Regular Board Meeting
October 26, 2023
Item 6: Solar Plus Residential
Distributed Microgrid Rates and
Agreements
10/26/23 2
Item 6: Solar Plus Program
• Recommendation:
• Conduct Public Hearing
• Adopt Resolution 2023-009 Setting Rates for Solar Plus Program effective 11/1/23
• Approve Power Purchase, Program Support, Program Management and Framework Distributed Microgrids Agreement.
• CAC received presentation on Solar Plus and support the program offering.
10/26/23 3
Introducing
10/25/23 4
§ $0 upfront costs to homeowners for solar + batteries
§ Lowest $/kWh available in the market (to the end customer) § Long-term customer pricing stability
§ Available to all customers and easily transferrable
§ No operational and maintenance costs to homeowners
§ 100% renewable energy and emergency backup power
§ An allocation for improvements related to the installation is included in the proposed rates
Benefits of a Distributed Microgrid
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For the Customer:
• Creates RESILIENCY by enabling
whole home back-up
• Generates and consumes SOLAR on
site, pulling from the batteries to
significantly avoid utility delivery
costs and the negativities of NEM 3.0
• Promotes EQUITY by providing a
simple, competitive, $0 up-front
cost, no FICO requirement path to go
solar + batteries
For CEA:
• Creates GRID STABILITY and power
pricing certainty
• GREEN ENERGY is created locally
and provides renewable energy
credits to meet CEA’s requirements
• Supports CEA CUSTOMER
RETENTION by providing customers
with the best value offer in the
market (which maintains load flowing
through CEA long term)
The program partners?
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Tesla, Inc.
§ Leading electric vehicle, charging
infrastructure, solar and battery
manufacturer.
§ Offers Turnkey residential, new homes,
commercial and utility scale solar and
battery operations throughout CA.
Participate.Energy LLC § Team comes from Corporate Credit, Inc. founded in 1994.
§ Over 250MW of rooftop solar developed since
2008.
§ Co-developed with Tesla, ~$300,000,000 of
SGIP ER
battery projects.
§ Lent over $5 billion of corporate loans in
connection with tax-based transactions.
§ Focused on developing, capitalizing and
managing the JPA Fund – including on-going
operations.
10/25/23 7
Program process
Customer Tesla Participate.
Energy CEA CEA & Customer
Enrolls in the
Program
Designs, builds,
operates solar &
battery systems
Buys systems
from Tesla
Buys wholesale
power from
Participate.Energy
Sells retail power
to customer via
on-bill tariff
Residential Renters Program
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§ Same program with Landlord
commitment and Tenant
participation
§ No credit underwriting
§ Seamless transfer to new
tenant (no underwriting)
§ Pass-through terms and
pricing from tenant to tenant
§ Fixed pricing and increases
over time
§ Upon request, can provide
landlord with template legal
language for tenants
Landlord Order
System Online
Landlord
Obligates
Tenant to enroll
Tenant Enrolls
NEW
TENANT
Item 6: Solar Plus Program
• Solar Plus Proposed Rates
10/26/23 9
Rate
$0.145/kWh With Pre-Construction Costs of $750 or less
$0.15 /kWh With Pre-Construction Costs of $751-$2,500
$0.155/kWh With Pre-Construction Costs of $2,501-$5,000 $115/Month Battery Fee – 1st Battery
$75/Month Each additional Battery
Item 6: Solar Plus Program
10/26/23 10
Item 6: Solar Plus Program
• There are four agreements that CEA executes to establish the Program:
• Power Purchase Agreement – establishes the terms, conditions, and price for CEA’s purchase of the solar energy and provides the rights for CEA to claim the renewable attributes of the energy; • Program Management Agreement – establishes CEA’s responsibilities to market the program to CEA’s customers and encourage participation in the Distributed Microgrids Program, for which CEA will be compensated by Participate.Energy;
• Program Support Agreement – establishes CEA’s responsibilities to provide program support for the systems, for which CEA will be compensated by Participate.Energy; • Framework Distributed Microgrids Program Agreement - establishes the terms and conditions under which CEA, Participate and Tesla, Inc. will perform. 10/26/23 11
Questions/Discussion
10/26/23 12
Item 8: Wholesale Market Access
Tariff Terms & Conditions;
Channelside WMAT & Positive
Enrollment Agreements
10/26/23 13
Item 8: WMAT Terms & Conditions;
Channelside WMAT and Positive
Enrollment Agreements
• Recommendation:
• Approve Wholesale Market Access Tariff Terms and Conditions; • Approve Channelside Wholesale Market Access and Positive Enrollment Agreements with San Diego Water Authority and Poseidon Resources, LP (Channelside) for enrollment of
Channelside account at the Carlsbad Desalination Plant; Authorize the CEO to execute all documents subject to General Counsel approval.
10/26/23 14
Item 8: WMAT Terms & Conditions;
Channelside WMAT and Positive
Enrollment Agreements
• Background:
• July 27, 2023 CEA Board approved MOU with SDCWA &
Channelside for development of WMAT related to consideration of serving the large Channelside load.
• Staff, technical consultants and legal team (General Counsel and Transactions Atty) have worked on development of WMAT Tariff and Channelside Agreements.
• Priority – mitigate risks to CEA and its customers related to serving Channelside and the normal opt-out rights of CEA’s customers 10/26/23 15
• WMAT Terms and Conditions
• Available to CEA customers that meet the following:
• Non-Residential Accounts within CEA’s service territory • Annual load greater than 150GWh
• Execution of WMAT Agreement
• Concurrent execution of Positive Enrollment Agreement • Not enrolled in Net Energy Metering
10/26/23 16
Item 8: WMAT Terms & Conditions;
Channelside WMAT and Positive
Enrollment Agreements
• Benefit to CEA
• Consistent with JPA goal of reducing GHG Emissions
• New predictable revenue stream to CEA
• Risks of load mitigated through agreement terms
• Minimum 3-year opt-out notice period
• Customer pays full costs related to their load – no cross subsidization from other CEA customers
• Benefit to Customer
• Enrollment in power supply with higher renewable energy content • Must meet CEA’s minimum renewable of 50% increasing to 100% by 2035 • More control over energy supply – participate in power procurement
10/26/23 17
Item 8: WMAT Terms & Conditions;
Channelside WMAT and Positive
Enrollment Agreements
• WMAT Rate Setting
• CEA Board has full rate setting authorization
• Rate approved in Public Hearing – consistent with all CEA’s rates • WMAT customer bears risk/benefits of related to rate volatility • Methodology (consistent with typical energy rate setting):
Administrative Cost Component: (CEA budgeted non-power supply expenses + reserves)/CEA forecasted load (excluding WMAT load) = per kWh Administrative Cost Component Energy Rate = Total WMAT Conventional Energy hedge contracts + (current forward price curve * open position) + Resource Adequacy Costs + Short-term energy costs + Long-Term Renewable Energy Costs = Total Energy Costs. Total Energy costs/WMAT forecasted load = per kWh Energy rate Per kWh Administrative Cost Component + Per kWh Energy Rate = Total WMAT Rate 10/26/23 18
Item 8: WMAT Terms & Conditions;
Channelside WMAT and Positive
Enrollment Agreements
• About Channelside:
• Carlsbad Desalination Plant owned by Poseidon Resources, LP (Channelside)
• Located in City of Carlsbad
• San Diego County Water Authority has decision-making authority related to energy provided through Water Purchase Agreement • Desalination Plant is largest in US, delivering nearly 10% of regions water supply
• SDCWA has electric provider decision-making authority through Water Purchase Agreement with Poseidon Resources, LP
10/26/23 19
Item 8: WMAT Terms & Conditions;
Channelside WMAT and Positive
Enrollment Agreements
• Channelside WMAT & Positive Enrollment Agreements
• Effective January 1, 2024
• Account enrollment no earlier than January 1, 2025
• SDG&E assigned 2024 PCIA Vintage
• Procurement Plan development beginning January 2024
• Comply with CEA’s Energy Risk Mgmt Policy and CEA’s compliance requirements • New Scheduling Coordinator ID established for the Channelside Load • Provides ability to track energy costs
• Rates established November 2024
• Monthly tracking – if more than 10% variance not anticipated to correct by year end subject to rate adjustment
• Annual True-up – overages and underages rolled into following year rates • Minimum 3-year opt -out notice, or tied to longest term contract whichever is longer
10/26/23 20
Item 8: WMAT Terms & Conditions;
Channelside WMAT and Positive
Enrollment Agreements
Questions/Discussion
10/26/23 21
Item 9: Consider Approval of
Clean Energy Alliance Solar
Billing Plan (NEM 3.0)
10/26/23 22
Item 9: CEA Solar Billing Plan (NEM
3.0)
• Seeking direction:
• Implement Solar Billing Plan (SBP) to mirror SDG&E’s SBP and maintain CEA’s current Net Surplus compensation methodology effective December 15, 2023; or
• Implement a Modified SBP to mirror SDG&E’s SBP and provide a $0.01 per kWh premium to the Avoided Cost Component; maintain CEA’s current NSC methodology effective December 15, 2023; or • Do not implement SBP.
10/26/23 23
Item 9: CEA Solar Billing Plan (NEM
3.0)
• Background:
• 12/2020 - CEA’s current Net Energy Metering Personal Impact approved
• Mirrors SDG&E’s NEM 1.0 and 2.0
• Set NSC at $0.06 per kWh for excess generation at end of 12-month relevant period
• 12/2022 – CPUC approved Decision 22-12-056 implementing SBP, successor to NEM 2.0
10/26/23 24
Item 9: CEA Solar Billing Plan (NEM
3.0)
• SDG&E CPUC Approved SBP
• Effective for NEM applications after 4/15/23
• Not applicable for NEM 1.0 & 2.0 legacy customers until end of their legacy period
• Changes methodology for calculating charges and credits • Customers placed on rate TOU-EV5 instead of TOU-DR1
• Changes from an annual true-up to monthly true-up
• Changes Net Surplus Compensation calculation methodology • Estimates solar system payback increases from 5-years to 9-years • Incentivizes battery storage
• CEA is not required to implement SBP
10/26/23 25
Item 9: CEA Solar Billing Plan (NEM
3.0)
• Charges & Credits Methodology Changes
• NEM 2.0 methodology:
• kWh generated netted against kWh usage for each time of use period • Rate calculated as: net kWh * retail rate in effect with either a net $ credit accrued or net charge incurred
• SBP methodology
• kWh generated is credited using the Avoided Cost Calculator, not the retail rate in effect (Export Credit)
• Evaluated on an hourly basis
• kWh used charge is calculated based on retail rate in at time of usage (Import Charge)
• Export credit and import charge are netted for resulting credit or charge 10/26/23 26
Item 9: CEA Solar Billing Plan (NEM
3.0)
• Analysis of current CEA NEM customer data results:
• Increases average NEM customer generation costs $42 per month (NEM 2.0 vs SDG&E SBP)
• Results will vary depending on usage for individual customer • Results improve with additional of battery storage
• Customer can fill battery during off-peak hours and use battery energy during on-peak hours
• Avoids generation and T & D costs
• CEA only has generation cost data, so unable to calculate a total bill impact
10/26/23 27
Item 9: CEA Solar Billing Plan (NEM
3.0)
• Current CEA NEM customers:
• 22,200 residential
• 300 – commercial
• NEM 1.0 – 6,500
• NEM 2.0 – 16,000
10/26/23 28
Item 9: CEA Solar Billing Plan (NEM
3.0)
• New SBP customers placed on NEM 2.0 temporarily until December 15, 2023, when SDG&E is expected to have billing system upgrades complete
• CEA customers will be placed on SBP for SDG&E T&D
regardless of whether CEA adopts SBP
10/26/23 29
Item 9: CEA Solar Billing Plan (NEM
3.0)
Maintain its existing NEM program for new solar and NEM 1.0 and 2.0 legacy customers.
• Does not offset SBP T&D increases for customers;
• CEA NEM customers would see this as a benefit compared to SDG&E bundled service;
• CEA would not realize the new revenue generated by SBP; • The SDG&E T & D side of bill would be calculated on a different methodology then the CEA Generation side, which could cause customer confusion;
• It would be difficult to calculate rate comparisons between SDG&E and CEA.
10/26/23 30
Item 9: CEA Solar Billing Plan (NEM
3.0)
Default to SDG&E’s new SBP using SDG&E’s ACC to determine the energy generation export credit.
• Affected customers would be on parity with SDG&E;
• Potential for new revenue for CEA (avg $42 per month per customer enrolled in SBP);
• T & D and Generation services would be calculated on same basis on customer bill, reducing possibility of confusion;
• Simplifies rate comparison between SDG&E and CEA;
• Estimated new revenue $160,800 in year 1 growing to $804,000 in year 5 (assumes 200 new customers per year).
10/26/23 31
Item 9: CEA Solar Billing Plan (NEM
3.0)
Adopt SDG&E’s new SBP with an additional premium added to the export credit (modified SBP).
• Provides a higher export rate to affected customers, resulting in a lower cost compared to SDG&E;
• Potential for new revenue for CEA, decreased by the premium adder; • T & D and Generation services would be calculated on same basis on customer bill, reducing possibility of confusion;
• Simplifies rate comparison between SDG&E and CEA;
• Estimated cost $4 per month per customer
• Funded through new revenue stream
• If adopted, CEA recommends a 5-year effective period – CEA Board revisit at end of 5-years.
• Modified SBP Annual revenue to CEA estimated at $151,200 in first year growing to $756,000 by year 5 (assumes 200 new enrolled customers). 10/26/23 32
Item 9: CEA Solar Billing Plan (NEM
3.0)
• Net Surplus Compensation
• Under SBP the Export credit (based on ACC) is deducted from NSC. • Avoids “double credit” of excess generation
• Staff recommends CEA maintain its current NSC
methodology as a benefit to being a CEA customer
• Not a new cost – CEA currently budgets for this benefit • CAC considered SBP and majority support CEA adopt the modified SBP
10/26/23 33
Questions/Discussion
10/26/23 34
Item 10: Consider Feed-in-Tariff
(Community Solar)
10/26/23 35
Item 10: Feed-in-Tariff (Community
Solar)
• Recommendation:
• Approve establishment of Feed-in-Tariff (Community Solar) Program with recommended criteria and direct staff to develop a marketing campaign, program guideline, application and power purchase agreement and return to Board for approval.
10/26/23 36
Item 10: Feed-in-Tariff (Community
Solar)
• The CEA Board and Community Advisory Committee have
previously prioritized establishment of a Feed-in-Tariff, also known as Community Solar.
• Incentivizes locally situated small-scale renewable energy projects
• Priced to recognize the value of locally generated
renewable energy
• Standard offering as opposed to Request for Offers
10/26/23 37
Item 10: Feed-in-Tariff (Community
Solar)
• Standard offering:
• Pre-determined price CEA will pay
• Delivery term – typically 10-years or longer
• Project size limitations
• Power Purchase agreement
10/26/23 38
Item 10: Feed-in-Tariff (Community
Solar)
• Recommended offering based on research of similar
projects
• Must be within CEA territory
• Projects 500kW – 1MW in size
• Initial offering no more than 4 projects
• Based offer price $85/MWh
• Bonus offer price $15/MWh co-located battery storage
• $500 non-refundable deposit with application
• 20-year term
• New-build projects
• Renewable Energy Credits to be transferred to CEA
10/26/23 39
Item 10: Feed-in-Tariff (Community
Solar)
• Program guidelines to be consistent with CEA’s Inclusive & Sustainable Workforce Policy
• Community Advisory Committee considered program and
majority support the development of Community Solar
Program.
• Program funds would come from CEA’s adopted FY 2023/24 Power Supply budget.
10/26/23 40
Questions/Discussion
10/26/23 41