Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: MICROGRID PROJECT UPDATE
Date: July 8, 2025
Written by: Damien O'Bid, City Manager
Recommendation
It is recommended that the City Council adopt a motion authorizing the City Manager to proceed with final design development of the proposed Phase 1 of the Microgrid Project.
Background
History of Energy Efficiency Upgrades
In 2005, the City completed construction of the new Police Station as part of the City Hall Complex. This facility was LEED certified at that time and includes a variety of energy saving systems. A photovoltaic panel (PV) array was installed on the adjacent Community Center and Cotati Room roofs to partially offset power usage at the Police Station. This PV system was recently decommissioned and largely removed as it was approaching end of life and needed removal for a roof replacement project.
In 2014, the City performed a variety of energy improvements through a Performance Contract, including replacing all customer water meters with remote read meters, converting all city owned high-pressure sodium streetlights to light emitting diode (LED) lights, and retrofitted City building lights with compact fluorescent lights, LED lights, and other lower energy use fixtures.
Some spaces received “smart” thermostats, but there were no general heating, ventilation, air conditioning (HVAC) improvements.
Over the past 5 years, the City has been transitioning the vehicle fleet to battery-electric (EV).
The City has a total of six (6) level 2 chargers for fleet use in the City Hall complex, including two at City Hall and four in the Police Station parking lot. These serve two electric vehicles for City Hall and five electric vehicles for the Police Department. There are currently no electric vehicles at the Public Works Corporation Yard. The electrical capacity in the existing panels at City Hall and the Police Building is full, preventing additional electric vehicle fleet expansion.
The City relies on electric vehicles to provide a variety of public safety and emergency services.
Therefore, a related consideration is the ability to feed backup power to some portion of the installed electric vehicle chargers, which is considered part of the critical load.
Portions of City Hall have also been recently remodeled, including the Community Development and Engineering offices, which received new insulation and energy efficient fixtures to meet current CalGreen building codes. Additionally, older single paned windows have been replaced with new double pane windows on the West Sierra Avenue side of City Hall as well as throughout the Community Center. The East School Street side of City Hall still contains all single-paned windows and doors.
As previously mentioned, an old PV system was removed from the roof of the Community Center (which served the Police Department), with the inactive remnants of this system still on the roof of the Cotati Room. The Community Center roof was replaced with a standing seam metal roof with the intent to mount PV panels at some point in the future.
The City Hall complex (including the Police Building) share a backup diesel generator which serves the general electrical uses at these facilities, including supporting a 911 Public Safety Answering Point (PSAP) and the City’s Emergency Operations Center. The Public Works Corporation Yard currently has no installed backup power source, but is a secondary control point and the only broadcast point for the City’s water and wastewater Supervisory Control and Data Acquisition (SCADA) system.
In 2020, an Energy Resiliency Feasibility Assessment was performed by TerraVerde Energy.
In 2024, the City completed a micro-project to replace older hot water heaters with heat pump water heaters at the Cotati Room in the City Hall Complex, the Train Depot, and at the Public Works Corporation Yard.
Finally, the City purchases all of it’s electricity from Sonoma Clean Power, a local Community Choice Aggregator, using 100% renewable power (“EverGreen”).
Request for Proposals
On July 17, 2024, the City posted a request for proposals (RFP) for energy services firms.
Specifically, the RFP requested a focus on evaluation of a Microgrid project at the City Hall complex, including a photovoltaic solar system, as well as a photovoltaic solar system at the City Corporation Yard and expansion of electrical service at both locations to facilitate further expansion of the City’s electric vehicle fleet. In addition to meeting the City’s climate goals, the project is also intended to lower on-going operational costs and add greater resilience during emergencies so that we can better serve the community.
On October 22, 2024, the City Council awarded the agreement to Schneider Electric and directed the City Manager to proceed through the Preliminary Evaluation stage.
Analysis/Discussion
The attached slide deck summarizes the Preliminary Evaluation for the requested infrastructure.
As noted, a complicating factor is the expected change in federal regulations in the near future with the passage of the federal budget bill. In particular, it appears that both the solar Investment Tax Credit (ITC) and portions of the electric vehicle infrastructure will be phased out quickly.
Simultaneously, the City has also applied for grants to facilitate the project goals that had nearterm deadlines. This included a California Office of Emergency Services (CalOES) Microgrid grant and the Charge! EV grant, administered by the Bay Area Air Quality Management District (BAAQMD). Additionally, the City also applied to the PG&E Fleet electrification program, as this program was on track to be fully subscribed by the end of June, 2025. At this time, the City has been admitted into the PG&E Fleet electrification program. The Charge! and CalOES grants are still pending review, with the Charge! grant recipients expected to be announced in the next couple of months. The CalOES Microgrid grant is not expected to announce awards until the end of 2025, at the earliest. However, this grant, or a similar grant amount from another source, is required to make this component of the project viable.
Recommended Project
Given the continued policy uncertainty at the federal government level and the expected timing of the grants, in particular the CalOES grant, staff is proposing to split this project into phases.
For the overall financial viability of the solar component of the project, it is recommended that this proceed to final design now so that the City could initiate construction prior to the end of 2025 and capture the full 30% ITC. To maximize the rebates under the PG&E NEM 3.0 rate tariff, as well as lower electricity costs through power peak shaving and back feeding the grid, it is recommended that this design includes some amount of battery storage, still to be determined.
This system would be designed to facilitate the future expansion into a Microgrid system.
Similarly, staff recommends proceeding with the EV architecture to leverage the PG&E side of the meter upgrades and customer side rebates, available under the PG&E Fleet electrification program. The timing of the announcements of the Charge! grant is expected to dovetail into the planned project timeline. Other factors that would play into the final scope of the EV infrastructure is the fate of federal EV charging funding, which currently appears to be phased out within 12 months of the federal budget being signed into law. The City‘s success (or not) with these grant programs could lead to expansion or reduction in scope for the first phase of work.
Lastly, the recommended first phase of work includes building lighting retrofits, which is a relatively simple, low cost and fast payback project.
The second phase of the work, contingent on receipt of grant funding, includes the full Microgrid at the City Hall complex and potentially additional EV architecture.
Next Steps
If the City Council authorizes proceeding into design development, Schneider Electric will perform an investment grade energy audit, complete the design and project fee with any proposed energy and/or operational savings guarantees. If authorized by City Council, it's expected that this design work will be completed by the fall of 2025. Once this design work is complete, staff will return to the City Council with a recommendation to proceed with none, some or all portions of the Phase 1 project and, if some or all of the project is moving forward, approve the Notice to Proceed.
Financial Considerations
If the City Council declines to move forward with any of the proposed work, the City would be required to pay Schneider Electric $8,000 for the preliminary evaluation work. If the City Council elects to proceed into final design, and subsequently does not proceed into construction, the City will be required to pay Schneider Electric $67,000 to exit the agreement.
If the City Council does elect to proceed into construction, these initial soft costs are rolled into the total project costs. As previously stated, the goal of the project is to achieve the various City goals without capital contributions through grant funding and likely some form of financing, offset by operational cost savings.
Environmental Issues
Where it can be determined with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA review.
This general rule can be applied to activities which could be subject to the CEQA process, but which logic dictates should not be subject to CEQA review. Therefore, based on the information provided above, the proposed resolution is exempt from CEQA pursuant to Section 14.03.021 of the CEQA Guidelines in that there is no possibility that the activity may have a significant impact on the environment.