Fremont City Council Meeting: 12/03/24 07:00 PM
3300 Capitol Avenue Div/Dept: Environmental Services
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5268) DOC ID: 5268
Updated: 11/27/2024 12:04 PM by Dina Lewis Page 1
CRITICAL MUNICIPAL FACILITIES PROJECT - Public Hearing (Published Notice) to consider a resolution 1) authorizing the City Manager or her designee to negotiate, execute and implement a Power Purchase Agreement (PPA) with Ava Community Energy for installation of solar-battery microgrids at six critical City facilities; 2) finding that the PPA qualifies for expedited procurement under California Government Code Section 4217.10; and 3) finding that the project is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) per, without limitation, on a separate and independent basis, Public Resources Code 21080.35, Guideline 15301 (Existing Facilities), 15303 (New Construction or Conversion of Small Structures), and 15311 (Accessory Structures).
Contact Persons:
Name: Kranti Kapur Dan Schoenholz
Title: Sustainability Coordinator Community Development Director Div/Dept: Environmental Services Community Development
Phone: 510-494-4519 510-494-4438
E-Mail: [email protected] [email protected]
Executive Summary: City staff have worked with Ava Community Energy to prepare plans and agreements for the installation of solar and batteries at six City facilities: Fire Station 1, Fire Station 9, the Family Resource Center, Age Well Center at Lake Elizabeth, Age Well Center at South Fremont and the City-owned building at 37350 Joseph St. housing the Tri City Volunteers food bank. The installations would be financed through a Power Purchase Agreement (PPA) between the City and Ava Community Energy. The PPA would allow a third-party developer (consisting of a team including Fremont-based Gridscape Technologies) to own, operate, and maintain the generating equipment and the City would agree to host the systems and purchase the electric output for 25 years. The project is an implementation action of both the updated Climate Action Plan (“Climate Ready Fremont”) and the City’s Hazard Mitigation Plan.
BACKGROUND: East Bay Community Energy (EBCE) formed in 2016 as a joint powers authority to provide cleaner, greener energy at lower rates to Alameda County customers.
EBCE started providing electricity to customers in 2018 and has expanded to include communities in San Joaquin County. In 2023, the name was changed to Ava Community Energy (Ava) to better reflect the larger service territory. Ava’s goals include local control and oversight, driving investment in renewable energy, and improving resilience of local communities. To help advance these goals, Ava is offering a procurement program called the Critical Municipal Facilities program, to deploy solar/battery microgrids at member agencies’ facilities.
On July 6, 2021, the City Council adopted a resolution authorizing the City Manager to pursue deployment of solar and battery energy systems at critical municipal facilities in partnership with Ava.
Council Staff Report (ID # 5268) Meeting of December 3, 2024 Updated: 11/27/2024 12:04 PM by Dina Lewis Page 2
Across Ava’s service area, more than 300 critical municipal facilities were analyzed to determine the feasibility of solar and battery energy storage systems to meet critical loads in times of grid outages. In Fremont, approximately forty critical municipal facilities were initially identified as potential microgrid locations.
After excluding sites that were due for significant retrofitting, rebuilding, or likely redevelopment, six sites in Fremont (described in the Discussion section, below) were selected as part of the procurement project portfolio.
The project schedule is divided into two phases based on the third-party developer’s capacity while also maximizing the financial savings generated by the project. Of Fremont’s six proposed sites, two (the two Age Well Center sites) are included in Phase 1 and are scheduled to be operational by April 2026. To achieve that operational date, the current schedule requires the PPA to be executed by the end of 2024.
The schedule for completion of the remaining four sites has not been finalized but is expected to trail the first phase by 1-2 years.
DISCUSSION/ANALYSIS: There are 30+ project sites across six cities participating in this program. Ava designed the Resilient Municipal Critical Facilities program to reduce barriers to local governments for the deployment of solar and storage by providing technical expertise and staff time and aggregating cities’ small solar projects into a larger portfolio to take advantage of bulk purchasing, a streamlined contracting process, and better pricing.
The primary objective of this program is to add resilience to municipal facilities, allowing them to operate emergency loads using solar and storage technologies during a grid outage.
Battery systems will also allow facilities to “island”, or isolate, from the grid during a Public Safety Power Shutoff (PSPS) event or other grid outage. The battery systems will provide eight or more hours of backup service under normal usage, 2.5 hours of backup service at maximum usage, and potentially infinite backup power with solar recharging and reducing demand to essential operations only.
Similar solar/battery microgrids were installed at three Fremont fire stations in 2018/19 with help from a California Energy Commission grant and have proven to provide reliable and clean backup power with no negative impact on operations.
The six sites proposed for upgrades are:
Project Site Location PV Size
(kW DC)*
Battery Size
(kWh)*
Family Resource Center Downtown 95.6 154.8
Tri City Volunteers Centerville 40.2 77.4
Age Well Center North Central Park 101.9 232.8
Age Well Center South Warm Springs 20.6 77.4
Fire Station #1 4200 Mowry
(Near Fremont Hub)
13.7 77.4
Fire Station #9 39609 Stevenson Pl.
(Near Central Park)
30.9 77.4
Council Staff Report (ID # 5268) Meeting of December 3, 2024 Updated: 11/27/2024 12:04 PM by Dina Lewis Page 3
*Sizes are approximate and may be modified to optimize operational and financial benefits.
Power Purchase Agreement (PPA) – Under a PPA model, a PPA provider pays for the installation, operations and maintenance of the solar and battery energy storage systems, and the City pays an agreed upon price per kilowatt-hour (kWh) for power generated. Staff has negotiated the key terms of the PPA between the City and Ava. Ava will contract with Green Bridge Energy as the project owner and contractual counterparty. Green Bridge Energy has in turn selected Fremont-based Gridscape Solutions as its developer. (It should be noted the City contracted with Gridscape for the three CEC-funded fire station microgrids installed in 2018/19 and that the company has performed well to-date). With support from Gridscape, Green Bridge Energy will install, own, operate and maintain the solar and battery systems. The solar will be placed either on building rooftops or on carport structures in parking lots, depending on site-specific considerations.
Key Terms of the PPA:
• There are no upfront costs to the City.
• The City will make monthly payments to Ava for the kilowatt hours of electricity received from the solar and batteries.
• The proposed Power Purchase Agreement (PPA) establishes a Year One photovoltaic (PV) electricity rate of $0.3616 per kilowatt-hour for four of the six designated locations: the Family Resource Center, Tri-City Volunteer, Fire Station #1, and Fire Station #9. The remaining two locations, the Age Well Center North and the Age Well Center South, will have a Year One rate of $0.3152 per kilowatt-hour. Additionally, the proposed kWh rates will include a 2.5% annual escalation over the 25-year term of the agreement.
• The Year 1 City PPA Annual Storage cost is set at $10.25 per kW per month, with a
2.5% annual escalation rate applied consistently over the 25-year term.
• The City’s total payments over the 25-year contract, in combination with regular electricity and natural gas bills, will be less than they would be without the project. • The City will only pay for the electricity received from the systems. Furthermore, if the equipment delivers less than 85% of the expected annual power output from the system, Ava would make cash payments to the City to offset the City’s costs in procuring needed power. This provision provides additional incentive to Ava and in turn GreenBridge/Gridscape to maintain the systems in good working order. • The PPA grants Ava and its contractors a license to access the solar and battery systems for monitoring and maintenance purposes.
• Gridscape will ensure that all contractors, subcontractors, and employees hired or contracted by Gridscape which will perform work on the projects will be paid prevailing wages.
Climate Ready Fremont and Hazard Mitigation Plan
Council Staff Report (ID # 5268) Meeting of December 3, 2024 Updated: 11/27/2024 12:04 PM by Dina Lewis Page 4
Council adopted an updated Climate Action Plan (entitled “Climate Ready Fremont”) in October 2023. Climate Ready Fremont includes a “Game Plan” that identifies priority actions to be completed in the first three years of implementation. Partnering with Ava to install solar/battery microgrids at City facilities is one of the actions called for in the Game Plan as it furthers the goals of carbon neutrality and community resilience embedded in Climate Ready Fremont.
Council also adopted an updated Hazard Mitigation Plan (HMP) in November 2024. The HMP includes a list of prioritized Mitigation Actions. One of the identified Mitigation Actions is to maintain and expand auxiliary power capabilities at critical City facilities, which would be furthered by the proposed solar/battery microgrid project.
Single Source Procurement
The proposed PPA with Ava, described above, is a single source procurement. Staff recommends that the City utilize California Government Code Section 4217.10, et seq., which allows for the expedited procurement of energy conservation projects by municipal agencies as long as the energy project is determined to provide financial savings over the operating lifetime.
Specifically, Code Section 4217.10 et seq authorizes public agencies to enter into an energy service contract without competitive bidding, provided that there is a two-week public notice before the authorization of the procurement and the cost of the conservation services provided by an energy conservation facility will be less than the anticipated marginal cost of energy that would have been consumed in the absence of the project. (see Government Code Section 4217.12)
FISCAL IMPACT: The proposed projects will increase the resiliency of critical facilities by using clean electricity generated and stored on site to perform essential operations during power outages. In addition to that primary benefit, the City can anticipate a reduction in utility costs. The City currently pays approximately $248,000 per year for electricity at the six sites. Assuming grid-purchased rates increase at 4.5% per year (the historic average of electric rate increases), the City would pay approximately $11,000,000 for electricity for the six sites over the next 25 years absent the PPA. With the PPA, which fixes annual rate increases at 2.5% Ava estimates the six proposed projects will generate total savings of nearly $900,000 over the 25-year life of the PPA.
The project developer, Gridscape Technologies, is a Fremont-based company. In addition to the direct benefits of the project to the local economy from employment, material purchases, etc., the project will also serve as a catalyst for the continued growth of a local company, further benefiting the local economy.
ENVIRONMENTAL REVIEW: The proposed project is exempt from the requirements of the California Environmental Quality Act (CEQA) per, without limitation, on a separate and independent basis, Public Resources Code 21080.35, Guideline 15301 (Existing Facilities), 15303 (New Construction or Conversion of Small Structures), and 15311 (Accessory Structures).
Council Staff Report (ID # 5268) Meeting of December 3, 2024 Updated: 11/27/2024 12:04 PM by Dina Lewis Page 5
ATTACHMENTS:
• 2024 Critical Facilities Resolution DRAFT
RECOMMENDATIONS:
1. Hold public hearing.
2. Adopt a resolution: a) authorizing the City Manager, or her designee, to negotiate, and execute a PPA with Ava Community Energy, consistent with the terms described in the staff report; b) finding that California Government Code Section 4217.10, et seq., applies to the PPA and authorizes s for expedited procurement; and c) finding that the project is exempt from CEQA per, without limitation, on a separate and independent basis, Public Resources Code 21080.35, Guideline 15301 (Existing Facilities), 15303 (New Construction or Conversion of Small Structures), and 15311 (Accessory Structures).