1 STAFF REPORT
DATE: January 14, 2025
TO: Justin H
ess, City Manager
FROM: Mandip Ka
ur Samra, General Manager, Burbank Water and Power
VIA: Riad Sleiman, Assistant General Manager, Electric Services Frank Messineo, Acting Assistant General Manager, Power Supply BY: Michael Wang, Principal Electrical Engineer
SUBJECT: Approval
to Authorize the General Manager to Negotiate, Approve, and Execute a System Long-Term Services Agreement with Tesla, Inc. for Multi- year Preventative Maintenance Services in Support of the Regional Intermodal Transportation Center Battery Energy Storage System Project
RECOMMENDATI
ON
Approve the authorization of the General Manager of Burbank Water and Power (BWP) to negotiate, approve, and execute a system long-term services agreement (LTSA) with Tesla, Inc (Tesla). for m ulti-year preventative maintenance services in support of the Regional Intermodal Transportation Center (RITC) Battery Energy Storage System (BESS) Project, subject to approval as to legal form by the City Attorney’s Office.
BACKGROUND
As part of the Solar and BESS Projects at the Hollywood Burbank Airport RITC, BWP is in the process of procuring a Tesla BESS. At the Jul y 30, 2024 City Council (Council) meeting, Council unanimously approved the Request for Proposal ( RFP) to provide design-build (DB) services for the BESS project to Baker Electric and Renewables, LLC (Contractor). Under the design- build agreement executed with the Contractor, the Contractor shall obtain a long- term services agreement with the BESS provider, but the City has the option to execute the LTSA with the BESS provider in lieu of having the Contractor do so.
Tesla will provi
de a 20-year warranty for the BESS that will be installed as part of the BESS Project. To meet the warranty requirements, the City must enter a System LTSA with Tesla. The 20- year LTSA will provide preventative maintenance activities for the
WATER AND
POWER
2 BESS and is how Tesla guarantees the BESS performance and warranty. A draft of the scope of th
e preventative m aintenance services is included (Attachment 1).
DISCUSSI
ON
Tesla must pr ovide preventative maintenance services f or its BES S. W hile t his is a war
ranty requirement, it also provides a consistent opportunit y for its trained technicians to exami
ne the BESS. The Tesla team will be able to leverage experience from all other Tesla BESS installations and direct communication with the product deve lopment team to ensur
e the maximum performance of the BESS.
S
taff recommends that the Council find it in the City's best interest to authorize the BWP General Manager to execute the LTSA t o support the RITC BESS project. While the Contr
actor is obligated to execute an LTSA with Tesla, BWP believes it is in the best interest of the City to execute the LTSA directly with Tesla. By executing the LTSA directly with Tesla, the City is expected to save an estimated 15% cost (approximately $42,300).
ENVIRONMENTAL REVIEW
The LTSA
onl y r elates t o preventative maintenance act ivities for t he batter y af ter constr
uction and installation have been completed. Since an LTSA was contemplated as part
of the original design-buil d agreement approved by C ouncil, no separate additional CEQ
A analysis is necessary.
FISCAL IMPACT
The LTSA with Tesla is estimated to cost $324,520 over 20 years with estimated annual cost starting at $14,250 and increasing by 2% each subsequent operating year. An additional contingency amount of $32,500 (1 0%) has been included to address any unforeseen iss
ues or circumstances. BWP included this cost in the previously executed BESS agreement, so there are no additional costs for the LTSA agreement. In addition, since t
he City is executing the LTSA directly with Tesla, the LTSA cost will reflect a savings of 15% when compared with the City going through Baker Electric (DB Contractor) for the LTSA. BWP has s ufficient budget authority for Fiscal Year 2024-25.
CONCLUSION
Staff recommends that the Council delegate authority to the General Manager of BWP to negotiate, approve, and execute an LTSA with Tesla in support of the RITC BESS project substantially in the form of B id Schedule No. 1521, as well as e nter into any ancillary documents and amendments as may be approved by the City Attorney’s Office but only to the extent the applicable funds are available and budgeted.
ATTACHMENT
Attachment 1 – Exhibit A, Preventative Maintenance Services