Audit & Finance Committee Meeting
June 13, 2022
Peninsula Clean Energy
Agenda
• Call to Order / Roll Call
• Public Comment (for items not on the Agenda)
• Action to set the Agenda and Approve Consent Items
• Chair Report
• Staff Report – None
• Regular Agenda
FY 2022-2023
(July 1, 2022 – June 30, 2023)
Budget Review
Final Draft
Peninsula Clean Energy
Schedule – Budget Review and Approval
4 • May 9, 2022 – Review Initial Draft Budget with Audit & Finance Committee • May 9, 2022 – Review Initial Draft Budget with Executive Committee • May 26, 2022 – Review Current Draft Budget with Board of Directors • June 13, 2022 – Review Revised Draft Budget with Audit & Finance Committee • June 23, 2022 – Approve Final Budget by Board of Directors Peninsula Clean Energy
Proposed Budget FY2022-2023 – Key Assumptions
5 PG&E Generation Rates – significant rise in rates
o April 1, 2022 – increase 33%
o January 1, 2023 – decrease 10%
o Net change of up 20% as of 1/1/23 compared to 3/31/22 o San Mateo County and Los Banos rates are the same
PCIA Rates – significant decrease in rates
o April 1, 2022 – decrease 59%
o January 1, 2023 – increase 65%
o Net change of down 32% as of 1/1/23 compared to 3/31/22 o Los Banos PCIA rate is higher than SMC starting April 1, 2022. Lower starting on 1/1/23. Then, comparable after 1/1/24 Rates to PCE – up more than 100% through Jan 1, 2023 (although customers only pay an additional 33% in total) Load – FY23 forecasted to be 3.2% higher than FY22 forecast – FY22 includes only 3 months of Los Banos load Cost of Energy –
o Budgeted to increase 18% over FY22 forecast to $263 million (includes $15 million conservatism adder) o Increase of 11% without conservatism adder
Peninsula Clean Energy
PG&E and PCIA Rate Change Summary
6 1/1/2021 4/1/2021 4/1/2022 1/1/2023 1/1/2024 1/1/2025 1/1/2026 Actual Actual Forecast Forecast Forecast Forecast
PG&E Generation Rate 0.112 0.109 0.144 0.130 0.126 0.124 0.126 Generation Rate Change (Percent) 33% -10% -3% -1% 1%
Cumulative % Change from 1/1/22 33% 20% 16% 15% 16%
PCIA (System Average)
San Mateo County 0.032 0.047 0.019 0.032 0.033 0.031 0.028 PCIA Change (Percent) -59% 65% 3% -6% -8%
Cumulative % Change from 1/1/22 -59% -32% -30% -34% -39% PCE Rate to Ratepayers
San Mateo County
PCE Rate (net of PCIA and 5% Discount) 0.075 0.056 0.118 0.092 0.087 0.087 0.092 Net PCE Rate Change (Percent) 109% -22% -5% 0% 5%
Cumulative % Change from 1/1/22 109% 63% 55% 55% 62%
Los Banos 0.028 0.025 0.028 0.032 0.030 0.028
PCIA Change (Percent) -11% 13% 16% -6% -9%
Cumulative % Change from 1/1/22 -11% 0% 16% 9% -1%
Peninsula Clean Energy
Proposed Budget FY2022-2023 – Summary
7 Budget and Forecast 2022 2022 Variance - Fav/(Unf) 2023 Items Approved Budget Forecast $ Variance Proposed Budget $ Change - Inc/(Dec) % Change
OPERATING REVENUES
Electricity Sales, net 219,619,107 238,605,965 18,986,858 364,961,141 126,355,176 53% Green electricity premium 2,621,034 2,795,259 174,224 2,822,550 27,291 1% 222,240,141 241,401,224 19,161,082 367,783,691 126,382,467 52%
OPERATING EXPENSES
Cost of energy 216,705,953 222,759,361 (6,053,408) 264,208,440 41,449,079 19% Staff compensation 6,464,275 6,220,953 243,322 8,583,221 2,362,268 38% Data Manager 3,420,000 3,401,178 18,822 3,600,000 198,822 6% Service Fees - PG&E 1,260,000 1,244,528 15,472 1,350,000 105,472 8% Consultants & Professional Services 1,351,204 1,100,949 250,255 1,431,813 330,864 30% Legal 1,615,500 1,243,016 372,484 1,474,000 230,984 19% Communications and Noticing 2,068,197 1,497,702 570,495 2,686,208 1,188,506 79% General and Administrative 2,259,391 2,065,386 194,005 2,359,806 294,420 14% Community Energy Programs 6,555,671 4,721,655 1,834,016 8,640,000 3,918,345 83% Depreciation 111,675 84,269 27,406 96,000 11,731 14%
Total Operating Expenses 241,811,865 244,338,996 (2,527,130) 294,429,488 50,090,492 21% Operating Income (Loss) (19,571,724) (2,937,772) 16,633,952 73,354,203 76,291,975 NON-OPERATING REVENUES (EXP.)
Total Nonoperating Income/(Expense) 900,000 (5,649,493) (6,549,493) 600,000 6,249,493 CHANGE IN NET POSITION (18,671,724) (8,587,265) 10,084,459 73,954,203 82,541,468 Net Position at the beginning of period 184,271,220 180,798,537 (3,472,684) 172,211,272 (8,587,265) Net Position at the end of period 165,599,497 172,211,272 6,611,775 246,165,475 73,954,203 Unrestricted Cash Days on Hand 250 234 286
Current Fiscal Year (FY2022) Proposed Budget (FY2023)
Variance - Proposed Budget vs. Prior Year
Forecast
Peninsula Clean Energy
Proposed Budget FY2022-2023 – Budget Summary & 5-year Plan 8 Budget and Forecast 2022 2022 Variance - Fav/(Unf) 2023 2024 2025 2026 2027 Items Approved Budget Forecast $ Variance Proposed Budget $ Change - Inc/(Dec) % Change Forecast Forecast Forecast Forecast
OPERATING REVENUES
Electricity Sales, net 219,619,107 238,605,965 18,986,858 364,961,141 126,355,176 53% 315,583,351 310,221,811 321,390,127 334,096,231 Green electricity premium 2,621,034 2,795,259 174,224 2,822,550 27,291 1% 2,973,323 3,132,849 3,301,644 3,480,252 222,240,141 241,401,224 19,161,082 367,783,691 126,382,467 52% 318,556,673 313,354,660 324,691,771 337,576,483
OPERATING EXPENSES
Cost of energy 216,705,953 222,759,361 (6,053,408) 264,208,440 41,449,079 19% 269,006,994 260,068,548 259,890,754 263,405,340 Staff compensation 6,464,275 6,220,953 243,322 8,583,221 2,362,268 38% 9,096,415 9,640,400 10,217,023 10,828,245 Data Manager 3,420,000 3,401,178 18,822 3,600,000 198,822 6% 3,708,000 3,819,240 3,933,817 4,051,832 Service Fees - PG&E 1,260,000 1,244,528 15,472 1,350,000 105,472 8% 1,390,500 1,432,215 1,475,181 1,519,437 Consultants & Professional Services 1,351,204 1,100,949 250,255 1,431,813 330,864 30% 1,454,973 1,453,785 1,450,217 1,449,390 Legal 1,615,500 1,243,016 372,484 1,474,000 230,984 19% 1,505,320 1,538,876 1,574,838 1,613,390 Communications and Noticing 2,068,197 1,497,702 570,495 2,686,208 1,188,506 79% 2,916,529 3,129,555 3,218,162 3,309,427 General and Administrative 2,259,391 2,065,386 194,005 2,359,806 294,420 14% 2,420,600 2,485,030 2,553,341 2,625,797 Community Energy Programs 6,555,671 4,721,655 1,834,016 8,640,000 3,918,345 83% 13,750,000 15,550,000 18,850,000 23,000,000 Depreciation 111,675 84,269 27,406 96,000 11,731 14% 96,000 96,000 96,000 96,000 Total Operating Expenses 241,811,865 244,338,996 (2,527,130) 294,429,488 50,090,492 21% 305,345,331 299,213,649 303,259,334 311,898,857 Operating Income (Loss) (19,571,724) (2,937,772) 16,633,952 73,354,203 76,291,975 13,211,342 14,141,011 21,432,437 25,677,626 NON-OPERATING REVENUES (EXP.)
Total Nonoperating Income/(Expense) 900,000 (5,649,493) (6,549,493) 600,000 6,249,493 618,000 636,540 655,636 675,305 CHANGE IN NET POSITION (18,671,724) (8,587,265) 10,084,459 73,954,203 82,541,468 13,829,342 14,777,551 22,088,073 26,352,931 Net Position at the beginning of period 184,271,220 180,798,537 (3,472,684) 172,211,272 (8,587,265) 246,165,475 259,994,817 274,772,368 296,860,441 Net Position at the end of period 165,599,497 172,211,272 6,611,775 246,165,475 73,954,203 259,994,817 274,772,368 296,860,441 323,213,373 Unrestricted Cash Days on Hand 250 234 286 292 316 339 360 Current Fiscal Year (FY2022) Proposed Budget (FY2023) Fiscal Year Projections Variance - Proposed Budget vs. Prior Year
Forecast
Overview of Stochastic Modeling to Evaluate
and Measure Risk to Cost of Energy
Continued from May 9, 2022
Peninsula Clean Energy
Agenda
• Stochastic Analysis
• Background
• Hourly Simulation Examples
• Cost of Energy
• Load
10 Stochastic Analysis
Peninsula Clean Energy
Modeling Risk/Uncertainty
• The current process for modeling the budgeted cost of energy is deterministic – there is one set of inputs and one output for the cost of energy
• However, there is uncertainty associated with a number of the inputs into the cost of energy – load, resource generation, market prices • To model the impact of uncertainty in our forecasts, we can use a stochastic model to evaluate multiple simulations
• Stochastic modeling can help us to understand the risk associated with our budget due to uncertainty
12 Peninsula Clean Energy
Big Drivers of Risk
13 Peninsula Clean Energy
Deterministic vs Stochastic Simulation
14 Stochastic approach captures the
uncertainty around renewable
generation by looking at multiple
simulations.
Deterministic approach looks at 1
simulation without uncertainty.
Peninsula Clean Energy
Importance of Stochastic Analysis
• Stochastic analysis helps us to better understand the risks associated with PCE’s portfolio and find ways to manage and minimize risks
o Co-simulation of load and prices (load and prices are correlated) o Simulate uncertainty around forecasts for:
o Market prices
o Load MWh
o Renewable generation
15 Peninsula Clean Energy
Software for Stochastic Simulation
• Performing stochastic analysis is complicated and requires specialized knowledge and tools
o We initially performed deterministic analyses using a variety of Excel and Python modeling tools mostly developed internally
o As the complexity of our power portfolio has increased, the complexity of our analysis needs has increased as well.
o 3rd party tools and services provide a more rigorous and sophisticated approach to modeling including the use of stochastic analysis tools which will better analyze the inherently incremental nature of renewable resources 16 Peninsula Clean Energy
Pilot for Stochastic Models
• PCE engaged in short-term pilots to test two tools that provide stochastic modeling functionality Ascend Analytics and cQuant.io o Both are software providers that can provide specialized services in portfolio analysis, budget planning, and long-term resource planning o We performed extensive analysis and modeling to test both options and concluded that Ascend’s software (PowerSimm) includes features/capabilities that better suites our needs
17 Peninsula Clean Energy
Ascend Analytics
• Energy software company founded in 2002 in Boulder, CO – 20+ years experience o Software has been tested over many years and by many clients • Several integrated software products for operations, portfolio analytics, and planning • Provide custom analytical solutions and consulting
• Serves many CCA and utility clients -
18 Background
Peninsula Clean Energy
Motivation
• Provide a range of likely outcomes for cost of energy instead of just one single deterministic number
• Evaluate the risk associated with our portfolio and understands the biggest contributors
20 Peninsula Clean Energy
Budget Process
• Work with Finance team to develop our base budget using deterministic Excel model
• Run budget through PowerSimm
o Use same inputs from our budget and evaluate in PowerSimm stochastic model to understand risks associated with the budget
• Main Differences
o Excel model: 1 simulation for load, prices and renewable generation o PowerSimm: 50 simulations for load, prices, and renewable generation 21 Peninsula Clean Energy
Stochastic Simulation
• 50 simulations for load, prices, and renewable generation in PowerSimm o Monthly load MWhs match monthly load MWhs in budget, but PowerSimm simulates 50 different hourly profiles based on our historical load data o Monthly renewable generation MWhs match Monthly MWhs in budget, but PowerSimm simulates 50 different hourly profiles based on historical renewable data o Average monthly prices match average monthly prices in budget, but PowerSimm simulates 50 different hourly profiles based on historical prices 22 Peninsula Clean Energy
Deterministic vs Stochastic
23 Peninsula Clean Energy
Stochastic Results
24 • There are several main metrics
to look at in a stochastic
analysis: o Expected: Average value across all
simulations
o P5 or 5th percentile: only 5 percent of
values are smaller than P5
o P50 or median: 50 percent of values are
smaller and 50 percent are bigger than
P50
o P95: only 5 percent of values are bigger
than P95
o Risk Premium: The difference between
P95 and P50 is referred to as risk premium
Hourly Simulation
Examples
Peninsula Clean Energy
Price-Load Correlation
• In general, higher load results in higher prices but load is not the only driver behind prices 26 0
20 40
60 80
100
120
140
0 100 200 300 400 500 600 700
Price ($/MWh)
Load (MWh)
December 2025
-100
0 100
200
300
400
500
600
0 100 200 300 400 500 600 700
Price ($/MWh)
Load (MWh)
August 2025
* Each dot, represent a single hour, hourly data for 50 simulations shown here
* Each dot, represent a single hour, hourly data for 50 simulations shown here
Peninsula Clean Energy
Hourly Load Simulation • 50 hourly trends
(simulations) for
load. Shapes are
created based
on our historical
load.
27 0
100
200
300
400
500
600
700
Load (MWh)
Hour
12 34
56 78
9 10
11 12
13 14
15 16
17 18
19 20
21 22
23 24
25 26
27 28
29 30
31 32
33 34
35 36
37 38
39 40
41 42
43 44
45 46
47 48
49 50
* 50 simulations, August of 2025
* P5, P50 and P95 of simulations, August of 2025, Month-Hour Average 200
250
300
350
400
450
500
550
159 13 17 21
Load (MWh)
Hour
P5 P50 P95
Peninsula Clean Energy
Hourly Price Simulation • 50 hourly trends
(simulations) for prices.
Shapes are created
based on forecasted
future price shapes.
28 -1000
100
200
300
400
500
600
Price ($/MWh)
Hour
12 34
56 78
9 10
11 12
13 14
15 16
17 18
19 20
21 22
23 24
25 26
27 28
29 30
31 32
33 34
35 36
37 38
39 40
41 42
43 44
45 46
47 48
49 50
* 50 simulations, August of 2025
* Prices shown here are for DLAP-PG&E node
-
20 40
60 80
100
120
140
160
180
200
159 13 17 21
Price ($/MWh)
Hour
P5 P50 P95
* P5, P50 and P95 of simulations, August of 2025, Month-Hour Average Peninsula Clean Energy
Hourly Solar Generation Simulation
• 50 hourly trends (simulations)
for solar generation. Shapes
are created based on
historical solar generation.
29 0
20 40
60 80
100
120
140
160
180
200
8/1/2025
8/1/2025 6:00
8/1/2025 12:008/1/2025 18:00
8/2/2025
8/2/2025 6:00
8/2/2025 12:008/2/2025 18:00
8/3/2025
8/3/2025 6:00
8/3/2025 12:008/3/2025 18:00
Generation (MWh)
Hour
1 9
30 50
* 50 simulations, August of 2025
* 4 simulations, 8/1/2025-8/3/2025
0 20
40 60
80 100
120
140
160
180
200
Generation (MWh)
Hour
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 26
27 28
29 30
31 32
33 34
35 36
37 38
39 40
41 42
43 44
45 46
47 48
49 50
Peninsula Clean Energy
Hourly Wind Generation Simulation
• 50 hourly trends
(simulations) for wind
generation. Shapes are
created based on
historical wind generation.
30 0
25 50
1/8/2025
1/8/2025 6:00
1/8/2025 12:001/8/2025 18:00
1/9/2025
1/9/2025 6:00
1/9/2025 12:001/9/2025 18:00
1/10/2025
1/10/2025 6:00
1/10/2025 12:001/10/2025 18:00
Generation (MWh)
Hour
1 9
30 50
* 4 simulations, 1/8/2025-1/10/2025
* 50 simulations, August of 2025
0 25
50 Generation (MWh)
Hour
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 26
27 28
29 30
31 32
33 34
35 36
37 38
39 40
41 42
43 44
45 46
47 48
49 50
Cost of Energy
Peninsula Clean Energy
Cost of Energy Summary • PowerSimm values are
averaged across 50
simulations o There are slight
differences in how the
models treat certain
assumptions including
resale of RECs/RA.
o We are working with
Ascend to
update/modify
modeling to more
accurately reflect how
these assumptions are
treated in our budget
32 Peninsula Clean Energy
Cost of Energy, Risk of Exposure to Market (FY 2023)
• If we didn’t have any hedge or
PPA contracts (yellow dots), our
cost of energy would increase
significantly as market prices
increase
33 Portfolio At price of
$60/MWh
At price of
$70/MWh
Current Portfolio $244 million $252 million
No Hedge Portfolio $276 million $305 million
No PPA Portfolio* $260 million $283 million
No Hedge/PPA Portfolio* $293 million $335 million
* Not considering impacts on RA/REC costs
Peninsula Clean Energy
Box-Whisker Plot
• A box-whisker plot can show a range of
values
o The box shows the values between 25th and
75th percentiles
o Any value lower than Q1−(1.5×IQR) or
greater than Q3+(1.5×IQR) are considered
outliers (values above upper extreme or
below the lower extreme)
* IQR: Interquartile Range = Q3 – Q1
Q3: 75th percentile, Q1: 25th percentile
34 Peninsula Clean Energy
Cost of Energy • Over time, range
of likely outcomes
becomes larger as
we have a larger
open position
* Yellow boxes show open
position for each FY
35 Peninsula Clean Energy
Cost of Energy: Range of likely Outcomes (FY 2023)
• P95: $254 million
• P50: $245 million
• Risk Premium: $9
million
36 Peninsula Clean Energy
Risk Premium • Over time, risk
premium increases
as our open
position becomes
larger
*Risk premium is defined as
the difference between p95
of simulations and p50 of
simulations
* Yellow boxes show open
position for each FY
37 Peninsula Clean Energy
Monthly Cost of Energy • Cost of energy
varies month-to-
month
• More uncertainty
around cost of
energy in Summer
and Winter months
due to higher
volatility in load and
prices
• Cost of energy in
Spring has very low
uncertainty
38 Load
Peninsula Clean Energy
Load Simulation • PowerSimm is
capable to simulate
a range of likely
outcomes for our
load
• In FY 2023, load
could vary between
3,655 and 3,772
GWh
40 Peninsula Clean Energy
Load Cost • Expected MWh of
load * Expected
price at DLAP
• Load cost
decreasing over
time due to
expected lower
prices
• Cost of Energy
includes load cost
as well as the
cost of hedges
and contracts to
manage load cost
41 Peninsula Clean Energy
Load Cost, Monthly
• Larger uncertainty
around load costs
in Summer months
due to possibility of
heatwaves
42 Appendix
Peninsula Clean Energy
WACP, Range of Likely Outcomes
• Over time, range
of likely outcomes
becomes larger as
we have a larger
open position
44 Peninsula Clean Energy
WACP, Risk of Exposure to Market (FY 2023)
• If we didn’t have any hedge or
PPA contract (yellow dots), our
cost of energy could have
significantly increased with
higher market prices
45 Portfolio At price of
$60/MWh
At price of
$70/MWh
Current Portfolio $66.2/MWh $67.7/MWh
No Hedge Portfolio $75.1/MWh $81.8/MWh
No PPA Portfolio* $70.6/MWh $76.0/MWh
No Hedge/PPA Portfolio* $79.50/MWh $90.1/MWh
* Not considering impacts on RA/REC costs
PPAs
Peninsula Clean Energy
PPA MWh
• PowerSimm will
simulate the
uncertainty around
renewable generation
47 Peninsula Clean Energy
Net PPA Cost • Net PPA Cost (PPA
Cost – PPA
revenue) could
vary significantly
based on market
prices
48 Peninsula Clean Energy
Net PPA Cost, Monthly
• Net PPA Cost (PPA
Cost – PPA
revenue) has much
larger uncertainties
in summer months
49 Hedges
Peninsula Clean Energy
Net Hedge Cost • Net Hedge Cost
(Hedge Cost –
Hedge revenue)
could vary
significantly based
on market prices
51 Peninsula Clean Energy
Net Hedge Cost, Monthly
• Net Hedge Cost
(Hedge Cost –
Hedge revenue)
has much larger
uncertainties in
winter months due
to larger volumes of
hegdes in these
months
52 Local Government Solar
and Storage Program
| 53
Audit and Finance Committee Update
June 13, 2022
Peninsula Clean Energy
Program Overview
Summary: Accelerate local renewable energy deployment at local government facilities
Objectives
• Local solar and storage towards PCE’s goal of 20 MW by 2025 • Reduce customer energy costs; insulate against rise in PG&E rates • Help local governments achieve sustainability goals
• Develop a reproducible program and new service model
54 Peninsula Clean Energy 55
Site Total PV
(kW DC)
Battery Sizing
(kW / kWh) Status
Atherton Town Hall 113.5 Approved by City Council
Belmont Police Station 88.5 Approved by City Council
Brisbane Mission Blue Center 11.1 25 / 155 Approved by City Council Colma Community Center 61.5 45 / 415 Approved by City Council Fair Oaks Community Center 88.5 75 / 300 Approved by City Council Hillsborough Public Works Yard 41.8 Approved by City Council Los Banos Community Center 151.7 Approved by City Council Los Banos Wastewater Plant 277.0 Approved by City Council Millbrae Chetcuti Building & Complex 411.5 Approved by City Council Millbrae Rec Center 155.0 Approved by City Council
Pacifica Community Center 76.7 60 / 240 Approved by City Council San Bruno Aquatic Center 271.8 In Council approval process San Carlos Youth Center 29.5 Approved by City Council
San Mateo County HSA Building (2500 Middlefield) 125.5 Approved by City Council San Mateo Police Building 169.8 Approved by City Council TOTALS 2073.4 205 / 110
Projects in Portfolio
Peninsula Clean Energy
General Deal Structure
56 Equipment
Suppliers and
Facility Installers
B
Facility
C
PCE Provides:
• Site evaluation, procurement, installation, and maintenance • Aggregation of sites to facilitate better pricing
• Screen, select, and contract with reputable installers • PPA to at a $/kWh that is lower than utility rate
Facility
A
PPA
PPA
PPA
PCE
Equipment
Suppliers and
Facility Installers
B
Facility
C
Facility
A
PPA
PPA
PPA
PCE
Tax Equity
Partner
Exploring
deal
structures
Peninsula Clean Energy
Key Customer PPA Contract Terms
1. Specified $/kWh price for solar generated by system
2. Term: 20 years. System life expected 25-30 yrs
o End of PPA options: PCE removes system or Customer purchases system at Fair Market Value. Also possible a PPA extension could be agreed in future.
3. Minimum solar production guarantee
4. Maintenance and operations included
57 Peninsula Clean Energy
Basic Financials
• Total Portfolio Project Cost: Estimated ~$8 million.
o Potential inflationary impact of recent supply chain issues • ITC value: 26% in 2022, 22% in 2023
• Cost of Capital
o PCE's cost of funds: assumed 0%
o 3rd party's cost of funds: TBD
58 Peninsula Clean Energy
Procurement Model 1 (Partner with Tax Equity)
• PCE co-invests with tax equity partner directly
59 Advantages:
• Potentially better pricing
• Potentially wider vendor pool
for installation contractors
• Utilize PCE’s low-cost capital
• More control
Disadvantages
• Complex
• More risk/liability
Peninsula Clean Energy
Procurement Model 2 (Master PPA)
• PCE procures aggregate portfolio via master PPA
60 Advantages:
• Simpler for PCE
• Not responsible for EPC
contractor directly
• Lower direct risk PCE
Disadvantages
• Likely higher cost
• Probably doesn’t fully
leverage value of PCE’s
project development work
• Limits pool of potential
bidders
• Less control – projects
become a bit of a black box
once we hand off to PPA
provider
Peninsula Clean Energy
Model 1 Deal Structure Exploration
61 • Discussions being held with possible Tax Equity (TE) partners • Challenge of our portfolio is size: relatively small from a TE perspective. (Typical deal size > ~20MW)
Peninsula Clean Energy
PENINSULA
CLEAN ENERGY
Site Host
Customers PPA
62 Desired Outcome
Peninsula Clean Energy
Options for Deal Structure
During Tax Equity Period
Tax Equity
Partnership Flip Sale Leaseback
PCE as Lender
to Project 1 2
PCE as Sponsor
Equity Investor 3 4
63 • Partnership Flip: Tax equity investors have an equity position in project company and sells that position to PCE at end of tax equity period (year 6) • Sale Leaseback: Tax equity investors buy the portfolio from the project company and lease the systems back to the project company
• Both enable PCE to own systems in Year 6 and have pros and cons; option we use would likely be at preference of tax equity partner
Peninsula Clean Energy
Partnership Flip Structure (Years 1 – 5)
PENINSULA
CLEAN ENERGY
Tax Equity
Investor
Tax Equity
Partnership
Project Company
Tax Equity Investment Equity Investment
Debt, equity,
or both
PPA
Site Host
Customers PPA
Project Equity
64 Partner Firm
to Tax Equity
Investor
Peninsula Clean Energy
Tax Equity
Project Co. Project Company Lease
Site Host
Customers
Debt
Tax Equity
Investor
Investment
PPA
PPA
Sale Leaseback Structure (Years 1– 5)
Sponsor Equity
PENINSULA
CLEAN ENERGY
65 Partner Firm
to Tax Equity
Investor
PCE could also be an equity participant
Peninsula Clean Energy
Deal Structure Following Tax Equity Period (Years 6 – 20)
PENINSULA
CLEAN ENERGY
Site Host
Customers PPA
66 • After Tax Equity value captured (end of year 5), the other parties exit Most likely, still via the
Project Company from
which other parties
have exited
Peninsula Clean Energy
Cash Flows by Phase, Model 1
67 Phase Year(s) Description
Contract Execution 2022 Cash outflow: 5% of contract value to secure 2022 ITC Construction 2023 Cash outflow: Some or all funding for project construction through COD
Commercial Operations 2023 Cash inflow: Tax Equity partner(s) investment at COD, approximately one-third of construction cost
PPA Revenue (Years 1 - 5) 2024 - 2029 Cash inflow: Portion of the PPA revenues from customers.
The remaining portion captured by TE partner(s)
Buyout of TE position 2030 Cash outflow: PCE purchases systems from TE partner(s) at Fair Market Value, typically less than 10% of original cost PPA Revenues (Years 6 – 20) 2030 – 2043 Cash inflow: full value of PPA revenues from customers End of PPA 2044 Cash inflow if Customers purchase systems (at FMV) or if parties agree to PPA extension
Cash outflow if Customers elect to have PCE remove
systems (their right at end of term)
Peninsula Clean Energy
Cash Flows by Phase, Model 2
68 Phase Year(s) Description
Contract Execution 2022 Cash outflow: 5% of contract value to secure 2022 ITC Commercial Operations 2023 Cash outflow to Master PPA provider Cash inflow from customers
Expected: Cash outflow <= cash inflow
End of PPA 2044 Potential option for PCE or customers to purchase systems Customer has right to have systems removed, though cost not PCE’s responsibility
Peninsula Clean Energy 69
Key Next Steps
• RFP issued by 6/20/22 for vendors that can support either or both Model 1 or Model 2
o We would determine whether to pursue Model 1 or Model 2 after receiving pricing from RFP and comparing between models
• In parallel, send Customer PPA to cities for review of terms (not yet pricing)
• Submit interconnection applications to secure NEM 2 tariff