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9 - Update: lease between the city and EyeOn Solar CITY OF BOULDER WATER RESOURCES ADVISORY BOARD AGENDA ITEM MEETING DATE: November 19, 2007 AGENDA TITLE: Update and discussion about the lease between the city and EyeOn Solar for the purpose of construction and operation of a solar system at the 75th Street Wastewater Treatment Plant. PRESENTERS: Ned Williams, Director of Public Work for Utilities EXECUTIVE SUMMARY: On November 13, 2007, City Council is scheduled to consider a motion to approve a 20- year lease between the city and EyeOn Solar for the purpose of design and construction of a solar photovoltaic (PV) system at the 75th Street Wastewater Treatment Plant (see Attachment A, Vicinity Map), and to authorize the city manager to approve the Agreement for Professional Solar Power Services in substantive form. At the November 20 WRAB meeting, staff will provide an update on the outcome of the City Council meeting and be prepared to answer questions. A copy of the City Council Agenda Item memorandum is included as Attachment B. Complete copies (50 pages) of the Lease and Agreement for Professional Solar Power Services may be found on the City Council Web site for the November 13, 2007 Council meeting, under Agenda Item number 3.E., or at: http://www.bouldercolorado.gov/files/C lerk/Agendas/2007/ 11-13-07/3e.pdf ATTACHMENTS: A - Vicinity Map B - Council Agenda memo AGENDA ITEM 9 PAGE 1 Attachment A, Vicinity Map EXHIBIT A OWNER'S PROPERTY Legal Description of Premises 1.91 ACS MIL SW %4 NW Y4 & 71.94 ACS MIL N/2 SW 'i4 13- 1N-70 \ a e .W v 4r P A ~ r. a T r e r : W ti 3~ Z' { AGENDA ITEM 4 PAGE 2 ATTACHMENT B CITY OF BOULDER CITY COUNCIL AGENDA. ITEM MEETING DATE: November 13, 2007 AGENDA TITLE: Consideration of a motion to approve a Ground Lease agreement . between the city of Boulder and EyeOn Solar for the purpose of construction and operation of a one megawatt photovoltaic solar power generating system at the 75Street Wastewater Treatment Plant. PRESENTERS: Jonathan Koehn, Environmental Affairs Manager Ned V4'illiams, Director of Public Works for Utilities -Floyd Bebler, Public Works/Utl.ities Wastewwater-Coordinator EXECUTIVE SUMMARY The purpose of this item is for City Council to consider a motion to approve a 20.20-year Ground Lease agreement (Attachment A) between the city and EyeOn Solar for the purpose of design and installation of a one megawatt (Mw) solar photovoltaic (PV) system to be installed at the 750' Street Wastewater Treatment Plant (WWTP), located at 4049 75"' St., in Boulder, and to authorize the city manager to approve the Agreement for Professional Solar Power Services (Attachment B) in substantive form as attached. EyeOn Solar, a local solar PV company, partnered with the city to submit a Renewable Energy Credit (REC) bid proposal to Xcel Energy Solar Rewards Program in January 2007, and was awarded in May 2007. The proposal is for a 1,000.9kW solar power plant to be installed at the 751' Street WWTP at no construction cost to the city of Boulder. EyeOn will coordinate third party financing for this project and will design, construct, operate and maintain the system for the duration of the agreement. EyeOn will sell the energy to the city of Boulder through the Power Purchase Agreement (PPA) (Attachment B). The PPA and Ground Lease Agreement allow EyeOn to provide the WWTP with clean energy at a fixed price. The city will be the direct beneficiary of the PPA, acquiring a portion of the 75t" Street WWTP energy consumption from -a renewable resource: the sun. The system will provide approximately 20 to 25 percent of the :Facility's electricity needs (approximately 1,425,000 kWh per year) and reduce electricity costs accordingly, saving the WWTP up to $43,000 annually (based on actual impact to current usage charges). This project has an important connection to the city's Climate Action Plan as greenhouse gas (GHG) emissions avoided equal 3.4 million pounds of carbon dioxide emissions and 897 pounds of nitrous oxide emissions annually. As part of the Solar Rewards Program and the PPA, Renewable Energy Certificates (RECs) will be assigned to Xcel Energy through the Solar - - Rewards program. EyeOn Energy will be assigned all rebates and potential tax incentives associated with the system. While the city will not have ownership of the associated RECs AGENDA ITEM #36PAGE 1 generated at the facility, the project will impact the Climate Actiou Plan (CAP) emission reduction goals by directly reducing greenhouse gas cnxiissious attributable to energy use at the WWT l If City Council approves the Ground Lease Agreement with Eye©n and the Agreement for Professional Solar Power Services in its substantive farm, staff will continue working with EyeOn to finalize the appropriate agroeraents to be signed by the city manager and proceed with installation this fall, CrP - Thera are three options for City Council to consider: 1. Approve the Ground Lease Agreement with EyeOn Solar for the installation of the PV system; 2. Modify the Groamd Lease Agreement; 3. Decline the Ground Lease Agreement STAFF RECI;FNI.IVIEI.ViiATION Staff recommends that City Council make a motion to approve the Ground Lease Agreement with Eyeonn Solar for the installation afthe PV system for the WWTP. CQI`_.NCM FILTER IMPACTS Economic: Where axe,manny types of rebates and RECs that are available to .investors; but no to mun cipZties. Additionally, the investor uses the Investment Tax Credit and Depreciation tc offset the cast of the system to create an innovative public/private partnership. Eye0h Solar will . . install the PV system. Xcel. Energy will retain ownership of the RECs for 20 years as a way to comply with their requirements in the Colorado Renewable Portfolio Standard. Environmental: By displacing a portion of its utility power usage with clean solar power, it is estimated that the WWTP will substantially reduce its annual share of emissions by generating close to 1.5 million kilowatt hours of clean electricity in the first year, while at the same time ehininating more than 3A million pounds of carbon dioxide emissions and 897 pounds of nitrous oxide emissions annually. According to the Environmental Protection Agency, this is equivalent to permanently removing 296 automobiles from operation, planting 360.acres of trees and powering 249 average homes- When constructed, the project at the WWTP will be the largest onsite PV project in the state of Colorado, and one of the largest municipal PV projects in the c0imtry. Social: Residents will benefit froxn the educational opport pities provided by the system and associated educational kiosk and online monitors that will be included as part of the project. Further, this project will stabilize a portion of the WWTP annual utility bill at a lower rate than is currently being paid, allowing for accurate utility cost projections on an annual basis. This associated savings can be translated into opportunities £ox'systern upgrades and enhanced customer service at the W WTP. AGEi" DA ITEM # 30 PAGE 2 t er lm acts - Fiscal: The WWTP will benefit from reduced energy costs during the estimated 20-year Ground Lease Agreement with EyeOn. Annual savings are estimated up to $43,000 and equivalent to about 20-25 percent of facility electricity needs. The city will not lave a contribution toward. purchase of the system. As part of the CAP budget, $7,500 was appropriated in 2007 to increase renewable energy use in city facilities, which will be used for the George Reynolds Library PV system. BOARD AND COMMISSION FEEDBACK The Environmental Advisory Board was briefed on this project at their September 2007 meeting. The Board unanimously agreed that the proj ect strongly supports established city initiatives such as the Climate Action Plan. This topic has not come before any other boards or commissions in 2007. MLIC FEEDBACK AND CAP ADVISORY GROUP A public meeting was held on Wednesday, October 10, 2007. An announcement of the meeting was publicized through typical media outlets, and was mailed to residents within a one-mile radius..of the WWTP. All in attendance were supportive of moving forward with the project, The CAP Advisory Group was briefed on this project earlier in 2007 and supported moving forward with the installation. ANALYSIS EyeOn Solar and city of Boulder staff aro proposing the construction and operation of a Photovoltaic Solar Generating System covering approximately 322,000 square feet at the City of Boulder owned and operated 75th Street Wastewater Treatment Plant, located at 4049 75th Street. Eye.On Solar develops, owns and operates profitable renewable energy assets in the state of Colorado. EyeOn is headquartered in Boulder, Colorado, and provides solar generated energy at or below current retail utility rates to a broad and diverse client base - from. public agencies to private enterprises to non-profit organizations. The company just recently completed a 100kw roof-mounted solar project for the Broomfield Sheet Metal facility and is currently constructing solar projects for a wide variety of public agencies and private companies in Colorado and California. EyeOn will provide the city with a complete Solar Photovoltaic Generating System as identified in the detailed scope of work in the PPA (Attachment B) . EyeOn will be responsible for the design and engineering subject to review by the city. EyeOn will also be responsible for established city Health & Safety Plan requirements, permits, utility interconnect: and meter fees, utility incentive application paperwork, approvals, project management, installation, startup, AGENDA ITEM it PAGE 3 checkout and ongoing operation and maintenance specifically associated with the work to be performed. The Solar Photovoltaic Generating System will have ten (10) 100 kW PV systems each with its own inverter unit providing output to a switchboard anchor transformer. Each inverter will also have a rnanual switch to disconnect the system from the grid. The system will produce 60 Hz, 480 Volt alternating current (AC), integrated into the WWTP's existing electrical service, The power will flow from the photovoltaic generators through a meter into the Xcel Energy power grid. The amount generated by the photovoltaic system will be subtracted from the Xcel Energy metered usage at the WWTP via net metering. The anticipated annual energy production is shown in table 1. TABLE 1: ESTIMATED ANNUAL -PRODUCTION BY MONTH (by kWh) Jan 100,272 kWh Feb 99,973 kWh Mar 136,941 kWh Apr 133,399 kWh May 135,583 kWh Jun 133,180 kWh Jul 137 167 kWh Au 241,241 kWh Sep 136,904 kWh Oct 119,286 kWh Nov 100,761 kWh Dec 97,103 kWh Description of System: The proposed 1,000.9 kW DC photovoltaic ground mounted system will be located in the southeast section of the wastewater treatment plant. EyeOn will prepare submittal drawings detailing the type of piers and foundations required to support the system in the existing soil conditions. Inverter equipment will be located on concrete pads adjacent to the system,, and conduit will ran from the system to the tie-in panel. The actual system design is subject to Xcel approval through the final design verification process. Specifications: The detailed specification of the various project elements are shown in table 2. TABLE 2: PROJECT SPECiIr'ICATIONS Peak DC System Nameplate Ratin 1,000.9 kW DC Number of PV modules: 5,715 Modules ( 175 WV DC or a uivalent System Output AC rating: 770.7 kW A/C PV grid projected animal kWh output: 1,472,942 kWh, year o ne projection, AGENDA. ITEM PAGE 4 1,393,926 kVJh median 24 year roduction A roxirnate area of Solar'S. stem: 7.339 acres Maintenance: The system provided by EyeOn comes with a 24-year photovoltaic module warranty, a 15-year extended inverter warranty from SatCon Power Systems, Inc., and a five-year comprehensive warranty Flom EyeOn on the remainder of the PV system,. EyeOn is responsible for maintaining and ensuring the continued operation of the installed systems during the agreement period. They will also provide special services at the completion of the project installation, including testing, commissioning, inspection and facility staff training as required. Additionally, EyeOn will provide daily and annual services, such as system status and performance monitoring and annual preventative maintenance inspections. EyeOWs staff of trained field technicians and knowledgeable service professionals is dedicated to the successful operation of the installed solar electric system. They will perform all needed maintenance .services, answer questions and concerns regarding system operation, performance, warranties, and monitoring, and assist with publicity, community outreach and other needs. Staff has been working on the necessary agreements related to the permitting, design and installation of the system and other relevant details described below. The information provided is based on the proposal detailed in the Ground Lease and Power Purchase Agreements. Pricing: Until recently, high initial costs, slow paybacks and limitations on tax incentives made solar energy systems impractical for municipalities. Third party financing makes solar energy available without capital or maintenance expenses, and offers much more predictable energy pricing. Third party financing is not a loan or equipment Ground Lease. The third party funds, installs, owns, operates and maintains the solar energy system. While the system will provide a portion of the WWTP's electricity needs, the facility will remain connected to the grid. Should the solar array deliver insufficient energy, the facility will continue to obtain the balance of its power from the grid. The city will pay EyeOn for the energy provided by the solar project based on an agreed upon pricing schedule set forth in the Power Purchase Agreement. The terms of the Power Purchase Agreement are based on rice per kilowatt hour (kWh). The city will pay EYeOn for the energy produced by solar facility at a rate of 3.2 cents/kilowatt hour; roughly three percent less than the facility's current 3.29 cents/kilowatt hour prescribed by Ycel Energy. The rate will escalate annually at 2.75% {as compared to a utility average increase of 4°/a} until the price reaches 4.16 cents/kilowatt hour, at which point it will be fixed for the duration of the term of the contract. The anticipated pricing schedule for the contract duration is illustrated in Fable 3. The utility annual increase of fourpercent is based on a 44-year average. However, the past five years have shown a seven percent historical increase, dramatically increasing'the potential savings at the facility through the solar component. This is also illustrated in Table 3. Graph 1 illustrates the AGENDA ITEM # 3P PAGE 5 potential savings associated with the solar option, and graphically shows the unsustainable nature of volatile utility energy costs. Provided that the city and EyeOn can accurately determine any savings in demand charges, the city and EycOn will split any savings in demand experienced as a direct result of the existence of the system can the site, which will be calculated and invoiced on a quarterly basis. ?n3TABLE 3: PRICING SCHEDULE 71 "z ~f iSavlit~Y! Ytrf ~i#r~'.S a~n S t s 3 ct7 7P 3 < ~ ~ertr;.? f x 3 n 1 d `8t!'.` i~#f 2r { r € u i a.: u r=i 9 Y S' i~' fPi 3t~ a. 6eF k k z»{~~ n tit c t~ F ~ ' ~ 2007 m. $0.0320 $6.4329 $0.0329 2008 $0.0329 $6.0342 $0.0352 2009 $0.0338 $0.0356 $0.0377 2010 $0.0347 $0.0370 $0.0403 2011 $0,0357 y $0.0385 $0.0431 2012 $0.0366 $0.0400 $0.0461 2013 $0.0377 $0,0416 $0.0494 2014 $0.0387 $0.0433 $0.0528 2015 $0.0398 $0.0430 $0.0565 2016 $0.0405. $0,0468 $0.0605 2017 $0.0416 $0.0487 $0.0647 2018 $0.0416 $0.0506 $0.0692 2019 $0.04416 $0.0527 $0.0741 2020 $0.0416 $0.0548 $0.0793 2021 $0.4416 $0.0570 $0.0848 2022 $0.0416 $0.0593 $0.0908 2023 $0.0416 $0.0616 _ $0.0971 2024 $0.0416' $0.0641 $0,1039 2025 $0.0416 $0.0666 $0.1112 2026 $0.0416 $0.0693 $0,1190 2027 $0.0416 $0.0721 $0.1273 r GRAPH 1: PRICING SCHEDULE AGENDA ITEM # PAGE 6 $0.3000 r F iix . iya ~kf, c~} ~e ~t~'ij r ~~m3 L~17C TiI ar a a t 11 t iIrr t 'y r ti c s s ~a u t " . xZcG..`~..S..c tit z~'f! ~r i ? r 1 I -;ns - 1. iwri n 11tY ,3 s ufY ~ts I 2 y 1i4r ! 3 It i r£t~~~7~ I € t fi`E , ~ ly -s.~'° S 5' C ? r s ~ u t t Mme" -Tt ra ~ t ; y~ .a} ! r7 C s x z i^ AF7 R r~13 N to 7(=. 'F a- 7 C $ faFJ 1 r ~I !'ryL ~I r i i 37{t $0.2500 is ti g q,~ h7t t rr 3Sf...r~ i { ~~ti iry~k ".it 'iJa! .I S e d t r rtr, d~{ s 3 r '"37j v {1 ,A tFttjt~dy.~x.a o~ t~t~~3rsG£ kkt~~e931th~il fe rt1~ ~,~K ~~'""9 i ~ t ti?tif't 3i~~1~ %tIL ~i f y r e tt e U! S' ffff6l ` liltE~a l} . 3E~fk i~~ $li ~ `=f 53 3 "tI~' ~IL~a~ ~ ' ~~~l~r I[ s el t~'~ny`3itf'i3E t' 31 p~ ;C~Fi3 tl~Itl~s ikr ~ Iffi~k":irfr Ii rr., l $0.G~r77Q(y~~O lJ f~i to s d ~Cf l a r ~t i ~ 'S r i1fF` tt ~~i i ~1ifz ~ 9. i4+1I,4 ~ r. z}r~~~ ~ ~ t~ k ~ t~ r<I fl t•,. !i: i... - $0,1500 N~LYi ~r +,ry rr $0,1000 j $0.0500 $0,0000 _ oAnticipated prig of power from Xcel Energy (per kWh) at 7°lo annual increase tn'lcipated price of power from &e-I Energy (per kWh) at 4% annual increase rice of solar power from EyeOn (per kWh) r To install the system, EyeOn must engage in an interconnection agreement with Xcel Energy to link the system to Xcel's power grid. EyeOn will also assign all RECs to Xcel through their standard Solar Rewards contract and the REC payment will go to EyeOn. All Solar Rewards rebates will be assigned to EyeOn as well. More information about Xcel's Solar Rewards r. Program and RECs can be found at http:l/www.xcelenergy.com. EyeOn has secured all permitting through Boulder County necessary for the project. While providing solar services, EyeOn will obtain and maintain all approvals, consents, licenses, permits and inspections from relevant governmental authorities, utility personnel and other agreements and consents required to be obtained and maintained to perform such work. The city has the ability to purchase the equipment at fair market value at the termination of the associated agreements. I AGENDA ITEM #3t5 PAGE 7 NEXT STEPS If City Council approves the Gro d Lease Agreement with HyeQnt, staff will work with EyeOn Solar to finalize negotiations and agreements to be signed by the city manager and proceed with installation this fall/winter. An opening ceremony will be planned to coincide witb the completion of conowtion expected this winter. Approved By: Frank W. Bruno, City 1blanager Attachments: A. Ground Lease Agreement with EyeOn Solar B. Agreement for Professional Solar Power Services (PPA.) AGENDA ITEM # ~ PAGE 8