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101-Staff Report.pdf OFFICE OF THE CITY MANAGER CITY HALL 1010300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3212www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: November 16, 2010 Subject Report on the status of the Solar Power Purchase Agreement (SPPA) project. Recommended Action Receive report and provide direction to staff. Description The SPPA will allow the city to purchase renewable energy generated among carport photovoltaic arraysat City Hall, Corporation Yard, and the Quinlan Community Center, which will beconstructed and maintained by two unique vendors. A Solar Power Purchase Agreement (SPPA) is a financial arrangement in which a third-party developer owns, operates, and maintains the photovoltaic (PV) system and a host customer agrees to site the system on its roof or elsewhere on its property (i.e. carport structure) and purchase the system’s electric output for a predetermined price and period. Power purchase agreements address many of the traditional barriers to adoption for organizations looking to install solar systems including high up-front capital costs, system performance risk and complex design and permitting processes. Challenges of Siting Renewables One of the major barriers for local governments topurchaserenewable energy systems is the high upfront costs involved. Although purchasing a renewable energy system outright is generally considered to be the most cost effective strategy in the long-term, the high up front capital costs are often prohibitive. An alternative method of financing was pursuedin order to utilize renewable energy and thereby decrease energy costs. In the past five years, the financial sector and renewable energy providers have partnered to develop innovative third party ownership financing structures, such as Power Purchase Agreements, to take advantage of the tax incentives available to the private sector. However, historically these financing structures require significant legal, procurement, property management, and engineering expertise to execute leading tohigh transaction costs that have presented a barrier to local governments. The Opportunity of Regional Aggregation In order to reduce the transaction costs associated with Power Purchase Agreements and to support the regional expansion of renewable energy generation, the members of the Joint VentureSilicon Valley-convenedClimate Protection Task Force created a collaborative procurementprocess, lead by Santa Clara County. By leveraging the contractual resource investment of the lead agency and creating a procurement pool, this approachenabled an affordable group purchase of renewable energy for all participating agencies.The Association of Bay Area Governments (ABAG) and the Department of Energy (DOE) later joinedthis effort, offering programmatic support and applying unique areas of subject matter expertise. ThisRegional Power Purchase Agreement (RPPA)is one model which provides an opportunity to reduceboth the upfront capital barriers to direct ownership and the transaction costs associated with third party financing:to moveour community and organization closer to siting solar and setting a leadership example throughout the Bay Area. Additionally, by creating a regional PPA rather than individual PPAs for each city, the costs of developing the agreement are reduced significantly for all parties involved. This method not only conserves funds, but also accelerates the financing process and deployment of renewable energy technologies, promotes energy and tax-dollar savings, and supports local economic development. Since the summer of 2008, the collaborative has researched solar power purchase agreement issuances, and developed RFQ and RFP documents. The overall objective of this effort has been multifaceted; to reduce transaction costs associated with development and negotiation of RPPA contracts, to obtain favorable pricing and terms through a large scale regional aggregate purchase, to rapidly deploysolar and other renewable technologies, and to enable participation in RPPA contracts for small governmental entities that would otherwise be unable to participate in RPPA financing structures due to the size of project sites. Over 22 jurisdictions in Santa Clara and San Mateo County expressed an interest in “piggybacking” on the RPPA effort. On February 2, 2010 Cupertino’s Council authorized a Memorandum of Understanding for Cooperative Purchasing of Power with the County of Santa Clara, allowing Cupertino’s participation in a County solicitation, a Request for Proposals for a th Regional Renewable Power Purchase Agreement (RFP# RRPPA-001-310) issued March 29, 2010. The first Request for Proposals (RFP) issuance included nine participating public agencies, including the cities of Cupertino, Los Gatos, Milpitas, Morgan Hill, Mountain View, and Pacifica, along with the County of Santa Clara, the Valley Transit Authority, and the South Bayside Waste Management Authority. The initial RFP was to procure 14MW of renewable power through power purchase agreements. The Department of Energy, Optony (an independent solar consulting firm) and Joint Venture Silicon Valley assisted the County of Santa Clara in assembling an evaluation panel consisting of members of the collaborative. The panel reviewed bid proposals from nine vendors,several of which submitted proposals for more than one bid bundle (grouping of sites for procurement purposes). This process officially closed on September 8, with the selection of qualified firms for five bundled project types: large (>650kW/site), medium (160kW –650kW/site), small (<160kW/site), small rooftop installations (<220kW/site), and other systems (solar thermal PV, fuel cell, micro-wind turbine). Cupertino sites included in this RFP were all for solar canopy/carport parking installations at City Hall, Quinlan Community Center and the Corporation Yard. Prior to participating in the RFP, Cupertino worked with City staff, Siemens(through the previous Detailed Energy Audit), and Critigen to evaluate the solar potential of these sites. A summary of findings are as follows: FacilityAnnual kWh Generated Average Annual kWh % Met by by PV SystemUsed at SiteSystem City Hall475,005524,65091% Quinlan Community Center140,564495,59528% Corporation Yard450,503143,595314% Renewable Energy Financing Options This pilot project considered several available financing structures to installrenewable energy systemsamong participating Bay Area agencies including: owned, leased or Power Purchase Agreement. Each financing structure has advantages and disadvantages: 1.City-Owned-The City would own the solar power generation system. Advantages include eligibility for incentive funds and ownership of tradable emission credits. Disadvantages include significant up-front capital costs, annual maintenance expenses for approximately 20 years, and the replacement of inverters between years 10 and 13. Owned systems are generally considered appropriate for sites where security and access are restricted. 2.Lease-to-buy-Advantages include no up-front capital expenses, and long-term leases that allow amortization of costs with the potential for ownership. There is a growing market of lenders and brokers interested in leasing solar installations. 3.Solar Power Purchase Agreements(SPPA) -This option creates a long term agreement for the purchase of power generated from the solar installation. Typically SPPA's have 20 year terms with prices determined through negotiations. In the past several years, local governments throughout California have funded renewableenergy projects through lease to purchase, and Solar Power Purchase Agreements (SPPA). These types of financing structures provide the opportunity to obtain solar power without the up-front capital investment as the power generation system is designed andinstalled by a third party provider and financed through a third party financier. The governmental entity benefits from capped or slowed growth in electricity rates, as the normal utility bill is paid to the financier through terms established in the SPPA. In California, at least ten jurisdictions have issued SPPA’s in the past two years. These issuances include the California Department of General Services, City of Fresno, San Francisco Public Utilities Commission, County of Solana, County of San Diego, and County of Ventura, among others. Project staff reviewed all ten SPPA issuances to compare terms and conditions. The proposalcurrently being negotiated is working towards the creation of a SPPA. Project Steps and Status 1.Issue Request for Information-COMPLETE The purpose of the RFI was to test the assumptions and information gathered to date on different financing mechanisms and procurement approaches. The RFI required vendors toshow their experience with financing mechanisms, the extent of that experience, possible terms that the County could expect, how the market would respond to bundled projects, whether additional sites should be considered and whether collaborative procurement at scale would deliver significantly reduced power purchase prices. Nineteen vendors responded to the RFI. Most firms have experience with a variety of financing methods. Installed price per kwH power varies as a reflection of the cost of capital, theFederal tax incentive for private sector investment and state solar incentives, and economies of scale in supply and financing. The attached RFI Summary Graphs provide general information from the responses to the RFI. Preliminary observations provided bythe County include: Most respondents indicated that their firm had been in business between 2 and 5 years -The significance of this finding is that traditional municipal government procurement criteria require extensive years of experience. Doing so in the renewable energy market would preclude most firms from competition. Most respondents are specialized in either solar ground-mount or rooftop systems. A few firms offer expertise in two or more technology areas, but they tended to be large vendors. The majority of respondents indicated that the installed cost of power for systems in general was below $0.19 per kwH. Many firms in lower cost ranges were newer market entrants. Most respondents indicated that economies of scale exist in collaborative procurement, and that these are quantifiable around 5% for bundled project packages of 10 MW, 15 % for packages of 20 MW, and 20% for packages of 50 MW. These discounts are incorporated to be compared to the cost per kwH of PG&E rates over the 20 year term of powerpurchase agreements. 2.City Signs Memorandum of Understanding – COMPLETE In order to obtain commitments, County staff requested a Memorandum of Understanding (MOU) from all jurisdictions. The MOUs were due tothe County on February 5, 2010. Staff th held a mandatory meeting with City attorneys and staff on December 4, 2009 to review PPA document terms, the RFP process and other issues. At this meeting 12 jurisdictions indicated that they wanted to participate in the first RFP issuance. These include; VTA, Morgan Hill, Mountain View, Cupertino, Sunnyvale, Los Gatos, Milpitas, County of San Mateo, Pacifica, Burlingame, Foster City and the Silicon Valley Waste Management Authority.. The MOU was finalized th through the review of the Board of Supervisors on February 9. 3.Conduct Detailed Solar Site Survey - COMPLETE Per Section 2.C. of the aforementioned Memorandum of Understanding, to participate in the bundled PPA project, cities were required to submit proposed real property sites that may accommodate renewable energy installations (individually, a “Site Survey”, and collectively the “Site Surveys”) prepared by a licensed engineer in a uniform, industrystandard format. To achieve this requirement, the city joined neighboring jurisdictions to work with CH2M Hill (now Critigen, LLC) to conduct solar site surveys by piggyback upon the competitively bid contract won by the company to analyze Santa Clara County-owned assets. The survey was solar site analysis and electrical and structural analysis. The city completed this process with three sites and abutting parking lots, Community Hall, Quinlan Community Center and the Corporation Yard. Work concluded in February and the results of the study are included in Attachment C. 4.Issue Request for Proposal (RFP) for Power Purchase Agreements COMPLETE The Request for Proposals to procure an initial 4MW of renewable power for county sites th through power purchase agreements was issued on March 29through BidSync. This th Solicitation was managed in two steps: Step 1 –Pre-Qualification due by 3PM on May 7, 2010 and Step 2 –Final Selection for Renewable Power Generating (RPG) Systems Bundles due by 3PMon June 29, 2010. 5.Evaluate Vendor Proposals COMPLETE The proposals for seven qualified firms were reviewed between the RFP deadline by the project’s leadership team which included the following members: Siva Darbhamulla, Chief of Design Services, County of Santa Clara Ben Foster, Vice President, Optony Caroline Judy, Assistant Director, Government Support Services, County of Alameda Jerry Lahr, Power Program Manager, Association of Bay Area Governments Kara Gross, Vice President, Joint Venture: Silicon Valley Network Rachel Massaro, Associate Director of Climate Initiatives, Joint Venture: Silicon Valley Network Steve Mitra, County Counsel, County of Santa Clara Lin Ortega, Utilities Engineer/Program Manager, County of Santa Clara Chris Schroeder, Purchasing Agent, City of Milpitas Mary Tucker, Energy Program Manager, City of San Jose A detailed summary of the RFP evaluation criteria is provided on pages 27 –29 in the RFP document, but focus primarily within four categories: firm and team qualifications, relevant project experience, technical expertise and proposed system cost. Using these factors, the Evaluation Committee determined the responsiveness and best value quality of the proposal. Using this criteria the following firms were selected for the following bundles: Large –>650kW/site Medium –160kW –650kW/site Small –<160kW/site Small Rooftop –<220kW/site Other -solar thermal PV, fuel cell, micro-wind turbine Relevant to Cupertino, the evaluation team selected Borrego Solar Systems, Inc. (www.borregosolar.com) to contract with cities to site medium sized bundles and Ecoplexus (www.ecoplexus.com) todevelop the City’s small sites. 6.Negotiate Final Contract Initiated: October2010, Anticipated: November 2010 Over the course of the month of October, legal and environmental representatives from each participating agency have participated in a series of joint contract negotiations with SPPA vendors. The coordinating committee convened this process to save both staff time and leverage the collective bargaining power of representative public agencies. Staff met in advance of initiating the vendor negotiation to discuss each agency’s key contracting requirements and establish a strategy to ensure all parties achieved mutually beneficial joint outcomes from the process. Vendor negotiations are scheduled to continue through November 10. 7.Project Commissioning andConstruction,Anticipated: December 2010 –December 2011 Staff propose the consulting firm, Optony, which has been assisting the County and partner agencies in the solar renewable energy procurement project to date, be retained throughout the design, engineering and construction phases of the project. In this role, Optony will ensure that the renewable energy system is (1) optimized through the review of system drawings and plans, is (2) constructed using the same components required through the contract, (3) meets industry standards for installation and production, and is (4) properly maintained to achieve all applicable warrantees. In partnership with staff, Optony will also work with Pacific Gas and Electric to develop an interconnection plan and verify that all California Solar Initiative (CSI) milestones are being met with rebates and deposits transferred back to the City. Furthermore, supporting staff will work with the vendor to ensure that parking lot closures are minimized during the construction phase and that vendor strictly adheres to the arborist’s tree mitigation plan and procedures. 8.Monitor and report on system production ONGOING The RFP clearly states that the firm must also provide for real-time monitoring and verification of power generated at each site listed during commercial operation. To achieve this requirement, the SPPA builds in a series of activities including the installation and maintenance of a meter at the delivery point and a monitoring system for each generating facility. Meters and all metering activities are to be provided, installed, owned and maintained, programmed and operated at the vendor’s expense and in compliance with of all applicable Transmission Provider Tariffs and the Buyer-PG&E Interconnection Agreement. The aforementioned monitoring system may be provided as a web-based tool or interface to view, collect and store data, in real time, including the energy delivered, greenhouse gas emissions reduced, AC efficiency, peak DC efficiency and total percent of energy used from the system. Roles and Responsibilities Asummary of the PPA participants’ roles and responsibilities are outlined below: 1.City of Cupertino: HostSite Agency (Site Owner) Nominate and approve Renewable Power Generating (RPG) sites. Review site-specific proposals, including technical description, qualifications, installation plans, and power prices. Make final acceptance decision on proposed prices. Agree to and make power payments per the terms of the PPA. Execute Site Lease Agreement(s). Execute Power Purchase Agreement(s). rd Review and approve tasks conducted by 3party relating to each Renewable Power Generation (RPG) System’s due diligence, environmental, design and construction plans and implementation. Facilitate and support the installation of the Renewable Power Generation System. 2.County of Santa Clara: Lead Agency Prepare the RFP, Power Purchase Agreement and Lease Agreement templates. Manage the RFP solicitation Lead the RFP response review process and participate in proposal review panels. Assist Agencies with compilation and posting of site-specific information. Provide program support and assistance. 3.Borrego Solar and Ecoplexus –3rd Party Renewable Energy Service Providers Determine technical and economic feasibility of Renewable Power Generation System sites (host facilities) prior to PPA award for System. Execute power purchase agreement substantially in the form of the PPA. Execute lease agreement substantially in the form of a Lease. Finance, engineer and construct the Renewable Power Generation System. Comply with all applicable California Building Codes and regulations, as well as any and all Agency requirements. Pay transaction costs as per the RFP and PPA. Install system metering and interconnection to utility grid. Own, maintain, operate and monitor the System. Bill host site for energy produced. Sustainability Impact Installing solar will eliminate fossil fuel demands at the Civic Center, Corporation Yard and Quinlan Community Center to help the City to achieve environmental objectives, including the Solar Action Area Goals established in the Bay Area Climate Compact to increase by 30% the use of renewable sources for electrical energy by the end of 2013, from a 2008 baseline. This project will reduce the city’s largest source of operational greenhouse gas emissions and air pollutants (facilities), providing the City a head start to implementing actions that mitigate the impactsof climate change in advance of the creation of its Climate Action Plan.Specific considerations pertaining to the environmental attributes of the system include the following: 1.CEQA Staff engaged two independent consultants to assess the project proposal under CEQA. In both cases, the consultants confirmed that the solar carport system would be categorically exempt under section 15303. Section 15303(e) consists of construction and location of limited numbers of small new equipment or structures and specifically identifies carports within its provisions. This is consistent with the findings of the California Energy Commission report titled “Distributed Generation: CEQA Review and Permit Streamlining,” which notes that under 15303 “certain types of DG may qualify if they have small footprints and the site’s zoning allows power generation to occur there.” 2.Urban Heat Island Effect Anurban heat island(UHI) is ametropolitan areawhich is significantly warmer than its surroundingrural areas.Sources indicate that the main cause of the urban heat island is modification of the land surface byurban developmentwhich uses materials which effectively retain heat. To address this concern for the solar carport project, it should first be noted that there are twoforms of solar energy. The first is solar thermal conversion, which uses sunlight to create heat and then electrical power (typical for solar hot water projects). The second is photovoltaic conversion, which uses sheets of special materials to create electricity from the sun. "Photo-" means "light," and "voltaic" means "producing electricity." Proposed for installation at the City of Cupertino are the second form of solar technology, solar photovoltaics, not solar thermal, which can often be associated with “waste heat” resulting from the solar thermal conversion. Industry best practices document solar modules collecting solar radiation and being cooled by ambient air movement withequivalent or better than heat collection on concrete/asphalt. Moreover, existing underlying pavement and parked cars are similar in albedo (i.e. reflectivity) to a solar systemand support structures that are light in color, further reducing concerns that urban heat island could result from this project.Upon furtherresearch,staff foundagencieswith UHI subject matter expertise(i.e. EPA, Lawrence Berkeley National Laboratory) presentsolar carport/parking structures as an urban heat island mitigation measures, in that this infrastructure provides anideal means to provide cover thereby reducing heat transfer between pavement and its surroundings. 3.Proposed Tree Mitigation and Replacement Plan To ensure photovoltaic modulesmay gain access to maximum sunlight exposure, the vendor proposed the City replace approximately 55 trees with 58 trees in an alternative location. Also proposed for the site is the addition of shade and drought tolerant vegetative groundcover to mitigate aesthetic changes. In an arborist report commissioned by the City, 18 trees proposed for removal were deemed “low suitability”, 30 were deemed “moderate suitability” and 12 were deemed “high suitability” for preservation. None of the trees are considered “protected trees’ pursuant to Section 14.18.035 of the City Code. 39 trees would require increased pruning to ensure they do not grow above their current height. Lastly, in addition to the city’s own actions, the vendor offers a tree replacement program as part of its service, thereby doubling those trees proposed for replacement among the city’s sites. Fiscal Impact The price proposals for Renewable Power Generation System bundles are presented at a fixed price rate (cents per kWh) with an annual escalator (in percent/year) for each kWh delivered to and metered at the electrical interconnection point, both with and without environmental attributes (RECs). In pricing, firms were made aware that the agencies (i.e. Cupertino) own the environmental attributes(RECs)of the system installed, not the firm. As such, these bundles seek to deliver the best value with rates demonstrably lower than forecasted PG&E pricing over the 20-year lifecycle of the installed renewable power generation system. Renewable energy power generation presents two distinct fiscal benefits for Cupertino: potential revenue generation from the sale of generated power and expenditure savings resulting from the use of renewable energy sources. Estimated savings from the proposed installation of carports at the Civic Center and Corporation Yard are estimated to be $625,000 over the 20 year term. Pricing estimates have not yet been provided for Quinlan Community Center. Furthermore, the value of the infrastructure investment on behalf of the vendor is estimated between $1.5M and $2M. To achieve these savings, vendors propose the transition to a Time-of-Userate (depicted below) to more closely follow the production of solar systems, as these schedules peak in the daytime and summer. These (A6) rates enable over-production during peak times and allow for the purchase of power during off-peak times at much lower rates. Through this structure, utility customers can get to a nearly $0 electricity bill with approximately a 70% energy offset. Savings represented above are reflective of a pricing model built upon certain assumptions that may be subject to change based on Council and staff project-based priorities or requests. Consideration of the following variables is underway, and will be fully accounted for in the subsequent staff report: 1.Aesthetic Features or Additional Design Attributes Cost: TBD Though more detailed financial information will be provided in the next staff report for Council’s review, savingspresented in this report were establishedby the vendor as a base system price. More specifically, equipment and installation materials evaluated by the vendor in its financial analysis are similar in nature to the image provided below and include, but are not limited to the following features open framing with module racking, inverters, rain gutters, and undercanopy lighting. It should be noted that changes to this equipment to accommodate design features or aesthetic attributes will change the vendor pricing, and ultimately the projected utility savings for the City. Staff are working to evaluate suite enhanced features available for the project, and the costs attributed to these features,to present to Council for itsconsideration. 2.Project Commissioning Consultant: Maximum Cost: $18,000 To date, the public agencies involved in this collaborative solar procurement efforthave been heavily supported by independent solar consultant, Optony, as these agencies are both new to the technology and financing mechanism.To advance the project through the commissioning phase, participating agencies were provided a proposalfor Optony to provide the following hands-on services: project inspection, project coordination, technology and installation inspections, specification compliance, and final project certification.These services will be offered at the discounted rate of $6,000 per site (vs. $11,000), due to the size of the project and number of participants. 3.Ongoing Pruning Cost: TBD Staff are currently evaluating whether or not additional staff time will be required to achieve the pruning goals of the PPA vendor. Proposed currently for the Civic Center is to maintain, at current height, the blackwood acacias on the eastern edge of the parking lot and the flowering pear on the western edge/sidewalk adjacent to the parking lot. This additional pruning cost is not part of the Power Purchase Agreement, and would, thereby, be the responsibility of the City. 4.Replanting Cost: TBD In addition to ongoing pruning costs, staff and potential vendors are working to evaluate the cost for replanting native and shade tolerant trees and ground cover where current trees are proposed for replacement. Note that replacement is only suggested for foliage that will shade the proposed solar photovoltaics (see Attachment D: Arborist Report and Tree Restoration Plan). As a means to reduce this cost, staff are also evaluating opportunities to apply rebates available from the Santa Clara Valley Water District for replacement of non-native water intensive plants. These costs could be included in the Power Purchase Agreement, which would increase the vendor rate and reduce cost savings for the City, or the City could independently finance the work. Power Purchase Agreement Contract Terms The approach pursued to negotiate the Solar Power Purchase Agreement is “master agreement”, shared jointly among all participating parties within the County,with addenda for each site including a site license (possibly separate clone agreements for each site). This approach supportsagencies to not only achieve economies of scale among typically high legal and contracting costs, which could ultimately drive up the PPA pricing, but also gain access to more favorable terms and conditions not commonly offered by vendors for sites of this size and scale (i.e. system performance cap, as described in further detail below). The following section outlines the major terms of the proposed Solar Power Purchase Agreement. 1.Term and Buyout 20 year contract from “Commercial Operations Date” Buyout available starting at year 6, and every year thereafter Buyout is “Fair Market Value” based on independent appraisal End-of-term extension for 5 year periods, if agreed If terminated, all equipment will be removed and site restored to original condition 2.Billing & Payments Monthly billing based on calculation of electricity generated times fixed rate (based on final contract) Annual escalation of fixed rate by 3-4% (based on final contract) Payments due monthly via electronic funds transfer 3.Renewable Energy Credits City will select to own the RECs or not at the inception of the PPA Owning the RECs will cost an additional $0.01 to $0.02/kWh 4.Early Termination Available from year 1 Payment schedule included with prohibitive costs through year 6 After year 6, based on FMV plus removal costs PPA provider must remove all equipment and restore facility to original condition 5.Performance System will perform on an annual basis to the forecasted kWh output, adjusted for weather and Force Majeure If the system under performs below 85%, PPA provider will reimburse City for lost savings If the system over performs above 110%, City not required to purchase, but may if beneficial Under-performance below 50% over full year is a default 6.System Design & Construction System designs reviewed by Optony for best practices and appropriate size All equipment must meet or exceed RFP specifications All construction conforms to City requirements and permitting processes Construction plan will be approved in advance to minimize site disruption CEQA and environmental concerns will be addressed in advance 7.Warranties Equipment warranty throughout the entire lifetime of the PPA Any failures will be promptly fixed by PPA provider Remaining warranties will be transferred if City purchases system 8.Insurance Fully insured during construction General liability and all other standard coverage during 20-year term by PPA provider City must indemnify PPA provider if City’s employees or facilities cause damage 9.Force Majeure Weather, earthquakes, flood, accidents and other typical events included Utility interruption or curtailment included Equipment failure or system underperformance not included Additional Considerations and Concerns 1.Parking Lot Closure The installation of carport structures and required electrical wiring and conduiting will require portions of the parking lot to close during construction, so as to maintain a safe and efficient worksite. To minimize disruptions for civic center visitors during construction, the vendor has proposed a phased approach to target installations for unique sections of the parking lot. The construction initiation date is to be negotiated by the city and the vendor, and will strategically target the time at which the civic center parking lot usage is lowest, likely in the early summer when school is not in session. Furthermore, during this time, staff will work to evaluate and designate alternative parking locations for library patrons. 2.Parking Space Loss The proposed designs will not eliminate any currently available parking spaces, as this has, and will continue to be, a staff priority. Value Proposition All parties involved in the Solar Power Purchase Agreement seek to, and will most likely, gain unique benefits through this collaboration. Furthermore, community membersand employees, not currently involved in this service offering may also derivevalue, if the partner agencies elect to expand the opportunity beyond public facilities and parking lots. Outlined below are the potential gains for these stakeholder groups. 1.All Santa Clara County Solar Power Purchase Agreement Project Participants This Regional Power Purchase Agreement (RPPA) is one model which provides an opportunity for all participating agencies to reduce both the upfront capital barriers to direct ownership and the transaction costs associated with third party financing.Additionally, by creating a regional PPA rather than individual PPAs for each city, the costs of developing the agreement are reduced significantly for all parties involved. In fact, pricing proposed through this collaboration are estimated at 10-14% lower due to a group purchase. This method not only conserves funds, but also accelerates the financing process and deployment of renewable energy technologies, promotes energy and tax-dollar savings, and supports local economic development. 2.City of Cupertino Beyond the benefits of a collaborative approach, this proposal to install carport structures will offer two new opportunities for the City: (1) utility price stabilityand (2) electric power reliability during times when backup power is needed. Moreover, the conservative estimated savings from this generation sourceare $625,000. Approximately $30,000 of these savings could be prioritized for reinvestment in public works-led energy efficiency, water conservation or alternative transportation projects that further reduce the greenhouse gas emissions associated with city operations. This cost-saving renewable energy generating system is estimated to be approximately $2M for direct purchase, not including annual O&Mcosts 3.Cupertino Community Members –Residents & Businesses The City is just beginning to explore the myriad of opportunities to leverage and expand this project to residential and commercial enterprises across our community. Potential programs that have been demonstrated around the country include: “Friends and Family” program from the vendors, bulk negotiation on behalf of consumer groups (i.e. employees, nonprofits, schools, neighborhoods), collaboration with local bank/credit union to finance solar projects, education and outreach on City solar initiatives, City-funded rebates to encourage deployment, City- subsidized feasibilities studies for businesses, and others. Proposals to advance this work are forthcoming. Recommended Action Receive report andprovide direction to staff. If Council should direct staff to proceed, staff will take the final enabling actions to advance the project scope: th 1.Project Due Diligence Proposed November 16 Complete arborist report for two sites with tree considerations (Civic Center and Quinlan Community Center) Complete joint contract negotiations to finalize Solar Power Purchase Agreement (contract) with vendors Return for Council approval of the Solar Power Purchase Agreement nd 2.Design Review Committee Proposed December 2 Complete Community Development Department Pre-Application Form and submit associated fees Develop and submit Design Review Committee staff report required to obtain (1) CEQA determination (2) architectural and site approval and (3) tree removal permits Notice the public and host Design Review Committee Public Hearing th 3.CEQA ComplianceProposedDecember 17 Mail Categorical Exemption Notice to County of Santa Clara Design Review Committee and County’s appeal/comment period ends Submit building permit and associated fees Staff engaged two independent consultants to assess the project proposal under CEQA. In both cases, the consultants confirmed that the solar carport system would be categorically exempt under section 15303. Section 15303(e) consists of construction and location of limited numbers of small new equipment or structures and specifically identifies carports within its provisions. This is consistent with the findings of the California Energy Commission report titled “Distributed Generation: CEQA Review and Permit Streamlining,” which notes that under 15303 “certain types of DG may qualify if they have small footprints and the site’s zoning allows power generation to occur there.” _____________________________________ Submitted by:Approved for submission: ___________________________________________________ Rick KitsonDavid W. Knapp Public and Environmental Affairs DirectorCity Manager _________________________ Erin Cooke Environmental Affairs Coordinator Attachments: Attachment A:Proposed Cupertino Photovoltaic Site Profiles Attachment B:Arborist Report and Tree Restoration Plan