Peninsula Clean Energy
Board of Directors Regular Meeting
February 22, 2024
Peninsula Clean Energy
Agenda
• Call to Order / Roll Call
• Public Comment (for items not on the Agenda)
o Please note, send any chats to Board Clerk, Nelly Wogberg • Action to set the Agenda and Approve Consent Items 1-2 o Consent - Public Comment
• Regular Agenda
• Adjournment
Chair Report (Discussion)
CEO Report (Discussion)
Peninsula Clean Energy
CEO Report
• PCE Rate Freeze - Feedback and Communications
• Minutes - Backlog and Shift to Action Minutes
• Upcoming:
o Policy 16 Board and Committee Amendments; JPA Agreement Clean Up o CEO/Council Briefings scheduled thus far. More to come - February 15 – Brisbane April 23 – San Bruno
- March 6 – Los Banos May 13- San Carlos
- March 11 – Hillsborough May 15 – Atherton
- April 1 - Burlingame August 27 - San Mateo County
5 Peninsula Clean Energy
CEO Report: Cal-CCA Activities
Cal-CCA Lobby Day on February 21 was a huge success!
CCA delegation of over 70 people
Key issues: Reliability/RA Concerns, Affordability/Rates, and Grid Upgrade Delays PCE team – Shawn, Shalini and Marc met with the following Legislators:
• Governor's staff Local Legislators:
• Senate Pro Tem Mike McGuire Senator Josh Becker
• Vice Chair Senate Energy Brian Dahle Staff for Asm Mark Berman • Chief Energy Consultant, Senate Energy Cmte, Nidia Bautista Staff for Senator Anna Caballero • Energy Consultant for Assembly Speaker Rivas, Chase Hopkins Asm. Esmerelda Soria Asm. Diane Papan
Next Up:
Shawn will speak at the Cal-CCA Partners Briefing on March 7 Shawn will speak at the Cal-CCA New Legislator Briefing on March 14 Cal-CCA Annual Conference – April 16-18 in San Jose; please let us know if you would like to attend 6 Peninsula Clean Energy
Legislative Update
• Sen. Mike McGuire (D-Healdsburg) became Senate Pro Tem on February 5 and subsequently appointed:
o Senator Monique Limon (D-Santa Barbara) to the Senate Committee on Energy, Utilities, and Communications
o Senator Catherine Blakespear (D-San Diego) to the Senate Budget Subcommittee on Resources, Environmental Protection, and Energy
• Assembly Speaker Robert Rivas expanded two committees and appointed:
o Assemblymember Rick Zbur (D-West Hollywood) to the Assembly Committee on Utilities and Energy
o Assemblymember Cottie Petrie-Norris (D-Irvine) to the Budget Subcommittee on Climate Crisis, Resources, Energy, and Transportation • 2,124 bills were introduced in the state Legislature by the February 16 deadline • Growing state budget deficit
7 Peninsula Clean Energy
Staffing Update:
Welcome! • Cyndi Lopez
-Spencer our Senior HR Specialist
• Jana Kopyciok-Lande our Associate
Director, Innovation and Strategy starting March 1st
• Ross Fisher our Associate Manager, DER Programs
starting March 18th
Promotions! • Kirsten Andrews
-Schwind - Associate Director,
Community Relations & Climate Equity
• Hailey Wu - Manager, Financial Planning & Analysis
• Carlos Moreno - Senior Analyst, Energy Programs
• Michael Arnaldo - Senior Specialist, Digital Marketing 8 Peninsula Clean Energy
Currently Posted Positions
Please help us spread the word!
• Associate Programs Manager, EV Charging
(Energy Programs)
• Sr Specialist / Associate Programs Manager,
Building Electrification
• Risk Manager
https://www.peninsulacleanenergy.com/join-our-team
Peninsula Clean Energy
Upcoming Meetings
• Audit and Finance Committee:
o Next meeting on March 11 at 8:30 a.m.
• Executive Committee:
o Monday, March 11 at 10:00 a.m.
• Citizens Advisory Committee:
o Thursday, March 14 at 6:30 p.m.
• Board of Directors:
o Thursday, March 28 at 6:30 pm
CAC Report (Discussion)
Single-Family Turnkey
Electrification Installation
Service
Board of Directors
February 22, 2024
Request Summary
Program: Turnkey Electrification Installation Service
Recommendation: Delegate authority to the CEO to execute a 3-year contract with Franklin Energy for the implementation of the turnkey electrification installation service for single-family homes Amount: Not-to-exceed $26M over 3 years; $24M of which are PCE funds
13 Presentation Overview
Context
Current Building Electrification Efforts
New Building Electrification Efforts
Turnkey Installation Service
14 Context
15 2035 DECARBONIZATION ANALYSIS
RESULTS REFRESHER
Programs Portfolio
16 2035: Buildings Electrification
• 2035 Decarbonization Feasibility Assessment
and Plan shows we need to rapidly scale
building electrification.
• PCE is best positioned to affect change in small
residential sector.
• Following program components needed to
succeed:
1. Flexible Incentives
2. High touch support
3. Links to Finance
17 State of the Building Electrification Market
18 12,000 water heaters
7,000 space heaters Space Heaters Water Heaters
Electrification rebates as a percentage of
replacements in 2023
Gas replacements Electrified
5% electrified
15% electrified
Annual small residential
gas replacements
Only 1% of homes in PCE
service territory are
estimated to take
taken any major home
electrification step
Current Building
Electrification
19 2035 DECARBONIZATION ANALYSIS
RESULTS REFRESHER
20 What We Have
Rebates for heat pump water
heaters & heat pump HVAC
0% loans up to $10k for heat
pump water heaters & heat pump
HVAC
Home Upgrade program: no-cost
electrification & minor home repairs for
income-qualified homeowners
Participants Count
Rebate & loan program 1,862
Home Upgrade program 281
Appliances installed (all
programs)
Count
Heat pump water heater 1,114
Heat pump HVAC 1,096
Induction cooktop/range 75
Electric dryer 73
Total GHG emissions
avoided
1,660 MT
CO2e
What We Still Need
• Current program provides incentives but minimal guidance/support • Updated services needs to address barriers customers face:
o Emergency replacements
o Lack of clear information
o Difficulty selecting contractors and equipment
o Limited time and money
o Technically complicated installations
Future Building
Electrification
22 2035 DECARBONIZATION ANALYSIS
RESULTS REFRESHER
Peninsula Clean Energy
Vision Building Electrification v2
23 Scale to Whole Home Increase Homes Impacted per Year One-Stop Shop Services Concierge Services Turnkey Installation Services 2023 2024 2025
Building Electrification v2: Timeline
24 RFP & Contracting Income-Qualified Install Service
In-house Contact Center
Exploration (Tentative)
Develop one-stop shop website v1 One-stop shop website v2 One-stop shop website v3 Market-Rate Install Service
In-house Contact Center
Operations (Tentative)
Concierge Hiring &
Development
Concierge
Operations
Emergency Replacement Service
Turnkey Installation Service
Service Overview & Contract
25 2035 DECARBONIZATION ANALYSIS
RESULTS REFRESHER
RFP For Turnkey Installation Services
Select experienced consultant + installation contractors team to implement three suites of installation services:
26 Income-Qualified
No-Cost Electrification
Market-Rate
Low-Cost Electrification
Emergency
Water Heater Replacements
No-cost whole-home
electrification for low-income residents
(Home Upgrade v2)
Low-cost installation
services to non-income-qualified
residents
(NEW)
Rapid replacement of
failing gas water
heaters with heat
pump water heaters
(NEW)
RFP Detail
Process
• Joint RFP with SVCE; they intend launch the same
services
• Released in August, proposals due October, selection in December
Results
• Received 5 proposals
• 2 shortlisted for interviews & follow up questions
• Selected Franklin Energy as the awardee
27 About Franklin Energy and Team
• Franklin Energy
o Large (~1,000 employees) nation-guide energy consulting firm, very active in CA o Experience in with electrification and energy efficiency, and working in San Mateo County • Contractors
o Enso: works on MCE program with Franklin. Will focus on income-qualified installs. o Fuse Service: large Bay Area contractor experienced in electrification. Will focus on market-rate installs & emergency replacements. o Electrify My Home: electrification-focused contractor. Will focus on market-rate installs. • Others
o Xerohome: energy modeling software to help develop home scopes and target customers 28 Program Labor Requirements
• Prevailing wage to all installation contractors
• Franklin is responsible for ensuring compliance
• PCE will have the ability to audit records
29 Peninsula Clean Energy
Average Electrification Costs Per Home
30 Measure Cost
Heat pump water heater (65 gallon, 240V) $6,350
Heat pump HVAC (ducted, inverter-driven, 2 ton) $12,300 Electric induction range $2,450
Electric clothes dryer $2,000
Level 1 EV-ready circuit $1,200
4 Circuits $4,800
Sub-panel $1,600
Permits & HERs test $1,000
Total $31,700
Panel replacement, if required $6,850
• Contract contains detailed measures table with costs, i.e. multiple configurations for water heaters, HVAC, etc.
• Some income-qualified homes will also receive minor home repairs, light energy efficiency & resiliency measures.
Average cost per whole-home electrification for a typical home, per Franklin contract pricing.
Peninsula Clean Energy
Contract Budget Distribution
3-Yr Budget Min. # of homes
Income-Qualified Installs $21,050,000 575
Market-Rate Installs $1,300,000 175
Emergency Water Heater
Installs
$400,000 127
Implementation Costs $3,250,000
Total Contract Budget $26,000,000
PCE Funds $24,000,000
Menlo Park Funds $2,000,000
31 • Counts for income-qualified assume all homes are fully electrified; count is likely to be greater. • Actual expenditures will be based on program uptake; market-rate and emergency water heaters are especially variable. • Implementation costs refer to all non-installation costs including customer support, contractor oversight, admin and reporting tasks. Costs account for efficiencies/savings of joint program with SVCE. • Menlo Park funds are entirely for Income-Qualified Installs (and associated implementation costs).
Peninsula Clean Energy
Contract Budget Detail
32 FY23-24 FY24-25 FY25-26 FY26-27 3-Yr Total GHG estimated Income-Qualified Installs Count 15 150 180 180 525 3,087 MT CO2e Budget $530,000 $5,300,000 $6,700,000 $7,030,000 $19,290,000 Market-Rate Installs
Count 0 30 45 100 175 823 MT CO2e
Budget $185,000 $260,000 $615,000 $1,300,000
Emergency Water Heater
Installs
Count 0 20 40 67 127 238 MT CO2e
Budget $60,000 $120,000 $190,000 $400,000
Implementation Costs Budget $190,000 $685,000 $955,000 $1,180,000 $3,010,000 Total PCE Budget $720,000 $6,230,000 $8,035,000 $9,015,000 $24,000,000 Total Menlo Park Budget $200,000 $1,800,000 N/A N/A $2,000,000 Total Contract Not To Exceed
Amount $26,000,000 4,148 MT CO2e
Peninsula Clean Energy
Request Summary
Program: Turnkey Electrification Installation Service
Recommendation: Delegate authority to the CEO to execute a 3-year contract with Franklin Energy for the implementation of the turnkey electrification installation service for single-family homes Amount: Not-to-exceed $26M over 3 years; $24M of which are PCE funds
33 Study Session – Project Ownership
February 22, 2024
Board of Directors Meeting
Peninsula Clean Energy
Agenda
35 Purpose
Background o Ownership
– Large Centralized Projects
o Ownership – Local/Distributed Projects
PCE Context o PCE Ownership Considerations o PCE Ownership – Pros o PCE Ownership – Cons o Ownership v. Long-term Contracting o Ownership Cases #1-4 Summary & Recommended Next Steps
Peninsula Clean Energy
Purpose
• To level-set our understanding on
ownership
• To evaluate the pros and cons of
ownership
• To explore different ownership
scenarios
• To seek alignment on future PCE
ownership efforts
36 To Own or Not to Own?
• What to own?
• Where to own?
• How to own?
• Why ownership?
• Why not ownership?
• Is ownership better than
PPAs?
• Any ownership opportunities
available?
Peninsula Clean Energy
Utility Ownership – Large Centralized Projects
Project Types: Coal, Gas, Nuclear, Large Hydro, Transmission Characteristics:
37 Not Applicable or No
Ownership Opportunity
• Large Scale (>100MW) Higher Cost & Risk
• Conventional Not Renewable
• Long Operating Lives Financial Upside
• Joint Ownership Risk Sharing
• “Anchor Tenant” $$ and Operating Agent
• O&M and Fuel Management Requires Expertise
• Major Replacements Planned or Unforeseen
• Tax-exempt Financing Available to CCAs
PCE
-
-
+
+
-
-
-
+
Peninsula Clean Energy
Utility Ownership – Local/Distributed Projects
Project Types: Gas Peaker, Storage, Solar, Microgrid
Objectives/Functions:
o Maintain local reliability
o Improve grid resilience
o Other distribution level benefits
o Provide customer benefits
o Create local jobs
o Demonstrate innovation/leadership
38 Limited –
PCE is not a
Distribution
Service
Provider
Peninsula Clean Energy
PCE Ownership Considerations – Where, What, How
• Location: Within service territory or anywhere in CA? • Technology Type: Solar, Geothermal, Battery Storage, Long-duration Storage, New Technologies?
• Ownership Structure: Sole v. Joint ownership?
• Configuration:
• Bonding Capacity?
39 Function Size Location Value
Behind the
Meter (BTM)
Serving
Customer’s
Load
<5MW Within
service
Territory
Primarily
Customer
Benefits
Front of the
Meter (FTM)
Serving the
Grid
>5MW Anywhere in
CA
Market
Revenue,
RA
Peninsula Clean Energy
PCE Ownership (Why?) – The PROs
Major Economic Factors:
• Tax-Exempt Financing
o Lower Cost of Capital
o Has always been a tool for local-governments to fund capital projects • IRA Direct Pay – PCE can receive Tax Credits directly o Not available prior to IRA
o Developers also benefit from Tax Credits, pass-through via PPA Prices (not fully transparent)
• Extended Value
o Upside (if any) after the financing term
Other Potential Benefits:
• Diversify supply risks with some resources owned
• Have more control: operational, technology modification • PCE credibility and visibility
40 Enough
Values to
Justify
Ownership
?
Peninsula Clean Energy
PCE Ownership (Why Not?) – The CONs
1. Development Risks: permitting, interconnection, supply chain, etc. o Can we do it better or most cost-effectively than the developers? o Sunk Cost if project fails
2. Performance Risks: equipment failure, system outage, weather o Can we live with limited protection on performance?
3. Liability & Reputational Risks: safety, fire, security, insurance requirements o Can we afford to have a project failure or accident?
4. Additional PCE Staffing and Resources Needed:
Development work / Long term O&M / Financing / New compliance reporting o Do we have the expertise? Or do we outsource & manage contractors?
5. Decommissioning Responsibility:
o What do we do with the project after its useful life? How much it’s going to cost?
6. Finance and Tax Credit Risk:
Debt impact on Rating / High Rates / Tax Benefit Uncertainties o Are we comfortable with taking on financing risks?
41 Peninsula Clean Energy
Comparing Ownership v. Long-Term Contracts
COMMON VALUES
• Energy
• Resource Adequacy
• Environmental
Attributes (REC)
• Meet Compliance
• Arbitrage (battery)
• Shaping (battery)
• Additionality
• Job Creation
42 Ownership Long Term Contracts
Tax Exempt Financing Yes Available through Pre-pay
ITC/PTC 100% Captured May not be 100%
Extended Value Yes No
Development Costs/Risk Yes On Developer
Performance Risk Yes On Developer
Liability Risk Higher Limited / None
Staffing & G&A Costs Higher Lower
Finance Cost & Risks Yes No
O&M Expenses Yes No
Decommissioning Yes No
Ownership results in Cost Saving if:
Green Box ($$ costs/risks) - Red Circle ($$ economic values) < Total Contract Cost $$ Peninsula Clean Energy
Ownership Cases #1, 2, 3
43 Case #1 – Large-Scale
Renewable & Storage
Size >20MW
Location/Configuration In State / FTM
Ownership Sole
Technology Solar, Wind, Storage
Ownership Analysis
Only major benefit is access to
tax-exempt financing;
High development, performance
and liability risks;
Requires substantial staff and
resources to own and operate
throughout project life cycle;
Limited intangible benefits
Recommendation (consider Prepay as an alternative)
Case #2 – Joint Ownership
through CC Power
>20MW
In State / FTM
Joint & Build-Transfer Agmt.
Hybrid, Long-duration Storage
Risk sharing opportunities
Economy of Scale
Turnkey at COD – removes
development risk
Other potential values
depending on the project
technology
(depends on project type and
economics)
Case #3 – Customer-sited
Installations (GovPV)
< 5MW
In PCE Territory / BTM
Sole
Solar & Storage
Relatively low development,
performance and liability risks
Relatively low resource and
staffing requirement
High and visible customer and
community benefits
High repayment certainty from
credible off-takers
(low-risk ownership model that
provides local benefits)
Peninsula Clean Energy
Ownership Case #4 – Local Projects with Unique Advantages 44 Case # 4
Size 5-10 MW
Location In PCE Territory
Configuration BTM and/or FTM
Ownership Sole
Technology Storage, Solar,
Microgrid, New
Technologies
• Grant Funding – Reduces Cost
• No Cost Land Lease - Reduces Cost
• CEQA-exempt sites – Reduces development
cost/risk/timeline
• Expedited Interconnection – Reduces
development cost/risk/timeline
• Branding opportunity – Projects that
demonstrate PCE innovation & leadership
• Significant Local Benefits
• Ideally, a combination of the above!
Evaluate values, savings and risks on a
case-by-case basis
Peninsula Clean Energy
Summary and Recommended Next Steps
Next Steps:
• Continue to deploy GovPV ownership;
• Assess joint ownership structure through
California Community Power;
• Explore other local ownership
opportunities, if any, and review
economics;
• Consider Prepay opportunities to take
advantage of tax-exempt financing.
45 Tax-Exempt Financing
+
Incremental ITC Direct Pay
+
Any Extended Value
+
Intangible Benefits
All COSTS and RISKS
associated with ownership,
including additional
STAFFING and
RESOURCES required
Ownership Scale
Adjournment
Peninsula Clean Energy