Savings Through SolarSeptember 12, 2018
FREMONT UNIFIED S C H O O L D I S T R I C T
Agenda:1. Procurement Options2. Project Savings3. Non-Financial Benefits4. Project Scope and Schedule5. Recommendations
2
Procurement OptionsCash Purchase Power Purchase Agreement (PPA)
System Owner Fremont Unified School District Vendor
Payment Full project cost by completion of construction
Per kWh consumed (example terms: $0.12 @ 0% escalation)
Payee Installer/Contractor Vendor Vendor / PPA Owner
Typical Duration Upfront payment or financing if desired 25 years
After 25 years District ownership Vendor removes system(purchase option also available)
Performance Guarantee Separate agreement to protect system performance (typically at an additional cost)
Rolled into PPA cost, vendor is incentivized to maximize system performance
Operations & Maintenance Separate agreement to ensure ideal system performance and equipment warranties (may be an additional cost)
Rolled into PPA cost, vendor is incentivized to maximize system performance
3
Comparing Solar Bill Savings Over 25 Years
$73.6 M
$36.0 M $36.0 M
$22.3 M $24.5 M
$0
$10
$20
$30
$40
$50
$60
$70
$80
Before Solar After Solar (Cash Purchase) After Solar (PPA)
Mill
ion
s
Bill Savings! $15.3M
Payable over 25 yrs to PPA Provider
Remaining PG&E Bill
(PG&E Bill)
Bill Savings! $13.1M
Up front payment to Solar Construction
Vendor
Remaining PG&E Bill
4
Year Costs
PG&E Bill
Savings
General Fund
Savings
Cumulative
Net-Benefit Year Costs
PG&E Bill
Savings
General Fund
Savings
Cumulative
Net-Benefit
0 ($1,013,882) $0 ($1,013,882) ($1,013,882) 0 ($21,899,850) $0 ($21,899,850) ($21,899,850)
1 ($998,651) $1,179,127 $180,475 ($833,406) 1 ($10,794) $1,179,127 $1,168,333 ($20,731,517)
2 ($993,658) $1,214,011 $220,353 ($613,054) 2 ($11,118) $1,214,011 $1,202,893 ($19,528,624)
3 ($988,690) $1,249,920 $261,230 ($351,824) 3 ($11,451) $1,249,920 $1,238,469 ($18,290,155)
4 ($983,746) $1,286,884 $303,137 ($48,686) 4 ($11,795) $1,286,884 $1,275,089 ($17,015,066)
5 ($978,828) $1,324,933 $346,106 $297,419 5 ($12,148) $1,324,933 $1,312,785 ($15,702,282)
9 ($959,397) $1,488,632 $529,235 $2,133,871 9 ($13,673) $1,488,632 $1,474,959 ($10,051,567)
10 ($954,600) $1,271,552 $316,951 $2,450,822 10 ($14,083) $1,271,552 $1,257,468 ($8,794,098)
15 ($930,973) $1,474,965 $543,992 $4,704,930 15 ($16,327) $1,474,965 $1,458,639 ($1,915,123)
16 ($926,318) $1,519,377 $593,059 $5,297,988 16 ($16,816) $1,519,377 $1,502,560 ($412,562)
17 ($921,686) $1,565,118 $643,432 $5,941,420 17 ($17,321) $1,565,118 $1,547,797 $1,135,235
23 ($894,379) $1,869,790 $975,411 $10,938,160 23 ($20,682) $1,869,790 $1,849,108 $11,450,718
24 ($889,907) $1,926,014 $1,036,107 $11,974,267 24 ($21,302) $1,926,014 $1,904,712 $13,355,430
25 ($885,458) $1,983,918 $1,098,461 $13,072,727 25 ($21,942) $1,983,918 $1,961,977 $15,317,407
(Years 6-8)(Years 6-8)
(Years 11-14)(Years 11-14)
(Years 18-22)(Years 18-22)
General Fund SavingsPPA Scenario ($0.12/kWh, 0% Escalation) Cash Purchase Scenario ($3.75/W)
ZZ
ZZ
ZZ
ZZ
ZZ
ZZ
5
Environmental & Educational Benefits
Carbon reduction equivalent* to:
Removing 10,000 cars from the road for a year
Planting 1.2 Million trees
Predictable utility expenses
Shaded parking – carport PV structures
Demonstrates environmental stewardship
Educational program tie-ins
Supports City of Fremont’s sustainability goals
*Assumes 0.49 lbs of CO2 per kWh of electricity (per CoF 2015 Carbon Inventory)
6
Proposed Scope and Schedule
Phase 1a: Solar PV
Walters Middle School
Horner Middle School
Phase 1b: Solar PV
Centerville Middle School
Thornton Middle School
Hopkins Middle School
Phase 2: Solar PV
Five High Schools
7
Recommendations & Next Steps
Issue RFP for Phase 1 to procure cash purchase and PPA pricing Maximizes current favorable PG&E rate structure
Capitalizes on existing tax credits (PPA option only)
Evaluate proposals and select a vendor for recommendation to the Board
Coordinate proposals with middle school conversions and finalize scope
Negotiate contract with vendor and seek Board approval of contract
Questions?
Thank you!
Newcomb | Anderson | McCormick
201 Mission Street, Suite 2000
San Francisco, CA 94105
Ann McCormick, PE
Vice [email protected]
415-230-8403
Steve Clarke, PE
415-699-9310
9
REFERENCE SLIDES
10
Lower Bills + Generation Credits = Savings
• Solar production < facility consumption = lower bill
• Solar production > facility consumption = export to grid for bill credit
How Net Metering Works
14
2
3Solar GenerationPanels convert energy from the sun into electricity
InverterConverts electricity from DC to AC to be used in your school
Energy UseEnergy is used in your school
Bi-Directional MeterMeasures energy used and excess energy exported to the grid
11
$0.12
$0.14
$0.16
$0.18
$0.20
$0.22
$0.24
$0.26
-
100
200
300
400
500
600
700
12:00 AM 6:00 AM 12:00 PM 6:00 PM 12:00 AM
Co
st o
f En
ergy
($
/kW
h)
Ener
gy (
kWh
)
Time of Day
Site Load (kWh)
Solar Production Curve (kWh)
Existing Rate Structure (A10)
New Rate Structure (A10 TOU Shifted)
Time of Use (TOU) Rate Impact on Solar ValueCurrent Credit
Value: $0.218/kWh
Current Credit Value:
$0.163/kWh
12
$15.3 M
$13.1 M
-$2.4 M
-$25 M
-$20 M
-$15 M
-$10 M
-$5 M
$0 M
$5 M
$10 M
$15 M
$20 M
0 5 10 15 20 25
US
Do
llars
(M
illio
ns)
Year
Solar PV Portfolio Fremont USD (5.24MW)
Ownership PPA Cost of Doing Nothing
General Fund Savings
Grandfathering Period Ends
*General Fund Savings figures updated to reflect currently available PG&E rates
Upfront $22.3M investment
16+ Yrs before general fund savings realized
with Ownership
PPA generates $5M in general fund savings in 16 yrs
13
City of Fremont Climate Goals & Solar Installations
2012: City of Fremont Climate Action Plan Goal: Reduce community-wide GHG emissions 25% from 2005-20
25% come from the commercial energy sector (electricity + gas) FUSD facilities represent 1.73% of commercial energy sector emissions
2015: 1.5 MW of solar carports across 4 facilities through PPAs
2017: “We Are Still In” and “Mayors for 100% Clean Energy”
declarations
2017-18: Installing microgrids at three fire stations for clean energy
& resiliency with grant from CEC
2018: Climate Action Plan update
Transportation59%
Residential Energy
14%
Commercial & Industrial
Energy25%
Waste1%
Water1%
2015 Communitywide GHG EmissionsFUSD planned solar installation would contribute to City of Fremont’s overall
carbon reduction targets and help meet overall sustainability goals!
14
Why Seek Pricing Now?
Near term market factors maximize potential value of solar: Grandfathering into solar friendly TOU rate periods through 2027
Aligning TOU rates with solar production increases NPV of Solar by $2.1M
Net Energy Metering (NEM) 2.0 allows for ~ full value of production exports
2019 regulatory changes expected to reduce value of production exports
Investment Tax Credits (ITC) still available
Phased reduction starting 2020
Vendors leverage ITC to offer better PPA pricing
Actual bids from vendors allows evaluation of solar benefit in coordination with future modernization and construction plans
15
Modeling Assumptions
Solar arrays sized to off-set ~ 90% of site’s annual load
Utility rate escalation at 3.5% every year, based on PUC historical data
Without Solar, cumulative utility expenditure over 25 years is $73.6 million (1)
With solar, cumulative utility expenditure over 25 years is $36 million
Solar purchase creates $37.6 million in general fund savings
Assumed rate switch to solar friendly rate for all sites
Grandfather into current TOU period rates for 9 years
Resulted in $2.1 Million in additional Bill Savings (2)
1American and Mission San Jose High load to be verified2Including American and Mission San Jose modelled benefits
16
Modeling Assumptions (cont’d)
PPA Rate: $0.12 / kWh w. 0% annual escalator
System performance modeled utilizing local weather data
Savings Guarantee Cost – priced to guarantee 95% of solar bill savings payable to vendor
Solar System Assumptions
Panels Trina 310W
Inverters Fronius 24kW
Panel tilt 7o
Solar panel degradation 0.5%
Useful life 25 years
Total Installed Cost
Construction Costs (4) $3.75 per Watt
Project management &
contingency
8% (ownership)
5% (PPA)
O&M Costs $50 per kW per year
(3% annual escalation)
Guarantee Costs $0.12 per Watt
4Division of the State Architect (DSA) pre-check solutions assumed
