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Solar Power HourCollaborative Solar Procurement for Municipal Agencies

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Solar Power HourCollaborative Solar Procurement for Municipal Agencies

Thomas Yurysta, Senior Project Manager, OptonyCaroline Judy, Acting Director, General Services Agency of Alameda County

September 10, 2015

The Collaborative Procurement Model

Case Study, R-REP

Q&A

| 20 min

| 15 min

| as needed

Agenda

The County of Alameda is a nationally recognized leader for it’s adoption of renewable energy, energy efficiency, green fleets and sustainability. Sustainability is part of the County’s mission, vision and values as we strive to have a small impact on the environment and a huge impact on the quality of life for its citizens.

The County of Alameda General Services Agency has led two innovative collaborative procurements; the Regional Renewable Energy Procurement (R-REP) and the Local Government Electric Vehicle Procurement.

Other GSA innovative projects and awards :

• County's Fleet Named One of 20 Greenest in North America• County Wins Two Awards for Comprehensive Climate Action Approach• First-of-its-Kind Smart Grid• Alameda County Recognized By EPA• Governor Gives Alameda County California's Highest Environmental Honor• Santa Rita Jail Photovoltaic (Solar) Project

About Alameda County

http://www.acgov.org/sustain/news/greenfleets2.htm

http://www.acgov.org/sustain/news/greencaaward.htm

http://www.acgov.org/government/news/smartgrid.htm

http://www.acgov.org/government/news/epaaward.htm

http://www.acgov.org/government/news/geelaaward.htm

http://www.acgov.org/srjp/

Optony develops and deploys clean energy best practices across the entire project lifecycle for government agencies, schools, banks and commercial organizations. Optony has been involved in over 3GW of project activity globally from strategy to project commissioning.

Optony creates and manages national-scale projects for clean energy market transformation including a variety of projects for the Department of Energy under the SunShot Initiative.

“Optony's consulting service is a must-have for any organization considering an investment in solar. Based on Optony’s comprehensive analysis and recommendations, we now have a low-risk, high-return solar strategy.”

About Optony Inc.

Award WinningPubic Sector Project

Award WinningPubic Sector Project

Multiple Grant-Winner for Solar Market Transformation

Best of Silicon Valley Recognition for Energy Services

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About Optony Inc.

http://www.jointventure.org/images/stories/pdf/purchasing.power_best.practices.guide.to.collaborative.solar.procurement.pdf

Solar Collaborative LeaderForemost technical advisor on municipal solar

collaborative projects in the nation Over 60MW in public energy projects 46 partner agencies

Co-authored Best Practices Guide World Resources Institute Joint Venture Silicon Valley Optony

http://www.jointventure.org/images/stories/pdf/purchasing.power_best.practices.guide.to.collaborative.solar.procurement.pdf

About Collaborative ProcurementBarriers >> The Model >> Outcomes >> Get Involved

Procurement ObstaclesHigh upfront cost

Preliminary services such as feasibility studies and project identification PV system equipment and installation

High transaction cost and administrative effort

Information gaps about the solar market, financing, and technology

National solar industry lacks standardization and development is fragmented with many individual sites being pursued opportunistically

Collaborative Procurement is emerging as a powerful means to tackle the costs and technical barriers and has already demonstrated great success

7

RootsFirst major procurement in Silicon Valley, led by County of Santa Clara

14MW of solar installed / 43 sites / 9 agencies County / 6 cities / 2 special districts Install price savings >10%, administrative time savings >50%

Great results led to Best Practices Guide for Municipal Collaborative Solar ProcurementModel has now been replicated several times

Washington, DC Central New York San Francisco Bay area (several)


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9

The Lead AgencyCrucial Role

Leads administrative efforts across participating agencies Leads design of the memorandum of understanding Leads in issuing and managing the Request for Proposals (RFP) Leads the vendor selection committee Takes the initiative in contracting negotiations with the selected vendor

Ideal Conditions for Agency Strong commitment to move forward with adopting solar power At least some experience in this sector Enough resources to play this role effectively Desire to be recognized regionally

The Lead Agency takes a lot of effort off all the other participants to achieve overall greater cost savings

10


ParticipantsKey Steps1. Gather site info2. Bring memorandum of understanding to Board/Council3. Decide which sites from feasibility assessments to include in RFP Development, review, and management of RFP by others

4. Help evaluate responses and choose solar vendors (optional)5. Finalize system sizes and contract terms with chosen vendor(s)6. Proceed with solar installations as per usual7. Return --% of project costs to revolving fund (if applicable)


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Risk free participation No up-front cost for services

Should a Participant decide to not install solar after reviewing financial and technical information, they pay nothing.

Optional: If a Participant decides to install solar, a small percentage of total project costs (1.9%) goes into

a revolving fund to continue to support public clean energy efforts or to pay for the upfront services retroactively.


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Purchasing Options RFP constructed to allow flexible contracting for various financing options Typically requires bids for:

Power Purchase Agreement – bidders own and operate system, sell energy to facility Direct purchase – bidders provide capital investment price for Agency to buy and own system

13


14* Not actual project sites, but representative of the potential cash flows from various solar financing options. All

costs, benefits, terms, conditions, and cash flows may vary.

$(2,000,000)

$(1,000,000)

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Cum

ulat

ive

Savi

ngs

per y

ear

Cumulative Projected Net SavingsFor a sample 600 kW system

Purchase

3% PPA

Lease Option

14


Demonstrated BenefitsAggregating purchasing power leads to:

Dramatically reduced transactions costs and administrative effort

Greater market interest and better pricing

Lower project risks with higher returns

Comparable bids from multiple qualified vendors

Regional collaboration allows participants to: Demonstrate leadership on a local, regional and national level

Achieve Sustainability and Climate Action Plans faster

Shorten the steep learning curve on solar and financing

Leverage projects for education and workforce development


15

San Francisco

San Jose

Silicon Valley Overview1 County / 6 Cities / 2 Special Districts

43 sites total 14.4MW of combined solar PV

Multiple Site Types: Carports Rooftops Ground mounted

Projects “bundled” by PV system size: Large (400 kW+) Medium (150 – 400 kW) Small rooftops and others

Lessons: Aggregated purchase discounts 12%+ Reduced admin and transactions costs 50%+ Better negotiated contract terms & conditions

16


More Bay Area RoundsR-REP: Public facilities in Alameda County, Santa Clara County, San Mateo

County, Contra Costa County Led by County of Alameda 19 agencies, 186 sites, 31MW potential Now the largest collaborative effort to-date nationally Workforce development component Additional refinements to collaborative model

SEED Fund: Public facilities in Marin, Sonoma, Napa Coordinating Agency: City of San Rafael 14 agencies, 32 sites, 6 MW potential Used CSI funding to eliminate barriers to entry Created revolving fund for future procurements


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Silicon Valley• Size: 14.4MW across

9 jurisdictions• Convener: Joint

Venture Silicon Valley• Lead Agency: Santa

Clara County• Completion: 2012

Small Cities Climate Action Partnership• Size: 2 MW across 4

jurisdictions• Lead Agency: City of

El Cerrito• Completion: 2013

Bay Area Regional• Size: ~40MW across

19 jurisdictions• Convener and Lead

Agency: Alameda County

• Completion: 2015

SEED Fund –North Bay• Size: 4.3MW across

13 jurisdictions• Lead Agency: City of

San Rafael• Completion: 2014

Others:• Solarize Central New

York• SEED Fund –

Monterey Bay • Washington D.C.


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Take Action!Find resources on your community’s Solar Roadmap

Contact Optony for prescreen assessment – no cost


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Collaborative Solar Procurementsfor Municipal Facilities

Caroline JudyActing Director, General Services Agency

9/10/15

Benefits of Renewable Energy for Public Agencies

Job Creation

Reduced Energy Costs

Reduction in GHG Emissions

Challenges of Renewable Energy Adoption

High upfront costs Significant staff time

Complex economic and technical

considerations

Benefits of Collaborative Procurement

Leverage experience of the Lead Agency and

consulting team

Pricing reflects economies of scale

Reduced transaction costs and administrative time

Standardized procurement documents and

solicitation process

19 Agencies186 Sites31 MW

Regional Renewable Energy Procurement (R-REP)

Project Team

Lead Agency

Conveners

Participating Agencies

Consultants

19 Public Agencies• Cities (11)• Special Districts (4)• Counties (3)

• Educational Institutions (1)

R-REP Timeline

Outreach phase begins September 2011Feasibility studies completed February 2013

Consultants engaged March 2013

RFP released September 2013Vendors selected March 2014 Contracts taken to Councils/Boards Spring – Summer 2014Site installations/site commissioning activities Summer – Fall 2014

Project completion Winter 2014 – Spring 2015

Leverage Investment of the Lead Agency

Leverage prior experience of lead agency in renewable energy procurement

Complexity

TimeLead agency invests significant staff resources, participating agencies save valuable staff resources


Consulting team funded through County’s Designated Energy Fund – incentives from past energy projects and rebates from current projects

$$$

Consultants Play Key Roleo Economic/technical analysis of siteso Assistance in writing RFPo Advised on the evaluation of bidso Provided analysis of economics on site-by-site

basis to the Participating Agencieso Bundling strategy


Complexity

Time$$$

Average pricing as bid ranged from $2.48 to $3.77/total installed cost/Watt

California Solar Initiative governmental site market comparable of $3.50 to $4.67 total installed cost/Watt (January 2013 – March 2014)

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Pricing Summary Cash Purchase (as bid)

31

SolarCity

SolarCity

Sun Edison

Sun Edison

Sun Edison

Sun Edison

$0.0500

$0.1000

$0.1500

$0.2000

$0.2500

L1 M1 M2 M3 M4 BA2

PPA

Rate

($/k

Wh)

R-REP Bundle

PPA Price Comparison

Market Ex3

SV-REP

SolarCity

Market Ex2

Market Ex1

Sun Edison

© 2014 Optony Inc.

Weighted average pricing shown

32

SolarCity

SolarCity

Sun Edison

Sun Edison

Sun Edison

$2.000

$2.500

$3.000

$3.500

$4.000

$4.500

$5.000

L1 M1 M2 M3 M4

Dire

ct P

urch

ase

Cost

($/W

)

R-REP Bundle

Direct Purchase Price Comparison

Market Ex4

CSI

SolarCity

Market Ex2

Market Ex1

Sun Edison

© 2014 Optony Inc.

Weighted average pricing shown

Lessons Learned Need a strong, regional convener to ensure project stays on timeline

Must sign up the Lead Agency first as it is the best support for outreaching to other participants

Develop clear messages to build awareness quickly and move forward without confusion

Vendors should include a time-based discount to their proposals

Sign up fewer agencies, with larger potential and in a regional cluster. Send out a survey to conduct high-level screening

Host and support high-level political champions

Arrange site tours for participating agency staff to visit finished projects

Lessons Learned

Lessons Learned• Financial business model with private investors still needs to be proven in the long run

• Add clarity around reimbursement invoicing process to MOU

• Conduct feasibility studies as soon as possible after signing MOU in order to maintain schedule and momentum

• Advertise RFP release with local construction clearinghouses

• During contract negotiations, have the lead agency legal counsel handle most of the document control

• Consider regularly-scheduled participant check-ins on a monthly basis

• Project timeline is longer than originally planned due to municipal processes

• Solar industry consolidation has a negative impact on transaction times

Lessons Learned

Results

Replicating the Collaborative Procurement Model• R-REP documents

www.acgov.org/rrep/

• Local Government EV Fleet Demonstration Project and information on the County’s Sustainability program are at: www.acgov.org/sustain

http://www.acgov.org/rrep/

http://www.acgov.org/sustain

Alameda County Contacts

• Caroline Judy, Acting Director [email protected]

• Kayla Platt, Management [email protected]

• Jeff Rayos, Management [email protected]

mailto:[email protected]



Thank You!Open time for Q & A

Submit questions via the chat menu on the left

For a free solar evaluation for your community, contact: [email protected] presentation is also available online at http://www.solarroadmap.com/m3/


http://www.solarroadmap.com/m3/

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