‐TaxRelatedIncentives......................................7‐97.1.3 StateandLocalFinancialIncentives.......................................................................7‐107.1.4 FutureTermandIncentiveSummary....................................................................7‐12
7.2 PotentialOwnershipStructures..................................................................................................7‐127.2.1 HistoricalApproachtoRenewableEnergyProjectOwnership...................7‐13
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BLACK & VEATCH | Table of Contents iv
7.2.2 MunicipalOwnership....................................................................................................7‐157.2.3 PowerPurchaseAgreement.......................................................................................7‐177.2.4 PowerPurchaseAgreementwithTransfer..........................................................7‐187.2.5 Pre‐PaidPowerPurchaseAgreement....................................................................7‐197.2.6 RealEstateInvestmentTrust.....................................................................................7‐20
7.3 EconomicandFinancingAssumptions.....................................................................................7‐227.4 EconomicAnalysisResults.............................................................................................................7‐24
7.4.1 SolarPhotovoltaic...........................................................................................................7‐247.4.2 Wind.....................................................................................................................................7‐267.4.3 Geothermal........................................................................................................................7‐277.4.4 OwnershipOptions.........................................................................................................7‐28
7.5 SupplyCurveofResources.............................................................................................................7‐317.5.1 ComparisonwithRenewableEnergyCredits......................................................7‐347.5.2 ComparisonwithDeveloperProposals.................................................................7‐34
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Table of Contents v
LIST OF TABLES Table1‐1 PhotovoltaicCostsandPerformanceComparison.................................................................1‐3Table1‐2 WindCostsandPerformanceComparison................................................................................1‐4Table1‐3 GeothermalCostsandPerformanceComparison...................................................................1‐5Table1‐4 TabularComparisonofAllResources(PPAwithTransfer)...............................................1‐9Table4‐1 SolarResourceData............................................................................................................................4‐1Table4‐2 SatelliteBasedGHI[kWh/m2/yr]bySource............................................................................4‐2Table4‐3 SolarSystemApplications................................................................................................................4‐4Table4‐4 In‐CitySolarSystemApplications.................................................................................................4‐9Table4‐5 HuntersPointDevelopmentPVDesignandPerformanceAssumptions....................4‐12Table4‐6 SchoolBuildingsPVDesignandPerformanceAssumptions...........................................4‐13Table4‐7 CollegeHillReservoirDesignandPerformanceAssumptions.......................................4‐15Table4‐8 SummitReservoirDesignandPerformanceAssumptions...............................................4‐16Table4‐9 StanfordHeightsReservoirDesignandPerformanceAssumptions............................4‐17Table4‐10 SutroReservoirDesignandPerformanceAssumptions....................................................4‐18Table4‐11 UniversityMoundReservoirDesignandPerformanceAssumptions..........................4‐19Table4‐12 PulgasBalancingReservoirDesignandPerformanceAssumptions............................4‐20Table4‐13 TeslaPortalPhotovoltaicDesignandPerformanceAssumptions................................4‐22Table4‐14 SunolValleyPhotovoltaicDesignandPerformanceAssumptions................................4‐23Table4‐15 FixedTiltDesignAssumptionsforStatewideProjects......................................................4‐24Table4‐16 TrackingDesignAssumptionsforStatewideProjects........................................................4‐24Table4‐17 SystemCostsforStatewideProjects..........................................................................................4‐25Table4‐18 StatewideProjectLocations..........................................................................................................4‐25Table4‐19 StatewideFixedTiltSystemPerformance...............................................................................4‐26Table4‐20 StatewideSingleAxisTrackingSystemPerformance.........................................................4‐26Table4‐21 In‐CityPhotovoltaicCostsandPerformanceComparison................................................4‐26Table4‐22 UpcountryPhotovoltaicCostsandPerformanceComparison........................................4‐27Table4‐23 StatewidePhotovoltaicCostsandPerformanceComparison.........................................4‐27Table5‐1 ComparisonofAnnualWindSpeeds............................................................................................5‐7Table5‐2 ComparisonCostsforClassIIandIIImachines......................................................................5‐8Table5‐3 SlopeCostMultipliers........................................................................................................................5‐8Table5‐4 OceansideWindFacilityDesign,Cost,PerformanceAssumptions...............................5‐11Table5‐5 SunolWindFacilityDesign,Cost,PerformanceAssumptions.........................................5‐14Table5‐6 TeslaWindFacilityDesign,Cost,PerformanceAssumptions.........................................5‐15Table5‐7 MontezumaHillsWindFacilityDesign,Cost,PerformanceAssumptions.................5‐17Table5‐8 AltamontWindFacilityDesign,Cost,PerformanceAssumptions.................................5‐19Table5‐9 WalnutGroveWindFacilityDesign,Cost,PerformanceAssumptions........................5‐21Table5‐10 LeonaValleyWindFacilityDesign,Cost,PerformanceAssumptions..........................5‐22Table5‐11 NewberrySpringsWindFacilityDesign,Cost,PerformanceAssumptions...............5‐24Table5‐12 ComparisonofWindDesign,Cost,PerformanceParametersforAllSites.................5‐25
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Table of Contents vi
Table6‐1 GeothermalDevelopablePotential...............................................................................................6‐2Table6‐2 GeothermalProjectCostandPerformanceParameters......................................................6‐4Table7‐1 MajorProductionTaxCreditProvisions....................................................................................7‐7Table7‐2 EconomicAnalysisAssumptions.................................................................................................7‐23Table7‐3 SolarLCOEs($/MWh),DifferentOwnershipOptions........................................................7‐25Table7‐4 WindLCOEs($/MWh),DifferentOwnershipOptions........................................................7‐26Table7‐5 GeothermalLCOEs($/MWh),DifferentOwnershipOptions...........................................7‐27Table7‐6 SensitivityAnalysisofDeveloperFinancingAssumptionsforWindhubPV.............7‐30Table7‐7 TabularComparisonofAllResources(PPAwithTransfer).............................................7‐32
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Table of Contents vii
LIST OF FIGURES Figure1‐1 OwnershipOptionComparison,BestResources....................................................................1‐7Figure1‐2 ModeledResourceSupplyCurve(PPAwithTransfer)........................................................1‐8Figure1‐3 ModeledResourceSupplyCurve(PPAOnly).........................................................................1‐10Figure4‐1 NRELSolarAnywhere10kmGrid................................................................................................4‐3Figure4‐2 AnnualGlobalHorizontalIrradianceinCalifornia.................................................................4‐8Figure4‐3 MapofIn‐CityLocationsandPulgas..........................................................................................4‐10Figure4‐4 CSIAverage2013SolarPVCapitalCosts,0to250kW($/kWdc).................................4‐11Figure4‐5 CollegeHillReservoir.......................................................................................................................4‐15Figure4‐6 SummitHillReservoir......................................................................................................................4‐16Figure4‐7 StanfordHeightsReservoir............................................................................................................4‐17Figure4‐8 SutroReservoir...................................................................................................................................4‐18Figure4‐9 UniversityMoundReservoir.........................................................................................................4‐19Figure4‐10 PulgasBalancingReservoir...........................................................................................................4‐20Figure4‐11 MapofUpcountryProjectSites....................................................................................................4‐21Figure5‐1 100MeterWindSpeedsintheSanFranciscoRegion...........................................................5‐3Figure5‐2 100MeterWindSpeedsinCalifornia..........................................................................................5‐5Figure5‐3 AvailableLandatOceanside..........................................................................................................5‐10Figure5‐4 AvailableLandatSunol...................................................................................................................5‐12Figure5‐5 MostFeasibleProjectOptionsatSunol....................................................................................5‐13Figure5‐6 AvailableLandatTesla....................................................................................................................5‐14Figure5‐7 AvailableLandatMontezumaHills............................................................................................5‐16Figure5‐8 RepresentativeAreaatAltamont................................................................................................5‐18Figure5‐9 AvailableLandatWalnutGrove..................................................................................................5‐20Figure5‐10 AvailableLandatLeonaValley....................................................................................................5‐21Figure5‐11 AvailableLandatNewberrySprings.........................................................................................5‐23Figure6‐1 CaliforniaGeothermalProjects......................................................................................................6‐3Figure7‐1 ElementsComprisingtheVariousProjectOwnershipOptions......................................7‐14Figure7‐2 CumulativeRenewableEnergyOwnership.............................................................................7‐16Figure7‐3 OwnershipOptionComparison,BestResources..................................................................7‐28Figure7‐4 ModeledResourceSupplyCurve(PPAwithTransfer)......................................................7‐31Figure7‐5 ModeledResourceSupplyCurve(PPAOnly).........................................................................7‐33
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BLACK & VEATCH | Table of Contents viii
LIST OF ABBREVIATIONS
ac AlternatingCurrentARRA AmericanRecoveryandReinvestmentActBLM BureauofLandManagementBOP BalanceofplantC CelsiusCAISO CaliforniaIndependentSystemOperatorCARB CaliforniaAirResourceBoardCF CapacityFactorCREB CleanRenewableEnergyBondsCRR CongestionRevenueRightsCSI CaliforniaSolarInitiativedc DirectcurrentDOE DepartmentofEnergyEBIT EarningsBeforeInterestandTaxesEGS EnhancedGeothermalSystemEIA EnergyInformationAgencyFIT FeedInTariffFMV FairMarketValueFTR FirmTransmissionRightsGHI GlobalHorizontalIrradianceGO GeneralObligationIOU InvestorOwnedUtilityIPP IndependentPowerProducerIRS InternalRevenueServiceITC InvestmentTaxCreditkW,kWh,kWp Kilowatt,KilowattHour,KilowattPeakLADWP LosAngelesDepartmentofWaterandPowerLCOE LevelizedCostofElectricitym/s Meterspersecond
m2 SquareMeterMACRS ModifiedAcceleratedCostRecoverySystemMW,MWh,MWp Megawatt,MegawattHour,MegawattPeakNMTC NewMarketTaxCreditsO&M OperationsandMaintenancePACE PropertyAssessedCleanEnergyPG&E PacificGas&ElectricPIER PublicInterestEnergyResearchPIRP ParticipatingIntermittentResourceProgramPPA PowerPurchaseAgreementpsf poundspersquarefootPTC ProductionTaxCredit
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Table of Contents ix
PURPA PublicUtilitiesRegulatoryPolicyActof1978PV PhotovoltaicQECB QualifiedEnergyConservationBondsQZAB QualifiedZoneAcademyBondsRAM RenewableAuctionMechanismREAP RuralEnergyforAmericaREC RenewableEnergyCreditsREIT RealEstateInvestmentTrustREPI RenewableEnergyProductionIncentivesRETI RenewableEnergyTransmissionInitiativeRPS RenewablePortfolioStandardSAT SingleAxisTrackingSCADA SupervisoryControlandDataAcquisitionSGIP Self‐GenerationIncentiveProgramsq.ft. SquareFootSSE SurfacemeteorologyandSolarEnergyTEPPC TransmissionExpansionPlanningPolicyCommitteeTMY TypicalMeanYearV,kV Volt,KilovoltW,Wh,Wp Watt,WattHour,WattPeakWECC WesternElectricityCoordinatingCouncilWREZ WesternRenewableEnergyZonesWWTP WastewaterTreatmentPlant
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Legal Notice LN‐1
Legal Notice This report was prepared for the San Francisco Public Utilities Commission (Client) by
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believed that the information, data and opinions contained herein will be reliable under the
conditions and subject to the limitations set forth in this report, B&V does not guarantee theaccuracy thereof. B&V has assumed that the information provided by others, both verbal and
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BLACK & VEATCH | Executive Summary 1‐1
1.0 Executive Summary Black&VeatchispleasedtoprovidethisreporttoassisttheSanFranciscoPublicUtilities
Commission(SFPUC)inplanningtoachievelong‐termrenewableenergygoals.
1.1 BACKGROUND AND OBJECTIVES TheSFPUCisconsideringarangeofpotentialoptionstomeetfuturerenewableenergy
targetsandloadgrowthneeds.SFPUCstaffandcontractorshavepreviouslyidentifiedseveral
promisingtechnologiesanddevelopmentlocations.Inthisreport,Black&Veatchbuildsuponthepreviousanalysisbydevelopingupdatedcostandperformanceestimatesfordeploymentof
representativesolarphotovoltaic(PV),wind,andgeothermaltechnologiesinpotentially
developablelocations.TheobjectiveofthisreportistoidentifyandcharacterizethecostandperformanceoffacilitiesthatcouldbeusedtodeliverpowertotheSFPUCinthefuture.Whilean
effortwasmadetoselectprojectsizesandlocationstorepresentawiderangeofoptionsavailable
totheSFPUC,thelistexploredinthisstudyshouldnotbeconsideredanexhaustivereviewofallavailableoptions.
1.2 SCOPE AND STUDY AREA Wind,solarPV,andgeothermalprojectswereevaluatedwithinSanFrancisco(“in‐city”),on
SFPUCcontrolledlands,andthroughoutthestate.Analysisofin‐cityandprojectsonSFPUCcontrolledlandswasperformedusinglocaldataforprojectsizingandresourcepotential.
StatewideprojectanalysisisbaseduponworkrecentlyconductedbyBlack&Veatchaspartofthe
CaliforniaRenewableEnergyTransmissionInitiative1(RETI)andWesternRenewableEnergyZones2(WREZ)projects.Previouslyperformedresourceassessmentsforwind,solar,and
geothermalprojectswereupdatedtoidentifyareasthroughoutthestatewhereeconomically
feasibleprojectscouldbedevelopedfortheSFPUC.Transmissionconstraintswerealsoconsideredwhenselectingprojectsizesandlocations.Areviewofavailableincentivesandownership
structureswasperformed,andthelevelizedcostofenergywasmodeledforeachproject.Supply
curvesweredevelopedtorepresentthecostandperformanceofselectedrenewableenergyoptionsavailabletotheSFPUCthroughoutthestate.
1.3 RESOURCE ASSESSMENT AND SUPPLY CURVES Wind,solarPV,andgeothermalprojectsinCaliforniawereconsideredforthisanalysis.
WhileotherrenewableenergyoptionsmaybeavailabletotheSFPUC,suchasbiogasandocean
wavegeneration,theseopportunitiesareeithertoolimitedortooexpensivetorepresentamajor
portionoffuturerequirementsatthistime.
1 The RETI reports are available online: http://www.energy.ca.gov/reti/documents/index.html 2 The WREZ report is available online: http://www.nrel.gov/docs/fy10osti/46877.pdf
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Executive Summary 1‐2
1.3.1 Solar Photovoltaic Assessment and Results
ThisassessmentconsistedofcostandperformanceanalysisforsolarPVoptionson
rooftopsinSanFrancisco(assumingnewbuildingconstructionornomajorbuildingupgradesatexistingsites),atSFPUCownedreservoirs,ground‐mountprojectsonSFPUCland,andlarge
ground‐mountprojectselsewhereinthestate.DatafrompaststudiesperformedfortheSFPUCby
otherconsultantswerereviewedandupdatedforsixSFPUCreservoirrooftopsandtwootherSFPUCownedsites(SunolandTesla).Costandperformanceofrooftopfacilitieswithinthecitywas
developedbyBlack&Veatchforfourrooftopsizesandthreeneighborhoods.Estimatedcostsfor
in‐citysystemswerebasedontypicalindustrycostsadjustedforhigherdevelopmentcostsinSanFrancisco.ThesecostswerecomparedtocurrentmarketpricingforSanFranciscoinstallations
basedonCaliforniaSolarInitiative(CSI)data.ForSanFrancisco,thisdataindicatesthatformany
rooftopprojects,thecapitalcostaveragedroughly$6/Wdc,equivalenttoabout$7.7/Wac.3WhileprojectsthatwillbeinstalledonSFPUCreservoirswillbelargerthanthesystemsreportedbythe
CSI,SanFranciscospecificcostfactorsremainrelevantforSFPUCdevelopedprojectsperinput
fromSFPUCstaff.Finally,costsweredevelopedforimportingsolarPVpowerfromafew
representativelargeprojectslocatedoutsideofSanFrancisco.Thesewerelocatednearlargeelectricsubstations:Midway,Windhub,andImperialValley.ProjectdatadevelopedfortheRETI
andWREZprojectswereusedforestimatingcostandperformance.Theseprojectshavelower
capitalcoststhanthein‐cityprojects,butwillincurtransmissioncoststodeliverthepowertoSanFrancisco.
Theplantsize,performance,costfactors,andestimatedlevelizedcostofelectricity(LCOE)
usingapowerpurchaseagreement(PPA)withtransferownershipstructureforallsolarPVprojectscanbeseenbelow.ThePPAwithtransferstructureinvolvesexecutingaPPAwitha
privatecompanywitheventualtransferofownershipoftheprojecttoSFPUC.Whilearangeof
otherownershipoptionswereexplored,thePPAwithtransferfinancestructureprovidedthelowestcostwithoutaddingconsiderablecomplexitytotheagreement.
3 While industry data is often reported in Wdc, for consistency with the other resources covered in this report, all solar cost and performance data is shown on an AC basis.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Executive Summary 1‐3
Table 1‐1 Photovoltaic Costs and Performance Comparison
LOCATION
PLANT CAPACITY (KWAC)
AC CAP. FACTOR
(PERCENT)
CAPITAL COST
($/KWAC) O&M COST ($/KW‐YR)
LCOE ($/MWh)
SAN FRANCISCO ROOFTOPS AND SFPUC RESERVOIRS
HuntersPoint 2.5 20.3 7,365 45 222.67
HuntersPoint 5 20.3 7,365 45 222.67
MarinaMiddleSchool 50 21.1 7,245 27 198.39
ThurgoodMarshall 200 22.3 6,165 27 162.58
CollegeHillReservoir 895 20.8 6,000 27 170.27
SummitReservoir 664 19.7 6,075 27 182.15
StanfordHts.Reservoir 704 19.6 6,060 27 181.98
SutroReservoir 2,010 19.7 5,550 27 168.09
UniversityReservoir 2,883 20.8 5,385 27 154.39
PulgasReservoir 2,650 21.5 5,385 27 149.64
GROUND MOUNT AT UP‐COUNTRY LOCATIONS
Tesla 1,600 24.8 3,420 22 85.40
Sunol 19,200 23.9 2,930 22 80.48
OTHER IN‐STATE GROUND MOUNT LOCATIONS
MidwayFixedTilt 20,000 26.7 3,289 29 80.49
WindhubFixedTilt 20,000 29.2 3,289 29 73.60
ImperialFixedTilt 20,000 28.2 3,289 29 76.21
MidwayTracking 20,000 31.6 3,536 32 73.50
WindhubTracking 20,000 35.9 3,536 32 64.70
ImperialTracking 20,000 33.4 3,536 32 69.54
Notes: Fornon‐rooftopprojects,thisdoesnotreflectdeliveredpricesatload.Thesenumbersare
notnecessarilywhattheSFPUCwillpayduetomarketfactorsandSFPUCdevelopmentconsiderations.
Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectanyincentivesortaxcredits;thesearetakenintoaccountintheLCOEcalculation.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Executive Summary 1‐4
TheresultsofthesolarPVanalysisshowsthattheup‐countrySFPUClocationsandlarge
statewidegroundmountedfacilitieshaveLCOEsroughlyhalfthoseofrooftopdevelopmentlocationsinSanFranciscooranyoftheSFPUCwaterreservoirs.Thisisduetothelargersizeand
bettersolarresourcefortheprojectssitedawayfromSanFrancisco.Thecostsfortheprojects
locatedoutsideofSanFranciscoreflectcoststointerconnectthepowerintotheCaliforniaIndependentSystemOperator(CAISO).AfteranychargesfromtheCAISOandPG&Etobringthe
powerintoSanFranciscoareincluded,theLCOEsforthelargegroundmountprojectsremainmuch
lowerthanforin‐cityprojects.
1.3.2 Wind Assessment and Results
Black&Veatchperformedcost,technology,andproductionassessmentsforwindprojects
atSFPUCownedfacilitiesanddevelopedcomparisonstoprojectsbuiltinotherareasofCalifornia.
Costandperformanceestimatesweremadeforwindsitedattwoup‐countrylocations(SunolandTesla),aswellasforonein‐citylocation(OceansideWWTP).Theteamalsoidentified
thecostforimportingpowerfromafewrepresentativelargewindprojectslocatedatgoodwind
resourcesinCaliforniawithintheCAISO.ProjectdatadevelopedfortheRETIandWREZprojects
wasusedinthisanalysis.Theplantsize,performance,costfactors,andestimatedLCOEusingaPPAwithtransferfinancestructurecanbeseenbelow.
Table 1‐2 Wind Costs and Performance Comparison
LOCATION
PLANT CAPACITY (KWAC)
CAPACITY FACTOR
(PERCENT)
CAPITAL COST
($/KWAC)
FIXED O&M COST ($/KW‐YR)
VARIABLE O&M
($/MWh) LCOE
($/MWh)
Oceanside 2,000 29 2,738 60 0 82.01
Sunol 30,000 15 2,577 35 0 129.85
Tesla 6,000 20 2,820 35 0 104.33
MontezumaHills 100,000 31 2,043 35 2.66 56.13
AltamontPass 20,000 34 2,349 35 2.68 56.63
WalnutGrove 170,000 34 2,244 35 2.70 54.89
LeonaValley 100,000 37 2,649 35 2.62 56.85
NewberrySprings 100,000 34 2,332 35 2.68 56.34
Notes: Reflectscostofnewgenerationusingtypicalindustrydevelopmentassumptionsatsites
withfewbarrierstoconstruction. LCOEsareatthesiteanddonotreflectdeliveredpricesatload.Thesenumbersarenot
necessarilywhattheSFPUCwillpayduetomarketfactorsandSFPUCdevelopmentcosts. Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectany
incentivesortaxcredits;thesearetakenintoaccountintheLCOEcalculation.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Executive Summary 1‐5
Theresultsofthewindanalysisshowsthatthein‐cityandup‐countrylocationsonSFPUC
landarelocatedinmuchpoorerwindresourcesareas,leadingtoconsiderablyhigherLCOEs.Inaddition,theselocationshavelesslandfordevelopmentwhencomparedtotheotherlocations
analyzedthroughoutthestate,whichcouldsupportalargefacilityandtakeadvantageofeconomies
ofscale.Finally,theoperatingcostoftheOceansidefacilityhasbeenraisedtotrytoreflecttheuniqueoperatingconditionsforanurbansingle‐turbinewindfacilitybecausetheabilitytopermit
andobtainlocalacceptanceofawindprojectinthislocationwouldbemuchmorechallengingthan
theotherprojectsites.
1.3.3 Geothermal Assessment and Results
Cost,technology,andproductionassessmentsweredevelopedforseveralCalifornia
geothermalprojectsthatcouldimportpowertotheSFPUC.Theresourceassessmentperformed
fortheSFPUCbyGeothermExin2010wasusedalongwithRETIandWREZresourceandcostcomparisonsfortheanalysis.Thisstudyupdatescostsforeachoftheareaspreviouslyidentified
andalsoidentifiesthethreelowestcostlocationsbasedoncapitalcostsandtransmission
constraints.Theplantsize,performance,costfactors,andestimatedLCOEusingaPPAwith
transferfinancestructurecanbeseenbelow.
Table 1‐3 Geothermal Costs and Performance Comparison
LOCATION
NET PLANT CAPACITY (KWAC)
CAPACITY FACTOR
(PERCENT) CAPITAL COST ($/KWAC)
VARIABLE O&M
($/MWh) LCOE
($/MWh)
Brawley‐Binary 50,000 80 4,963 30 61.91
Geysers‐Flash 50,000 90 4,467 27 53.37
LongValley–Binary 40,000 80 4,283 34 63.81
Notes: LCOEsareatthebusbaranddonotreflectdeliveredpricesatload.Thesenumbersarenot
necessarilywhattheSFPUCwillpayduetomarketfactors. Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflect
anyincentivesortaxcredits;thesearetakenintoaccountintheLCOEcalculation. Thegeothermalresourceattheselocationsiswellunderstood;itisassumedthat
predictionsoftheheatavailablewillberealized.Lessunderstoodresourceswillhavehighercosts.
Allofthegeothermalprojectsanalyzedarepromisingandcouldprovidelowcostpowerto
theSFPUC.However,thechallengewithanynewgeothermalprojectisassurancethatthe
geothermalheatresourcecanproduceattheprojectedoutputlevelsandcostprojectionsovertheentirelifeoftheproject,aswellasthelongleadtimesfordevelopment.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Executive Summary 1‐6
BasedonBlack&VeatchandSFPUC’sexperiencewithrecentmarketpricingforgeothermal
projects,thecostsestimatedinthisreportaresignificantlybelowthepricesbeingofferedinthemarket.Whilethepricesshownabovemayreflectthedevelopmentcostforthebestknown
resourceareas,anumberoffactors,includingdevelopmentrisk,higherinvestorreturn
expectations,projectcosts,uncertaintyofpricinggiventhethinmarketforavailableprojects,andresourceavailabilitywouldlikelydrivepricesupbeyondthecostsestimatedinthisreport.
Furthermore,asadependablebaseloadresource,geothermaldevelopersmayfeeltheyofferamore
valuableproductthanvariablewindandsolarresources.Duetothisuncertainty,itwasdecidedthatthefocusoftheeconomiccomparisonsinthesupplycurvelaterinthisreportshouldbeon
resources(windandsolar)thathaveagreaterchanceofdevelopmentatcostsconsistentwithon
actualtransactionprices.Nevertheless,SFPUCshouldstillconsidergeothermalasapotentiallycompetitiveresourceoption.
1.3.4 Incentives and Financial Structures
Theeconomicsofrenewableenergyarestronglytiedtoavailableincentivesandthe
financingandownershipstructureoftheproject.Black&Veatchidentifiedthemainfinancial
incentivesavailabletotheSFPUCandprivatedevelopers,includingfederal,state,andlocaloptions.Inthebasecasefinancialmodeldevelopedforthisstudy,a30percentinvestmenttaxcredit(ITC)
andaccelerateddepreciationisassumedinallcaseswhereownershipisbyataxableentity.While
thiscreditexpiredattheendof2013forwindandgeothermalprojects,projectsthatarecurrentlyunderconstructionwouldstillbeabletocapturethesecredits.
Theownershipstructureofaprojectcanhaveamaterialimpactontheelectricitycostpaid
bytheSFPUCduetoeligibilityforincentives,costoffinancing,andtaxtreatment.ThemajorstructuresconsideredinthisstudyareSFPUCownership,PPAwithandwithouttransfer,prepay
PPA(alsowithandwithouttransfer),andrealestateinvestmenttrust(REIT).Thefinancialmodel
providedwiththisreportdemonstratesthedifferencesbetweensomeofthemajorstructures.Todemonstratethedifferencesbetweenthebestresourceandownershipoptions,the
LCOEsin$/MWhforthelowestLCOEsolarPVreservoir(Pulgas),single‐axistracking(SAT)ground
mountsolarPV(WindhubSAT),wind(WalnutGrove),andgeothermal(Geysers)sitesmodeledaspartofthisanalysisforeachofthefiveownershipoptions4arecomparedinthefigurebelow.
4 Given the barriers to the use of REITs and the uncertainty regarding their viability in the current market, this financial structure is not recommended as an option for near‐term project financing.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Executive Summary 1‐7
Figure 1‐1 Ownership Option Comparison, Best Resources
1.3.5 Supply Curve
Asupplycurveforwindandsolarprojectsidentifiedduringtheresourceassessmentwas
developedtocomparethecosttotheSFPUCofeachresource.Thesupplycurvereflectsthecostofgenerationversustheenergygenerationpotential.Thetotalamountoflargescalewindenergy
wasnormalizedtoequaltheamountofenergyfromlargescalesolartoprovideanequal
comparison.Fromthis,anoverallcomparisonofthecostforeachresourceoptionismade,withrecommendationsfortheoptionsthatshouldbepursuedinthefuturebytheSFPUC.
Thisanalysisonlyreflectsaportionoftheoutputfromprojectsmodeledaspartofthis
assessment.TherearealargenumberofadditionalrenewableresourceoptionsthatcouldbeavailabletotheSFPUC.Theintentistoprovidearelativeunderstandingforhowthedifferent
resourcetypescomparetooneanother.ThesupplycurveshowingtheLCOEsunderthepreferred
financingoption(PPAwithtransfer)ispresentedinFigure1‐2.
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BLACK & VE
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San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Executive Summary 1‐9
Table 1‐4 Tabular Comparison of All Resources (PPA with Transfer)
NAME TECHNOLOGY LOCATION SIZE (MW) LCOE ($/MWh)
WalnutGrove Wind Yolo 170 54.89
MontezumaHills Wind Solano 100 56.13
NewberrySprings Wind SanBernardino 100 56.34
Altamont Wind(Repower) Alameda 20 56.63
LeonaValley Wind LosAngeles 100 56.85
Windhub TrackingPV Kern 20 64.70
ImperialValley TrackingPV Imperial 20 69.54
Midway TrackingPV Kern 20 73.50
SunolPV FixedPV SFPUCLand,Alameda 19.2 80.48
Oceanside Wind SanFrancisco 2 82.01
TeslaPV FixedPV SFPUCLand,SanJoaquin 1.6 85.40
TeslaWind Wind SFPUCLand,SanJoaquin 6 104.33
SunolWind Wind SFPUCLand,Alameda 30 129.85
PulgasRes. RooftopPV SanMateo 2.7 149.64
UniversityRes. RooftopPV SanFrancisco 2.9 154.39
SutroRes. RooftopPV SanFrancisco 2.0 168.09
ThurgoodMarsh. RooftopPV SanFrancisco 0.2 168.65
CollegeHillRes. RooftopPV SanFrancisco 0.9 170.27
StanfordHeights RooftopPV SanFrancisco 0.7 181.98
SummitRes. RooftopPV SanFrancisco 0.7 182.15
MarinaSchool RooftopPV SanFrancisco 0.05 198.39
HuntersPoint RooftopPV SanFrancisco 0.005 222.67
IftheSFPUCchoosesnottotakeprojectownership,thePPAfinancestructurewouldlikelybeused.Thisisarelativelysimple,well‐establishedstructurethattheSFPUChasusedinthepast.
Asshownbelow,thisstructuremayincreasetheLCOEtotheSFPUC,sincetheSFPUC’slowcostof
capitalwouldnotbeappliedtowardsownershipasitwouldinthePPAwithtransferstructure.
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BLACK & VE
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San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Executive Summary 1‐11
agreementforaprepayscenario.PrepayPPAsarecomplicated,havehigherstructuringexpenses,
mayencountergreaterIRSauditrisk,arebettersuitedforlargerprojects,andmayplacesomeproductionriskonSFPUC.Notethatifthefederaltaxcreditsareremoved,thiswouldgreatly
reducetheincentivefortheSFPUCtoconsideranytypeofPPAstructure.Inthiscase,thelowcost
ofcapitalavailabletotheSFPUCwouldfavorself‐ownershipasthepreferredoption.Notethatthisanalysisispreliminaryandisnotintendedtosubstituteforfinancialadvisoryserviceswhichthe
SFPUCshouldsecureifanyoftheseoptionsarepursued.
Whencomparingdifferenttechnologiesandlocations,large,utility‐scalefacilitiesconnectedtotheCAISOtendtohavelowerLCOEsrelativetolocal,smaller‐scalewindandsolarprojects
locatedinandaroundSanFrancisco.However,otherfactorsnotquantifiedheresuchaslocal
developmentandjobs,visibility,andeaseofdevelopmentcouldjustifythedevelopmentofmorelocalresources.
Ifavailablefordevelopment,largewindprojectsareestimatedtohaveaslightcost
advantageoverlargesolarfacilities,althoughtheprojectedLCOEsareveryclose.However,bothgeothermalandwindfacegreaterdevelopmentchallengesrelativetosolar.Theavailabilityofnew
oroperatinggeothermalfacilitiesislimited,andwindprojectsfacemorechallengingsitingand
permittingissuesrelativetonewsolarunits.Inaddition,thewindoutputcanbemorevariable;acloserlookattheoutputprofilesfordifferentwindandsolarprojectscanhelptheSFPUCto
determineiftherearetimeofgenerationadvantagesthatwouldfavoroneoftheseresourcesover
another.AnotheroptionavailabletotheSFPUCtomeetfuturerenewableenergyandpower
requirementsistopurchasebothonthewholesalemarket.Currently,bothwholesalepowerand
RECpricesinNorthernCaliforniaarelow:USDOEEIAdatafor2013showstheaveragemarketclearingwholesalepriceatnearly$44/MWh,andCategory3RECsarecurrentlytradingataround
$1/MWh.Ifalonger‐termperspectiveistakenintoaccount,theeconomicprospectsforthe
developmentofnewgenerationimproves.Black&Veatchforecaststhatthe2020wholesaleNorthernCaliforniapowerpricewillberoughly$54/MWh(in2013$).RECpricesareexpectedto
remainlowunlesshighergoalsareestablishedfortheCaliforniaRPS.Itisbecomingincreasingly
likelythatRPStargetswillrise,whichmayleadtohigherfutureRECvalues.ThebestrenewableenergyresourcesidentifiedinthisanalysishaveLCOEsof$55to60/MWh,makingthem
competitivewithlong‐termpurchasesofgreenpower.Lockinginapriceatthislevelinalong‐term
PPAwouldactasaneffectivehedgeagainstvolatilepowerandRECpricesprovidedthattheSFPUCpredictsasteadyfuturedemandforadditionalgeneration.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Introduction 2‐1
2.0 Introduction TheSFPUCisconsideringarangeofpotentialgenerationoptionstomeetfuturerenewable
energytargetsandloadgrowthneeds.SFPUCstaffandcontractorshavepreviouslyidentified
severalofthebestpotentialtechnologiesanddevelopmentlocations.Inthisreport,Black&Veatchbuildsuponthepreviousanalysisbydevelopingupdatedcostandperformanceestimatesfor
deploymentofsolarPV,wind,andgeothermaltechnologiesinareasidentifiedassuitable.
Representativelowcostlocationsandtechnologiesareidentified,alongwiththeownershipoptionsandfinancialstructuresthatmaybeattractivetotheSFPUC.Supplycurvesprovideeasy
comparisonsbetweenthetechnologiesandlocationsbeingconsidered.
2.1 OBJECTIVE TheobjectiveofthisreportistoidentifyandcharacterizevarioussolarPV,wind,and
geothermalpowerfacilitiesthatcouldbeusedtodeliverpowertotheSFPUCinthefuture.An
effortwasmadetoselectprojectsizesandlocationstorepresentawiderangeofoptionsavailabletotheSFPUC,rangingfrom2.5kWrooftopPVfacilitiesinSanFranciscoto100MWwindprojectsin
southernCalifornia.
2.2 APPROACH UtilizingworkpreviouslyperformedbyBlack&VeatchaswellasbytheSFPUCandtheir
consultants,resourceassessmentswereperformedforsolarPV,wind,andgeothermalpower
facilitiestoidentifyprojectlocationsandsizesthatcouldeconomicallydeliverrenewableenergyto
theSFPUC.Theresourceassessmentsincludedcost,technology,andproductionassessmentsforeachproject.Basedontheseassessmentsprojectcapitalandoperatingcostsweredeveloped.
Black&Veatchthenreviewedavailableincentivesthatcouldbeutilizedandassessedvarious
ownershipstructuresfortheprojects.Thecosts,productionestimates,incentives,andownershipsstructureswereusedtocalculatetheLCOEforeachoption.Supplycurveswerethendevelopedto
provideabasisofcomparisonforthevariousprojectsandownershipstructuresconsideredinthis
analysis.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Methodology 3‐1
3.0 Methodology ProjectswereevaluatedwithinSanFrancisco,onSFPUCcontrolledlands,andthroughout
thestate.StatewideprojectanalysisisbaseduponworkrecentlyconductedbyBlack&Veatchas
partoftheRETIandWREZprojectstoassessrenewableresourcesavailabletoachieveCaliforniaRPSgoals.Previouslyperformedresourceassessmentsforwind,solar,andgeothermalprojects
wereupdatedtoidentifyareaswhereeconomicallyfeasibleprojectscouldbedevelopedforthe
SFPUC.Transmissionconstraintswerealsoconsideredwhenselectingprojectsizesandlocations.Areviewofavailableincentivesandownershipstructureswasperformed,andthelevelizedcostof
energywasmodeledforeachproject.Supplycurvesweredevelopedtorepresenttherangeof
renewableenergyoptionsavailabletotheSFPUC.Thisreportsectiondetailsthemethodologyusedinthisassessment.
Detailedcapitalcostassessmentswereperformedforeachsolarandwindsite,takinginto
accountallfactorsincludedindevelopinganewproject.Whilesitespecificfactors,suchasslope,terrain,andresourcepotentialweretakenintoaccountasmuchaspossible,itwasassumedthat
eachsitewouldbesuitablefordevelopmentwithfewbarriers.Typicalprivateindustry
developmentcostsforcomparableprojectswereusedasastartingpoint,withadjustmentsmadefortheprevailingwage.Morestringentdesignrequirements,differencesinlaborproductivity,
greaterenvironmentalandpermittingcosts,andunforeseensitetechnicalrestrictionswould
increasethecostsbeyondthoseestimatedinthisreport.Forin‐citysolarPVprojects,adjustmentsweremadetotheestimatedcapitalcoststoreflectactualcostdatareportedbytheCaliforniaSolar
Initiative.Geothermalcostassessmentsperformedinpreviousstudiesforeachspecificlocation
werereviewedandupdated.Estimatedcostsreflecttherequirementstoproduceanddeliverthepowertolocalloador
transmission,butwillnotreflectthedeliveredcostofpowertoSanFranciscoforprojectsoutsideof
thecity.RenewableresourcesdeliveringpowerusingtheCAISOgridwillpayatransmissionwheelingchargetobringthepowertoSanFrancisco.Ifthegeneratorisavariableresource,aslong
astheresourceisparticipatingintheCAISOParticipatingIntermittentResourceProgram(PIRP)
therearenoadditionalcostsforgenerationvariability(i.e.scheduledeviationpenaltiesorancillaryservicescharges).Theresourceshouldhavea“fullcapacity”interconnectionagreementwiththe
CAISO.NoFirmTransmissionRights(FTR)arerequiredtodelivertheenergy,butdependingon
thelocationoftheresource,congestionrevenuerights(CRRs)mayberequiredtoensurefulldeliveryoftheenergyfromthegeneratingresourcetoSFPUC.
Inaddition,thecostofpowerreflectsthecosttothedeveloperoftheprojectbutnot
necessarilywhattheSFPUCwillpay.Otherfactors,suchasthelevelofsupplyanddemandforrenewableenergyinCalifornia,willimpactthefinalpricing.
3.1 RESOURCE ASSESSMENT AND PROJECT IDENTIFICATION Wind,solarPV,andgeothermalprojectsinCaliforniawereconsideredforthisanalysis.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Methodology 3‐2
3.1.1 Solar Photovoltaic Project Assessment
Black&Veatchperformedacost,technology,andproductionassessmentforsolarPV
projectsthatcouldpotentiallybebuiltatSFPUCownedfacilities,aswellasprovidedcomparisonstothecostofsolarPVbuiltonSanFranciscorooftopsandprojectsbuiltoutsideoftheservice
territory.Thecostsincludetransmissionanddistributionchargesbutdoesnotincludeanycharges
totransmitpowerfromtheCAISOortheHetchHetchydistributionsystemintoSanFrancisco.Thefirstpartofthisassessmentincludesareviewandupdateofpaststudiesperformedfor
theSFPUCbyotherconsultants.ProjectsizesandcapitalcostsweredevelopedforsixSFPUC
reservoirsandtwoupcountrylocations(SunolandTesla);thetechnologyassumptionsandcostswereupdatedforthisstudy.
ForcomparisontofacilitieslocatedonSFPUCproperties,anestimatefortheaveragecost
andperformanceofrooftopfacilitieswithinthecitywasdeveloped.Fourrooftopsizesandthreeneighborhoodsweremodeledtoprovidearangeofcostandperformanceestimatesforrooftop
facilities.TwosizesofresidentialrooftopsweremodeledinHuntersPoint,andtwocommercial
rooftopsweremodeledattheMarinaMiddleSchoolandThurgoodMarshallSchoollocations.
Asafurtherpointofcomparison,theteamdevelopedcostsforimportingsolarPVpowerfromafewrepresentativelargeprojectslocatedoutsideofSanFrancisco.Projectdatadeveloped
fortheRETIandWREZprojectswasusedforthestatewideprojectassessments.
3.1.2 Wind Project Assessment
Black&Veatchperformedcost,technology,andproductionassessmentsforwindprojectsthatcouldpotentiallybebuiltatSFPUCownedfacilities,anddevelopedcomparisonstoprojects
builtoutsideoftheserviceterritory.Thecostsincludetransmissionanddistributioncharges;as
withthesolarwork,coststobringthepowerintoSanFranciscofromthepointofinterconnectisnotincluded.
Costandperformanceestimatesweremadeforwindsitedattwoupcountrylocations
(SunolandTesla),aswellasforonein‐citylocation(OceansideWWTP).Theteamalsoidentifiedthecostforimportingpowerfromafewrepresentativelargewindprojectslocatedatgoodwind
resourcesinCaliforniawithintheCAISO.ProjectdatadevelopedfortheRETIandWREZprojects
wasusedinthisanalysis.
3.1.3 Geotechnical Project Assessment
Cost,technology,andproductionassessmentsweredevelopedforseveralCalifornia
geothermalprojectsthatcouldimportpowertotheSFPUC.Theresourceassessmentperformed
fortheSFPUCbyGeothermExin2010wasusedalongwithRETIandWREZresourceandcostcomparisons5fortheanalysis.Thisstudyupdatescostsforeachoftheareaspreviouslyidentified
andalsoconsidersavailabletransmissioncapacitiesandinterconnectioncostsforeachofthe
resourceareas.
5 Note that GeothermEx and Black & Veatch collaborated on the original RETI and WREZ geothermal assessments.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Methodology 3‐3
3.2 TRANSMISSION AND INTERCONNECTION Availabletransmissioncapacitywasconsideredwhensitingeachofthelargescalewind,
solarPV,andgeothermalprojects.Windandgeothermalresourceassessmentswerefirst
performedtoidentifythemostattractivelocationsandthenpubliclyavailableinformationwas
consultedtoverifythepresenceofadequatetransmissioncapacityforeachsite.Interconnection
costsweredevelopedandlocationswithuneconomicinterconnectionandtransmissioncostswerefilteredout.ForsolarPV,sincetheentirestatehasadequateresourcestosupportdevelopmentof
commercialfacilities,thetransmissionandinterconnectionscreenidentifiedtheleastcost
interconnectionpoints.Fromthesescreens,projectsizesweredevelopedandproductionassessmentswereperformed.Thefollowingparagraphspresentadditionalinformationonhow
interconnectioncostswereassessed.
UsingpublicinformationfortheCaliforniainvestorownedutilities,availabletransmissioncapacitycanbeidentifiedatmajorprojectsubstations.Foreachsite,basedontheanticipated
lengthofthegenerationtieline,andinterconnectionsubstationavailabilitywithrespectto
proposedcapacity,themosteconomicalsubstationshavebeenidentified.Substationinterconnectioncostswereestimatedprimarilyusingthe2012Western
ElectricityCoordinatingCouncil(WECC)TransmissionExpansionPlanningPolicyCommittee
(TEPPC)transmissioncostestimatingtool.Thetoolprovidesstakeholdervettedhighlevelcapitalcostestimatesforsubstationequipmentrated230kVandabove6.Forthepurposeofthisstudy,the
toolwasexpandedinaccordancewiththe2013CAISOParticipatingTransmissionOwnerPerUnit
CostsandBlack&Veatchindustryexperience,toaccommodatecalculationofcapitalcostsatvoltagelevelstypicalofinterconnectionsubstations7.
The115kVclasssubstationbaseandequipmentcostsweredevelopedbyapplyinga25
percentreductionfactortothe2012WECC230kVsubstationbaseandequipmentvalues.Thisreductionfactoraccountsfordecreaseinequipmentsizeandclearancerequirementsandisin
accordancewiththerelativecostsofthe115kVand230kVCompleteLoop‐inSubstationsproposed
inthePG&E2013ProposedGeneratorInterconnectionperUnitCostGuide8.ThoughmediumvoltagecostsarenotprovidedintheCAISOParticipatingTransmission
OwnerPerUnitCostestimates,mediumvoltagefeederprotectionandbusequipmentcostswere
includedbasedonaveragevaluesseenbyBlack&VeatchforCaliforniainterconnectionprojects.Mediumvoltagecostsincluderiserstands,switches,switchstands,circuitbreaker,andbuswork
andarerepresentativeofequipmentcostsofmediumvoltageACcollectionfromthesubstation
fencetothesecondarywindingofthesubstationstepuptransformer.
6 WECC Transmission Capital Cost Report – Black & Veatch: http://www.wecc.biz/committees/BOD/TEPPC/External/BV_WECC_TransCostReport_Final.pdf 7 Investor Owned Utilities Per Unit Costs – CAISO Website: http://www.caiso.com/informed/Pages/StakeholderProcesses/ParticipatingTransmissionOwnerPerUnitCosts.aspx 8 2013 PG&E Per Unit Cost Guide: http://www.caiso.com/Documents/PGE_2013ProposedPerUnitCostGuide.xls
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Methodology 3‐4
3.3 INCENTIVES AND FINANCIAL STRUCTURES Black&VeatchdevelopedalistofthemainfinancialincentivesavailabletotheSFPUCand
privatedevelopers,includingfederal,state,andlocaloptions.Therestrictionsandeligibilityfor
eachhasbeenhighlighted.
ArangeofpossibleownershipoptionsforrenewableenergyprojectssupplyingtheSFPUC
wasthenconsidered.Thisassessmenthighlightsthestructure,requirements,andpotentialbenefits/drawbacksofeach.ThemajorstructuresconsideredareSFPUCownership,PPAwithand
withouttransfer,prepayPPA(alsowithandwithouttransfer),andREIT.
3.4 RESOURCE VALUATION Aproformaeconomicmodelwasdevelopedtoestimatethelevelizedcostofelectricityfor
themajorresourceoptionsdeliveredtotheSFPUCserviceterritory.Thedifferentownership
structuresaremodeledtoprovidecomparisonsandrecommendationsforthemostattractiveoptionstoconsider.Thefinancialmodelisadetailedproformathatallowsentryofawiderangeof
projectspecifictechnicalcostsandfinanceassumptionstodeterminearangeofpotentiallevelized
costs.Majorinputstothemodelincludetechnicalassumptions(capitalcost,operatingcosts,capacityfactor,escalationrates,etc.),ownerassumptions(prepayamount,bondcosts,discount
rate,additionalfees,etc.),anddeveloperfinancialassumptions(incentives,costofdebt,costof
equity,economiclife,depreciation,flipstructure,etc.).
3.5 SUPPLY CURVE DEVELOPMENT Supplycurvesbasedontheprojectsidentifiedaspartoftheresourceassessmentwere
producedtocomparethedevelopmentcostofeachresource.Thesesupplycurvesreflectthecost
ofgeneration(notnecessarilythepricethattheSFPUCwouldpay)versustheenergygenerationpotential.Fromthesecurves,acomparisonofthecostforeachresourceoptionismade,with
recommendationsfortheoptionsthatshouldbepursuedinthefuturebytheSFPUC.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Solar Photovoltaic Resource Assessment 4‐1
4.0 Solar Photovoltaic Resource Assessment Aselectionofprojectlocationsandsizeswereconsideredinthisassessmenttodevelopthe
technicalbasisforestimatingcostandperformanceforsolarPVfacilitiesthatarerepresentativeof
theopportunitiesavailabletotheSFPUC.
4.1 SOLAR RESOURCE ANALYSIS ToestimatesolarresourcesandenergyproductioninSanFrancisco,upcountry,andin‐
statelocations,Black&VeatchusedsatellitedatabenchmarkedagainstthemetstationdatathathasbeenmadeavailablebytheSFPUC.SolarAnywherewasselectedasthesatellitedatasourcefor
thisassessment.SolarAnywhereisafree,publiclyavailabledatasourcethatoffers1kmresolution
solardatayearlyfrom1998topresentinCalifornia.UsingaconsistentdatasourceandformatprovidesabasisforcomparisonofsiteswithinSanFrancisco,upcountry,andotherstatewide
locations.SolarAnywheremeasurementshavelowuncertainty(+/‐5percentforglobalhorizontal
irradiance(GHI))whichiscomparabletomostofthemetstationinstrumentation.Inaddition,satellitedatadoesnotintroducequestionsaroundcalibration,maintenance,ormissingdatapoints
thataccompanysomeofthegroundbasedmeasurements.
Black&Veatchcreatedatypicalmeanyear(TMY)fileforeachprojectlocationusingmultipleyearsofsatellitedata,asshownbelow.
Table 4‐1 Solar Resource Data
SITE ANNUAL TYPICAL GHI (kWh/m2/year)
HuntersPoint 1757
ThurgoodMarshallSchool 1730
MarinaMiddleSchool 1673
CollegeHillReservoir 1730
PulgasBalancingReservoir 1827
SutroReservoir* 1639
UniversityMoundReservoir 1735
StanfordHeightsReservoir 1635
SummitReservoir* 1639
Sunol 1854
Tesla 1893
WindHub 2114
ImperialValley 2143
Midway 1992
*DuetotheproximityofSutroandSummitreservoirsthesameTMYfilewasusedforthesesites.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Solar Photovoltaic Resource Assessment 4‐2
Toprovideabasisforcomparison,theGHImeasurementsobtainedfromSolarAnywherearecomparedtotwootherpubliclyavailablesatellitedatasets,SolarProspectorandNASASurface
meteorologyandSolarEnergy(SSE),inTable4‐2.SolarAnywhereusesneweralgorithmsthan
whatwasusedwhenderivingtheSolarProspectordataset.TheNASASSEdatasetusesadifferentalgorithmforestimatingGHIandamuchcoarsergridsize,leadingtohigheruncertainty.
Table 4‐2 Satellite Based GHI [kWh/m2/yr] by Source
LOCATION SOLAR
ANYWHERE SOLAR
PROSPECTOR NASA SSE
HuntersPoint 1757 1745 1670
ThurgoodMarshallSchool 1730 1745 1670
MarinaMiddleSchool 1673 1768 1670
CollegeHillReservoir 1730 1588 1670
SutroandSummitReservoirs 1639 1588 1670
UniversityMoundReservoir 1735 1588 1670
StanfordHeightsReservoir 1635 1588 1670
Eachsatellitedatasourceaveragesreadingsacrossageographicarea.SolarAnywheredata
isaveragedacross1kmgridsquares,whichprovidesenoughgranularitytomodelindividualneighborhoodswithinSanFrancisco.SolarProspectordataaggregatesdataonaroughly10km
grid.TheSolarProspectorgridthatcapturestheCollegeHill,Sutro,Summit,UniversityMound,and
StanfordHeightsreservoirscoversmuchofSanFranciscoandaggregatesreadingsfromneighborhoodsthatarelargelysunnywiththosethatexperiencegreateramountsoffogcover(Grid
Number1inFigure4‐1).InFigure4‐1,theHuntersPointandThurgoodMarshallSchoollocations
arecapturedinGridNumber2,whileMarinaMiddleSchoolislocatedinGridNumber3.NASASSEdataisaggregatedonalargerscale,andalloftherepresentativeSanFranciscoprojectlocationsare
characterizedwiththesamegridinthatdataset.AcomparisonoftheSolarAnywhereGHIvalues
withtheSolarProspectorGHIvaluesforsiteslocatedinGridNumber1showsthattheSolarAnywherevaluesareequivalentorhigherformostsites.Howeverthesevaluesarelikelytobe
morerepresentativeofthesolarresourceinthoseneighborhoodsthanSolarProspectorbecauseof
theaveragingeffectofthelargergridsquare.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Solar Photovoltaic Resource Assessment 4‐3
Figure 4‐1 NREL Solar Anywhere 10 km Grid
Forthesereasons,Black&VeatchchosethemoregranularSolarAnywheredataforthe
analysis.However,theoutputandcapacityfactorestimateshowninthisreportmaybehigherthan
paststudiesandinstallationsfortwomainfactors.Thefirstisthedifferenceindatasetsoutlinedabove.Second,thedesignsdevelopedinthisstudyreflectstate‐of‐the‐art,newdesignswhichare
likelytohavehigheroutputthanolderfacilities.Thisislargelyduetothelowercapitalcostfor
solarpanels,whichleadtohigherinverterloadingratios.Currentdesignsfinditeconomictoincreasethenumberofpanelsinagivenfacilitytoincreaseoutputduringtheshoulderperiodsof
theday.Whilethissacrificesasmallamountofoutputatthepeak,theneteffectisgreateroverall
outputandimprovedsystemeconomics.OnefinalitemtokeepinmindisthatallsolarPVanalysisisbasedontheassumptionthat
thesiteswouldbegoodcandidatesforPV:southfacing,noroofupgrades,fewobstructions,and
typicallossesandmaintenancerequirements.Recentin‐citydesignswhichareprojectedtopotentiallyhavelowercapacityfactorsthanthoseestimatedinthisreportarenotduetomajor
differencesinthesolarresourcedata,butratherdifferentassumptionsfortilt,azimuth,shading,
andsoiling.
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4.2 TECHNOLOGY DESCRIPTION TherewerefourdifferentapplicationsidentifiedinthisprojectaslistedinTable4‐3.The
moduletechnologyassumedforallsystemsiscrystallinesiliconmodules.Thetechnical
characteristicsofthephotovoltaicsystemsinthistablearedescribedinthesectionsbelow.Black&
Veatchnotesthatthetechnologydescriptionsareofgeneralnatureandthesystemsdevelopedwith
thesefeaturesareataconceptuallevel.Theobjectiveinthisstudyistoprovideanindicationofthesystemssizeandcostbasedoncommerciallyavailableequipmentandtypicalconstruction
methodsusedinthesolarindustryasofthewritingofthisreport.
Table 4‐3 Solar System Applications
TYPE SIZE
Residentialrooftops 2.5 – 5kWac
Largerooftopsystemsforschools 50– 200kWac
Largerooftopsystemsforreservoirs 0.7 – 2.9 MWac
Utilityscale,groundmountedsystems 1.6– 20 MWac
4.2.1 Residential Rooftop Systems
Thisreportconsiderstworesidentialrooftopoptions–a2.5kWacsystemanda5kWac
system.ThesizeofthesystemsistypicalofresidentialapplicationsinCalifornia.Theexpectedlife
timeofthesystemis25yearsusingpoly‐crystallinesiliconmodulesratedat230Wdceach.Thetotalnumberofmodulesis13forthe2.5kWacsystem,requiringabout230squarefeetofavailable
area.Thissystemsizeandrooftopspacerequirementsaredoubledforthe5kWacsystem.The
modulesareflushmountedonanaluminumrack,elevatedlessthan12inchesfromthehouse’sroof,followingtheroof’stilt.Tomodelproductiontheroofwasassumedtohaveatiltof10degrees.
Forconstructionproductivityandinstallationcosts,itwasassumedthatthesupportofthesolar
rackwasbuilt‐intheroofatthetimeofthehouse’sconstruction(solarreadyroof).Thereisone
inverterpersystemwhichwillhavetobereplacedapproximatelyatyear12aftercommissioning.Thetypicalstandardwarrantyfortheseinvertersis10years.Theinvertersareservicefree,and
requirefullreplacementincaseoffailureorattheendofinverterlife.Thisisincontrasttolarger
inverterswhichcanberepairedandmaintainedduringtheirlifetime.Theinverterstieintothehouseholdelectricalmains,onthehousesideofthemeter.Themeterhasbi‐directional(net
metering)capabilities.
4.2.2 Commercial Rooftop Systems
Thisreportconsiderstwocommercialrooftopoptions–a50kWacsystemanda200kWacsystem.ThesizeofthesystemswasdefinedusingasareferencetwospecificschoolsinSan
Francisco:MarinaMiddleSchoolintheMarinaDistrictandThurgoodMarshallHighSchoolinthe
SilverTerraceDistrict.Theexpectedlifetimeofthesystemsis25yearsusingpoly‐crystallinesiliconmodulesratedat250Wdceach.The50kWacsystemcomprises224modules,requiringless
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than4,000squarefeetofavailableroofarea.The200kWacsystemutilizes896modules,requiring
about15,750squarefeetofrooftopspace.Themodulesaremountedonmetalstructureswithonemodulemountedonlandscapepositionandtilted10degrees.Thestructuresselectedaretypically
usedonrooftopapplications.Theyareattachedtotheroofthroughballasts(concreteblocks)and
fewanchorpointstothestructuralmembersoftheroof.Itisassumedthatbuildingstructureisabletosupporttheaddedweightofthesolarsystem.Itisalsoassumedthattheroofmembraneis
ingoodconditionsandthatonlyminimalroofpreparationsarerequiredbeforeinstallingthe
system.Nostructuralorroofretrofitswereincludedinthecostestimates.Thereisone50kWacinverterforthesmallersystemandtwo100kWacinvertersforthelargersystem.Theinverters
canbeinstalledontheroofornexttotheinterconnectionpoint.Theinverterswillhavetobe
refurbished(somecomponentswillbereplaced)approximatelyatyear12aftercommissioningbuttheyareexpectedtolastthelifeofthePVsystem.Thetypicalwarrantyoftheseinvertersis5years
standardwithoptionalpurchaseofextendedwarrantiesforupto20yearsaftertheendofthefirst
5years.Thetypicalmaintenancescheduleisonetotwotimesperyear.Incaseoffailures,repairsaremadeonsite.Typically,theinverterswilltie‐intotheexistingelectricalinfrastructurewithno
majorretrofitsrequired.Anewmetermayhavetobeinstalledwithbi‐directionalcapabilitiesfor
net‐metering.
4.2.3 Large Rooftop Systems for Reservoirs
ThesizeofthesystemswasdefinedusingsixspecificwaterreservoirsinSanFrancisco,basedonavailableareaspreviouslydevelopedbyconsultantstotheSFPUC.Thereservoirs
consideredinthisstudyare:
● CollegeHill● Summit
● StanfordHeights
● Sutro● UniversityMound
● Pulgas
Thereservoirroofshavealowweightbearingcapacityandlimitedsurfacearea.Becauseofthis,thesystemspecificationsforthesecasesarebasedonstandardcomponentsbuiltbySunPower
Corporationspecificallyforlight‐weightrooftopapplications.Othervendorscanprovide
equivalentsystems.Theexpectedlifetimeofthesystemsis25yearsusingmono‐crystallinesiliconmodulesratedat320Wdceach.Thetotalnumberofmodulesrangesbetween2,696forthe
smallestsystem(666kWac)attheSummitreservoirto11,672forthelargestsystem(2,880kWac)
atUniversityMound.Themodulesaremountedonpre‐engineeredstructurebuiltofapolymermaterial.Themodulesaremountedata5degreetilttominimizewindloadsandmaximizesurface
areacoverage.Duetothelowtiltandinter‐lockingfeaturesoftheunits,thestructuresarenot
attachedtotheroof.Fewanchorpointstothestructuralmembersoftheroofwereconsidered.Itisassumedthatbuildingstructureisabletosupporttheaddedweightofthesolarsystem.Itisalso
assumedthattheroofmembraneisingoodconditionsandthatonlyminimalroofpreparationsare
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requiredbeforeinstallingthesystem.Nostructuralorroofretrofitswereincludedinthecost
estimates.Theinvertersusedforthesesystemsareratedat100kWac,250kWacand500kWac.Theinverterswouldbeinstalledontheground.Theinverterswillhavetoberefurbished
approximatelyatyear12aftercommissioningbuttheyareexpectedtolastthelifeofthePV
system.Thetypicalwarrantyoftheseinvertersis5yearsstandardwithoptionalpurchaseofextendedwarrantiesforupto20yearsaftertheendofthefirst5years.Thetypicalmaintenance
scheduleisonetotwotimesperyear.Incaseoffailures,repairsaremadeonsite.Typically,the
inverterswilltie‐intotheexistingelectricalinfrastructurewithnomajorretrofitsrequired.Anewmetermayhavetobeinstalledwithbi‐directionalcapabilitiesfornet‐metering.
4.2.4 Utility Scale Ground Mounted Systems
ThesizeofthesystemswasdefinedfortwospecificSFPUCproperties–SunolandTesla.
Additionally,aconceptual20MWacsystemwasassumedaspartofthestatewideresourceassessment.
TheTeslaandSunolsitesareopenland.TheareaavailabletobuildaPVsystemateachsite
isapproximately100acresatSunoland8acresatTesla.Theareaforconstructionisassumedto
bemostlyflat.Theexpectedlifetimeofthesystemsis25yearsusingpoly‐crystallinesiliconmodulesratedat300Wdceach.Theconstructionapproachisbasedonbuildingblocks.Each
buildingblockisanindependentsystemratedat1.6MWacandintegratedby6,840modulesand
twoinverters,800kWaceach.Themodulesaremountedonmetalstructures.Bothfixedtiltandsingle‐axistrackersystemswereevaluated.
Forthefixedtiltsystem,twomodulesaremountedinportraitorientation(vertically
stacked)facingduesouthwithafixedtiltof27degreesattheSFPUClocationsand25degreesforthestatewidelocations.
Forthesingle‐axistrackersystem,onemoduleismountedonabeamthatrotatesthe
modulesEasttoWest,followingthedailysun‐path.Inthismanner,themoduleshaveagreaterexposuretothesunonadailybasis,whichincreasestheenergyproductionofthesystem.Single‐
axistrackersaremoreexpensivethanfixedtiltsystemsandrequiremoreland.
Thestructuresselectedforbothtypeofmountingstructuresaretypicallyusedonutility‐scaleapplications.Theyaresupportedbymetalbeamsthataredrivenintotheground.Itis
assumedthatthetopographyofthesiteismostlyflatsuchthatcoststoleveltheterrainarenot
significantrelativetothecostsoftheproject(lessthan2percent).Itisalsoassumedthatthesoilconditionsarenotcorrosiveandofadequateconsistencytousedrivenpilefoundations.Minimal
civilworksandminimalenvironmentalpermittingprocesseswereassumed.Thereisatotalof1
blockconsideredforTeslaand12blocksforSunol.Theestimatedsurfacearearequiredforthesesystemsis5.25acresperMWacforthefixedtiltand6.8acresperMWacforthesingle‐axis.The
inverterswouldbeinstalledoutdoorsorenclosedinsideaspecialcontainer.Theinverterswillhave
toberefurbished(somecriticalcomponentswillhavetobereplaced)approximatelyatyear12aftercommissioningbuttheyareexpectedtolastthelifeofthePVsystem.Thetypicalwarrantyof
theseinvertersis5yearsstandardwithoptionalpurchaseofextendedwarrantiesforupto20
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yearsaftertheendofthefirst5years.Thetypicalmaintenancescheduleisonetotwotimesper
year.Incaseoffailures,repairsaremadeonsite.Inatypicalelectricaldesignofautility‐scalesystemtheoutputoftheinvertersisconnectedtoamediumvoltagetransformer.Thepoweroutput
ofalltheblocksinthesystemiscollectedinanACcollectorstationandthenroutedtothepointof
interconnection.ThePVsystemwasassumedtobeco‐locatedwiththepointofinterconnection.Nonewtransmissionlineinfrastructurewasincludedinthecostestimates.Thecostforasubstationto
interconnectwasincludedforSunol.
4.3 RESOURCE AVAILABILITY SolarPVtechnologiesusedirectandindirectirradiancetogenerateelectricity.Therefore
theGHIwascharacterizedforthisstudy.
4.3.1 California Solar Resource Potential
Figure4‐2presentstheGHIforCalifornia,withseveralprojectsidentifiedforreference.For
solarPVprojects,resourceavailabilityistypicallynotthedecidingfactorinchoosingwheretositeaproject.Transmissionconstraintstypicallyhavegreaterinfluenceonprojectsiting.
4.3.2 San Francisco Solar Resource Potential
SanFranciscohasgoodsolarresourcepotential,andbenefitsfromcoolerweatherduring
theclearestdayswhichenablessolarpanelstogenerateelectricitymoreefficientlythaninhotterclimates.AvarietyoflocationswithinSanFranciscoweremodeledforthisstudyandwerefoundto
havetypicalannualGHIreadingfrom1636kW/m2to1757kW/m2asshowninthefigurebelow
basedonNRELdata.
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Figure 4‐2 Annual Global Horizontal Irradiance in California
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4.4 IN CITY COST AND PERFORMANCE CHARACTERISTICS ThePVsystemsconsideredforthecitywerederivedfromdiscussionswithSFPUC.There
werethreedifferentapplicationsidentifiedinthisprojectaslistedinTable4‐4.Theseoptionsare
meanttorepresentsomeoftherooftypesavailablewithinthecity.Thelocationofeachapplication
isshowninFigure4‐3.
Table 4‐4 In‐City Solar System Applications
TYPE SIZE LOCATION
Residentialsize 2.5kWac/5kWac HuntersPoint– Residentialdevelopment
Largerooftopsystemsfor
schools
50kWac/
200kWac
MarinaMiddle‐School(MarinaDistrict)
ThurgoodMarshallHighSchool(SilverTerraceDistrict)
Largerooftopsystemsforreservoirs
670kWac‐2.9MWac
CollegeHillReservoirSummitReservoirStanfordHeightsReservoirSutroReservoir
UniversityMoundReservoirPulgasBalancingReservoir
Black&Veatchdevelopedconceptualdesignsforeachofthesystemstoestimateinstalled
costs.Thesedesignswerealsothebasistodevelopedelectricalenergyproductionestimatesusing
thesolarresourcedatadiscussedinSection4.3.Black&VeatchalsoreviewedsystemdesignandcostsestimatesmadeforthereservoirsandpreparedbyAEPCGroup,LLCinSeptember2011.This
sectionincludestheestimatesfoundinthosereportsandtheupdatesmadebyBlack&Veatch.
Majorupdatesincludethefollowing:● ThecostsestimatesprovidedbyAEPCGroupareoutdated.Thepriceofphotovoltaic
moduleshasdecreasedsignificantlysince2011.Inaddition,thepriceofbalanceofsystems
equipmenthasalsodroppedandtheconstructionmethodshaveimproved.● Theefficiencyofmoduleshasalsoincreased,whichprovidesahigherpowerdensity(W/sq.
ft.)thanthe2011modules.
● TherearesomedifferencesintheestimatesofsurfaceareaavailableasreportedbyAEPCGroupandfoundbyBlack&Veatchforseveralreservoirs.Basedonmeasurementsderived
fromaerialimages(GoogleEarth)anddiscussionswiththeSFPUC,Black&Veatchmade
updatestothepreviousestimateswhereappropriate.Inmostcasesthepreviousassumedareawasmaintainedforthisstudy.
● Black&VeatchreceivedguidancefromSFPUCtousetheinterconnectionandstructural
assumptionslaidoutintheAEPCreports.
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Figure 4‐3 Map of In‐City Locations and Pulgas
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Detailedcapitalcostassessmentswereperformedforeachsolarsite.Theinitialbasisforall
in‐citycostestimateswastypicalprivateindustrydevelopmentcostsandlaborproductivity.Thesecostestimateswerethenadjustedbasedonactualdevelopmentcostfactorsforprojectsinstalledin
SanFranciscoaspartoftheCSIprogram.9Asummaryofthe2013CSIcapitalcostdata,in$/kWdc,
forprojects250kWorsmallerinlocationsthroughoutCaliforniaisshownbelow.DifferencesbetweentheoriginalestimatesandtheCSIdatawereusedtoadjustin‐citycosts.
Figure 4‐4 CSI Average 2013 Solar PV Capital Costs, 0 to 250 kW ($/kWdc)
ForSanFrancisco,thisdataindicatesthatformanyrooftopprojects,thecapitalcost
averagedroughly$6/Wdc,equivalenttoabout$7.7/Wac.Thesecoststakeintoaccountprevailingwages,productivity,andsystemdesignrequirements.Whileprojectsthatwillbeinstalledon
SFPUCreservoirswillbelargerthanthesystemsreportedbytheCSI,similarcostfactor
adjustmentsforSanFranciscoremainrelevantforSFPUCdevelopedprojectsasconfirmedwithSFPUCstaff.
4.4.1 Hunters Point Development
DevelopmentofrooftopsolarPVonnewresidentialconstructionintheHuntersPoint
neighborhoodwasevaluated.Theresidentialsystemsarehighlyvariableintermsoforientation(tiltandazimuth)duetothediversityofroof’sorientations.BecausemostroofsinthecityofSan
9 Data is available at http://www.californiasolarstatistics.ca.gov/current_data_files/
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Franciscoarebuiltwithsimilarstructuraldesignandmaterials,themountingfeaturesand
electricaldesignarerelativelysimilarindependentlyofthetiltandorientation.Therearevariationsininstalledsystemcostsduetodifferentsupplierandintegratorprices,designandconstruction
productivity,andeconomiesofscaleforlargeprocurementvolumes.Black&Veatch’sestimates
aremeanttoprovideanaveragesystemcost.
Table 4‐5 Hunters Point Development PV Design and Performance Assumptions
PARAMETER 2.5 KWAC SYSTEM 5 KWAC SYSTEM
TotalArea(sq.ft.) 230 460
ModuleType Poly‐crystalline(230W)
MountingType Flushmounted|10degrees|FacingSouth‐southwest(35deg. azimuth)
TMY‐GHI(W/m2) 1,757
PVSystemSize(kWac) 2.5 5
ACCapacityFactor(percent) 20.3 20.3
EnergyYield(kWh/kWp) 1,490 1,490
Production(kWh/yr) 4,455 8,910
CapitalCost(2013$) 18,410 36,825
TheremayalsobepotentialfordevelopmentofgroundmountedsolarintheHuntersPoint
area.ParcelE,a138acrepieceoflandlargelyusedforlandfillinthepast,couldhostalargesolararray.Detailedinvestigationofthepotentialforthissitetodevelopandinterconnectionwasnot
performed;however,thesizeandlocationofthesitecouldbeattractiveforalargescalesolar
projectclosetoSFPUCload.ThechallengesindevelopingaprojectonaformerSuperfundlandfillsiteandthelowersolarirradiancerelativetotheothergroundmountedsitesconsideredwould
likelyleadtohighercostsrelativetootherlarge‐scaleoptionsevaluatedinthisreport.
4.4.2 School Buildings
LargeflatroofsarefoundextensivelythroughoutthecityofSanFrancisco.Thesebuildingstendtobewarehousetypeofstructureorconcretebuildings.Thebuildingsconsideredforthis
studyareschoolbuildings(typicallyconcrete),whicharewithinSFPUC’sjurisdiction.The
orientationofthebuildingsmaynotbethebestrelativetooptimalsolargain(buildingroofalignedonatrueNorth‐Southaxis).Therefore,thegeometryofthesolarsystemrelativetothegeometry
andorientationofthebuildingmaybethesameordifferent.Matchingthegeometryofthesolar
systemtothegeometryoftheroof’sbuildingwillmaximizethepowerdensityofthesolarsystem.However,thiscancauseamisalignmentofthesolarsystemtotheoptimalorientation(modulesnot
facingtrueSouth),whichwillreducetheenergyproduction.Becausetheroofsareflat,itispossible
toalignthesolarsystemtotheoptimalorientationalthoughthiswouldreducethecapacityofthe
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system.Black&Veatchassumedanoptimalorientationfortheschoolsystems,thatis,themodules
arefacingtrueSouth.Fortheelectricalinterconnection,Black&Veatchassumedthatthereisenoughspaceand
capacityforabustapattheexistingelectricalswitchgearofthebuilding.Onlyminorelectrical
infrastructureretrofitsareincludedinthecostsestimates.Theinterconnectionwouldbeat480Vac(3phases).
Black&Veatchassumedthatthebuildingshavethestructuralcapacitysupportthestatic
(weight)anddynamic(wind)loadsaddedbythesolarsystem.Nostructuralretrofitswereincludedinthesystemcostsestimates.Black&Veatchalsoassumedthattheroofmembraneisingood
conditionsandthatonlyminorrepairs,includingthosecausedbyconstructiondamagesand
anchoringofthemountingstructure,arerequiredbefore,duringandafterinstallingthesolarsystem.
Therearevariationsininstalledsystemcostsduetodifferentsupplierandsystem
integratorprices,designandconstructionproductivityandeconomiesofscaleforlargeprocurementvolumes.Black&Veatch’sestimatesaremeanttoprovideanaveragesystemcost.For
theschoolsystems,Black&Veatchdidnotassumedeconomiesofscaleandconsideredthatthe
equipmentandmaterialprocurementonlyappliedtothespecificproject.However,somediscountinequipmentprice,designandlaborproductivitywasgivenassumingtheprojectisdevelopedby
anexperiencedsolarintegrator.
Table 4‐6 School Buildings PV Design and Performance Assumptions
PARAMETER
MARINA MIDDLE SCHOOL
50 KWAC SYSTEM
THURGOOD MARSHALL
200 KWAC SYSTEM
TotalArea(sq.ft.) 4,000 15,800
ModuleType Poly‐crystalline(250W)
MountingType Fixedtilt|ballasted|10degrees|FacingSouth(0deg.azimuth)
TMY‐GHI(W/m2) 1673 1,730
PVSystemSize(kWac) 50 200
ACCapacityFactor(percent) 21.1 22.3
EnergyYield(kWh/kWp) 1,421 1,500
Production(kWh/yr) 92,337 390,014
CapitalCost(2013$) 362,250 1,233,000
4.4.3 Reservoirs
Black&VeatchconsideredsixspecificwaterreservoirswithinthecityofSanFranciscoasindicatedbytheSFPUC.Thewaterreservoirshavelargeflatroofs,whichmakesthemideal
candidatesforsolarsystems.However,asindicatedbytheAEPCGroup’sreports,thestructural
capacityoftheseroofsislimitedtolessthan6poundspersquarefoot(psf).Inthecaseofthe
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CollegeHillreservoir,therecommendedloadisupto2.7psf.Black&Veatchdidnotreviewany
structuralinformationforthesebuildingsandusedtheguidelinesintheAEPCGroup’sreports.Toaddressthelowweightcapacityofthereservoirs’roof,Black&Veatchassumedtheuse
oftheT5productmanufacturedandsoldbySunPowerCorporation.Theselectionofthis
equipmenttodevelopconceptualdesignsdoesnotimplyanyrecommendationonthepartofBlack&Veatchtousethisequipment.Othervendorsmayofferanequivalentorbettersolution.Inthe
reportsdevelopedbyAEPCGroup,themoduleandmountingstructureselectedappeartonolonger
existinthemarket.Othermajorassumptionsincludethefollowing:● Optimalorientationofthemodules(Southfacing)andapproximately95percentcoverageof
thetotalroofsurface.Basedonaerialimages,theroofsappeartoberelativelyfreeof
equipment.Shadingfromnearbyobjectsthatmaylimitthesystemwasnotconsideredforthispreliminaryassessment.Roofconditions,roofobjects,shadingandstructuralcapacity
arekeyfeaturesthatwillhavetobeassessedindetailforprojectdevelopmentand
construction.● TheelectricalinterconnectioncharacteristicsweretakenfromtheAEPCGroup’sreports,
whichconsideredatie‐intoanearbyPG&Esubstationwitha480Vacdistributionsection.
Onlyminorelectricalinfrastructureretrofitsareincludedinthecostestimates.● Theroofisingoodconditionandthatonlyminorrepairs,includingthosecausedby
constructiondamagesandanchoringofthemountingstructure,arerequiredbefore,during
andafterinstallingthesolarsystem.● Therearevariationsininstalledsystemcostsduetodifferentsupplierandsystemintegrator
prices,designandconstructionproductivityandeconomiesofscaleforlargeprocurement
volumes.Estimatesaremeanttoprovideanaveragesystemcost.Discountsareappliedtothecostduetothelargescaleofeachreservoirsystem.
GoogleEarthimages,solarirradiance,systemsize,capacityfactor,production,andcost
estimatesforeachreservoirareshownonthefollowingpages.
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CollegeHillReservoir‐CollegeHillreservoirisasingle,largeovalshapedbuildingwitha
flatroofasshowninFigure4‐5.
Figure 4‐5 College Hill Reservoir
Table 4‐7 College Hill Reservoir Design and Performance Assumptions
PARAMETER PREVIOUS ASSUMPTION UPDATED ASSUMPTION
NetareaforPV(sq.ft.) 104,000 Nochange
ModuleType Mono‐crystalline(450W) Mono‐crystalline(320W)
MountingType Roofingmembrane|Modulebuilt‐in|SolarSave
Polymerstructure,built‐in|SunPowerT5
TMY‐GHI(W/m2) NotReported 1,730
PVSystemSize(kWac) 500 895
ACCapacityFactor(percent) NotReported 20.8
EnergyYield(kWh/kWp) NotReported 1,405
Production(kWh/yr) NotReported 1,628,788
CapitalCost(2013$) 6,500,000 5,370,000
CapitalCost($/Wp) 10.03 4.63
CapitalCost($/Wac) 13.00 6.00
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SummitReservoir‐Summitreservoirisasingle,largerectangular/octagonalshaped
buildingwithaflatroofasshowninFigure4‐6.
Figure 4‐6 Summit Hill Reservoir
Table 4‐8 Summit Reservoir Design and Performance Assumptions
PARAMETER PREVIOUS ASSUMPTION UPDATED ASSUMPTION
NetareaforPV(sq.ft.) 77,400 Nochange
ModuleType Mono‐crystalline(450W) Mono‐crystalline(320W)
MountingType Roofingmembrane|Modulebuilt‐in|SolarSave
Polymerstructure,built‐in|SunPowerT5
TMY‐GHI(W/m2) NotReported 1,639
PVSystemSize(kWac) 500 664
ACCapacityFactor(percent) NotReported 19.7
EnergyYield(kWh/kWp) NotReported 1,329
Production(kWh/yr) NotReported 1,146,590
CapitalCost(2013$) 6,500,000 4,033,800
CapitalCost($/Wp) 10.03 4.68
CapitalCost($/Wac) 13.00 6.08
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StanfordHeightsReservoir+‐StanfordHeightsreservoirisasingle,largetrapezoid
shapedbuildingwithaconcreteflatroofasshowninFigure4‐7.
Figure 4‐7 Stanford Heights Reservoir
Table 4‐9 Stanford Heights Reservoir Design and Performance Assumptions
PARAMETER PREVIOUSASSUMPTION UPDATEDASSUMPTION
NetareaforPV(sq.ft.) 138,000 81,750
ModuleType Mono‐crystalline(450W) Mono‐crystalline(320W)
MountingType Roofingmembrane|Module
built‐in|SolarSave
Polymerstructure,built‐in|
SunPowerT5
TMY‐GHI(W/m2) NotReported 1,635
PVSystemSize(kWac) 1,000 704
ACCapacityFactor(percent) NotReported 19.6
EnergyYield(kWh/kWp) NotReported 1,326
Production(kWh/yr) NotReported 1,208,475
CapitalCost(2013$) 6,500,000 4,266,240
CapitalCost($/Wp) 10.03 4.68
CapitalCost($/Wac) 13.00 6.06
Black&Veatchnotesthatthereisasignificantdiscrepancyintheestimatednetsurfacearea
forthesolarsystem.ApproximationsofavailablesurfaceroofareausingGoogleEarthindicatesamuchsmalleravailableareathanquotedbyAEPC.
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SutroReservoir‐Sutroreservoirisasingle,largerectangularshapedbuildingwithaflat
roofasshowninFigure4‐8.
Figure 4‐8 Sutro Reservoir
Table 4‐10 Sutro Reservoir Design and Performance Assumptions
PARAMETER PREVIOUS ASSUMPTION UPDATED ASSUMPTION
NetareaforPV(sq.ft.) 233,600 Nochange
ModuleType Mono‐crystalline(450W) Mono‐crystalline(320W)
MountingType Roofingmembrane|Modulebuilt‐in|SolarSave
Polymerstructure,built‐in|SunPowerT5
TMY‐GHI(W/m2) NotReported 1,639
PVSystemSize(kWac) 1,500 2,010
ACCapacityFactor(percent) NotReported 19.7
EnergyYield(kWh/kWp) NotReported 1,329
Production(kWh/yr) NotReported 3,460,183
CapitalCost(2013$) 19,500,000 11,155,500
CapitalCost($/Wp) 10.03 4.29
CapitalCost($/Wac) 13.00 5.55
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UniversityMoundReservoir‐UniversityMoundreservoirisasingle,rectangularshaped
buildingwithaflatroofasshowninFigure4‐9.
Figure 4‐9 University Mound Reservoir
Table 4‐11 University Mound Reservoir Design and Performance Assumptions
PARAMETER PREVIOUS ASSUMPTION UPDATED ASSUMPTION
NetareaforPV(sq.ft.) 192,000 335,250
ModuleType Mono‐crystalline(450W) Mono‐crystalline(320W)
MountingType Roofingmembrane|Modulebuilt‐in|SolarSave
Polymerstructure,built‐in|SunPowerT5
TMY‐GHI(W/m2) NotReported 1,735
PVSystemSize(kWac) 1,500 2,883
ACCapacityFactor(percent) NotReported 20.8
EnergyYield(kWh/kWp) NotReported 1,408
Production(kWh/yr) NotReported 5,259,054
CapitalCost(2013$) 19,500,000 15,524,000
CapitalCost($/Wp) 10.03 4.16
CapitalCost($/Wac) 13.00 5.39
ItisunclearwhytheAEPCGroupconsideredasmallersurfacearearelativetothepotential
roofsize.
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BLACK & VEATCH | Solar Photovoltaic Resource Assessment 4‐20
PulgasBalancingReservoir–PulgasBalancingreservoirisasingle,squareshaped
buildingwithaflatroofasshowninFigure4‐10.
Figure 4‐10 Pulgas Balancing Reservoir
Table 4‐12 Pulgas Balancing Reservoir Design and Performance Assumptions
PARAMETER PREVIOUS ASSUMPTION UPDATED ASSUMPTION
NetareaforPV(sq.ft.) 255,380 Nochange
ModuleType Mono‐crystalline(450W) Mono‐crystalline(320W)
MountingType Roofingmembrane|Modulebuilt‐in|SolarSave
Polymerstructure,built‐in|SunPowerT5
TMY‐GHI(W/m2) NotReported 1,827
PVSystemSize(kWac) 2,000 2,650
ACCapacityFactor(percent) NotReported 21.5
EnergyYield(kWh/kWp) NotReported 1,453
Production(kWh/yr) NotReported 4,987,126
CapitalCost(2013$) 25,500,000 14,270,000
CapitalCost($/Wp) 9.84 4.16
CapitalCost($/Wac) 12.75 5.39
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4.5 UPCOUNTRY COST AND PERFORMANCE ESTIMATES TheupcountrysitesconsideredforPVsystemdevelopmentwerederivedfromdiscussions
withSFPUC.Theupcountrysystemsaregroundmounted,utility‐scalesystemsattwolocations,
TeslaPortalandSunolValleyasshowinFigure4‐11.
Figure 4‐11 Map of Upcountry Project Sites
Black&Veatchdevelopedconceptualdesignsforthetwosystemstoestimateinstalled
costs.ThesedesignswerealsothebasistodevelopelectricalenergyproductionestimatesusingthesolarresourcedatadiscussedinSection4.3.Thekeyassumptionsmadeforeachofthesystemsand
theresultsaredescribedbelow.
● ThecostestimatesprovidedbyAEPCGroupareoutdated.Thepriceofphotovoltaicmoduleshasdecreasedsignificantlyinthelastfewyears.Inaddition,thepriceofbalanceofsystems
equipmenthasalsodroppedandtheconstructionmethodshaveimproved.Detailedcapital
costassessmentswereperformedforeachsolarsiteusingtypicalprivateindustry
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BLACK & VEATCH | Solar Photovoltaic Resource Assessment 4‐22
developmentcostsandlaborproductivity.Unlikethein‐citycostestimates,noadjustments
weremadetoreflecthigherSFPUCprices.● Theefficiencyofmoduleshasalsoincreased,whichprovidesahigherpowerdensity(W/sq.
ft.)thanthe2011modules.Black&VeatchnotesthatAEPCGroup’sassumptionsonsurface
arearequiredforthePVsystemarenowunrealistic.● BasedonthemapsprovidedtoBlack&Veatch,itappearsthatthereisnotenoughland
availabletoreachthedesigncapacityidentifiedbyAEPC.
● Thesitesareassumedtoberelativelyflatwithadequatesoilconsistencyfortheuseofdrivenpiles.Relativelysimplesitepreparations(vegetationremoval,earthworks,grading,
etc.)wereconsidered.
● Afixedtiltsystemwasassumedforbothsites.Fixedtiltsystemsaremorecompactthansingle‐axistrackersystemsandhavealowercapitalexpenditure.Themodulesaremounted
atanoptimalorientation(Southfacing).
● TheelectricalinterconnectioncharacteristicsweretakenfromtheAEPCGroup’sreports,whichconsideredatie‐intoanearbyPG&Edistributionlinesat12kV.Notransmissionline
costswereconsideredasinterconnectioninfrastructurewasassumedtobeco‐locatedwith
thetransmissionlinesandattheedgeofthePVpowerplant.Theinterconnectionrequirementsandmethodsmustbereviewedindetailforprojectdevelopment.
4.5.1 Tesla Portal
Table4‐13presentsthefindingsforTeslaPortal.
Table 4‐13 Tesla Portal Photovoltaic Design and Performance Assumptions
PARAMETER PREVIOUS ASSUMPTION UPDATED ASSUMPTION
AvailableArea(acre) 16.5 8
AcreperMWac 2.4 5.2
ModuleType Mono‐crystalline(210W) Poly‐crystalline(300W)
MountingType Fixedtilt(anglenotreported) Fixedtilt–27degrees
TMY‐GHI(W/m2) NotReported 1,893
PVSystemSize(kWac) 5,500 1,600
ACCapacityFactor(percent) NotReported 24.8
EnergyYield(kWh/kWp) NotReported 1,691
Production(kWh/yr) NotReported 3,470,142
CapitalCost(2013$) 57,100,000 5,472,530
CapitalCost($/Wp) 8.00 2.67
CapitalCost($/Wac) 10.38 3.42
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Black&VeatchnotesthatAEPCGroup’sassumptionsof2.4acreperMWacareunrealistic.
Also,inconsultationwithSFPUCtheavailableareawasreducedfromearlierestimatestotakeintoaccountrecentconstructionactivityatTeslaPortalthatreducedtheavailableareaforPV.
4.5.2 Sunol Valley
Table4‐14presentsthefindingsforSunolValley.
Table 4‐14 Sunol Valley Photovoltaic Design and Performance Assumptions
PARAMETER PREVIOUS ASSUMPTION UPDATED ASSUMPTION
AvailableArea(acre) 100 NoChange
AcreperMWac 2.5 5.25
ModuleType Mono‐crystalline(210W) Poly‐crystalline(300W)
MountingType Fixedtilt(anglenotreported) Fixedtilt–27degrees
TMY‐GHI(W/m2) NotReported 1,854
PVSystemSize(kWac) 20,000 19,200
ACCapacityFactor(percent) NotReported 23.9
EnergyYield(kWh/kWp) NotReported 1,631
Production(kWh/yr) NotReported 40,162,953
CapitalCost(2013$) 207,800,000 47,884,188
CapitalCost($/Wp) 8.00 2.28
CapitalCost($/Wac) 10.39 2.93
Black&VeatchnotesthatAEPCGroup’sassumptionsof2.5acreperMWacareunrealistic.
4.5.3 Warnerville
Unliketheothertwolocations,theSFPUCdoesnotownthelandthathoststheWarnervilleSwitchyard,butmaybeabletoobtainlong‐termleasesforprojectdevelopment.TheWarnerville
Switchyardislocatedat10501WarnervilleRd,Oakdale,CA95361andissurroundedprimarilyby
agriculturalland.ThesiteisrelativelyflatandcouldbesuitableforthedevelopmentofasolarPVfacility,possiblymoresothanSunolorTesladuetothefavorabletopography.Asiteassessment
wasnotperformedforthisstudybutmaybeconsideredinfutureupdates.
4.6 COST AND PERFORMANCE ESTIMATES FOR OTHER IN‐STATE LOCATIONS Toprovideabasisforcomparisontoin‐citycosts,severalpotentialprojectlocationswere
selectedinCalifornia.Black&Veatchdevelopedtwotypical,conceptualdesignsforutility‐scale
photovoltaicinstallations:fixedtiltandtracking.Bothdesignsweremodeledateachofthreerepresentativeprojectlocations.
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4.6.1 System Parameters
Tobestrepresentallcommercialoptionsforutility‐scalesolar,Black&Veatchdeveloped
systemdesignsforbothfixedtiltandtrackingphotovoltaicsystems.Bothsystemsarebasedonpolycrystallinemodulesandaretypicalofthecurrentstateofutility‐scaledesign.
Table 4‐15 Fixed Tilt Design Assumptions for Statewide Projects
PARAMETER VALUE NOTES
Module 300Wattpolycrystalline Generic72‐cellmodule
Inverter 500kW Pairedinto1MWblocks
MountingType Fixedracks Orientedtwohighinportrait
MountingOrientation 25degreetilt;facingduesouth
MountingSpacing 15ft. clearrowspacing
PVSystemSize(MWac) 20MW Sumofinverternameplate
PVSystemSize(MWdc) 27.7MW Sumofmodulerating
Table 4‐16 Tracking Design Assumptions for Statewide Projects
PARAMETER VALUE NOTES
Module 300Watt polycrystalline Generic72‐cellmodule
Inverter 500kW Pairedinto1MWblocks
MountingType SingleAxisTracking Orientedonehighinportrait
MountingOrientation RowsorientedN‐S,trackingE‐W
GroundCoverageRatio 37 percent
PVSystemSize(MWac) 20MW Sumofinverternameplate
PVSystemSize(MWdc) 25.9MW Sumofmodulerating
4.6.2 System Costs
Black&Veatchdevelopedcostestimatesfortheconstructionandoperationofthe
conceptualutility‐scaleplantsinCalifornia.Capitalcostsarefortheovernightconstructionofthefacilityinthesecondhalfof2013byaprivatedeveloperusingtypicalindustryspecifications.
SpecificlocationandinterconnectiondetailswerenotdevelopedfortheconceptualPVsystems
becausethesitingofthesystemsisflexibletomakebestuseofavailabletransmission.Forthisreason,thecapitalcostsincludethecostofagenerictransmissioninterconnectionusinga34.5kV
onsitesubstationwithnosignificantgen‐tierequired.Itisassumedthatthiscostisrepresentative
ofopportunitiesinthevicinityoftheselectedprojectlocations.
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Table 4‐17 System Costs for Statewide Projects
CAPITAL COST (2013$/KWAC)
FIXED ANNUAL COST
(2013$/KWAC/YR)
FixedTiltDesign $3,289 $29
TrackingDesign $3,536 $32
Note:O&Mcostsexcludepropertytaxes,butincludelandleasepaymentsandinsurance.
4.6.3 Project Locations
Forthepurposesofmodelingsystemperformance,Black&Veatchselectedproject
locationswhicharerepresentativeofutility‐scaleprojectsinCalifornia.Theselectedlocations
satisfythefollowingrequirements.● HasavailabletransmissioncapacitybasedonBlack&Veatch’sanalysisofmajorsubstations.
● HasdemonstratedcommercialinterestbasedonBlack&Veatchmarketexperience,PPA
contractinformation,andinterconnectionrequests● Islocatedinaregionwithasignificantamountofdevelopableland,basedonGISanalysisof
terrain,environmentalconcerns,farmlandprotection,militaryland,andotherconcerns.
Projectlocationswerechosentobethesitesofmajortransmissionsubstations.Black&Veatchdoesnotsuggestthatdevelopmentatthesubstationislikely,butnotesthatthesolar
resourceatthesubstationsitecanrepresenttheresourceforprojectsintheregion.Torepresent
thediversityofsystemperformanceavailableinCalifornia,onesubstationwaschosenfromeachofCalifornia’sthreeInvestorOwnedUtilities.Thisprovidedgoodrepresentationofthespectrumof
climateswhicharebeingdevelopedinCalifornia.
Table 4‐18 Statewide Project Locations
SUBSTATION /
LOCATION COUNTY
GLOBAL HORIZONTAL
IRRADIANCE
(KWH/SQM/DAY) NOTES
Midway(Path15) Kern 5.45 SouthernCentralValley
Windhub Kern 5.80 Tehachapi
ImperialValley Imperial 5.56 ImperialValley/Sunrise
4.6.4 System Performance
Black&Veatchmodeledtheperformanceofsystemsmatchingourconceptualdesignsat
eachoftheselectedlocations.TheperformancemodelwasbasedontheNationalRenewableEnergyLaboratory’sSolarAdvisorModelalongwithdatafromtheNationalSolarRadiation
Database.Themodelwasbasedonthedesignparametersdescribedaboveaswellasstandard
industryassumptions.
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Table 4‐19 Statewide Fixed Tilt System Performance
LOCATION AC CAPACITY FACTOR ANNUAL GENERATION
Midway 26.7 percent 46.9MWh
Windhub 29.2 percent 51.2MWh
ImperialValley 28.2 percent 49.4MWh
Table 4‐20 Statewide Single Axis Tracking System Performance
LOCATION AC CAPACITY FACTOR ANNUAL GENERATION
Midway 31.6 percent 55.4MWh
Windhub 35.9 percent 62.8MWh
ImperialValley 33.4 percent 58.5MWh
4.7 COMPARISON BETWEEN LOCATIONS Thissectionsummarizescostandperformanceparametersestimatedtoin‐city,upcountry,
andstatewideprojectlocations.
Table 4‐21 In‐City Photovoltaic Costs and Performance Comparison
LOCATION
NET PLANT
CAPACITY
(KWAC)
AC CAPACITY
FACTOR
(PERCENT)
CAPITAL COST
($/KWAC)
O&M COST
($/KW‐YR)
HuntersPoint 2.5 20.3 7365 45
HuntersPoint 5 20.3 7365 45
MarinaMiddleSchool 50 21.1 7245 27
ThurgoodMarshall 200 22.3 6165 27
CollegeHillReservoir 895 20.8 6000 27
SummitReservoir 664 19.7 6075 27
StanfordHeightsReservoir 704 19.6 6060 27
SutroReservoir 2,010 19.7 5550 27
UniversityReservoir 2,883 20.8 5385 27
PulgasReservoir 2,650 21.5 5385 27
Notes:
Costsreflectallconstructionanddevelopmentrequirementsfornewconstructionwithfewsiteimprovements.Theydonotreflectanyincentivesortaxcredits
PulgasBalancingReservoirislocatedoutsideofSFCitylimits O&Mcostsexcludepropertytaxesandlandleasepayments,butincludeinsurance
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Table 4‐22 Upcountry Photovoltaic Costs and Performance Comparison
LOCATION
NET PLANT
CAPACITY (KWAC)
AC CAPACITY
FACTOR (PERCENT)
CAPITAL COST
($/KWAC)
O&M COST
($/KW‐YR)
Sunol 19,200 23.9 2.930 22
Tesla 1,600 24.8 3,420 22
Notes:
Reflectscostsofnewgenerationusingtypicalindustrydevelopmentassumptions Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectany
incentivesortaxcredits O&Mcostsexcludepropertytaxesandlandleasepayments,butincludeinsurance
Table 4‐23 Statewide Photovoltaic Costs and Performance Comparison
LOCATION
NET PLANT
CAPACITY (KWAC)
AC CAPACITY
FACTOR (PERCENT)
CAPITAL COST
($/KWAC)
O&M COST
($/KW‐YR)
MidwayFixedTilt 20,000 26.7 3,289 29
MidwayTracking 20,000 31.6 3,536 32
WindhubFixedTilt 20,000 29.2 3,289 29
WindhubTracking 20,000 35.9 3,536 32
ImperialValleyFixedTilt 20,000 28.2 3,289 29
ImperialValleyTracking 20,000 33.4 3,536 32
Notes:
Reflectscostsofnewgenerationusingtypicalindustrydevelopmentassumptionsatsiteswithfewbarrierstoconstruction
Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectanyincentivesortaxcredits
O&Mcostsexcludepropertytaxesandlandleasepayments,butincludeinsurance
4.8 DEVELOPMENT CHALLENGES SolarPVprojectsfacemanytypesofdevelopmentchallenges.Thosecommontoanytypeof
developmentincludetechnicalrisks,suchastheadequacyofthepowergridtotransmitthepower,
thedistancefromtransmissioninterconnectionpoints,scheduledelays,developmentcost
overruns,andpowerplantperformance.Regulatoryandlegalrisksalsoapply,suchaspotentialenvironmentalimpacts,landuseandzoningconstraints,ownershipandaccessissues,permitting,
regulatoryapprovalofPPAterms,andavailabilityoftaxincentives.Commercialriskscommonto
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BLACK & VEATCH | Solar Photovoltaic Resource Assessment 4‐28
manytypesofpowerplantsincludetheabilitytonegotiateacommerciallyviablePPAprice,the
creditworthinessoftheoff‐taker,macroeconomicriskssuchasgrowthrates,inflation,andpowerdemand,aswellastheabilitytoattractequityinvestmentandobtainprojectfinance.Someorallof
theseareusuallypresentinasolarproject.
Solarresourceuncertaintyisarisktosolarprojects.Thesolarresourceismorepredictableandstablethanotherrenewableresources,butitisstillspecifictotheprojectsite.Gooddataon
thesite‐specificresourcemaynotbeeasilyavailable,andexpectedinterannualvariabilitycanmean
thatalongdatahistoryisneededtoachieveconfidenceinthelong‐termperformanceoftheproject.Thereareafewrisksassociatedwiththesuitabilityoftheprojectsite.Shadingofthesolar
projectisarisktoprojectproduction.Foragroundmountedsite,thismaybetreesthatcannotbe
removedorfeaturesonthehorizon.Foraroof‐mountedsite,thiscouldbenearbystructures,equipment,orarchitecturalfeatures.
Foragroundmountedsite,thetopographyordrainagecouldbetoodemandingfor
economicsolaruse.Solarprojectstypicallyoccupylargeareasofland,butcannotbearthecostofsignificantcivilworks.Further,itcanbehardtopermitaprojectunlesslandfeaturesare
preserved,whichcanfragmenttheprojectsite.Afragmentedprojectsitecanbeprohibitively
complextodevelop.Forarooftopsite,thereisriskassociatedwiththeconditionoftheroof.Thestructureof
theroofmustbeprovenadequatefortheadditionalloadsassociatedwiththesolarsystem.These
includewindloadsinadditiontotheweightofthesystem.Alsothelifetimeofthesolarsystemcanextendbeyondtheremaininglifeoftheroofingmaterial,whichcanaddadditionallifetimecostto
theproject.
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BLACK & VEATCH | Wind Resource Assessment 5‐1
5.0 Wind Resource Assessment Aselectionofprojectlocationsandsizeswereconsideredinthisassessmenttodevelopthe
technicalbasisforestimatingthecostandperformanceforwindresourcesthataretypicalofthe
typesofopportunitiesavailabletotheSFPUC.
5.1 TECHNOLOGY DESCRIPTION Windenergytechnologyhasmademajoradvancementssincetheproductionofwind
turbinesintheearly1980’s.Threedecadesoftechnologicalprogresshasresultedintoday’swindturbinesbeingacuttingedgetechnology.Amodern,singlewindturbinehastheabilitytoproduce
nearlytwohundredtimesmoreelectricityannuallyandatlessthanhalfthecostperkilowatt‐hour
thanitsequivalenttwentyyearsago.Thewindpowersectornowincludessomeoftheworld’slargestenergycompanies.
Awindfarmtypicallyconsistsofmanyindividualwindturbinesspreadacrossalargearea.
Theoverallshapeandsizeofawindfarmvarieswitheachindividualproject,buttheyaretypicallyarrangedinseveralrowsorclusterofturbines.Windresource,terrain,landcover,landownership,
residences,environmentalrestrictions,andexistingroadnetworksallinfluencethefinal
configurationofawindproject.Althoughalargeamountoflandisrequiredfordevelopmentandconstructionofawindproject,mostofthelandisundisturbedbytheprojectandcanremaininuse
foritsoriginalpurpose.Thismakeslargewindprojectshighlycompatiblewithagricultural
activities,withsomeexceptionssuchasaerialapplicationofpesticidesandfertilizers.Windturbinesgenerallyaremountedtorelativelyshallowoctagonalinvertedteespread
footingfoundations,typicallybetween50and60feetacross,withanchorboltsembeddedintoa
smallercircularpedestal10‐15feetacross,towhichtheturbinetowerismounted.Dependingonthespecificconfigurationofthewindturbinegenerators,asmalltransformermaybemounted
adjacenttotheturbinebase,insidethebaseoftheturbinetower,orintheturbinenacelle.This
transformerconvertspowerfromthetypical600Vgeneratingvoltagetothe35kVclasscollectionsystemvoltage(typically34.5kVintheUS).
Acentralcollectionsubstationisgenerallybuiltwithintheoverallfootprintofawindfarm.
Thiscollectionsubstationincludesthemainpowertransformer,whichconvertsthecollectionsystemvoltagetothevoltageoftheinterconnectiontransmissionline.Fromthiscollection
substationwindfarmisinterconnectedtothegrid.Theinterconnectionpointmaybeadjacentto
thesubstationifitisbuiltalongtheinterconnectingtransmissionline,ortheprojectmayconstructanewtransmissionlineandinterconnectionswitchyardadjacenttotheinterconnecting
transmissionline.
Althougheachturbineisfullycapableofautonomousoperation,allturbinesarelinkedtogethertoaprojectcontrolsystem(SCADA).ThecentralSCADAsystemcanmonitorandcontrol
theprojectasneeded,includedrecordingofallprojectoperatingdataandimplementationof
curtailmentcontrolsasneeded.
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Inadditiontotheturbines,accessroads,collectionsystem,andsubstation,windprojects
typicallyincludeanoperationsandmaintenance(O&M)facility.Thisfacilityisoftenapre‐engineeredbuildingandwarehouse,withoffices,conferencerooms,restroomsandshowers,
storage,andwarehousing.
5.2 RESOURCE AVAILABILITY ThissectionsreviewsavailablewindresourcesinSanFranciscoandCalifornia.
5.2.1 In‐City
Black&VeatchreviewedthefindingsofthePublicInterestEnergyResearch(PIER)Cityand
CountyofSanFranciscoWindResourceAssessmentProject10forestimatingin‐cityperformance.
ThePIERstudydeterminedthatthemajorityofsitesinthein‐cityareawerenoteconomicallyfeasiblefora10kilowattmachineinstalledata10meterhub‐height.Thisfindingisinlinewith
Black&Veatch’sexperienceregardingsmall,urbanareainstallations.Generally,windregimesin
urbanareasareadverselyimpactedbylocalobstructions,andthecostscanbeveryhigh.Thisisinpartduetotheinabilitytoapplyeconomiesofscalefortheproject,resultinginhigher
manufacturingcostsper‐turbine,andengineering,mobilization,anddemobilizationcoststhatare
relativelyhigheronaper‐kilowattbasis.Duetothesechallenges,thereisalsoalimitedamountofdataforcomparisonandstudyregardingsmall,urbanprojects.
Black&Veatchhasperformedahigh‐levelreviewofthepotentialforasinglecommercially
sizedturbineattheOceansideWasteWaterTreatmentPlant.Anin‐depthassessmentofin‐citypotentialwasnotperformedforthisstudy.Anoverviewofthe100meterwindspeedpotentialin
theSanFranciscoregionisshownbelowinFigure5‐1basedonAWSTruepowerdata.
10 Available at http://www.energy.ca.gov/pier/project_reports/500‐04‐066.html
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BLACK & VEATCH | Wind Resource Assessment 5‐3
Figure 5‐1 100 Meter Wind Speeds in the San Francisco Region
5.2.2 Statewide
SFPUCisinterestedinthewinddevelopmentpotentialofseveralsitesonastate‐widelevel.
Thesizeoftheselocationsvariesfromapossiblesitecapacityof6megawattsto30megawatts.ThemajorityoftheselocationsareeastoftheSanFranciscoarea.Thisincludesproposedprojects
attheSunolandTeslafacilities,apossibleprojectintheMontezumaHillsbasedonaproposal
receivedbytheSFPUC,andapotentialre‐poweringsiteintheAltamontPass.InadditiontothesitescurrentlyunderconsiderationbySFPUC,Black&Veatchperformeda
high‐levelassessmentoftheavailablewindresourceandprojectdevelopmentpotentialacrossthe
stateofCaliforniatoidentifyotherpotentialsitesfordevelopment.NotallthelandinCaliforniacanbeconsideredavailable,so“exclusions”forexcludinglandthatmaynotbesuitableforwind
developmentweredevelopedforthisstudy.Theseexclusionsincludeurbanareas,nationalparks,
wetlands,militaryno‐flyzones,andothersensitiveareas.Areaswithwindspeedslowerthan5.5
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BLACK & VEATCH | Wind Resource Assessment 5‐4
meterspersecondwerealsoexcluded,asprojectswithwindspeedslowerthan5.5metersper
secondareunlikelytobeeconomicallyfeasible.Theseexclusionsensurethattheanalysisusesrealisticassumptionsaboutwherewindpowercanbedeveloped.
Black&Veatchselectedseveralpossiblecandidatewindprojectsfromtheavailableland
whichhadhighwindspeedsandlowestimatedbalanceofplant(BOP)/erectionandturbinecosts.Transmissioncostswerenotconsideredfortheinitialselection,butwerereviewedforeachofthe
identifiedcandidates.Basedonthisreview,thecandidateswerenarrowedtothreeprojects,which
arerepresentativesitesforlow,moderate,andhightransmissioncosts,asseeninNewberrySprings,WalnutGrove,andLeonaValley,respectively.
TheestimatedwindspeedregimeforCaliforniaandtheeightprojectsinvestigatedinthis
reportisshownbelowinFigure5‐2,basedonAWSTruepowerdata.
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BLACK & VEATCH | Wind Resource Assessment 5‐5
Figure 5‐2 100 Meter Wind Speeds in California
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BLACK & VEATCH | Wind Resource Assessment 5‐6
5.2.3 Locational Analysis
Thissectionprovidesanoverviewofwhatinformationwasusedandhowprojectswere
locatedforthisstudy.
5.2.3.1 Wind Resource
MeasureddatawasprovidedbytheclientattheSunolandTeslasites.Approximatelysixyearsofdata,fromFebruary2007toApril2013,wereavailablefromtheSunolsite.AttheTesla
location,7monthsofdatawereavailable.Theexactheightsandcoordinatesforeachdataresource
werenotknown,butareunderstoodtoberooftoporotherfacility‐mountedequipment.SincetheTeslasitehadonlyhalfayearofdata,Black&Veatchusedthelong‐termreferencedataatthe
airporttoobtainaroughestimationofthesite’swindcharacteristicsfortheentireyear.Black&
Veatchobtained10yearsofwindspeeddatafromthenearestavailableairportthathadadatarecorddatingbackto2009,theMetropolitanAirportinStockton.
AstudywasperformedbyAWSTruepowerin2007fortheCaliforniaEnergyCommission’s
IntermittencyAnalysisProject.AWSTruepowerusedtheirMesoscaleAtmosphericSimulationSystem(MASS)topredictwindspeedsatseveralheightsaboveground.Theatmosphericmodel
outputisgriddedwithaspatialresolutionof2km.Theresultsoftheatmosphericmodelarethen
interpolatedtoa200metergridbyAWSTruepowerbasedonlocalterrainandlandcover.Themodelwasruninnestedgridsforathreeyearperiodandhadreanalysis,rawinsonde11andsurface
weatherdataasinputs.ThisdatawasutilizedbyBlack&Veatchtocharacterizethewindspeeds
throughoutCalifornia.TheaveragewindspeedsatSunolandTeslawerecomparedtotheresultsobtainedusing
themodeledAWSTruepowerdata.WhilebothresourceswereinroughagreementattheSunol
site,indicatinglowwindspeeds,themeasuredTeslasiteshowedsignificantlyhigherwindspeedsatthemeasuredheightthantheAWSTruepowerdataat100metersabovegroundlevel.Thereare
severalpossibleexplanationsforthisdifference.Theremaybehighlylocalizedwindconditions
causedbythelocaltopographythatoccursonascaletoosmallforthemodeltoaccuratelycapture.TheAWSTruepowerwindmodelhasaresolutionof8kilometerswhichmaynotbefineenoughto
accuratelyrepresentthissite.Anotherexplanationisthattheplacementofthemastmaynotbe
suitableforwindcollection.Theinformationavailableindicatesthatthemeasurementsensorsareinstalledontopofastructure,perhapsatank,roughly20feetabovetheground.Dependingon
howtheequipmentwasinstalled,thisobstructionmaycausespeed‐upeffects.Theequipmentalso
mightbelocatedinthehighestwindspeedarea,whichmaynotberepresentativeforthesiteasawhole.
Thesuitabilityofthedataforthisstudywasevaluated,andBlack&Veatchchosetousethe
modeledresultsfromAWSTruepowertoestimatewindspeedsateachsite.TheuncertaintyinthemeasureddataattheTeslasiteistoogreattobasethisstudyon.However,itmaybeworthfurther
11 A method of upper‐atmosphere meteorological observation conducted by means of a radiosonde tracked by radar.
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investigation,witha60meterorhighermetmast,toverifyiftheTeslasitedoeshavelocalizedhigh
windsthatwouldotherwisenotbecorrectlyestimatedinthehigh‐levelmodeleddata.
5.2.3.2 Additional Site Selection
Siteswerechosenfromtheavailablelandaftertheremovalofexclusionsbasedon
anticipatedproduction,aswellasfactorsthatcouldimpactcosts,suchasproximitytoexisting
transmission,landownership,andterrain.Representativesiteswerechosentoillustratelow,moderate,andhightransmissioncostscenarios.
ThewindspeedsexpectedateachsitearesummarizedbelowinTable5‐1.
Table 5‐1 Comparison of Annual Wind Speeds
SITE COUNTY WIND SPEED
SFOceansideWWTP SanFrancisco 5.97m/s
Sunol Alameda 4.52m/s
Tesla SanJoaquin 4.98m/s
MontezumaHills Solano 6.84m/s
Altamontre‐power Alameda 7.32m/s
WalnutGrove Yolo 6.53m/s
LeonaValley LosAngeles 6.99m/s
NewberrySprings SanBernardino 6.53m/s
5.3 COST BASIS Theapproachfordevelopingcapitalcostsandoperationsandmaintenancecostsare
outlinedinthissection.TransmissionscostswereassessedasdescribedinSection3.2.
5.3.1 Base Costs
Avarietyofcomponentsmustbeconsideredwhenestimatingcosts.Variousturbinetypes
andhubheightswillrequiredifferentamountsofrawmaterials.Tallerturbineswithlargerrotor
diametersnecessitatemorerobustfoundationsandlargercranesforinstallation.AsummaryofallthecostcategoriesconsideredforClassIIandIIImachinesisshownbelowinTable5‐2.TheClass
IImachinewasassumedtohavean80meterhubheight,whereastheClassIIIwasexaminedusing
a100meterhubheight.
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Table 5‐2 Comparison Costs for Class II and III machines
CATEGORY CLASS II, 80 M HUB HEIGHT ($/KWAC) CLASS III, 100 M HUB HEIGHT ($/KWAC)
Turbine 1200 1350
BOP/erection 470 515
Owner’sCost (15percentDirectCosts) (15 percent DirectCosts)
5.3.2 Slope Multipliers
Thelocationofaprojectsitecanalsoimpactcosts.Steepslopescanmakeitdifficultto
constructawindfarm,asmuchofthelandmustbecutinordertocreatelevelsurfacesforfoundations,roads,andcranepads.Toaccountfortheimpactofterrain,Black&Veatchapplied
multiplierstoBOP/erectioncostsbasedontheaverageslopeofagivenarea.Thesemultipliersare
shownbelowinTable5‐3.
Table 5‐3 Slope Cost Multipliers
SLOPE MULTIPLIER
Slope<4 1.0
4<slope<8 1.16
8<slope<16 1.22
Slope>16 1.55
5.3.3 Economies of Scale
Economiesofscaleallowlargeprojectstoreducecostsonaperkilowattbasis,butthiseffectislostonceprojectsbecometoosmall.Black&Veatchhasassumedthataprojectof20
megawattsorlargerisabletobenefitfromeconomiesofscale.However,notalltheprojectsunder
considerationinthisreportmeetthatsizerequirement.BoththeOceansideandTeslasitesareonlylargeenoughforonetothreeturbines,atmostabout6MWofcapacity.Thiscausesincreases
inengineering,mobilization,demobilization,BOP,andowner’scostsrelativetothetotalcostofthe
project.Inthe2011WindTechnologiesMarketReportpublishedbytheU.S.DepartmentofEnergy,installedcostsareexaminedbyprojectsize,turbinesize,andregion.Thereportillustratedthat
smallprojectsoffivemegawattsandsmallerhaveatotalinstalledprojectcostroughly20percent
higherthanlargerprojects.Italsodemonstratedthattherewaslittlechangeinprojectcostindollarsperkilowattonceaprojectreached20megawattsormore.Assuch,Black&Veatchhas
assumedthateconomiesofscaleapplytoanyprojectwithratedcapacityof20megawattsor
greater,andhasappliedafactorof1.2tothetotalcostsofanyprojectbelow20megawattsinsize.
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BLACK & VEATCH | Wind Resource Assessment 5‐9
5.3.4 Operation and Maintenance costs
OperationandMaintenancecostshavebeendividedintofixedandvariablesegments.The
basecostis35dollarsperkilowatt‐year,whichincludesnormaloperations,scheduledandunscheduledmaintenance,projectmanagement,taxes,insurance,andsoon.Thesecostsarebased
oninformationfromthe2011WindTechnologiesMarketReportpublishedbytheU.S.Department
ofEnergy,alongwithreviewofseveraldetailedwindprojectoperatingbudgets.Landroyaltycostsarethenaddedtothisbasecostdependingonthetypeoflandtheprojectisexpectedtobeinstalled
on.IftheprojectisbuiltonfederallyownedBureauofLandManagement(BLM)land,afixedcostof
4.115dollarsperkilowattperyearisadded,basedonpublishedBLMlandleaserates.IftheprojectisbuiltonPrivateland,thecostisconsideredtobevariable,reportedindollarspermegawatt‐hour
basedon3.5percentofgrossrevenues.Thisiscalculatedfromestimatedgenerationandtypical
windprojectPPAcostsinCalifornia..Ingeneral,itismoreexpensivetoconstructaprojectonPrivatelandthanitisonBLMland.
5.4 COST AND PERFORMANCE CHARACTERISTICS ProjectspecificcostandperformancecharacteristicsareoutlinedforSFPUCcontrolled
landsandotherstatewidelocationsselectedforthisstudy.
5.4.1 SFPUC Controlled Lands (Oceanside, Sunol, Tesla)
Oceanside‐TheOceansidesiteislocatedattheOceansideWasteWaterTreatmentPlant,
justsouthoftheSanFranciscoZoo,inSanFranciscoCounty.Theavailablelandisroughly0.09
squarekilometers.AmapoftheareaisshownbelowinFigure5‐3.
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BLACK & VEATCH | Wind Resource Assessment 5‐10
Figure 5‐3 Available Land at Oceanside
Thisregionisinadeveloped,urbanarea.Neighboringbuildingsmayactasobstaclesthatwillcreatelocaldisruptionstothewindcharacteristicsoftheregion.Thesiteisverysmall,suitable
foronlyasinglecommerciallysizedturbine,andsetbackswouldhavetobecarefullyconsideredfor
safety.Thissitewouldbeanticipatedtohave2MWinnameplatecapacity,dependingontheturbineselected.
Theassumptionforinterconnectionatthissiteanticipatestieintooneofthetwo12kV
distributionfeedersservingtheOceansideplantload.DiscussionswithSFPUChaveindicatedthatoneofthefeedersprovidesredundantcapacityandcouldbeusedbythewindfacilitywhennot
neededforback‐uppowerservicebythetreatmentplant.
ThePIERstudyestimatedawindspeedof4.0m/sat10metersabovegroundlevel.TheAWSTruepowermodelpredictsanaveragewindspeedatthe100meterlevelforthetwositesnear
theSanAntonioReservoiris5.97m/s.Tocomparethefindingsofthesetwostudies,ifthe100m
windspeedisestimatedbasedonthePIERreportfindingsusingthewindshearpowerlaw
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BLACK & VEATCH | Wind Resource Assessment 5‐11
approximationandastandardwindshearcomponentassumptionof1/7,theresultis5.56m/s,
within10percentoftheAWSTruepowermodelresults.ThePIERstudyconcludedthatthewindspeedat10meterswasinsufficienttobuildan
economicalsitewitha10kWmachine.Thismightnotbethecaseforacommercialturbine
designedforlow‐windwithahub‐heightof100meters.However,sincetheprojectissosmall,economiesofscaledonotapply.Costsperkilowattatthissmallprojectaregoingtobehigherthan
theywouldbeforalargesitewiththesamewindspeedcharacteristics.Furthermore,the
proximitytobuildingsmayimpactthewindspeedsinwaysthatcannotbeproperlyrepresentedintheAWSTruepowermodel.Iftheclientchoosestofurtherinvestigatedevelopmentatthislocation,
adetailedwindresourcedatacollectioncampaignataminimummeasurementheightof60meters
foratleastayearwouldbeneededtoevaluatethelocalcharacteristicsofthislocation.UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated
theperformanceandcostexpectedforaprojectdevelopedinthecombinedOceansidesite.Note
thatthesmallsizeofthisprojectincreasesthecostsoftheprojectper‐kilowattaseconomiesofscalenolongerapply.ThisinformationissummarizedinTable5‐4.
Table 5‐4 Oceanside Wind Facility Design, Cost, Performance Assumptions
PARAMETER VALUE
TurbineModel ClassIII
SiteCapacity(MWac) 2MW
Height(m) 100m
CF(percent) 29
CapitalCost($/kW) $2,738
FixedO&MCost($/kW‐yr) $60.00
VariableO&MCost($/MWh) $0
5.4.1.1 Sunol
TheSunolsiteislocatedroughlysevenmileseastofFremont,California,inAlamedacounty.
Theavailablelandisroughly159squarekilometers,althoughnotallofthislandisappropriateforwinddevelopment.AmapoftheareaisshownbelowinFigure5‐4.
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BLACK & VEATCH | Wind Resource Assessment 5‐12
Figure 5‐4 Available Land at Sunol
Thisregionhasfairlycomplexterrain.Muchoftheareaiscomprisedofnarrowvalleysandreservoirssurroundedbyhillsandmountains.30percentto50percentgradesarenotuncommon,
particularlyinthesouthernportionoftheavailableland.Theflattestregionsofthesiteareinthe
northernsection,wherevalleysbroadenandaresurroundedbymoremoderate,rollinghills.Thevalleysaregenerallyflat,andthehillstypicallyhave5percentto10percentgrades.Focusingon
thisnorthernportioninterrainwithlessthana5percentgrade,themostfeasibleoptionsforthe
SunolsitearetworegionsneartheSanAntonioReservoir,onetotheeastandonetothewest.Thesetwoareascombinedareroughly15squarekilometers,withenoughspaceforapproximately
30MWofcapacity,20MWtothewestand10MWtotheeast.ThesesitesareshowninFigure5‐5
below.Pleasenotethatthesesiteshavenotbeenevaluatedforenvironmentalset‐backs,suchasexcludingareaswheregoldeneaglesmightroost.Theselocationswerechosenbasedonlyontheir
feasibilitybyterrain,forthepurposeofthishigh‐levelstudy.
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BLACK & VEATCH | Wind Resource Assessment 5‐13
Figure 5‐5 Most Feasible Project Options at Sunol
TheassumptionforinterconnectionatthissiteanticipatesnogenerationtielinefromtheprojectsubstationtotheSunolsubstation.Theprojectsubstationisassumedtobe69kV,basedon
publiclyavailableinformation,andassumesthereistransmissionavailabilityandonlyneedsan
additionallineposition.Thewindspeedsmodeledatthissitearelow,andunlikelytoyieldaneconomicallyviable
project,evenwiththenewestClassIIIlow‐windturbinetechnologies.TheAWSTruepowermodel
predictsanaveragewindspeedatthe100meterlevelforthetwositesneartheSanAntonioReservoiris4.52m/s.
UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated
theperformanceandcostexpectedforaprojectdevelopedinthecombinedSunolsite.ThisinformationissummarizedinTable5‐5.
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BLACK & VEATCH | Wind Resource Assessment 5‐14
Table 5‐5 Sunol Wind Facility Design, Cost, Performance Assumptions
PARAMETER VALUE
TurbineModel ClassIII
SiteCapacity(MWac) 30MW
Height(m) 100m
CF(percent) 15
CapitalCost($/kW) $2,577
FixedO&MCost($/kW‐yr) $35.00
VariableO&MCost($/MWh) $0
Tesla‐TheTeslasiteislocatedroughlysixmilessouthwestofLyoth,California,inSan
JoaquinCounty.ThesiteisadjacenttoaChlorinationStationanddisinfectionfacility.Theavailablelandisroughly0.21squarekilometers,althoughapreferencehasbeenexpressedfordevelopment
onlywithintheconstructionstagingarea,whichis0.04squarekilometers.Amapoftheareais
shownbelowinFigure5‐6,withtheconstructionstagingareahighlightedinred.
Figure 5‐6 Available Land at Tesla
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BLACK & VEATCH | Wind Resource Assessment 5‐15
Thisregionhassimple,flatterraininthenorthernpartofthesite.Thesouthernportionof
thesitehashillswith15percentto20percentslopes.Sincetheregionisverysmall,notmanyturbinescouldbeinstalledinthisarea.Ifonlytheconstructionstagingareaisutilized,asingle
turbinecouldbeinstalledatthislocation.Ifthefacilityasawholewasabletobeutilized,twoor
threeturbinesmightfitonthesite,forasmuchas6MWofcapacity.Theassumptionforinterconnectionatthissiteanticipatesalocaldistributionlevel
interconnectiontoanearby12kVsystem.Projectsofthissizearegenerallyuneconomicalif
additionalinterconnectioninfrastructureisrequired.Thewindspeedsmodeledatthissitearelow,andunlikelytoyieldaneconomicallyviable
project,evenwiththenewestClassIIIlow‐windturbinetechnologies.TheAWSTruepowermodel
predictsanaveragewindspeedatthe100meterlevelforthesitetobe4.98m/s.
UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&VeatchhasestimatedtheperformanceandcostexpectedforaprojectdevelopedintheTeslasite.Notethatthesmallsizeofthisprojectincreasesthecostsoftheprojectper‐kilowattaseconomiesofscalenolongerapply.ThisinformationissummarizedinTable 5‐6.
Table 5‐6 Tesla Wind Facility Design, Cost, Performance Assumptions
PARAMETER VALUE
TurbineModel ClassIII
SiteCapacity(MWac) 6MW
Height(m) 100m
CF(percent) 20
CapitalCost($/kW) $2,820
FixedO&MCost($/kW‐yr) $35.00
VariableO&MCost($/MWh) $0
5.4.2 Statewide Projects
MontezumaHills‐TheMontezumaHillssiteislocatedroughlyonemilesouthwestofBirdsLanding,California,inSolanoCounty.Thelayoutandsiteboundariesweresuggestedinthe
proposedMontezumaZephyrWindProjectpresentedbyMontezumaWetlands,LLC.Theavailable
landisroughly14.2squarekilometers.Basedondiscussionswithlocaldevelopersandoperators,Black&Veatchbelievesthatitisunlikelythisprojectwouldbeviableduetoenvironmental
concerns.However,thereareindicationsthatadditionalareastothenorthofhighway12may
opentodevelopmentinthefuturewithcomparable,ifnotbetter,windspeeds.Forthepurposesofthisstudy,Black&Veatchhasfocusedontheoriginallyproposedsite.Theresultsofthecost
estimatesforthisregionshouldberoughlycomparabletoasimilarprojectthatcouldbeinstalled
tothenorth.AmapoftheareaisshownbelowinFigure5‐7.
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BLACK & VEATCH | Wind Resource Assessment 5‐16
Figure 5‐7 Available Land at Montezuma Hills
Thisregionhassimple,flatterrain.Usingaturbinespacingtypicallyseeninmostprojects
acrossthenation,roughlythreerotordiametersbyeightrotordiameters,thissitewouldbe
suitableforover30MWofcapacity.However,giventhestrongwindsandunidirectionalwindtypicalforthisregion,itiscommonforturbinespacinginMontezumaHillsprojectstobemuch
narrower,aslittleas1.6rotordiametersby6rotordiameters.Ifthisnarrowerspacingisused,as
intheMontezumaZephyrWindProjectproposal,thissitecouldcontainasmuchas100MWofcapacity.
Theassumptionforinterconnectionatthissiteanticipatesnogenerationtielinefromthe
projectsubstationtotheMontezumaHillssubstation.Theprojectsubstationisassumedtobe230kV,basedonpubliclyavailableinformation,andassumesthereistransmissionavailabilityandonly
needsanadditionallineposition.
Thewindspeedsmodeledatthissitearestrong.TheZephyrWindProjectproposalindicatedanestimatedmeanwindspeedof6.7meterspersecondatthe90meterlevel,althoughit
isunclearifthisestimateisrepresentativeofthelong‐termwindcharacteristics.TheAWS
Truepowermodelpredictsanaveragewindspeedatthe100meterlevelforthesitetobe7.04m/s.ThisisintheupperrangeofwindspeedlimitsforaClassIIImachine,andClassIImachinesare
typicalforthisarea.Assuch,theClassIIturbinemodelwithan80meterhub‐heightwas
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BLACK & VEATCH | Wind Resource Assessment 5‐17
consideredmoreappropriateforthissite.TheAWSTruepowermodelpredictsanaveragewind
speedatthe80meterlevelforthesitetobe6.84m/s.
UsingaClassIIturbine‐typewithan80meterhub‐height,Black&VeatchhasestimatedtheperformanceandcostexpectedforaprojectdevelopedintheMontezumaHillssite.ThisinformationissummarizedinTable5‐7.
Table 5‐7 Montezuma Hills Wind Facility Design, Cost, Performance Assumptions
PARAMETER VALUE
TurbineModel ClassII
SiteCapacity(MWac) 100MW
Height(m) 80m
CF(percent) 31
CapitalCost($/kW) $2,043
FixedO&MCost($/kW‐yr) $35.00
VariableO&MCost($/MWh) $2.66
Altamont(repower)‐TheAltamontrepowersiteislocatedwithinexistingdeveloped
areasnearBethanyReservoirroughlyeightmilesnortheastofLivermore,California,inAlameda
county.MuchofthisareaisownedbyNextEra,andiscurrentlypartofarepoweringeffort.However,severalregionsremainthathavenocurrentrepowerplans.Black&Veatchselecteda
generalareafromtheselocationsthatincludedmultipleexistingprojectsasarepresentativesite.
Theavailablelandisroughly9.9squarekilometers.AmapoftheareaisshownbelowinFigure5‐8.
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BLACK & VEATCH | Wind Resource Assessment 5‐18
Figure 5‐8 Representative Area at Altamont
Thisregionhascomplexterrain,comprisedofrollinghillswithslopesrangingfrom8
percentto25percentgradients.Usingaturbinespacingtypicallyseeninmostprojectsacrossthenation,roughlythreerotordiametersbyeightrotordiameters,thissitewouldbesuitablefor
approximately20MWofcapacity.
TheassumptionforinterconnectionatthissiteanticipatesnogenerationtielinefromtheprojectsubstationtotheAltamontsubstation.Theprojectsubstationisassumedtobe69kV,based
onpubliclyavailableinformation,andassumesthereistransmissionavailabilityandonlyneedsan
additionallineposition.Thewindspeedsmodeledatthissitearestrong.TheAWSTruepowermodelpredictsan
averagewindspeedatthe100meterlevelforthesitetobe7.32m/s.Thisisintheupperrangeof
windspeedlimitsforaClassIIImachine,andClassIImachinesaretypicalforthisarea.Assuch,theClassIIturbinemodelwithan80meterhub‐heightwasconsideredmoreappropriateforthis
site.TheAWSTruepowermodelpredictsanaveragewindspeedatthe80meterlevelforthesiteto
be7.28m/s.UsingaClassIIturbine‐typewithan80meterhub‐height,Black&Veatchhasestimatedthe
performanceandcostexpectedforaprojectdevelopedintheAltamontsite.Thisinformationis
summarizedinTable5‐8.
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BLACK & VEATCH | Wind Resource Assessment 5‐19
Table 5‐8 Altamont Wind Facility Design, Cost, Performance Assumptions
PARAMETER VALUE
TurbineModel ClassII
SiteCapacity(MWac) 20MW
Height(m) 80m
CF(percent) 34
CapitalCost($/kW) $2,349
FixedO&MCost($/kW‐yr) $35.00
VariableO&MCost($/MWh) $2.68
WalnutGrove(Low)‐TheWalnutGrovesiteislocatedroughlyninemilesnorthwestof
WalnutGrove,California,inYoloCounty.Theavailablelandissplitbyaman‐madewater‐waycalledtheSacramentoRiverDeepWaterShipChannel.Theavailablelandisapproximately71
squarekilometers.AmapoftheareaisshownbelowinFigure5‐9.
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BLACK & VEATCH | Wind Resource Assessment 5‐20
Figure 5‐9 Available Land at Walnut Grove
Thisregionhassimple,flatterrain,comprisedofpredominantlycultivatedland.Usinga
turbinespacingtypicallyseeninmostprojectsacrossthenation,roughlythreerotordiametersbyeightrotordiameters,thissitewouldbesuitableforupto170MWofcapacity,ortwosmaller
projectsofupto85MWoneithersideofthechannel.
Theassumptionforinterconnectionatthissiteanticipatesaone‐milegenerationtielinetothePG&EGrandIslandsubstation.Theprojectsubstationisassumedtobe115kV,basedon
publiclyavailability,andassumesthereistransmissionavailabilityandonlyneedsanadditional
lineposition.Thewindspeedsmodeledatthissitearefairlystrong.TheAWSTruepowermodel
predictsanaveragewindspeedatthe100meterlevelforthesitetobe6.53m/s.Whileinthe
upperrangeofwindspeedlimits,thisisstillanacceptablewindspeedforaClassIIImachine.UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated
theperformanceandcostexpectedforaprojectdevelopedintheWalnutGrovesite.This
informationissummarizedinTable5‐9.
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BLACK & VEATCH | Wind Resource Assessment 5‐21
Table 5‐9 Walnut Grove Wind Facility Design, Cost, Performance Assumptions
PARAMETER VALUE
TurbineModel ClassIII
SiteCapacity(MWac) 170MW
Height(m) 100m
CF(percent) 34
CapitalCost($/kW) $2,244
FixedO&MCost($/kW‐yr) 35.00
VariableO&MCost($/MWh) 2.70
LeonaValley(Moderate)‐TheLeonaValleysiteislocatedintheareasurroundingLeona
Valley,California,inLosAngelescounty.TheavailablelandisoneithersideofandalongPortalRidge.Theavailablelandisapproximately101.5squarekilometers.Amapoftheareaisshown
belowinFigure5‐10.
Figure 5‐10 Available Land at Leona Valley
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BLACK & VEATCH | Wind Resource Assessment 5‐22
Thisregioncontainsbothsimpleandcomplexterrain.TheportionnorthofPortalRidgeis
flat,openplains.WithintheLeonaValleyaremoderatelyrollinghillswiththreepercenttoeightpercentgrades.Theridgeitselfhas20percentto35percentgrades.Usingaturbinespacing
typicallyseeninmostprojectsacrossthenation,roughlythreerotordiametersbyeightrotor
diameters,thissitecouldcontainover200MWofcapacity.Ifonlythenorthernplainwasconsidered,thatregioncouldsupportroughly70MWofproduction,whiletheLeonaValleycould
fitapproximately50MWofcapacity.Forthisassessmenta100MWprojectwascharacterized.
Theassumptionforinterconnectionatthissiteanticipatesa23‐milegenerationtielinetotheSCEWindhubsubstation.Theprojectsubstationisassumedtobe230kV,basedonpublicly
availability,andassumesthereistransmissionavailabilityandonlyneedsanadditionalline
position.Thewindspeedsmodeledatthissitearestrong.TheAWSTruepowermodelpredictsan
averagewindspeedatthe100meterlevelforthesitetobe6.99m/s.Whileintheupperrangeof
windspeedlimits,thisisstillanacceptablewindspeedforaClassIIImachine.UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated
theperformanceandcostexpectedforaprojectdevelopedintheLeonaValleysite.This
informationissummarizedinTable5‐10.
Table 5‐10 Leona Valley Wind Facility Design, Cost, Performance Assumptions
PARAMETER VALUE
TurbineModel ClassIII
SiteCapacity(MWac) 100MW
Height(m) 100m
CF(percent) 37
CapitalCost($/kW) $2,649
FixedO&MCost($/kW‐yr) $35.00
VariableO&MCost($/MWh) $2.62
NewberrySprings(High)‐TheNewberrySpringssiteislocatedtwomilesnortheastof
NewberrySprings,California,acrossinterstate40inSanBernardinoCounty.Theavailablelandis
approximately46squarekilometers.AmapoftheareaisshownbelowinFigure5‐11.
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BLACK & VEATCH | Wind Resource Assessment 5‐23
Figure 5‐11 Available Land at Newberry Springs
Thisregionisinsimpleterrain,predominantlyflat,openfieldsinterspersedwithcultivated
land.Usingaturbinespacingtypicallyseeninmostprojectsacrossthenation,roughlythreerotor
diametersbyeightrotordiameters,thissitecouldcontainaround100MWofcapacity.Theassumptionforinterconnectionatthissiteanticipatesa10‐milegenerationtielineto
theSCEGalesubstation.Theprojectsubstationisassumedtobe115kV,basedonpublicly
availability,andassumesthereistransmissionavailabilityandonlyneedsanadditionallineposition.
Thewindspeedsmodeledatthissitearefairlystrong.TheAWSTruepowermodel
predictsanaveragewindspeedatthe100meterlevelforthesitetobe6.53m/s,acceptableforaClassIIImachine.
UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated
theperformanceandcostexpectedforaprojectdevelopedintheNewberrySpringssite.ThisinformationissummarizedinTable5‐11.
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BLACK & VEATCH | Wind Resource Assessment 5‐24
Table 5‐11 Newberry Springs Wind Facility Design, Cost, Performance Assumptions
PARAMETER VALUE
TurbineModel ClassIII
SiteCapacity(MWac) 100MW
Height(m) 100m
CF(percent) 34
CapitalCost($/kW) $2,332
FixedO&MCost($/kW‐yr) 35.08
VariableO&MCost($/MWh) 2.68
5.4.3 Conclusions
Mostprojectswithanetcapacityfactorabove25percenthavethepotentialtobe
economicallyfeasible,althoughthecostsmustbecarefullyconsideredinadditiontotheestimated
productionforanysite.Projectswithlessthan25percentcapacityfactors,suchastheSunolandTeslasites,maynotbeeconomicalforwinddevelopment.Othertechnologies,suchassolar,might
bemoreprofitablefordevelopmentintheseareas.Acomparisonoftheturbinetypes,capacity
factors,andcostsforeachsiteisincludedinTable5‐12.
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BLACK & VEATCH | Wind Resource Assessment 5‐25
Table 5‐12 Comparison of Wind Design, Cost, Performance Parameters for All Sites
TURBINE
MODEL
CAPACITY
(MW AC)
HEIGHT
(M)
CF
(PERCENT)
CAPITAL
COST
($/KW AC)
FIXED O&M
COST
($/KW‐YR)
VARIABLE
O&M COST
($/MWH)
Oceanside ClassIII 2 100m 29 2,738 60 0
Sunol ClassIII 30 100m 15 2,577 35 0
Tesla ClassIII 6 100m 20 2,820 35 0
Montezuma
Hills
ClassII 100 80 m 31 2,043 35 2.66
Altamont ClassII 20 80 m 34 2,349 35 2.68
WalnutGrove
ClassIII 170 100m 34 2,244 35 2.70
LeonaValley
ClassIII 100 100m 37 2,649 35 2.62
Newberry
Springs
ClassIII 100 100m 34 2,332 35 2.68
Notes:
Reflectscostofnewgenerationusingtypicalindustrydevelopmentassumptionsatsiteswithfewbarrierstoconstruction.Furtherenvironmentalpermittingviabilitymustbeperformedatallsites,especiallyOceansideandAltamont.
Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectanyincentivesortaxcredits
OceansideandTeslahavenoeconomyofscaleadvantageduetotheirsize.
5.5 DEVELOPMENT CHALLENGES Thetechnicalandcommercialchallengestowinddevelopmentarelimited.Whilehighwind
sitesinCaliforniaareincreasinglylimitedasdevelopmentcontinues,goodopportunitiesstillexist.Windisamaturetechnology,anddevelopmentcostsarewellknown.Developmenttimelinesand
requirementsarealsowellunderstood.Commercialandfinanceriskexists,butisgenerallylowas
well.Theprimarychallengestowinddevelopmentareenvironmentalandpermitting.While
someofthesechallengesmayrestmoreonperceptionthangenuinerisktheystillpresentareal
challengetowinddevelopment.Keyrisksforwinddevelopmentincludethepotentialforimpactstobirds,bothlocalandmigratory,andotherwildlife.Thisisespeciallytruefortheidentified
repoweringprojectintheAltamontPass,whichhaswellknownhistoricalavianissues.Highquality
environmentalstudiesmustbeperformed,andimpactstootherwildlife,includingbatsandthreatenedandendangeredground‐dwellinganimals,mustbewellstudied.Permitsonanational,
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BLACK & VEATCH | Wind Resource Assessment 5‐26
state,andlocallevelmustbeobtained.Commonly,thisincludesFederalAviationAdministration
review,anendangeredspeciesactreview,historicalpreservationandculturalstudies,stormwaterdischarge,highwayoccupancy,andconditionalusepermits.Anotherchallengeisthetransportation
oflargecomponents,bothtosomeofthemoreruggedsitesinCaliforniaandtourbanlocations.In
habitedregions,routesmustavoidlow‐hangingelectricallinesandnarrowturns.Inruralareas,roadsmayrequireenhancementtobeartheweight,oralteredtotheproperslopeandangleof
curvature.
Somepossibledevelopmentchallengesarespecifictotheidentifiedpotentialprojects.TheOceansidelocationislocatedwithinacity,relativelyclosetobusinessesanddwellings.Turbinesin
anurbansitecancausedisturbancesduetoshadowflicker,noise,orvisualskylinedisruptions.
Carefulsiting,robuststudies,andcooperationwiththelocalcommunitythroughouttheprocessareessential.Curtailmentduringcertaintimesofthedayoryearmayalsobecomenecessaryto
addresscommunityconcerns.Transportationcanpresentachallenge.Inadditiontopreviously
notedavianissues,theAltamontPassprojectmayalsobesubjecttoheightandsizerestrictionsthatcouldaffectusinglargeturbines.TheidentifiedprojectintheMontezumaHillsislocatedin
low‐lyinglandandmayhavepermittingandenvironmentalconstraints.Developmentinother
partsoftheMontezumaHillsmayhaveincreasedlossesandreducedabilitytomovepowertomarketbecauseofexistingheavydevelopmentintheregion.
Projectsareoftendependentonfederaltaxincentives,whichhistoricallyhavebeen
renewedonacycleshorterthantheaveragedevelopmenttimeforaproject,andcanleadtouncertainty.Procurementcanhavelongleadtimeintervals,uptoayearormoreforwindturbines,
and9‐12monthsforothermajorequipment.
Otherrisksrelatetouncertaintyabouttheresourceduringearlyphasesoftheproject,notablythoserelatedtothefollowingparameters:
● Turbineavailabilityforthefirstyearofoperation(typicallymoreproblemsinthisperiodthan
fortherestoftheinstallationlife‐span)● Long‐termwindresourcebehavior
● Wakelossesintroducedbynewneighboringdevelopments
● Environmentalissuesthatmaydeterioratetheblade’ssurface● Curtailmentduetoloadorcommunityconcerns
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BLACK & VEATCH | Geothermal Resource Assessment 6‐1
6.0 Geothermal Resource Assessment Aselectionofprojectlocationsandsizeswasconsideredinthisassessmenttodevelopthe
technicalbasisforestimatingcostsandperformanceforgeothermalpowerfacilitiesthataretypical
ofopportunitiesavailabletotheSFPUC.
6.1 TECHNOLOGY DESCRIPTION Threemaintypesoffacilitiesareusedtogenerateelectricity–directsteamplants,flash
steamplants,andbinaryplants.Directsteamandflashsteamplantssupplysteamfromthegrounddirectlytoaturbinegenerator.Directsteamplantsaresuitablewherethegeothermalhydro
resourceisdominatedbyvapor.Flashsteamplantsareusedwhenhotwaterresourcesabove
about190Caredominatedbyliquidandmustbeflashedtoproducesteam.Steamexitingthesteamturbinegeneratoriscooledintoliquidformandistypicallyre‐injectedintotheearth.Binary
plantsareusedwhenwaterresourcetemperaturesarelowerthanabout190Cusingaworking
fluidthatisheatedtoitsboilingpointinaheatexchanger,wherethermalenergyistransferredtotheworkingfluidfromthehotwaterresource.Binarysystemsmayalsobeeconomicalinareas
withhighertemperaturefluidispresentthathashighscalingpotential.Inabinaryfacility,the
workingfluidandhotwaterareinseparateclosed‐loopsystems.Theworkingfluidvaporissuppliedtoaturbinegeneratorandisthencondensedtobeusedagainwhilethespenthotwateris
re‐injectedintotheearth.ThereareknowngeothermalresourcespresentinCaliforniatosupport
thedevelopmentofbothflashandbinaryfacilities.Enhancedgeothermalsystems(EGS)usethepresenceofgeothermalheatinareaswithno
fluidtoproducesteambyinjectingwaterintotheground.EGStechnologyisnotyetacommercially
proventechnology.EGSisthereforenotconsideredinthisstudy.
6.2 RESOURCE AVAILABILITY TwelveareaswithdevelopablegeothermalpotentialhavebeencharacterizedbyBlack&
Veatch.TheseareaswerepreviouslyidentifiedfortheRETIprojectwiththehelpofGeothermEx,asubcontractortoBlack&Veatch,throughareviewofpubliclyavailableinformation.Developable
potentialforeachareawasupdatedforthisstudytoreflectrecentprojectdevelopment.These
areasarelistedinTable6‐1.Themegawattpotentialidentifiedreflectswhatisavailablefornewdevelopment.
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BLACK & VEATCH | Geothermal Resource Assessment 6‐2
Table 6‐1 Geothermal Developable Potential
RESOURCE AREA TECHNOLOGY
MWAC
POTENTIAL NOTES
Brawley Binary 160 SumofBrawley,EastBrawley,andSouth
Brawley
EastMesa Binary 32 Includes Dunes&Glamis
Geysers Flash 135 Includes Calistoga&ClearLake[SulphurBank]
Heber Binary 32 Includes Border,MountSignal,&SuperstitionMountain
HoneyLake Binary 8
LakeCity/SurpriseValley Binary 32
LongValleyM‐PLeases Binary 40
MedicineLake Binary 384
Mt.Shasta Flash 45 Includes areasaroundLassen:Growler&Morgan
Randsburg Binary 24
SaltonSea Binary 1,120 Includes NilandandWestmoreland
Truckhaven Binary 40 Includes SanFelipeProspect
Theapproximatelocationofeachofthetwelveareaswithrespecttotransmissionwas
identified.Transmissioncapacitywasverifiedforeachlocation,andestimatedinterconnectionandtransmissioncostsweremodeledforeachlocation.Basedonthecostsandaccesstotransmission
foreachofthegeothermalresourceareas,threelocationswiththelowestinterconnectioncostsand
readilyavailabletransmissioncapacitywereselectedtoprovideabasisforcomparisontootherrenewableenergytechnologiesconsideredinthisstudy.Forthisstudy50MWwasselectedasthe
upperlimitforprojectsizesbasedoneconomicsandrecentprojectdevelopment.Typicalprojects
includeadditionalexpansionasafuturegoalbutthiswasnotmodeledforthecurrentstudy.Figure6‐1identifiesthelocationsofthethreeselectedprojects:
● Geysers–50MW
● LongValleyMammoth–Pacificleases–40MW● Brawley–50MW.
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BLACK & VEATCH | Geothermal Resource Assessment 6‐3
Figure 6‐1 California Geothermal Projects
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BLACK & VEATCH | Geothermal Resource Assessment 6‐4
6.3 COST AND PERFORMANCE CHARACTERISTICS Costsaredependentonmanyfactors.Costforwellsandresourcecharacterizationstudies
aresubstantialforgeothermalprojects,makingupabouthalfoftheoverallcapitalcost.Equipment
selectionsuchasturbinesizeandtype,whetherheatexchangersareused(e.g.forbinaryorhybrid
facilities),balanceofplantcosts,andcoolingtowerdesign.Thecostsdevelopedforthisreport
includeestimatedtransmissionandinterconnectioncosts.TheGeyserscostassumesinterconnectiontoanearby230kVlineatSonoma,LongValleyassumeda115kVinterconnection,
andBrawleyinterconnectstoa92kVline.Interconnectioncostsassumethereistransmission
availabilityandthereonlyneedstobeanadditionallinepositionO&Mcostsdependonmanyfactorsincludingthechemicalmakeupofthefeedwaterand
whetherithashighorlowpHandwhetheritcontainsanycorrosivesorscalingagents.Thetypeof
plantisafactoraswell.Table6‐2presentscostandperformancevaluesconsideredforthisstudy.
Table 6‐2 Geothermal Project Cost and Performance Parameters
PARAMETER GEYSERS LONG VALLEY BRAWLEY
PlantType Flash Binary Binary
Capacity(MWac) 50 40 50
GenerationMWh/yr 394,200 280,320 350,400
CF(percent) 90 80 80
CapitalCost($/kW) 4,467 4,823 4,963
O&MCost 27 34 30
Notes:
Reflectscostofnewgenerationusingtypicalindustrydevelopmentassumptions. Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectany
incentivesortaxcredits. Thegeothermalresourceattheselocationsiswellunderstood;itisassumedthat
predictionsoftheheatavailablewillberealized.Lessunderstoodresourceswouldhavehighercosts.
6.4 DEVELOPMENT CHALLENGES Geothermalprojectsfacemanytypesofdevelopmentchallenges,someofwhichare
generallycommontoanytypeofpowerplantdevelopmentandsomewhichareuniquetogeothermalresourcedevelopment.
Thosecommontoanytypeofdevelopmentincludetechnicalrisks,suchastheadequacyof
thepowergridtotransmitthepower,thedistancefromtransmissioninterconnectionpoints,scheduledelays,developmentcostoverruns,andpowerplantperformance.Regulatoryandlegal
risksalsoapply,suchaspotentialenvironmentalimpacts,landuseandzoningconstraints,
ownershipandaccessissues,permitting,regulatoryapprovalofPPAterms,andavailabilityoftax
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incentives.Commercialriskscommontomanytypesofpowerplantsincludetheabilityto
negotiateacommerciallyviablePPAprice,thecreditworthinessoftheoff‐taker,macroeconomicriskssuchasgrowthrates,inflation,andpowerdemand,aswellastheabilitytoattractequity
investmentandobtainprojectfinance.Someoralloftheseareusuallypresentinageothermal
project.However,therearesomeimportantrisksthatarespecifictogeothermaldevelopment.
Developmentcostsvaryconsiderablyforgeothermalpowerdevelopment.Costsfordrilling
productionwellsvaryconsiderablebecausedeeperwellscostmore.Alsothecharacterofthegeothermalresourcewillhaveanimpactondevelopmentcostsbecauseitinfluencesthetypeof
powerplantthatissuitableforthesite.Forexamplebinarypowerplantscanbemoreexpensive
perinstalledkWthanflashpowerplants.Geothermalprojectsrequirethatalmosttheentirewellfieldbedeveloped(i.e.,drillallthewells,whichcompriseabouthalfofthetotaldevelopmentcost)
beforeanyrevenueisrecognizedfrompowerproduction.Otherrisksrelatetouncertaintyabout
theresourceduringearlyphasesoftheproject,notablythoserelatedtothefollowingparameters:● resourcesizeandtemperature
● averagewellproductivity
● drillingcosts● drillingsuccessrate
● long‐termreservoirbehavior
● thenumberof“make‐up”wellsthatwillberequiredduetogradualresourcedegradationovertheprojectlife
● theoptimumproduction/injectionscheme(depthsandlocationsofproductionandinjection
wells)● pressuredeclineorcoolingduetooffsetproductionfromneighboringdevelopments(i.e.,the
situationregardingresourceaccess)
● fluidchemistryissues(corrosion,scaling,highnon‐condensablegases)Oftheaboveissueslisted,threekeyitemsspecifictolargerscalegeothermalresource
developmentforelectricityinCaliforniaincludeidentifyingproductiveresourceareas,dealingwith
competinguseoftheareas,andaccesstotransmissionlines.
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BLACK & VEATCH | Economic Analysis 7‐6
7.0 Economic Analysis Aftercompletingtheresourceassessmentsandprojectcostanalysis,aproformafinancial
modelwasdevelopedfortheSFPUCthatestimatestheLCOEforthedifferentrenewableenergy
options.Anumberofassumptionsweremadeinthismodelregardingprojectfinancialstructuresandlikelyincentives.Thissectionprovidesanoverviewforthestructuresandincentives
considered,alongwithjustificationfortheassumptionsusedinthemodel.Themodelhasthe
flexibilitytotestarangeofdifferentscenarios,makingitadaptabletochangesthatmayoccurinthefinancingandsupportforrenewableenergytechnologies.
7.1 RENEWABLE ENERGY FINANCIAL INCENTIVES Anumberoffinancialincentivesareavailablefortheinstallationandoperationof
renewableenergytechnologies.Theseincentivescansubstantiallyinfluenceprofitabilityandcan
makealargeeconomicdifference.Thefollowingdiscussionprovidesabrieflistofexisting
incentivesthatareavailabletonewrenewableenergyfacilities.Itshouldbenotedthattheintentofthissectionistoprovidegeneralinformationonavailableincentives;theavailabilityofeach
incentivecanbedependentuponoverallenrollmentandlegislativeaction.
7.1.1 U.S. Federal Government Tax Incentives
ThepredominantfederalincentiveforrenewableenergyhasbeenofferedthroughtheU.S.
taxcodeintheformoftaxdeductions,taxcredits,oraccelerateddepreciation.Anadvantageofthisformofincentiveisthatitisdefinedinthetaxcodeandisnotsubjecttoannualcongressional
appropriationsorotherlimitedbudgetpools(suchasgrantsandloans).However,sunset
provisionsinthetaxcodecanimpactprojecteligibility.Tax‐relatedincentivesinclude:● Section45ProductionTaxCredit(PTC)
● Section48InvestmentTaxCredit(ITC)
● AcceleratedDepreciation● NewMarketTaxCredits(NMTC)
TheSection45PTCisavailabletoprivateentitiessubjecttotaxationfortheproductionof
electricityfromvariousrenewableenergytechnologies.Theincometaxcreditamountsto1.5cents/kWh(subjecttoannualinflationadjustmentandequalto2.3cents/kWhin2013)of
electricitygeneratedbywind,solar,geothermal,andclosed‐loopbiomass.Thecreditisequalto
0.75cents/kWh(inflationadjusted,equalto1.1cents/kWhin2013)forallotherrenewableenergytechnologies.Aproblemwiththecreditistheever‐presentthreatofexpiration,whichpromotes
boomandbustbuildingpatterns.ThePTCwasextendedinFebruary2009aspartofH.R.1,the
AmericanRecoveryandReinvestmentAct(ARRA,orthe“StimulusBill”),thenfurtherextendedandmodifiedinJanuary2013aspartoftheAmericanTaxpayerReliefActof2012(H.R.6).H.R.6
extendedtheeligibilityofwindforoneyearandreplacedtherequirementsthatprojectsbe“placed
in‐service”bysetdeadlinesforeligibilitywitharequirementthatprojectsonlyneedtohavebegunconstruction.Projectsthathavenotbegunconstructionbytheendof2013arenolongereligible
forthePTCasofJanuary2014.
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MajorprovisionsoftheSection45PTCarepresentedinTable7‐1.
Table 7‐1 Major Production Tax Credit Provisions
RESOURCE
ELIGIBLE
CONSTRUCTION START
DATES
CREDIT SIZE* SPECIAL CONSIDERATIONS
Wind 12/31/93‐12/31/13 Full
Biomass
Closed‐Loop 12/31/92‐12/31/13 Full Cropsgrownspecificallyforenergy
Closed‐LoopCofiring 12/31/92‐12/31/13 Full Onlyspecificcoalpowerplants
Open‐Loop Before12/31/13 Half Doesnotincludecofiring
LivestockWaste Before12/31/13 Half >150kW.
Geothermal 12/31/99‐12/31/13 Full
SmallIrrigationHydro 10/22/04‐12/31/13 Half Nodamsorimpoundments;
150kW‐5MW
IncrementalHydro 10/22/04‐12/31/13 Half Increasedgenerationfromexistingsites
LandfillGas 8/8/05‐12/31/13 Half
MunicipalSolidWaste 10/22/04‐12/31/13 Half Includesnewunitsaddedatexistingplants
Notes:
AllPTCsareinflation‐adjustedandequaled$23/MWh(“Full”)or$11/MWh(“Half”)in2013.
TheSection48ITCeffectivelyoffsetsaportionoftheinitialcapitalinvestmentinaproject.
WhileinvestorownedutilitiesoriginallywerenoteligibletoreceivetheITC,theextensionofthe
ITCpassedin2008changedthiswordingtoallowutilitiestoclaimtheITCiftheyhaveataxburden.Inaddition,theARRAexpandedtheeligibilitytoabroaderrangeofresources.TheITCprovisions
arenow:
● Solar–Eligiblesolarequipmentincludessolarelectricandsolarthermalsystems.Thecreditamountforsolaris30percentforprojectsthatareplaceinservicepriortoDecember31,
2016;afterthat,thecreditdropsto10percent.
● Geothermal–Geothermalincludesequipmentusedtoproduce,distribute,oruseenergyderivedfromageothermaldeposit.TheARRAincreasedthecreditamountto30percentfor
unitsthatbeginconstructionbytheendof2013,exceptforheatpumpswherethecreditis
limitedto10percentthrough2016.
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● Wind–ProjectseligibleforthePTCarealsoITCeligible.Unitsmusthavebegun
constructionbyDecember31,2013.● Biomass,LFG,hydro,andanaerobicdigestion–Unitsmusthavebegunconstructionby
December31,2013.
TheARRAlanguagethatexpandedthePTCdoesnotallowclaimingofboththePTCandthe
ITC.Projectdevelopersmustchooseoneortheother.Forcapital‐intensiveprojects,theITCis
typicallymoreattractive.Forprojectswithlowercapitalcostandhighercapacityfactors,thePTCmightbemoreadvantageous.2009analysisbyLawrenceBerkeleyLaboratoryhasquantifiedwhen
thePTCorITCismoreattractiveforaprojectinvestor.12Forthisproject,theITCwasusedfor
eligibleprojectsandstructures.TheITCalsointeractswithaccelerateddepreciation,asdiscussedfurtherbelow.
Section168oftheInternalRevenueCodecontainsaModifiedAcceleratedCostRecovery
System(MACRS)throughwhichcertaininvestmentscanberecoveredthroughaccelerateddepreciationdeductions.Thereisnoexpirationdatefortheprogram.Underthisprogram,certain
powerplantequipmentmayqualifyfor5‐year,200percent(i.e.,double)declining‐balance
depreciation,whileotherequipmentmayalsoreceivelessfavorabledepreciationtreatment.RenewableenergypropertythatwillreceiveMACRSincludessolar(5‐year),wind(5‐year),
geothermal(5‐year)andbiomass(7‐year).Typically,themajorityoftheprojectcapitalcost,but
notall,canbedepreciatedonanacceleratedschedule.TheARRAincludeda“bonusdepreciation”allowanceformostqualifiedrenewableenergyfacilitiesthatallowed50percentdepreciation
duringthefirstyearofoperation.TheAmericanTaxpayerReliefActof2012extendedthedeadline
sothatfacilitiesthatareplacedinservicebytheendof2013areeligible.Giventhelimitednumberofresourcesthatcouldqualifyforbonusdepreciation,itwasnotincludedinthecostevaluation.
Theaccelerateddepreciationlawalsospecifiesthatthedepreciablebasisisreducedbythevalueof
anycashincentivesreceivedbytheproject,andbyhalfofanyfederalinvestmenttaxcredits(e.g.,theITC).Thisprovisionhastheeffectofloweringthedepreciablebasisto95percentforprojects
thatreceivethe10percentITCand85percentforprojectsthattakethe30percentITC.
NewMarketTaxCredits(NMTC)arecreditsforupto39percentofthequalifiedinvestmentmadeinlow‐incomecommunities.TheNMTCisabroaddevelopmentsupportprogramthatis
opentoarangeofinvestments,notjustenergyprojects.Whilethespecificeligibilityrequirements
andapplicationprocessislengthy,thebenefitscanbesubstantial.AswiththeITC/PTC,onlytaxableentitiesareeligiblefortheNMTC.UnliketheITC/PTC,thereareverycomplicated
transactionrulesandnotallprojectsthatapplyforNMTCswillbegrantedanaward.TheUS
Treasuryholdsallocationroundsthenreviewsapplicationsandselectsawardees.Giventhecomplexity,competition,andveryspecifictermsrequiredforanNMTCaward,fewrenewable
energyprojectshavebeenabletoutilizethisincentive.ForthepurposesofSFPUCmodeling,the
NMTCwasexcludedfromtheanalysis. 12 “PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States.”, report NREL/TP‐6A2‐45359, March 2009.
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7.1.2 U.S. Federal Government Non‐Tax Related Incentives
Arangeofdifferenttypesofnon‐taxincentiveshavebeenavailabletorenewableenergy
projectdevelopers,buttheytendtobemuchmorelimitedinfundingandofashortertimeframerelativetotax‐basedincentives.Themostwidelyrecentlyusedgrant,the1603program,was
passedaspartoftheARRAbillbuthassinceexpired.
Manyofthecurrentnon‐taxrelatedincentivesaretargetedatnon‐taxableentitiessuchasmunicipallyownedutilities.Government‐ownedutilitiesandothertax‐exemptentitiesarenotable
todirectlytakeadvantageoftaxincentives.Tax‐exemptentities,however,doenjoyanumberof
otherbenefitswhenfinancingandoperatingcapitalinvestments.Themostobviousbenefitisfreedomfromfederalandstateincometaxliability.Dependingonprojectlocationandlocallaws,
paymentofpropertytaxesmayalsobereducedoreliminated.Theseentitiesarealsoabletoissue
tax‐exemptdebt,whichcarrieslowerinterestratesthancomparablecorporatedebt.Non‐taxincentiveprogramsavailabletodaytosupportrenewableenergyincludethe
following:
● USDOERenewableEnergyProductionIncentives
● CleanRenewableEnergyBonds● QualifiedEnergyConservationBonds
● RuralEnergyforAmericaProgramGrantsandLoanGuarantees
● DOELoanGuaranteesThefederalgovernmenthasestablishedtwoprimaryincentiveprogramsfornon‐taxable
entities,butneitherofwhichiscurrentlyprovidinganysupport.ThesearetheRenewableEnergy
ProductionIncentive(REPI)andCleanRenewableEnergyBonds(CREBs).Neitherprogramisintendedforprivately‐ownedprojects,andbothrelyonlimitedcongressionalappropriations.
Originallyauthorizedin1992,theREPIprogramwasrenewedbytheEnergyPolicyActof2005but
hasnotreceivedanyfundingallocationsince2009.Theprogramprovidedpaymentstotaxexemptentities,buttheamountoffundingwaslimitedtowhateverwasprovidedduringannual
appropriations.In2009justone‐thirdofprojectpaymentrequestsreceivedfunding.
CREBswereintroducedaspartoftheEnergyPolicyActof2005asaresponsetotheperceivedproblemswiththeREPIprogram.CREBsprovideinterest‐freeloanstopublicutilities
(includingruralelectricco‐ops),whileprovidingtaxcreditstopurchasers(theinvestorswhobuy
thebonds).TheprogramispatternedaftertheQualifiedZoneAcademyBonds(QZABs)usedtofinanceschoolimprovements.Congressauthorized$2.4billioninbondsin2008and2009.The
IRShastypicallyindicatedthatprojectswouldbefundedstartingwiththesmallestrequestand
continuingwiththenextsmallestuntilthefundsareexhausted.ThismakestheCREBfundsmuchmorelikelytobeavailableforsmallprojects.Whileitisunclearifthefullfundingallocationhas
beenissued,thereisnocurrentpathwayforobtainingCREBs.Theapplicationdeadlineforthe
mostrecentroundofCREBswasNovember1,2010,andthereisnoindicationofanewroundoffundingavailableinthenearfuture.
AgovernmentbondfinancingprogramthatisopenistheQualifiedEnergyConservation
Bonds(QECBs).ThesearesimilartoCREBsinthattheyhavebeencreatedtohelpstateandlocal
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governmententitiesfinanceenergyefficiencyandrenewableenergyprojects.OnceaQECBis
issued,thegovernmentagencyissuingthebondpaysbackthebondprincipal,whilethebondholderreceivesafederaltaxcreditinlieuoftraditionalbondinterest.UnlikeCREBs,thereisno
federalapplicationprocess.EachstateisallocatedacapfortheamountofQECBsthatmaybe
issued,withastateagencybeingresponsibleforadministrationoftheprogram.Californiahasbeenallocated$381millioninfundswhichisbeingadministeredbytheCaliforniaStateTreasurer.
Asoftheendof2012,itappearsthatfundingisstillavailableforinterestedqualifiedparties.
TheRuralEnergyforAmericaProgram(REAP)promotesenergyefficiencyandrenewableenergyforagriculturalproducersandruralsmallbusinesses.Federalgrantsandloanguarantees
areavailablethroughREAP.Congressmustallocategrantfundingonanannualbasis,andthelevel
ofoverallfundingandfundingperprojectislimited.Forthemostrecentsolicitation(April2013),individualprojectgrantsforupto25percentoftheprojectcostwereavailable,providedthatthey
didnotexceed$500,000.Loanguaranteesarenottoexceed$25million.Ifawardedbothagrant
andaloanguarantee,thecombinedtotalmustnotexceed75percentoftheproject’scost.ThepresentdeadlineforentitiestoapplyforgrantsandloanguaranteeswasJuly15,2013,although
additionalfundingperiodsarecurrentlybeingconsideredinthe2013FarmBill.Tobeeligiblefor
funding,theSFPUCwouldlikelyneedtopartnerwithadeveloperthatwouldbeeligibleforfundingundertheREAPprogramfordevelopmentofprojectsinrurallocations.Thelimitedfundinglevels
anduniquepartnershiprequirementsmaketheREAPprogramunlikelytobealikelyfunding
source.UndertheEnergyPolicyActof2005theDOEwasauthorizedtoissueloanguaranteesfor
projectsthatreducedgreenhousegasemissionsordemonstrated“neworsignificantlyimproved
technologies”.Largeprojectswithatotalcostgreaterthan$25millionweretheprimaryfocusofthisprogram.Loanguaranteerecipientsarerequiredtorepayloansinfullat90percentofthe
usefullifeoftheproject(or30years,whicheverissooner).Currentlytherearenosolicitations
open,butfuturesolicitationsmaybecomeavailable.
7.1.3 State and Local Financial Incentives
CaliforniaandtheCityofSanFranciscohaveanumberofpoliciesandincentivesthatsupportthedeploymentofrenewableenergyprojects.Themajorsupportmechanismsthatare
relevanttoprojectsthatmaybedevelopedbytheSFPUCorwithintheCityofSanFranciscoarethe
following:● RenewablePortfolioStandard(RPS)
● NetMetering
● GlobalWarmingSolutionsAct(AB32)CapandTradeProgram● GoSolarSF
● GreenFinanceSF
ThroughitsRPSprogramCaliforniahascreateddemandforrenewableenergyprojects.Utilitiesarerequiredtomeet33percentrenewableenergyby2020.UnderchangestotheRPSas
ofJanuary2011,RenewableEnergyCredits(RECs)maybeusedforRPScompliance.OneRECis
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equivalentto1MWhofelectricitygeneratedbyrenewableresources.TradableRECsmaybeused
tomeetupto25percentofautility’scompliancerequirementthroughDecember21,2013;afterwardsthisthresholdisreduceduntilitreaches10percentin2017.TheRECpriceiscurrently
cappedat$50.
TheSFPUCisrequiredtomeetallitsretailsalesthroughpowergeneratedbyHetchHetchyandeligibleRPSresources.InyearswhereHetchHetchypowerdoesnotmeetthefullretailload,
theSFPUCcanmeetitsobligationthroughanycombinationofRECsandRPSeligiblepower.Ifthe
SFPUCbuildsrenewablesinexcesslocaldemand,therewillbearetailmarketforthepowerandRECsbeyondtheobligationsthattheSFPUChasforpowersales.However,atleastintheshort‐
term,thevaluefortheRECislikelytobelowgiventheaggressiveprocurementeffortsthathave
alreadybeenperformedbythestate’sutilities.DatafromtrackingorganizationsshowsthattradableRECs(Bucket3)arecurrentlypricedataround$1/MWh,roughlyequivalenttoGreen‐e
RECsthatareusedforvoluntarycompliance.13
WhiletheselowpriceslimitthevaluethattheRPSbringstonewrenewablegenerationprojectsthrough2020,proposedeffortstoraisetheCaliforniaRPSbeyond33percentmayprovide
greaterincentivesinthefuture.GiventhecaponRECprices,itmaybelessexpensivefortheSFPUC
topurchaseRECstomeetfutureRPSobligationsintheshort‐term.Allutilitiesinthestateprovidenetmeteringaccesstocustomers.Netmeteringisa
programwherecustomersareallowedtoinstallgenerationontheirpropertyandsellanyexcess
backtotheutility.Limitsexistonthemaximumsizeofagenerationunitatacustomer’spropertyandthetotalamountofaggregatecapacityonautility’ssystem.Uptonow,netmeteringhasnot
playedalargeroleattheSFPUCbecauseofthenatureofthecustomersthataresupplied.However,
ifthecustomerbaseattheSFPUCexpands,netmeteringisaprogramthatwillneedtobetakenintoaccountwhenestimatingthecostsandbenefitsofin‐cityrenewableprojects.
ThecapandtradeprogramimplementedbytheGlobalWarmingSolutionsAct(AB32)has
imposedacostonstatewidecarbonemissions.Beginningin2013,regulatedentitiesinCaliforniamustsubmitallowancesforcarbonemittedfromlargepointsourcesofCO2.Regulatedentities
includethosewithover25,000tonnesperyearofCO2emissions,impactingroughly600facilitiesin
thestate.Beginningin2015,transportationfuelsandnaturalgaswillalsobeincludedinthecomplianceobligations.Regulatedentitieshavethefollowingmajoroptionsformeetingtheir
obligations:reducetheiremissionsfootprint,usefreeCaliforniaAirResourceBoard(CARB)
allocations(whichdeclineovertime),buycredits,orobtainoffsets.CarboncreditsintheMay2013auctionaveraged$14.25/metrictonneforvintage2013creditsand$11.02/metrictonnefor
vintage2016credits,slightlyhigherthanthe$10/metrictonnefloordefinedbythestatute.
TheSFPUCreceivesafreeallocationofcreditsfromCARBanddoesnothaveacomplianceobligationduetoitssourcesofgeneration.Therefore,inclusionofadditionallowcarbonresources
haslittlevaluefortheSFPUCunderAB32.
13 See “Green‐e RECs Edge Up To Compliance Value”, available at http://www.renewableenergyworld.com/rea/blog/post/print/2013/05/green‐e‐recs‐edge‐up‐to‐compliance‐value
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BoththeGoSolarSFandGreenFinanceSFaremeanttostimulatedevelopmentofsolar
energywithinSanFrancisco.TheGoSolarSFprogramprovidesincentivestoresidential,lowincomeresidential,andcommercialbuildingstodevelopsolarPVontheirproperties.Thebasic
benefitforresidentialpropertiesis$2,000;forcommercialpropertiesitis$1,500/kW(uptoa
maximumbenefitof$10,000),butthiscanchangebasedafewfactorssuchasincomelevelandownershipbynon‐profits.Fundingislimitedtoanoverallcapperfiscalyear.GreenFinanceSFisa
PropertyAssessedCleanEnergy(PACE)programwherethecostsforenergyefficiencyandsolar
projectsarerolledintothepropertyowner’syearlytaxburdeninsteadofbeingfullypaidattheoutset.SanFranciscocollectstheloanrepaymentsanddistributesthemdirectlytothelender.
Bothoftheseprogramhelptostimulateandlowerthecostofsmallscale,customersitedsolarPVin
SanFrancisco.Thereareotherstateprogramsin‐placewhichprovideincentivesorfixedpricestoprojects
forcustomersoftheinvestorownedutilities,butnottheSFPUC.TheseincludetheSelfGeneration
IncentiveProgram(SGIP),theCSI,theRenewableAuctionMechanism(RAM)andfeed‐intariffs(FIT).TheonlycomparableprogramavailabletoSFPUCcustomersistheGoSolarSFprogramwhich
providesanadditionalincentivetoSanFranciscoresidentsalreadyreceivingaCSIrebate.
7.1.4 Future Term and Incentive Summary
Thefutureoffinancialincentivesisasourceofuncertaintyfornewrenewableprojects.The
PTCandITCbothexpiredattheendof2013foralltechnologiesexceptsolar(whichwillfallfrom30to10percentattheendof2016).Projectsmusthavebegunconstructionbytheendofthese
yearstoqualify.Theseincentiveshaveasubstantialimpactonthecostofgenerationfrom
renewables;caseswithandwithouttheseincentiveswillhaveanappreciabledifferenceinthelevelizedcostofelectricity.
Thereislittlebasisonwhichtoforecastfutureincentives.Intheshort‐term,itisassumed
thattheSFPUCcouldlikelycontractwithprojectsbeginningconstructionin2013inanytechnologyandthuscapturetheITC.Theeconomicmodelaccompanyingthisreporthastheabilityto“toggle”
specificincentivestoseethesensitivityoftheresultstodifferentassumptions.Inthebasecase,the
ITCandaccelerateddepreciationareassumedforalltechnologieswhenownedbyataxableentity.IfthestateRPSrequirementincreasestomorethan33percentrenewablesby2020,this
willlikelyincreasethedemandfornewrenewableprojectsandthevalueforRECs.However,since
theSFPUCisalreadycommittedtoprocuringallnewgenerationfromrenewableresources,thispolicychangewouldhavelittleimpactoneithertheprojectincentivesorSFPUCprocurement
strategyunlesstheSFPUCdesiredtobeinapositiontosellexcessRECs.
7.2 POTENTIAL OWNERSHIP STRUCTURES Theownershipstructureofaprojectcanhaveamaterialimpactontheelectricitycostpaid
bytheSFPUCduetodifferentincentivestructures,costoffinancing,andtaxtreatment.Thissection
providesanoverviewofthemajorstructuresavailableandrecommendationsforstructuresthat
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shouldbeconsideredbytheSFPUC.Thefinancialmodelprovidedwiththisreportwill
demonstratethedifferencesbetweensomeofthemajorstructures.
7.2.1 Historical Approach to Renewable Energy Project Ownership
Withthenotableexceptionofhydroelectricfacilities,renewableenergyprojectshavetypicallybeenownedbyindustrialandindependentpowerproducers(IPP)withexcesspowersold
toutilitiesthroughPPAs.TherearehistoricalreasonsforthepredominanceofIPPsinthe
renewableenergysector.RenewableenergygenerationbyIPPswasdrivenbytheenactmentofthePublicUtilitiesRegulatoryPolicyActof1978(PURPA),whichstimulatedthedevelopmentofalarge
numberofrenewableenergyprojectsinsubsequentyears.Manybiomass,wind,andgeothermal
plantscameonlineinthistimeperiodandwereallowedunderPURPAtosellexcesspowertotheutilityatavoidedcostorothernegotiatedrates.AstheinfluenceofPURPAwanedwithlower
electricitycostsinthe1990s,anewroundofrenewableenergydevelopmentwasspurredbythe
PTCandITC(discussedintheprevioussection).Publicutilitiesarenotabletodirectlyrealizethebenefitsofthesetaxincentives.ThePTCandITCreinforcedthetrendtocontractrenewableenergy
throughPPAsforbothpublicandinvestorownedutilities.Althoughtherehavebeensomeutility
ownedrenewableenergyprojectsbuiltintherecentpasttheseprojectshavebeentheexception,andnottherule.
Basedonpastexperience,interviewswithotherpublicutilities,andaliteraturereview,the
projectteamdevelopedalistofpotentialprojectownershipscenariosthatmaybeapplicabletotheSFPUC.Manydifferentpermutationsandvariationswereidentified,andincludethefollowing
projectelements:
● ProjectStructure–thebasicarrangementthatspecifiesownershipandoperatingcontrol,capitalflow,powerflow,etc.
● PartnersandCounterParties–forpublicownership,thevarioustypesofprojectpartners
andcounterpartiesthatmaybeinvolvedinprojects.TheseorganizationsmayfillvariousrolesincludingprojectownerssellingpowertotheSFPUC,jointparticipantsinownership,
poweroff‐takers,plantoperators,orotherowners.
● FinancingApproach–differentsourcesoffinancingsuchasretainedearnings,generalobligation(GO)bonds,orprojectfinance.
● DevelopmentApproach–degreeofinvolvementintheprojectdevelopmentprocess,ranging
fromcompleteself‐developmentofagreenfieldprojecttopurchaseofaturnkeyprojectatcommercialoperation.
AsillustratedinFigure7‐1,combinationsofthesedifferentelementsdefinedifferent
options.Notallelementsareusedtodefineeachoption.Forexample,forthepurposesofthisproject,therewouldbenorelevantcounter‐partyinSFPUCownershipprojects,andSFPUC’sactive
involvementindevelopmentwouldbeunusualforatypicalPPAproject,fromwhichitpurchased
power.
San Francis
BLACK & VE
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San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐15
● ProjectControl–AssessestherelativelevelofrisktheSFPUCwouldfaceformaintainingthe
levelofoperationsrequiredtoachieveplantgenerationtargets.● Prevalence–Indicatestherelativeindustryexperiencedevelopingprojectsaccordingtothe
givenownershipstructure.
7.2.2 Municipal Ownership
PerhapsthemoststraightforwardownershipoptionfortheSFPUCisdirectprojectownership.Inthisinstance,theSFPUCwouldbethesoleownerofthefacilityandwouldreceiveall
energygenerated.TheSFPUCcouldberesponsibleforthedevelopmentandconstructionofthe
project,orcouldpurchaseanalready‐constructedprojectdevelopedbyaprivateparty.Theseandotherdevelopmentoptionsinvolvevariouslevelsofdevelopmentactivitybytheultimateownerof
thefacility.Financingwouldbeobtainedthroughthemunicipalbondmarketwithgeneral
obligationbondsorrevenuebonds.Alternately,theprojectcanbefinancedwithinternalretainedearnings.
Anexampleofthisownershipoptionisthe120MWPineTreeWindFarmnearMohave,CA
whichwasthelargestmunicipallyownedwindprojectwhenfinishedin2009.Theprojectwas
developedbyHorizonWindEnergyunderdirectionandoversightofLADWP.LADWPactivelyparticipatedindevelopmentactivitiesandconstructedtheprojectsubstationandtransmissionline
interconnection.ThishelpedtoreduceprojectcostsandallowedLADWPtomaintaincontrolover
modificationsbeingmadewithintheirtransmissionsystem.SomemunicipalutilitiessuchasLADWPpreferthistypeofstructuretokeepmuchoftheprojectwork,operations,andcontrolof
theunitwithintheutility.Aftersuccessfulcommissioning,LADWPassumedownershipofthe
projectbymakingalumpsumpaymentfromtheirretainedearningstoHorizon.LADWPnowoperatesandmaintainsthewindfarm.Thegeneralattributesofthepublicutilityownershipoption
arecharacterizedbelow:
● FinancingCosts–Financingcostsforpubliclyownedrenewableenergyprojectsarenearlyalwaysmoreattractivethanforprivateprojectsduetotax‐exemptfinancing.Thefinancing
ratevariesslightlydependingonwhethergeneralobligationorrevenuebondsareissued.
● Development/ConstructionRisk–Asthesoleowneroftheproject,risksduringthedevelopmentandconstructionphaseoftheprojectarehigherformunicipalownership
versusotheroptions,suchasaPPA.Toacertainextent,theSFPUCcancontroltheserisksby
employingdifferentdevelopmentapproaches(forexample,self‐developmentversuspurchaseofaturnkeyfacility).
● FinancialRisk–Thefinancialriskprofileoftheprojectisrelativelyhighbecausethe
municipalutilityisthesolepartyresponsiblefordebtrepayment,operations,andmaintenanceoftheproject.
● UseofTaxIncentives–Becauseitisatax‐exemptentity,underthisstructuretheSFPUC
cannottakeadvantageofincentivesavailabletotaxableentities(e.g.,investorownedutilities(IOUs)).However,theSFPUCdoesnotpaystateorfederaltaxes.
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● ProjectControl–TheSFPUChasthegreatestcontrolovertheprojectwiththisownership
option.Theownermayelecttoforfeitsomeofthiscontroltoothers,suchasaturnkeydeveloper,inexchangeforreducedexecutionrisk.
● Prevalence–Whiletherehasbeenafewlargemunicipallyownedrenewableenergyprojects
developedinthelastfewyears,municipalownershipremainsverylimited.Thereiscurrentlyroughly1300MWofmunicipallyownedrenewableenergyprojects,withthe
majorityconsistingofbiomassprojectsbuiltbeforetheyear2000.Figure7‐2showsthe
breakdownofownershipoptionsforcurrentlyoperatingrenewablefacilitiesbytechnologybasedondatafromEnergyVelocity.
Figure 7‐2 Cumulative Renewable Energy Ownership
PublicownershipisaconventionalprojectstructurethataffordstheSFPUCagreatdealofcontroloverprojectdevelopment,construction,andoperation.Inexchange,theSFPUCassumes
muchoftheprojectrisk.Theseriskscanbepartiallymanagedduringthedevelopmentphaseby
partneringwithothercompanies.Financingcostsforpublicownershipprojectsaregenerallylow;however,theSFPUCwouldnotbeabletotakeadvantageofthelucrativetaxcreditsavailableto
privatelyownedrenewableenergyprojects.
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7.2.3 Power Purchase Agreement
ThepurchaseofrenewableenergybyapublicutilitythroughaPPAwithanIPPisthemost
commonwayinwhichrenewableenergyprojectshavebeendevelopedintherecentpast.PPAsprovidelow‐riskdeliveryofpowertothepurchaser,usuallyforasetcostperunitofenergy,while
largelyshieldingthepurchaserfromprojectrisks.Inthisarrangement,anIPPwilleitherdevelopa
projectconceptandmarketthepowertovariousoff‐takers,orrespondtoanRFPfromautilityforprovidingnewgeneration.AftersecuringthePPA(s),theIPPwillclosefinancingontheprojectand
buildit.Thereafter,ownershipand/oroperationsmaybesoldortransferredtoanotherprivate
party.Ineitherevent,theutilitywouldcontinuetoreceiveandpayforpowerperthetermsofthePPA.ItisnotuncommonforrenewableenergyPPAstobeofferedwithfixedpricesovertheirfull
term.PPAsforrenewableenergyprojectsdonothavetobeexclusivelywithIPPs.Otherpotential
counterpartiesincludeotherpublicutilities,IOUs,individuals/communityorganizations,andfederalsuppliers.
TherearemanyexamplesofPPAsbetweenIPPsandpublicutilitiesinCalifornia.Recent
onesincludeSMUD’s30MWPPAwithGradientResourcesforpowerfromthePatuaGeothermal
PlantandLADWP’s250MWPPAwithKRoadMoapaSolar.ThefeaturesofatypicalPPAprojectaredescribedbelow.
● FinancingCosts–Thecostoffinancingistypicallyhigherforthisoptionthanmunicipal
ownership.Developerswillfinancetheprojectthroughfinancialmarkets,includingcommerciallypriceddebtandequity.
● Development/ConstructionRisk–ThedevelopmentandconstructionriskforthePPAoption
isthelowfortheutilitypurchasingthepowerbecausethecounter‐partybearsthefullresponsibilityfortheseactivities.
● FinancialRisk–Thisoptioncarriesthelowestfinancialriskofanyoftheoptionsconsidered
forthisstudysincetheSFPUCwouldonlypayforthepowerdelivered.PPAsarenottotallywithoutrisk;issuesmightariseinafewareassuchas(1)take‐or‐payagreementsifthe
SFPUCisnotabletoreceivetheentireoutputoftheproject,(2)anyagreementwherethe
SFPUCassumesresponsibilityforPTCpaymentsincaseofoutputcurtailment,and(3)failureofthepowerprovidertoperform,inwhichcasetheSFPUCmayneedtoturnto
alternativesuppliesofelectricity.Theseriskscanbecontrolledthroughcontractnegotiation
andprudentduediligenceofpotentialsuppliers.● UseofTaxIncentives–Taxablecounterpartiesareabletoclaimtaxincentives,andthese
benefitswould,intheory,bepassedontotheSFPUCintheformoflowerPPAprices.
● ProjectControl–Controloftheprojectdevelopment,construction,operationsandmaintenancewouldresidewiththeIPP.
● Prevalence–PPAsarethemostcommonmeansbywhichrenewableenergyprojectshave
beendeveloped.ItisverycommonforautilitytoobtainrenewableenergyfromanIPPthroughaPPA.
Doingsoallowstheutilitytoprocuretheenergyatverylittleriskwhileallowingtheprojectto
claimtaxincentivesthatareindirectlypassedtotheutilityintheformoflowerenergycosts.Other
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benefitsincludelimitedexposuretodevelopmentcostandleveragingtheexperienceofa
knowledgeabledeveloper.ThetradeoffisalackofprojectcontrolandpossiblyupwardpressureonthePPApricefortwomainreasons.First,theprojectownerisnottypicallyabletouselow‐cost
tax‐exemptfinancing.Second,itshouldbeexpectedthatthepowerseller,whoassumesmostthe
risktodeveloptheproject,wouldchargetheutilityapricepremiumtocounterbalancethisrisk.AttheendofthePPAtermortheexpirationofthePTC,theutilitymaychoosetopurchase
theasset.Thisscenario(PPAwithtransfer)isdiscussedinmoredetailbelow.
7.2.4 Power Purchase Agreement with Transfer
ThisoptionissimilartothePPAoption,butaddsaprovisionforassettransfertotheSFPUC
attheendoforduringthePPAterm.Thedevelopermustownandoperatetheprojectforatleastsixyearstobeabletoclaimanyfederaltaxcredits.Thetransferpricemustbebasedon“fair
marketvalue”(FMV).Thisallowsataxablecounter‐partytoreceivealltaxbenefitsandrecover
someportionofthecapitalcostoftheproject.SFPUCthenbuysthedepreciatedassetandassumesoperation.Thisstructureispopularwithpublicandnon‐taxableagencies,andhasrecentlybeen
usedorconsideredbygroupssuchasSantaClaraUniversity,StanfordUniversity,andSaltRiver
Project.TheattributesofaPPAwithtransferstructurearedescribedbelow:● FinancingCosts–Theprojectwouldinitiallybefinancedwithhigher‐costcommercial
finance.Upontransfer,thetransferpricepaidbytheutilitymightbepaidusingretained
earningsorlow‐costtax‐exemptdebt,reducingtheaggregatecostofthefacility.However,thereissomeriskthattax‐exemptfinancingmaynotbeallowableforpurchasinganexisting
asset,andalegalopinionofthismattershouldbesoughtbeforeproceeding.
● Development/ConstructionRisk–Thedevelopmentandconstructionriskofthisstructurewouldbelow,similartothePPAoption.
● FinancialRisk–ThefinancialriskofthisoptionwouldbelowandsimilartothatofaPPAfor
theinitialterm.ThelargestriskwiththisoptionisthecostandconditionoftheassetupontransfertotheSFPUC.PerIRSguidelines,thedevelopermustowntheprojectforatleastsix
yearsandapre‐agreedtransferpriceisnotallowedifthedeveloperwouldliketocapture
federaltaxcredits.Therefore,thecostoftransferisnotknowninadvance.Further,theSFPUCwouldnothavedirectcontrolovertheoperationsandmaintenanceoftheplantwhen
ownedbytheprivateparty.Thereareseveralmethodstomitigatetheserisksincluding(1)
makingthetransferoptional,(2)specifyingrequiredO&MproceduresorathirdpartyO&Mcompany,and(3)defininghowFMVwillbecalculatedasawaytoreducetheuncertainty
whilestayingwithinIRSguidelines.
● UseofTaxIncentives–Taxablecounterpartiesareabletoclaimtaxincentives,andatleastaportionofthesebenefitsshouldbepassedontotheSFPUCintheformoflowerPPAprices.
● ProjectControl–TheprojectcontrolprofilewouldmirrorthatofthePPAbeforethetransfer
ofthefacilitytotheSFPUC,andwouldmirrorthatofdirectSFPUCownershipafterthatpoint.TheSFPUCmayassertcontroloversomeaspectsofO&MduringthePPAphaseto
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assurethattheplantisingoodconditionwhentransferredorplacespecificcondition
requirementsinthecontract.● Prevalence–Whilefewexamplesofthisstructureexistedfiveyearsago,thistypeof
structureisbecomingmuchmorecommonamongstpublicagenciesasawaytodevelop
renewableenergyprojectsatalowcost.Takingownershipreducestherentandroyaltypaymentstothedeveloperandallowsthepublicagencymoreactivecontrolintheproject’s
operations.Theagencymustfeelcomfortableoperatingandmaintainingtheproject,and
thatcoststodothiswouldbecommensuratetothoseofthedeveloper.ThePPAwithtransfercombinesmanyoftheadvantagesofthePPAanddirectproject
ownershipoptions.TheuseofaPPAwithataxablecounter‐partyshouldallowtaxbenefitstobe
indirectlypassedtotheSFPUCintheformoflowerPPApayments.Further,developmentandconstructionriskisprimarilyassignedtotheprojectdeveloper,althoughthelackofutility
involvementindailyO&Mdecisionsmightincreaselongtermperformanceriskintheeventof
projectacquisition.TheSFPUCwouldneedtostructureprojectagreementscarefullytomanagethisrisk.Theuseoftax‐exemptdebttopurchasetheprojectatthetransferdatewouldfurther
improvetheeconomics.However,therearequestionsastowhethertax‐exemptdebtcouldbeused
forthispurpose.
7.2.5 Pre‐Paid Power Purchase Agreement
ThePPAprepaymentoptionfollowsthegeneralformofaconventionalPPA;however,paymentforpartofthepowerismadeinonelumpsumatthebeginningofthePPAterm.Forthe
remainderofthepowerthatisnotpre‐paid,theutilitywouldpayanongoing“tariff”tomakeupthe
difference.TheUSTreasuryDepartmentissuedarulingin2003allowingpubliclyownedutilitiestousetax‐exemptfinancingtoprepayfutureelectricsupplies.14Thistypeofstructureisnotvery
commoninthepublicpowersector,sinceittendstobecomplicatedandonlymakeseconomic
senseforlargerprojects.ExamplesincludeMemphisLight,GasandWater’s15‐year,$1.5billionagreementwithTennesseeValleyAuthorityin200315andSMUD’s2012agreementwithVestasand
CitigroupforPhase3oftheSolanoWindProject.16
Aprepaystructurecouldbecosteffectivesincethepublicagencyisineffectpayingalargeportionofthecapitalcostwithlowcosttax‐exemptdebtorretainedearnings.Thenetcostforthe
deliveredpowermaybepotentiallylowerifthemunicipaldebtrateislowerthantheeffectiveafter
taxdebtrateoftheprivatedeveloper.However,prepayingforelectricityinadvanceofdeliverycouldentailahighlevelofrisk.Thepublicagencymustcomeupwithalargepaymentatthestart
oftheprojectbeforeanypowerisdelivered.Anyagreementwouldneedtoincludesignificant
penaltiesforfailuretodeliverpowerandprovisionsintendedtominimizeriskstotheSFPUC.Also, 14 US Department of the Treasury, "Treasury Issues Final Regulations Regarding Pre‐payments Financed with Tax‐Exempt Bonds," available at http://www.ustreas.gov/press/releases/js629.htm, August 1, 2003. 15 Tennessee Valley Authority, “Treasury Approves Innovative TVA‐MLGW Pre‐pay Deal,” available at http://www.tva.gov/insidetva/august03/treasury.htm, August 2003 16 https://www.smud.org/en/about‐smud/news‐media/smud‐updates/2012‐05‐01‐solano‐expansion.htm
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theIRShasguidelinesforthemaximumamountofpowerthatcanbepre‐paid;ifthelevelistoo
high,thepublicagencywillberuledtobethetrueowner,preventingthetaxincentivesfrombeingusedbythedeveloper.Thislimitisgeneralthoughttobearound50percent,althoughthereisno
explicitlimitandviewsonthelimitdiffer.Black&Veatchhighlyrecommendsdiscussionswitha
taxattorneybeforeengaginginaprepayPPA.ThecharacteristicsofaprojectemployingthePPAprepaymentstructurearedescribedbelow.
● FinancingCosts–Thoughtheprivateownerofthefacilitywouldhavetoaccessmorecostly
commercialmarketsfordebtandequity,theSFPUCwouldbeabletouselow‐costtax‐exemptbondstofundtheprepaymentofthePPA.BecausetheSFPUC’scostofcapitalis
lowerthanthatoftheIPP,suchaprepaymentcouldbeeconomicallyadvantageous.
● Development/ConstructionRisk–SimilartoaPPA,thedevelopmentandconstructionriskprofilefortheSFPUCisverylow;thecounter‐partyisresponsibleforallproject
developmentandconstructionrisk.
● FinancialRisk–Thereisconsiderablefinancialriskinthistypeoftransactionbecauseofthelargedebtburdenissuedattheoutsetofthetransaction,withapromiseoffuturedelivery
butariskofnon‐delivery.TheSFPUCisessentiallyacceptingtherolethatwould
traditionallybefilledbyprojectfinanciers.Prudentduediligenceoftheprojectandtheproposingcounter‐partywouldbenecessary.TheSFPUCcouldreduceriskbyonly
prepayingasmallpercentageofthetotalupfrontenergycosts,butthiswouldreducethe
valuethatthisstructurepromises.● UseofIncentives–Iftheprojectweredevelopedbyataxableentity,useoftaxincentives
shouldbepossible;theSMUDSolanoprojectisanexampleofthistypeofstructurebeing
successfullyarranged.Furtherinvestigationofincentiveapplicabilityandpotentialinteractionswithtaxexemptfinancingisprudent.
● ProjectControl–ProjectcontrolconsiderationsarethesameasatraditionalPPA.
● Prevalence–Thisstructurehasbeenusedforrenewableenergytechnologies,butisrare.Onlypublicagenciesthathavetheabilitytomakealargeupfrontpayment,arewillingto
acceptfinancialrisk,andthathaveaprojectlargeenough(atleast10MW,butpreferable
larger)tomakethistypeofstructureworththetimeandeffortshouldconsideraprepayPPA.
ItmaybepossiblefortheSFPUCtoprocurepoweratsubstantiallyreducedratesthrough
enhancednegotiatingleveragewiththePPAprepaymentoptionforlargeprojects.TheSFPUCwouldhavetomakeafairlylarge,upfrontfinancialcommitmenttoenterintosuchanagreement.
Therisksofdoingsowouldneedtobecarefullyweighedagainsttheadvantageofsecuringlow‐cost
power.
7.2.6 Real Estate Investment Trust
RenewableenergyinvestorshaverecentlyconsideredtheuseofREITsasatax‐efficientinvestmentstructure.AREITisaninvestmentfundthatallowssmallinvestorstopooltheirmoney
forpurchasesofrealproperty,similartoamutualfund.Thereareveryspecificrulesdefininghow
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aREITmustoperatethatcoveritemssuchastheminimumnumberofinvestors,theamountofthe
REITthatcanbeheldbyanindividualinvestor,andmostimportantly,thetypesofassetsthatcanbeheldbyaREIT.Bylaw,75percentofaREIT’sassetsmustbe“realestateassets”,cash,and
governmentsecurities.Therearemajorquestionsonifrenewableenergyequipment,suchaswind
turbinesandsolarpanels,willpasstheIRSdefinitionof“realestateassets”sincemostofthisequipmentdoesnotpassthe“inherentlypermanent”test.Also,thesaleofinventoryfromREITsis
a“prohibitedtransaction”;itislikelythatthesaleofelectricitywillbeclassifiedas“inventory”if
heldinaREIT.TheadvantageofREITscomesinhowtheyaretreatedfortaxpurposes.Bylaw,atleast90
percentofaREIT’srevenuemustbedistributedasdividendstoshareholders.Thesedividendsare
deductedfromtheREIT’snettaxableincome.Byreducingcorporateincometaxandthustaxingmostrevenueatthepersonaldividendrate,thenettaxburdenislower.REITshavebeenusedin
theenergyindustrylargelyforoilandgasinvestments,byallowingthepurchasesoflandandnon‐
building,non‐machineryequipment.REITswillhavelimitedabilitytousethefederalPTCorITC;theamountofthetaxcreditisreducedbythelevelofdividenddistributions,andtheindividuals
whoreceivethedividendsareunabletoclaimthem.Therefore,whilethePTCandITCarestill
available,REITsareunlikelytoplayalargeroleintherenewableenergyindustry.AREITisnotreallyafullprojectfinancestructure,butlargelyawaytoobtaindevelopment
financingthatcanbeusedinaPPA,PPAwithtransfer,orpre‐paidPPAstructure.Thereareboth
companieslookingtoinvestspecificallyinrenewableenergyREITsandtraditionalREITslookingtoaddrenewableassetstotheirportfolio.TherearecurrentlytwoREITswithsomeinvestmentin
renewableenergy:HannonArmstrongandPowerREIT.WhilePowerREITisinvestingonlyin
propertythatmaybeusedforrenewableenergy,theHannonArmstrongREITholdslargelyenergyefficiencyinvestments,withlessthanone‐thirdoftheREITtargetedforinvestmentinrenewable
projects.HannonArmstrongrequestedaprivateletterruling(PLR)fromtheIRSthatallowedtheir
specificsituationtobeapproved.Thecurrentviewintheindustryisthatthisisa“boutiquestructure”thatisnotwidelyapplicabletoothers.ThecharacteristicsofaprojectemployingaREIT
aredescribedbelow.
● FinancingCosts–ItisunclearhowprojectfinancingbeingdevelopedbyaREITwillimpacttheoverallfinancingcost.Itmaybelowerthanbankfinancing,sincereturns(dividends)on
theprojectwillbetaxedatalowerratethancorporatefinancing.
● Development/ConstructionRisk–AREITwouldprovidefundingtoadeveloperwhocouldthenutilizeanytypeofprojectagreementtheywished.Thereisnoadditionalriskinthis
areacreatedthroughestablishmentofaREIT.
● FinancialRisk–ThereismajorriskwiththeuseofaREITforfinancingsincethereareanumberofhurdlestoacceptanceofthistypeofstructureforrenewableenergy.IfaREIT
wasfoundtobeappropriateforfinancing,thenthefinancialrisktotheSFPUCshouldbeno
differentthantheotherstructures,dependingonwhattypeofarrangementwasestablished.
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● UseofIncentives–Unliketheotherstructuresevaluated,aREITwouldbeapoorvehiclefor
useoffederaltaxincentives.ThiscouldmakethecostoftheoverallprojecthigherthattheotheroptionsevaluatedwhiletheabilitytoclaimthePTCorITCexists.
● ProjectControl–Aswithdevelopment/constructionrisk,aREITdoesnotestablishany
additionalriskinthisarea.● Prevalence–TherearenoREITsthathavebeenestablishedpurelyforthedevelopmentof
newrenewables.Giventhe“realproperty”issuesandinabilitytofullyutilizethetaxcredits,
itisunlikelythatREITswillbewidelyusedforrenewableprojectsanytimesoon.GiventhebarrierstotheuseofREITsandtheuncertaintyregardingtheirviabilityinthe
currentmarket,itisnotrecommendedthattheSFPUCconsiderthisfundingmechanismasan
optionfornear‐termprojectfinancing.
7.3 ECONOMIC AND FINANCING ASSUMPTIONS Black&VeatchdevelopedafinancialmodeltoassisttheSFPUCinevaluationofdifferent
renewableenergyandfinancingoptions.Thismodelisprovidedasaseparatedeliverabletothis
report.ThemodelinputsforthecostandperformanceofdifferenttypesofsolarPV,wind,andgeothermalprojects,alongwithlettingtheusermodifytheseinputsasdesired.Inaddition,eachof
thedifferentprojecttypescanbepairedwithadifferentfinancingoption.Basedontheanalysis
above,SFPUCownership,PPA,PPAwithtransfer,prepayPPA,andprepayPPAwithtransferarealloptionsthatcanbechosenforevaluation.
MajorinputsfortheSFPUCandprivateownershipcasescanbeseenbelow.
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Table 7‐2 Economic Analysis Assumptions
PARAMETER SFPUC OWNERSHIP PRIVATE OWNERSHIP
DebtPercentage 100percent 45 to50 percent
DebtRate 3.8percent 6.5 percent
DebtTerm(years) 30 15forsolarandwind,20forgeothermal
EconomicLife(years) 20forwind,25forsolar,30forgeothermal
DepreciationTerm(years) N/A 5years
PercentDepreciated N/A 85 percent
TaxRate N/A 40 percent
EquityPercentage 0percent 55 percent (60percentinthe
prepayscenario)
CostofEquity N/A 8 percent forprepay,10percentotherwise(12percentforgeothermal)
DiscountRate 3.8percent N/A
Inflation 2.0percent
DebtServiceCoverageRatio 1.2to1.3
Othermajorassumptionsandfunctionalityforthemodelincludethefollowing:
● ThediscountrateusedtocalculateLCOEisbasedonSFPUC’sweightedcostofcapitalof3.8percent.
● Generalinflationfactorof2percentperyearwasappliedtoallO&Mcosts.
● ThemodelisabletoaccommodateaPossessorTaxaspartofthelandleasefortheprivateownershipfinanceoptions.Forthebasecaseanalysis,noPossessorTaxwasassumed.
● Fortransferscenarios,transferisassumedtooccuratyear7,afterthetaxcreditshavebeen
monetized.Themethodologyforcalculatingthetransferpriceisbasedonthepresentvalueoftheearningsbeforeinterestandtaxes(EBIT)streamoftheprojectinyear7discountedat
thedeveloper’sequityreturnrate.
● ForprepayPPAs,itisassumedthat40percentoftheenergyispre‐paidattheoutsetoftheproject.
● Additionalincentives,eitherformunicipalownershiporprivateownership,canbeincluded
intheanalysis.TheITCandaccelerateddepreciationaretheonlyincentivesincludedintheresultspresentedhere,althoughchangestotheITC,PTC,orotherincentivescanbe
modeled.
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TheestimatedLCOEforeachoftheprojectsmodeledunderthedifferentownershipoptionscanbeseeninthenextsection.
7.4 ECONOMIC ANALYSIS RESULTS TheLCOEestimatesforeachdifferenttechnologyareshownbelow,alongwithadiscussion
oftheresults.FollowingthetechnologyspecificresultsisacomparisonofownershipoptionsfortheprojectswiththelowestLCOEs.Finally,asupplycurvecomparingtheoptionsbetween
technologiesandrecommendationsforfutureSFPUCdevelopmentisprovidedinSection7.5.
Thecostsshownbelowreflectthebusbarcostofgeneration,butnotnecessarilywhatSFPUCwouldpaytoobtainenergyproducedfromeachproject.Thepriceofenergyisimpactedby
othermarketfactorssuchasoverallsupplyanddemand,sitespecificdevelopmentconsiderations
notreflectedhere,thevalueofthepowergivenitsgenerationprofile,andcostofpowerdeliverytotheload.Forexample,manygeothermalPPAsaresignedatvalueshigherthanthoseshownhere
giventhehigherdevelopmentriskfacedbygeothermalprojectsandloweramountofcompetition
forbaseloadrenewableresources.
7.4.1 Solar Photovoltaic
TheresultsofthesolarPVanalysisshowsthattheup‐countrySFPUClocationsandlarge
statewidegroundmountedfacilitieshaveconsiderablylowerLCOEswhencomparedtorooftop
developmentlocationsinSanFranciscooranyoftheSFPUCwaterreservoirs.ThisisduetothelargersizeandbettersolarresourcefortheprojectssitedawayfromSanFrancisco.Thecostsfor
theprojectslocatedoutsideofSanFranciscoreflecttransmissioncoststointertiethepowerinto
theCAISO.EvenonceanychargesfromPG&EtobringthepowerintoSanFranciscoareincluded,theLCOEsforthelargegroundmountprojectswillremainmuchlower.
Forthethreelargegroundmountprojects(Midway,Windhub,andImperialValley),LCOEs
forbothfixedandSATprojectslocatedonthesamesitewerecalculated.ThegoodsolarresourceatalltheselocationsjustifiesthehighercapitalcostofaSATsystem,withLCOEsroughly10
percentlower.Therefore,SATprojectsonlywillbecarriedforwardtofuturesupplycurveanalysis.
Whiletheresultsforalllocationsundereachownershipoptionislistedbelow,prepayPPAsaretypicallyonlyseenonlargerprojectsduetotheircomplexityanddevelopmentcosts.This
structurewouldonlybeviableforrooftop,reservoir,andsmallgroundmountsystemsifbundled
withinalargerportfolioofprojects.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐25
Table 7‐3 Solar LCOEs ($/MWh), Different Ownership Options
PROJECT PPA PPA WITH
TRANSFER PREPAY PPA
PREPAY WITH
TRANSFER
SFPUC
OWNERSHIP
HuntersPoint $294.18 $222.67 $222.25 $226.66 $305.82
MarinaSchool $266.12 $198.39 $197.97 $202.14 $276.94
ThurgoodMarsh. $217.15 $162.58 $162.25 $165.61 $225.92
CollegeHillRes. $227.24 $170.27 $169.93 $173.43 $246.21
SummitRes. $243.18 $182.15 $181.78 $185.53 $252.99
StanfordHeights $242.94 $181.98 $181.62 $185.37 $252.74
SutroRes. $223.81 $168.09 $167.76 $171.19 $232.79
UniversityRes. $205.37 $154.39 $154.09 $157.23 $222.38
PulgasRes. $199.05 $149.64 $149.35 $152.39 $207.02
TeslaFixed $112.60 $85.40 $85.24 $86.92 $117.04
SunolFixed $101.93 $80.48 $77.66 $79.15 $105.90
MidwayFixed $104.69 $80.49 $80.35 $81.85 $108.71
WindhubFixed $95.73 $73.60 $73.47 $74.84 $99.40
ImperialValleyFixed $99.12 $76.21 $76.08 $77.50 $102.93
MidwaySAT $95.48 $73.50 $73.38 $74.74 $99.13
WindhubSAT $84.05 $64.70 $64.59 $65.78 $87.26
ImperialValleySAT $90.34 $69.54 $69.42 $70.71 $93.79
Notes:
Reflectsbusbarcostofnewgenerationusingtypicalindustrydevelopmentassumptions;SFandSFPUCownedsitesadjustedtoreflectlocalcosts.ThesenumbersarenotnecessarilywhattheSFPUCwillpayduetomarketfactorsandSFPUCdevelopmentconsiderations.
Rooftopandreservoirdevelopmentcostsassumenostructuralmodificationsarerequired.
PrepayPPAsareviableforlargescaleprojectsonly;smallprojectswouldneedtobebundledinalargerportfolio.
TheresultsshowthatPPAwithtransferandprepayoptionshaveLCOEsroughly25percent
lowerthanstraightPPAsorSFPUCownership.However,itisunlikelythataprepayoptioncouldbe
usedforthesmallerprojects(cityrooftops,reservoirs,andTesla)unlesstheywereaggregatedintoalargefinancingbundle.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐26
7.4.2 Wind
Theresultsofthewindanalysisshowsthatthein‐cityandup‐countrylocationsonSFPUC
landarelocatedinmuchpoorerwindresourcesareas,leadingtoconsiderablyhigherLCOEs.Inaddition,theselocationshavelesslandfordevelopmentwhencomparedtotheotherlocations
analyzedthroughoutthestate,whichcouldbuildalargefacilityandtakeadvantageofeconomiesof
scale.Finally,whiletheoperatingcostoftheOceansidefacilityhasbeenraisedtotrytoreflecttheuniqueoperatingconditionsforanurbanwindfacility,theabilitytopermitandobtainlocal
acceptanceofawindprojectinthislocationwouldbemuchmorechallengingthantheother
projectsites.
Table 7‐4 Wind LCOEs ($/MWh), Different Ownership Options
PROJECT PPA PPA WITH
TRANSFER
PREPAY
PPA
PREPAY WITH
TRANSFER
SFPUC
OWNERSHIP
Oceanside $96.77 $82.01 $82.59 $83.46 $105.91
Sunol $156.72 $129.85 $130.92 $134.36 $173.34
Tesla $126.38 $104.33 $105.21 $108.03 $140.02
MontezumaHills $66.44 $56.13 $56.54 $57.14 $72.81
AltamontRepower $67.43 $56.63 $57.06 $57.69 $74.12
WalnutGrove $65.22 $54.89 $55.30 $55.91 $71.60
LeonaValley $68.05 $56.85 $57.30 $57.96 $74.97
NewberrySprings $67.07 $56.34 $56.77 $57.40 $73.71
Notes: Reflectsbusbarcostofnewgenerationusingtypicalindustrydevelopmentassumptions.These
numbersarenotnecessarilywhattheSFPUCwillpayduetomarketfactorsandSFPUCdevelopmentconsiderations.
Furtherenvironmentalpermittingviabilitymustbeperformedatallsites,especiallyOceansideandMontezumaHills.
PrepayPPAsareviableforlargescaleprojectsonly;smallprojectswouldneedtobebundledinalargerportfolio.
Aswillbeseenintheothertechnologies,theprepayandtransferoptionshavelowerLCOEs
whencomparedtoeitherastraightPPAorSFPUCownership.ThisisduetotheuseofboththeITC
andtheSFPUC’slowcostofdebtineachoftheseownershipscenarios.Asmentionedabove,prepayPPAstructurestendtobecomplicatedandtypicallyofinteresttoonlylargerdeveloperspursuing
fairlylargeprojects.Giventheseissues,aPPAwithtransferappearstobethebestchoiceforwind
development.AnyofthestatewideprojectsoutsideofSanFranciscoorSFPUCcontrolledlandswouldbeofasizeandstructuresuitableforthistypeoffinancialarrangement.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐27
7.4.3 Geothermal
Allofthegeothermalprojectsanalyzedarepromisingandcouldprovidelowcostpowerto
theSFPUC.However,thechallengewithanynewgeothermalprojectisassurancethattheheatresourcecanproduceattheprojectedoutputlevelsandcostprojections.Capitalcostsof
geothermalfacilitiescanvarywidelyforseveralreasons,butoneofthemostimportantvariablesis
thedrillingcosttodeveloptheresource.Duringtheexplorationphaseitiscommontohaveoneormoreholesthatarefoundtobeunabletoprovidetemperaturesorflowratesthatsupport
commerciallyattractivedevelopment.Oncedefinedandproven,thedevelopmentwells
(productionandinjection)aredrilled.Wellcostsincreasenon‐linearlywithdepth,soifaresourceisfoundtobedeeperthanexpectedcostswillincrease.Factorslikethis,aswellaspotentialscaling
andcorrosionissuesduringoperation,makecostestimateslesscertainthanforothertypesof
renewableenergy.Furthermore,geothermalprojectstendtohavelongleadtimesasexploratorywelldrillingcouldlastaslongas2to5yearsormore.
Table 7‐5 Geothermal LCOEs ($/MWh), Different Ownership Options
PROJECT PPA PPA WITH
TRANSFER PREPAY PPA
PREPAY WITH
TRANSFER
SFPUC
OWNERSHIP
LongValleyBinary $77.39 $63.81 $67.47 $68.00 $78.02
GeysersFlash $65.96 $53.37 $56.77 $57.26 $66.54
BrawleyBinary $77.65 $61.91 $66.16 $66.77 $78.37
Notes: Reflectsbusbarcostofnewgenerationusingtypicalindustrydevelopmentassumptions.These
numbersarenotnecessarilywhattheSFPUCwillpayduetomarketfactors.
PPAwithtransferandtheprepayPPAcasesremainthemostattractiveownershipoptions.
ThelowcostofcapitalavailabletotheSFPUCmakesoptionswheretheutilitytakesoverownership
oftheprojectmoreattractivethanthistypeofstructureforothertechnologies.Thisisbecausetheinvestmentriskishighertoprivateinvestorsleadingtoahighercostofprivateequity.
BasedonBlack&VeatchandSFPUC’sexperiencewithrecentmarketpricingforgeothermal
projects,thecostsestimatedinthisreportaresignificantlybelowthepricesbeingofferedinthemarket.Whilethepricesshownabovemayreflectthedevelopmentcostforthebestknown
resourceareas,anumberoffactors,includingdevelopmentrisk,higherinvestorreturn
expectations,projectcosts,uncertaintyofpricinggiventhethinmarketforavailableprojects,andresourceavailabilitywouldlikelydrivepricesupbeyondthecostsestimatedinthisreport.
Furthermore,asadependablebaseloadresource,geothermaldevelopersmayfeeltheyofferamore
valuableproductthanvariablewindandsolarresources.Duetothisuncertainty,itwasdecidedthatthefocusoftheeconomiccomparisonsinthesupplycurvelatershouldbeonresources(wind
andsolar)thathaveagreaterchanceofdevelopmentatcostsconsistentwithonactualtransaction
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐28
prices.Nevertheless,SFPUCshouldstillconsidergeothermalasapotentiallycompetitiveresource
option.
7.4.4 Ownership Options
Tobetterdemonstratethedifferencesbetweenthebestresourceandownershipoptions,
theLCOEsforthebestsolarPVreservoir(Pulgas),groundmountsolarPV(WindhubSAT),wind
(WalnutGrove),andgeothermal(Geysers)sitesmodeledaspartofthisanalysisforeachofthefiveownershipoptionsarecomparedinFigure7‐3.
Figure 7‐3 Ownership Option Comparison, Best Resources
Fromthisanalysis,conclusionscanbemaderegardingthebestresourceandownershipoptions.Therelativeattractivenessofmunicipalself‐ownershipversusastraightPPAishighly
dependentonthespreadbetweenthecostofcapitalforSFPUCandthedeveloper.Theverylow
costofcapital(3.8percent)modeledfortheSFPUCmakesmunicipalownershipcomparabletoastraightPPA,albeitslightlymoreexpensive.IfthespreadbetweenthecostofcapitaltotheSFPUC
andprivatedeveloperswastoshrink,themunicipalownershipoptionwouldlooklessattractive.
Ingeneral,thePPAwithtransferandbothprepayPPAoptionshavelowerLCOEsforalltechnologieswhencomparedtostraightPPAsorSFPUCownershipbecausethemunicipalityisable
tobenefitintwoways:(1)thedeveloperisabletopassthroughthesavingsfromfederaltaxcredits
andaccelerateddepreciationintheformoflowerPPApricingwhile(2)themunicipalityisableto
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐29
utilizelowmunicipalcostofcapitaltofinancealargeportionofthecapitalcostoftheproject.
Thesethreeoptionsappearcomparabletoeachotherforthefollowingreasons:● Atsomepoint,whetheritisinthefirstyearasintheprepayoptionorinyearsevenasinthe
PPAwithTransferoption,theSFPUCwillfinanceaportionoftheprojectcost,eitherdirectlyor
indirectly,usingmunicipalbonds.● CostofdebtforSFPUCof3.8percentiscomparabletotheafter‐taxdebtrateofthedeveloper
inthePPAscenarioof3.9percent(6.5percentx(1‐TaxRate))inthePPAwithTransfer
scenario.● ThedebttermforthePPAscenarioisassumedtobe15yearsforsolarandwind.Longerdebt
termsenableprojectstohavelowerLCOEs.
● TheportionofequityinvestmentassumedinthePPAversusprepayscenariosare55percentand60percentrespectively,whiletheequityreturnrequirementsare10percent(levered)
and8percent(unlevered).Thecombinationsofassumedequitypercentageandequityreturn
requirementsforeachofthescenariosresultinsimilarLCOEs.Whiletheequityreturnrequirementsreflectreturnsinhighlycompetitivemarkets,thereturnrequirementsmaybe
higherforsomedevelopers,especiallyunderleveredstructures.
Sincetherelativerankingoftheseoptionsliesintheassumptions,Black&VeatchtestedtheimpacttoLCOEinthePPAwithtransferoptionasaresultofchangestofinancingassumptionsfor
theWindhubPVproject.Theanalysisfocusedonthedebtrate,debttermandequityreturn
requirements.BytestingthefinancingassumptionsforthePPAwithtransferscenario,onecanseetheLCOEchangerelativetotheprepayoptions.
Thesensitivityoftheprepayoptiontochangesinassumptionswasalsotested.Municipal
bondrateswerenotmodifiedsinceanychangeinthemunicipalbondratemaymeanacorrespondingchangeincommercialdebtrates.Theresultsofthesensitivitiesareshowninthe
tablebelow.Notethatinallcases,thedebtportionwasadjustedtoachievethesamelevelofdebt
coverageasthebasecase,whichiswhythedebtpercentisnotthesameinallinstances.
San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐30
Table 7‐6 Sensitivity Analysis of Developer Financing Assumptions for Windhub PV
FINANCING SCENARIO
DEBT RATE/
PERCENT*
DEBT TERM
(YEARS)
EQUITY
RATE
(PERCENT)
LCOE
($ PER MWH)
Prepay
BaseCase(40PercentPrepay)
NA NA 8 $64.59withouttransfer$65.78withtransfer
50PercentPrepayNA NA 8 $56.26withouttransfer
$62.14withtransfer
PPA
withTransfer
BaseCase 6.5/45 15 10 $64.70
HighDebtRate 7.5/44 15 10 $69.58
ShortDebtTerm 6.5/38 10 10 $73.48
HighEquityRate* 6.5/50 15 14 $63.46
HighCombined 7.5/45 10 14 $77.89
Notes
HighequityratescenariohasahigherinitialPPApricebutlowertransfercostoftheprojectinyear7becausethenetpresentvalueofEBITisdiscountedatthehigherequityreturnrate.Thus,theLCOEappearsslightlylowerthanthebasecase.
Forthesensitivitytest,theprepayoptionsappeartobecomemoreattractiveiftheprepayportionisincreasedto50percent.Thebasecaseanalysisassumesamoreconservative40percent;
thelargeramountofprepay,thegreaterriskthattheIRSwillconsidertheSFPUCtheprepaythe
owner,potentiallyeliminatingtheabilitytoclaimanytaxcreditsbythedeveloper.Inaddition,theLCOEforthePPAwithtransferisfairlysensitivetothefinancial
assumptions,makingprepayoptionsappearmoreattractiveunderanumberofchangestothe
financingassumptions,suchashigherdebtrates,shorterloanperiods,andhigherleveredratesofreturn.However,SFPUCneedstoweighthosepotentialbenefitsagainstthecomplexityandrisksof
thecontractualagreementforaprepayscenario.PrepayPPAsarecomplicated,havehigher
structuringexpenses,arebettersuitedforlargerprojects,mayencountergreaterIRSauditrisk,andmayplacesomeproductionriskonSFPUC.
Notethatincrementallegalexpensesassociatedwithprepayoptionsarenotcapturedhere.
Inaddition,ifthefederaltaxcredits(ITCandPTC)areallowedtoexpire,thiswouldgreatlyreducetheincentivefortheSFPUCtoconsideranytypeofPPAstructure,prepayornot.Inthiscase,the
lowcostofcapitalavailabletotheSFPUCwouldfavorself‐ownershipasthepreferredoption.This
analysisispreliminaryandisnotintendedtosubstituteforfinancialadvisoryserviceswhichtheSFPUCshouldsecureifanyoftheseoptionsarepursued.
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San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐32
Table 7‐7 Tabular Comparison of All Resources (PPA with Transfer)
NAME TECHNOLOGY LOCATION SIZE (MW) LCOE ($/MWh)
WalnutGrove Wind Yolo 170 54.89
MontezumaHills Wind Solano 100 56.13
NewberrySprings Wind SanBernardino 100 56.34
Altamont Wind(Repower) Alameda 20 56.63
LeonaValley Wind LosAngeles 100 56.85
Windhub TrackingPV Kern 20 64.70
ImperialValley TrackingPV Imperial 20 69.54
Midway TrackingPV Kern 20 73.50
SunolPV FixedPV SFPUCOwned,Alameda 19.2 80.48
Oceanside Wind SanFrancisco 2 82.01
TeslaPV FixedPV SFPUCOwned,SanJoaquin 1.6 85.40
TeslaWind Wind SFPUCOwned,SanJoaquin 6 104.33
SunolWind Wind SFPUCOwned,Alameda 30 129.85
PulgasRes. RooftopPV SanMateo 2.7 149.64
UniversityRes. RooftopPV SanFrancisco 2.9 154.39
SutroRes. RooftopPV SanFrancisco 2.0 168.09
ThurgoodMarsh. RooftopPV SanFrancisco 0.2 168.65
CollegeHillRes. RooftopPV SanFrancisco 0.9 170.27
StanfordHeights RooftopPV SanFrancisco 0.7 181.98
SummitRes. RooftopPV SanFrancisco 0.7 182.15
MarinaSchool RooftopPV SanFrancisco 0.05 198.39
HuntersPoint RooftopPV SanFrancisco 0.005 222.67
Ingeneral,large,utility‐scalefacilitiesconnectedtotheCAISOtendtohavelowerLCOEsrelativetolocal,smaller‐scalewindandsolarprojectslocatedinandaroundSanFrancisco.
However,otherfactorsnotquantifiedheresuchaslocaldevelopmentandjobs,visibility,andease
ofdevelopmentcouldjustifythedevelopmentofmorelocalresources.Ifavailablefordevelopment,largewindprojectsareestimatedtohaveaslightcost
advantageoverlargesolarfacilities,althoughtheprojectedLCOEsareveryclose.However,both
geothermalandwindfacegreaterdevelopmentchallengesrelativetosolar.Theavailabilityof
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San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT
BLACK & VEATCH | Economic Analysis 7‐34
7.5.1 Comparison with Renewable Energy Credits
AnotheroptionavailabletotheSFPUCtomeetfuturerenewableenergyandpower
requirementsistopurchasebothonthewholesalemarket.Currently,bothwholesalepowerandRECpricesinNorthernCaliforniaarelow:USDOEEIAdatafor2013showstheaveragemarket
clearingwholesalepriceatnearly$44/MWh,whileSection7.1.3showsthatCategory3RECsare
currentlytradingataround$1/MWh.Intheshort‐term,marketpurchasesappeartobealowercostoptionwhencomparedtodevelopmentofeventhebestresourcesavailabletotheSFPUC.
Ifalonger‐termperspectiveistakenintoaccount,theeconomicprospectsforthe
developmentofnewgenerationimproves.Black&Veatchforecaststhatthe2020wholesaleNorthernCaliforniapowerpricewillberoughly$54/MWh(in2013$,equivalentto$60/MWhat2
percentinflation).RECpricesareexpectedtoremainlowunlesshighergoalsareestablishedfor
theCaliforniaRPS.ItisbecomingincreasinglylikelythatRPStargetswillrise,whichmayleadtohigherfutureRECvalues.EvenatlowRECprices,thebestrenewableenergyresourcesidentifiedin
thisanalysishaveLCOEsof$55to60/MWh,makingthemcompetitivewithlong‐termpurchasesof
greenpower.Lockinginapriceatthislevelinalong‐termPPAwouldactasaneffectivehedge
againstvolatilepowerandRECpricesprovidedthattheSFPUCprojectsasteadyfuturedemandforadditionalgeneration.AdditionalimprovementsinthedeliveredcostofpowerfromsolarPV
facilitiesmayfurtherimprovetheeconomicsofnewsolarplantsrelativetopurchasedpower.Even
withtheseimprovementshowever,developmentofin‐cityfacilitiesmayremainmoreexpensivethanwholesalepurchases,evenoveralong‐termplanninghorizon.
7.5.2 Comparison with Developer Proposals
DataprovidedtoBlack&VeatchbytheSFPUCfordeveloperproposalsshowaslightly
higherprojectedLCOErelativetotheresourcesconsideredbythisanalysis.Withoutseeingdetailontheassumptionsusedbythedevelopers,itishardtomakeadirectcomparisonwiththeprojects
madeinthisSection.Mostofthedeveloperproposalsaremorethanayearold,whichexplainsa
portionofthedifferenceduetochangesinfinancialassumptionsandtechnologies.Inaddition,manyofthedevelopersareusingstraightPPAassumptions,whichwillyieldahigheroverallLCOE
price.Theprojectionsusedinthisreportandthefinancialmodelshouldbeutilizedasadirect
comparisonagainstanyfutureofferingsmadebydeveloperstotheSFPUC.