Executive Committee Meeting
August 8, 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
o Public Comment
• Regular Agenda
• Committee Members Reports
• Adjourn
Chair Report
Item 3
CEO Report
Item 4
Peninsula Clean Energy
Staffing Updates
Many successful recruitments!
o CFO – Kristina Alagar Cordero started on July 25
o Director of Human Resources – Cora Dino starting on August 15 o Power Resources Manager – Jeff Wright starting on August 31 o Renewable Energy Analyst – Moya Enright starting on September 1 o Electric Vehicle Associate Programs Manager – Joe Ficalora starting on August 22 o Regulatory Compliance Analyst – Zsuzsanna Klara starting on September 12 Open Positions:
o Director of Power Resources
o Strategic Accounts Manager
5 Proposed Agenda for September
Board of Directors Retreat
Executive Committee Meeting
August 8, 2022
Peninsula Clean Energy
September 22 Board Retreat – 5:30 to 9:30 pm
• Consent Agenda (5 min)
• DEAI Policy Adoption (30 min)
• Strategic Plan Dashboard Update (25 min)
o Break (5 min)
• Update and Discussion on 100% renewable on 24/7 basis by 2025 (75 min) o Break (5 min)
• Update and Discussion on 2035 Decarbonization Plan (75 min) 7 EV Ready – EV Charging
Program
Executive Committee Meeting
August 8, 2022
Peninsula Clean Energy
EV Ready Program Overview
Overview
• $28M+ for EV charging infrastructure
• Targeting 3,500 ports installed by 2024
• Launched Sept. 2020
• Co-funding partnership with state program (CALeVIP)
• Progress to-date: 241
Key Elements
• Outreach, free technical assistance and incentives
• Workplace, multi-unit dwellings, public
• Advanced designs reduces costs, increases ports
• Network of contractors
9 Technical Assistance ($2M)
PCE Incentives
($4M)
CALeVIP
($12M CEC
+ $8M PCE)
Workforce Development ($1M)
Peninsula Clean Energy
Challenges
• Progress towards goal is very slow
• Last completed installation with network contractor: January 28th • Three major challenges
o Supply chain and inflation: raising costs
o Low contractor engagement: few or new bids per project o Major delays with CALeVIP (state incentive program PCE co-funds) 10 Peninsula Clean Energy
Program Updates
Challenge Program Updates
Rising Costs Adjust incentives to account for rising costs of labor and materials.
Contractor Engagement Increase flexibility for sites to use the contractor of their choice plus increased recruitment of diverse contractor pool.
CALeVIP delays
PCE will assume direct administration of $4 million in remaining PCE funds that were to be administered by CALeVIP administrator, Center for Sustainable Energy. Incentive levels will be aligned.
11 Peninsula Clean Energy
Timeline
• August
o Program design refinement – updated incentives and eligibility o Document and systems updates
o Contractor recruitment
o Soft-launch to public agencies for projects, including unfunded projects formerly planned for CALeVIP incentives
• September
o General communications on program updates including to workplaces, charging vendors, and other property owners
12 Public Facilities Solar +
Storage Update
Executive Committee Meeting
August 8, 2022
| 13
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
14 Peninsula Clean Energy
Pilot Portfolio: 2.0 MW
15 Agency Site(s) Size (kW) Status
Atherton Town Hall 113.5 Approved
Belmont Belmont City Hall 88.5 Approved
Brisbane Brisbane Mission Blue Center 11 Approved
Colma Colma Community Center 61.5 Approved
San Mateo
County
HSA Building 126 Approved
Hillsborough Hillsborough Public Works Yard 41.8 Approved Los Banos Community Center,
Waste Water Treatment Plant
152
287
Approved
Millbrae Millbrae Rec Center 155 Approved
Millbrae Millbrae Chetcuti Complex 412 Approved
Pacifica Pacifica Community Center 77 Approved
Redwood City Fair Oaks Community Center 89 Approved
San Bruno Aquatics Center 271.8 Approved
San Carlos San Carlos Youth Center 30 Approved
San Mateo San Mateo Police Building 170 Approved
Peninsula Clean Energy
RFP Update
• RFP for construction services plus optional PPA
• Issued June 20, 2022
• Deadline for proposals was August 1
• Multiple bids received, under review
16 Peninsula Clean Energy
Financial Structure
Capital
• Installation can be financed, but with interest
• PCE capital may reduce cost of capital
Tax Credit
• Federal Investment Tax Credit (ITC) + depreciation can reduce costs about one-third • Currently requires tax liability to secure, however this is likely to change with “Direct Pay” • PCE is tax-exempt so tax equity partnerships have been explored to capture share of tax benefits Options being considered
1. Tax credit and finance secured together with a developer PPA (“all in” model)
2. PCE provides capital, secures tax credit with tax equity partner, contracts for install only
3. PCE provides capital, secures tax credit with federal “Direct Pay”, contracts for install only 17 Peninsula Clean Energy
Recap: General Deal Structure
18 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
Recap: Model 1 vs Model 2
19 Model 1: PCE works with Tax Equity Partner (TEP)
directly. Procures via EPC from RFP
Model 2: PCE procures via Master PPA from
RFP, akin to wholesale procurements
Advantages:
• Simpler for PCE
• 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
Advantages:
• Potentially better pricing
• Potentially wider vendor pool for installation contractors • Utilize PCE’s low-cost capital
• More control
Disadvantages
• Complex
• More liability management
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
Possible debt
financing
PPA
Site Host
Customers PPA
Project Equity
20 Partner Firm
to Tax Equity
Investor
Peninsula Clean Energy
Deal Structure Following Tax Equity Period (Years 6 – 20) 21 • After Tax Equity value captured (end of year 5), the other parties exit
PENINSULA
CLEAN ENERGY
Project Company
100%
ownership
and control
PPA
Site Host
Customers PPA
Resources remain here
Purchase at Fair
Market Value of
assets
Peninsula Clean Energy
Federal Policy: Status
• Inflation Reduction Act includes $369 billion in clean energy & climate provisions
• Passed by the Senate Aug 7th
• Near-certain passage in the House, likely this week
• Significantly improves the financials and reduces complexity for government solar projects
22 Peninsula Clean Energy
Inflation Reduction Act: ITC & Direct Pay
• Increases Investment Tax Credit (ITC) to 30% (from 26%) for projects with prevailing wage
• Establishes “Direct Pay” ITC which allows government agencies to directly monetize credits without intermediaries
o But does not include depreciation value
• Removes need for complex tax equity partnership structure • PCE could directly own systems without project company • Evaluation of implications is not complete
23 Peninsula Clean Energy
Pending with Cities: Customer PPAs
• Goal is standard customer PPA for all cities. Pricing, which will vary by site, will be provided later
• Draft of contract with Terms and Conditions was circulated to all cities for review. Currently 7 of 13 jurisdictions have provided comments. • Reviewing comments and attempting to get jurisdictions that have not provided comments to do so imminently
24 Peninsula Clean Energy
Next Steps
• July-Aug.: Receive city/county Customer PPA Terms (not pricing). Revise • Aug.-Sept.: Revise plans to account for federal direct pay option. Determine PPA pricing for each facility in portfolio, send PPA with all items (including pricing) included; determine final portfolio.
• Aug.-Sept.: Begin submitting interconnection applications to secure NEM2 grandfathering • Aug.-Oct: Negotiate on Customer PPA Terms, if necessary. • October: Execute PPA contracts with final portfolio site owners. • November: Execute EPC or Master PPA agreement
o Need to expend 5% of contract value in 2022 to safe harbor 26% ITC • If Climate Bill passes, the pressure to execute all contracts in 2022 will be reduced. 25 Committee Members’ Reports