Item No.
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: OFFICE OF THE CITY MANAGER
BY: MATTHEW BAUMGARDNER, DIRECTOR OF PUBLIC WORKS/CITY
ENGINEER
DATE: MARCH 26, 2024
SUBJECT: ACCEPTANCE OF THE SOLAR PHOTOVOLATAIC AND BATTERY
ENERGY STORAGE SYSTEMS PROJECT AT CITY FACILITIES
EXECUTIVE SUMMARY
The City Council will consider accepting the installation of the Solar Photovoltaic and Battery Energy Storage Systems at six City facilities – City Hall, Downey Police Department, Downey Library, Downey Theater, Barbara J. Riley (BJR) Senior and Community Center, and the Columbia Memorial Space Center. Additional work necessary for the completion of the project included replacement of the electrical transformers at City Hall, Police Department Building, and BJR, as well as the replacement of the roof at the Downey Theater.
RECOMMENDATION
That the City Council:
1. Accept the work for the Solar Photovoltaic and Battery Energy Storage Systems Project at City Facilities, and the additional work for replacement of the electrical transformers at City Hall, Downey Police Department Building and BJR Senior and Community Center and replacement of the roof at the Downey Theater; and
2. Authorize Public Works Director/City Engineer to file Notice of Completion with the Los Angeles County Recorder’s office.
BACKGROUND
On August 24, 2021, the City Council approved the solar power purchase and energy services agreements with CEG Solutions, LLC (CEG) and Onyx Development Group, LLC (Onyx) for construction of the solar panels at six City facilities (City Hall, Downey Police Department, Downey Library, Downey Theater, BJR Senior and Community Center, and the Columbia Memorial Space Center) and the installation of battery energy storage systems at five sites (City Hall, Downey Library, Downey Theater, Downey Police Department. and the BJR Senior and Community Center). CEG managed the engineering design and installation of the systems and Onyx provided the financing mechanism for
ACCEPTANCE OF THE SOLAR PHOTOVOLATAIC AND BATTERY ENERGY STORAGE SYSTEMS
PROJECT AT CITY FACILITIES
MARCH 26, 2024
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the project. While the City of Downey did not use its own funds on the design and installation of the systems, back in 2021 the City committed $1 million in Department of Housing and Urban Development (HUD) CDBG funding towards the project to reduce the per Kilowatt hour charges. Additionally, during the design phase, it was determined that the existing transformers at City Hall, Downey Police Department, and the BJR Senior and Community Center had exceeded their design life and required replacement in order for the solar system to function optimally. finally, it was determined that the roof area at the Downey Theater, where the solar panels were proposed to be installed, needed replacement. Subsequently, on December 14, 2021, the City Council awarded a contract to CEG in the amount of $253,710, to replace the three transformers and the roof at the Downey Theater.
ANALYSIS
The work to install the solar panels, battery energy storage systems, transformers, and roof at the Downey Theater was completed in Summer 2023. During testing of the solar power system, Edison found that their transformer at the Police Department had to be upgraded so that the solar system would function as designed. The cost for Edison to upgrade its transformer and install a new conductor was $113,703, which cost was passed through to the City. With the installation of the Edison transformer and conductor, the work was completed on December 17, 2023.
The power purchase and energy services agreement with Onyx allowed the City to complete the solar and battery energy storage system installations at the City Facilities without the City having to commit any of its own funds, other than $1 million in CDBG funds that the City had applied for and that would be payable to Onyx. The agreement with Onyx outlined a cost that the City would pay the company on a per Kilowatt hour basis for the use of solar-generated power. This cost starts at $0.110 per Kilowatt hour and escalates over a period of 25 years, contingent upon the City’s $1 million contribution.
When compared to the rate that SCE would charge the City during the 25-year period if it had not done the solar project, it was estimated that the City would achieve approximately $10 million in savings. The process to get approval from HUD for the CDBG application was not in place at the time of the agreement. Onyx prepared an alternate cost table in the agreement that started with a $0.131 per Kilowatt hour rate as opposed to the $0.110 per Kilowatt hour. This table was incorporated into the agreement in the event that the City was unable to get approval for its CDBG application.
However, after reviewing the solar project eligibility, it was found that it would not meet the CDBG criteria for the use of the $1 million funds. Consequently, the starting rate uses the alternate table beginning at $0.131 per Kilowatt hour. All six solar powered facilities are now generating solar power and, after they came online, it was found that the solar output has increased. This increase in actual production over the original estimate allows the savings to come in much closer to $10 million in savings over the 25-year period. As
ACCEPTANCE OF THE SOLAR PHOTOVOLATAIC AND BATTERY ENERGY STORAGE SYSTEMS
PROJECT AT CITY FACILITIES
MARCH 26, 2024
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such, the estimated energy savings is now revised to approximately $9.7 million, even though the City was not able to provide the initial $1 million funding to the project.. For the first few months that the facilities have been generating power, Onyx has been charging the City at the original rate of $0.110 per Kilowatt hour, assuming that the CDBG funding would be available as an initial investment from the City. The actual rate should be $0.131 per Kilowatt hour and the City will be charged a cost of $12,299 to make up the difference for this period. This expenditure along with the SCE transformer upgrade will be covered with available CIP funds.
The solar panel systems, battery storage systems, electrical transformers at City Hall, Downey Police Department and BJR Senior and Community Center, and replacement of the roof at the Downey Theater project has been completed in accordance with the approved plans and specifications, and staff recommends that the City Council accept the project as complete.
CITY COUNCIL PRIORITIES
Quality of Life, Safety & Infrastructure
FISCAL IMPACT
The additional expenditures for the upgrade of SCE’s transformer at the Police Department facility and the balance due to Onyx for not investing the $1 million in CDBG funds is $126,702. There are available Capital Improvement Program (CIP) funds to cover the Total Estimated Project Cost (breakdown listed in following table).
Description Amount
SCE upgrade of Transformer at Police Department facility $113,703 Additional charged due to Onyx at alternate rate of $0.131 per Kilowatt hour $12,299
Total Estimated Project Cost: $126,702
There is sufficient fund balance for the necessary final expenditures. The available CIP funds for this project are $350,000 in Account 10-661, as shown in the table below.
Account No. Funding Source Amount
10-661 Assigned for Capital Projects $350,000
Total Available Funding: $350,000
ACCEPTANCE OF THE SOLAR PHOTOVOLATAIC AND BATTERY ENERGY STORAGE SYSTEMS
PROJECT AT CITY FACILITIES
MARCH 26, 2024
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Costs of $253,710 for the transformer and roofing project that was approved by the City Council on December 14, 2021, were covered by a General Fund transfer in Fiscal Year 2021-2022.
ATTACHMENTS
None