STAFF REPORT
City of Lancaster
CC 7
2/13/2024
JC
Date:February 13, 2024
To: Mayor Parris and City Council Members
From:Larissa De La Cruz, Director – Community Development Patti Garibay, Assistant Director – Community Development Subject:Approve the Lancaster Advanced Energy Community Green District Pilot Program Tariff and Participant Agreement
Recommendation:
Approve the Lancaster Advanced Energy Community (AEC) Green District Pilot Program Tariff and Participant Agreement.
Fiscal Impact:
The maximum cost of the bill credits provided by the Green District Tariff would be approximately $250,000.00 annually for the duration of the two-year pilot. This amount can be counted towards the City’s match funding commitment to the California Energy Commission for the AEC grant.
However, it is important to note that the Green District program is designed to yield overall cost savings for Lancaster Energy (LE), and the intention is that operational cost savings will offset the cost of the Green District Pilot Tariff bill credits.
Background:
The Lancaster AEC project is a collaboration of the City of Lancaster and the Zero Net Energy Alliance (ZNEA). This collaboration has resulted in two major grant awards from the CEC, which yielded a combined total of $6,468,839.00 of grant funding to support the development and implementation of a comprehensive suite of advanced community energy solutions designed to produce economic and environmental benefits for the Lancaster community.
Phase 1 of the AEC project, which was completed in 2018, established a framework for projects and programs designed to reduce local greenhouse gas emissions, increase deployment of distributed energy resources (DERs), deliver cost savings, and enhance local energy resiliency.
Phase 2 of the AEC project, which was initiated in Q3 of 2019, has involved the refinement and implementation of the plan developed in Phase 1. This includes the deployment of advanced energy systems, DERs, and innovative technologies managed by LE to produce cost savings for 1 5
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the organization and participating customers, as well as provide other co-benefits on a community- wide basis.
The objectives for Phase 2 of the AEC grant project include the deployment of distributed DERs, development of an advanced DER Management System (DERMS), the implementation of a demand response program pilot through the Green District, development of a tariff or retail rate design that maximizes the value of DERs for participating customers (Green District Tariff), and the integration of Demand Response and flexible load management with Community Choice Aggregator (CCA) energy resource planning and scheduling through Virtual Power Plant (VPP) applications.
Through the Green District Pilot, Lancaster will offer a suite of valuable low or no cost DERs, including: microgrids, solar photovoltaics, energy storage, flexible load controllers, and other smart devices that can be monitored and dispatched in real time using the DERMS platform developed for LE.
Project goals include deployment of these advanced energy assets at commercial, industrial, and municipal sites that LE will monitor and dispatch. Active load management will reduce power procurement costs, contribute to resource adequacy requirements, and over time generate new sources of revenue through direct participation in wholesale markets – such as the California Independent System Operator (CAISO).
The AEC project team has developed the Green District Pilot program design and provided supporting outreach and education materials including marketing collateral, a participant agreement, and a special tariff designed to share the value created via the installed DERs with participating customers through an innovative and cost-effective pay for performance (P4P) arrangement.
To participate in the program, customers will be required to execute the Green District Pilot Participant Agreement which details terms and conditions as well as expected benefits of participation. The program will be available to a maximum of 50 customers. Participants in the Green District Pilot must:
•Be a nonresidential customer of LE in good standing.
•Agree to a two-year program term in which LE will have the ability to monitor and dispatch their DER assets.
•Execute an installation agreement with a contractor authorized by LE.
Participating customers will receive flat monthly bill credits for their participation in the Green District, as well as an annual true-up payment of $.11 for every kilowatt hour of value delivered by their installed DERs over the course of the preceding year. The Flat Monthly Bill Credits are intended to pay the participants a portion of the value that their system is expected to deliver each month. This ensures that customers receive a solid and stable value immediately, while also protecting LE from the risk of overcompensating participants. The maximum Flat Monthly Bill Credit amount for Commercial Customers will be $500.00 per month for Commercial customers, and $1000.00 per month for Industrial customers. Participating customers will also receive an Annual True-up Bill Credit (in addition to their Flat Monthly Bill Credits), which is intended to compensate customers for the full value of their contributions to our VPP over the course of the year. A robust Measurement and Verification process will be conducted by a qualified third-party 1 5
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provider each year to validate the actual kilowatt hours delivered to the VPP by each participant.
The number of kilowatt hours delivered will be multiplied by $0.11, the twelve (12) Flat Monthly Bill Credits (for the preceding calendar year) will be subtracted from that amount, and the participant will receive an additional Bill Credit for the outstanding balance.
All of the calculations that determine the participating customer payouts will be transparent to all parties, and will be validated through a robust measurement and verification process administered by a third party. This approach was developed to provide a simple and transparent methodology for compensating participating customers fairly for their contributions and mitigate overpayment risk for LE.
PG/hb
Attachments:
Phase II CEC Commitment Letter
Green District Pilot Program Tariff
Green District Participant Agreement