2018_09-25_PWETCpacket - Laserfiche WebLink

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37 - A Solar Rewards Program system could be installed on all three subject roofs (City Hall, 38 Fire Station, Maintenance Facility) 39 40 PV Demand Credit Program: 41 - New program in 2018 where Neel compensates customers for helping them control 42 demand during peak energy use periods. 43 - City receives a $0.07139 Credit per kWh produced from 1 PM to 7 PM. According to 44 IDEAL Energies this normalizes to $0.0343 per kWh generated from the solar array 45 throughout the day. 46 - City purchases power from the solar array at $0.1090/kWh in Year 1. Power Purchase 47 Agreement (PPA) rate increases by 2.5% annually. 48 - Annual average cost of energy for Maintenance Facility is $0.106/kWh (from actual 49 energy bills over past 12 months). With Average Demand Credit averaged out at 50 $0.0343/kWh, savings are equivalent to $0.1403/kWh averaged over the year. Net gain 51 (Savings —PPA Expense) is equal to $0.0313/kWh. Given actual energy bills from last 12 52 months, staff estimates savings as much as $2,933 in Year 1. IDEAL Energies' Cash flow 53 analysis estimates a lower net gain of 0.0146 (assumes lower energy and demand expense 54 savings) for an estimated Year 1 savings of $1,366. 55 - Setup for termination of PPA at year 18. 56 - Proposals were received for a PV Demand Credit array on City Hall and the Maintenance 57 Facility. If the City Council is comfortable with this program, but only wants to proceed 58 with one system, staff recommends installing the smaller (83.3 kW) system on top of the 59 Maintenance Facility. 60 61 There are some unique components to IDEAL Energies' proposals compared to previous 62 proposals the City Council has seen. First and foremost, these proposals are setup such that the 63 City owns the systems on day 1. That means we are responsible for insurance costs and some 64 maintenance costs during the PPA portions of the agreement. Staff has consulted with the 65 League of MN Cities Insurance Trust and we estimate additional insurance costs for a rooftop 66 system would be approximately $125 annually. A ground mount system is seen as having much 67 more risk for vandalism and therefore the insurance costs are estimated at $2,400 annually 68 (assuming a $600,000 value). 69 70 Secondly, the financing and Cash Flow analysis are setup to end the PPA Agreement as soon as 71 possible. For the Solar Rewards program, the cash flow is setup for the PPA to be terminated at 72 Year 13. Therefore, from Year 14 beyond the City would realize full benefit of the power 73 produced by the PPA system. For the PV Demand Credit Program, the cash flow is setup for the 74 PPA to be terminated at Year 18. For both systems, once the PPA Agreement is terminated, the 75 City is responsible for all operation and maintenance (O&M) costs. We would likely contract 76 with a third party to provide those services beyond that point. Staff suggests using a 77 conservatively high estimate of $1000 annually for each system for those O&M costs. 78 79 There has also been concern about the disposal costs of the solar arrays once they reach their end 80 of life. As these are electronic components with heavy metals and other "hazardous" materials at within them, they must be disposed of properly. However, there is a growing market for 82 recycling the components of solar panels and that market will grow as the number of solar panels 83 grows. Currently, IDEAL Energies estimates the disposal costs of about $15-$20 per panel. For a 84 40kW system that would be around $10,000 to dispose of the entire solar array. 85 Page 2 of 4