Fremont City Council Meeting: 07/08/25 07:00 PM
3300 Capitol Avenue Div/Dept: Environmental Services
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5491) DOC ID: 5491
Updated: 7/3/2025 9:29 AM by Dina Lewis Page 1
CRITICAL MUNICIPAL FACILITIES PROJECT - Public Hearing (Published Notice) to consider a resolution 1) authorizing the City Manager, or designee, to negotiate, execute and implement a Power Purchase Agreement (PPA) with Ava Community Energy for installation of solar-battery microgrids at two critical City facilities; 2) finding that the PPA qualifies for expedited procurement under California Government Code Section 4217.10; 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); and 4) finding that the resolution supersedes Resolution 2024-49.
Contact Persons:
Name: Allyn McAuley
Title: Sustainability Manager
Div/Dept: Environmental Services
Phone: 510-494-4576
E-Mail: [email protected]
Executive Summary: City staff have worked with Ava Community Energy (Ava) to prepare plans and agreements for solar and battery installations at two City facilities: Age Well Center at South Fremont and the City-owned building at 37350 Joseph Street housing the Tri-City Volunteers Food Bank. The proposed projects would be financed through a Power Purchase Agreement (PPA) between the City and Ava. It is anticipated to cost about $55,000 in the first year with a 2% annual inflator over a 25-year term. These upgrades are expected to save the City just under $15,000 over the full term. The PPA would allow Ava 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 Local Hazard Mitigation Plan.
Staff is recommending that Council authorize the City Manager, or designee, to negotiate, execute and implement the PPA with Ava and make additional findings to carry out this action as stated in this staff report.
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 regional procurement program called the Critical Municipal Facilities program, to deploy solar/battery microgrids at city facilities for some of its member agencies.
Council Staff Report (ID # 5491) Meeting of July 8, 2025 Updated: 7/3/2025 9:29 AM by Dina Lewis Page 2
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.
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 were selected as part of the procurement project portfolio. On December 3, 2024, the City Council unanimously adopted Resolution No. 2024-49 authorizing the City Manager to negotiate and execute an agreement with Ava Community Energy (Ava) to install solar- battery microgrids at those six city facilities.
Following the December 2024 Council meeting, staff worked closely with Ava staff to carry out Council’s direction by negotiating the PPA for the six sites, while some participating cities were still preparing to bring the item to their respective councils. During the PPA negotiations, Ava and their partners began having concerns when they learned about potential tariffs and rescinded renewable energy tax credits that were likely to have direct impacts on this project. Starting in late January, the new federal administration began taking actions and discussing future actions that elevated these concerns. Ava notified participating cities including Fremont on February 13th that the project’s financier, Green Bridge Energy, was ceasing work on this project, effectively ending their involvement and the entire project in its existing form.
Ava acted quickly to devise a new arrangement to preserve the project. The new strategy included Ava taking over as the owner, conducting a new RFP to hire an Engineering, Procurement, and Construction (EPC) firm, and reducing the scope for the regional project to two sites per city. Now that Ava is serving as the owner, they wanted to reduce the portfolio to decrease the financial risk and increase the likelihood of building the projects by the April 15, 2026 deadline to achieve the more favorable NEM 2.0 solar rates. The Ava Board of Directors considered this revised project at their May 21st meeting and voted to proceed unanimously.
As of June 2025, Fremont, Hayward, Livermore, and Berkeley are still participating in the regional project.
DISCUSSION/ANALYSIS: There are 8 project sites across four 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 are anticipated to provide 8 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.
Council Staff Report (ID # 5491) Meeting of July 8, 2025 Updated: 7/3/2025 9:29 AM by Dina Lewis Page 3
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 two sites proposed for upgrades are:
Project Site Location PV Size
(kW DC)*
Battery Size
(kWh)*
Tri-City
Volunteers
Centerville 51.33 81
Age Well Center
South Fremont
Warm Springs 25.23 81
*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 is contracting with McMillan Electric to build the microgrid installations. Ava will own, operate and maintain the solar and battery systems.
Key Terms of the PPA:
• There are no upfront costs to the City.
• The City will make monthly payments to Ava for electricity and battery storage. • 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 their contractors, to maintain the systems in good working order. • The PPA payments include a 2% annual escalation rate over the 25-year term of the agreement, compared to a forecasted 4.5% escalation rate for standard electricity bills.
• The City’s total payments over the 25-year contract, in combination with regular electricity and natural gas bills, are projected to be less than they would be without the project.
• The PPA grants Ava and its contractors a license to access the solar and battery systems for monitoring and maintenance purposes.
• Ava will ensure that all contractors, subcontractors, and employees hired or contracted by Ava which will perform work on the projects will be paid prevailing wages.
Council Staff Report (ID # 5491) Meeting of July 8, 2025 Updated: 7/3/2025 9:29 AM by Dina Lewis Page 4
The staff report for the December 2024 Council meeting stated that Ava estimated the six proposed projects would generate total savings of nearly $900,000 over the 25 year life of the PPA. However, due to the substantial changes to the project resulting from the federal actions and the withdrawal of the financing partner, Ava no longer forecasts significant savings for the City. This project is now projected to be essentially cost-neutral.
Even with the revised economics, staff still recommends the project due to several key benefits:
• Resiliency: Adding microgrids at an Age Well Center and community food bank provides vital public-serving community facilities with the ability to use electricity generated and stored on-site to perform essential operations during power outages. • Clean Tech: This project will equip city facilities with advanced renewable energy and non-fossil fuel technologies.
• Reduced Risk: Solar PPAs enable the City to “lock in” electricity rates for a long term, and the reduced portfolio of 2 sites lowers financial risk. In addition, Ava will take on the financial risk of relevant items like tariffs and tax credits and guarantee an estimated savings floor of 0.5% for the City.
Climate Ready Fremont and Local Hazard Mitigation Plan
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 Local Hazard Mitigation Plan (LHMP) in November 2024.
The LHMP 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 that 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.
Council Staff Report (ID # 5491) Meeting of July 8, 2025 Updated: 7/3/2025 9:29 AM by Dina Lewis Page 5
Equipment Pre-order
In June, Ava notified the City that they intend to pre-order equipment for Fremont in advance of the July 8th Council meeting. Ava understands that the City’s participation in this regional project is contingent upon Council approval and hence their decision carries some risk. Ava has decided that it is nevertheless most prudent for them to pre-order the equipment due to the risks of increased tariffs and losing the applicable investment tax credits.
FISCAL IMPACT: The City is anticipating costs of about $55,000 in PPA payments the first year. These costs were included in the FY 2025/26 General Fund adopted operating budget.
This forecast is derived using a fixed 2% annual rate increase for the PPA payments, and a
4.5% anticipated annual escalation rate for standard electricity bills. Since Fremont’s portfolio only consists of two sites, the expected annual payments with this project are similar to the expected annual payments without these systems. The project is forecasted to be slightly more expensive than anticipated costs absent the PPA for the first half of the 25-year term, between $500 - $8,500 annually. Then the project is forecasted to be less expensive than anticipated costs absent the PPA for the second half of the term, with expected savings of $500 - $14,500 annually. These annual payments cumulatively result in anticipated savings of just under $15,000 over the full term when compared to estimated electricity costs for the two sites absent the PPA.
ENVIRONMENTAL REVIEW: The proposed 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).
ATTACHMENTS:
• 2025 Critical Facilities Resolution DRAFT
RECOMMENDATIONS:
1. Hold public hearing.
2. Adopt a resolution a) authorizing the City Manager, or designee, to negotiate, execute and implement a PPA with Ava Community Energy, consistent with the terms described in the staff report; b) finding that California Government Code Section 4217.10 applies to the PPA and authorizes expedited procurement; c) finding that the project is categorically 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); and d) finding that the resolution supersedes Resolution 2024 -49.