DATE: October 8, 2024
DEPARTMENT: FINANCE
FROM: RENE MENDEZ, CITY MANAGER
By: SELINA ANDREWS, FINANCE Director
TITLE: solar photovoltaic (PV) systems within El Gabilan Library and the Police Department AND BACK-UP GENERATOR FOR CITY HALL RECOMMENDED MOTION:
Receive a report from staff and presentation from ENGIE, and direct staff to present an Energy Services Contract with ENGIE to City Council.
EXECUTIVE SUMMARY:
The City is working with ENGIE to assess certain City facilities for installation and maintenance of solar photovoltaic (PV) systems within El Gabilan Library and the Police Department. ENGIE previously constructed and currently maintains the existing solar arrays at seven (7) sites within the City and analyzed the existing solar performance for the facilities and identified significant savings to the City, upwards of $6 million over a seven (7) year period. In addition to the solar photovoltaic (PV) systems, staff also recommends a backup generator to support City Hall be included as part of the scope. ENGIE identified a few ways to implement and maintain the solar PV systems and generator - the Tax-Exempt Equipment Leasing Program (TELP), other financing options, or the City’s existing financial resources. It is anticipated that the City would also benefit from the NEM 2.0 savings and tax credits from the Inflation Reduction Act.
DISCUSSION:
The City is faced with an opportunity to invest in a cleaner future by installing solar PV systems at El Gabilan Library and the Police Department. The program goals are to reduce utility bills and return operating expenses back to the community, plan for future load and EV charging requirements by the state and take advantage of the NEM 2.0 savings and tax credits from the Inflation Reduction Act.
According to NEM 2.0 policies, each kilowatt-hour (kWh) a solar customer produces is valued at the same market rate as kilowatt-hours the customer purchases from the utility. This means a solar customer can produce excess energy during the day, receive a credit for sending it to the grid, and then use that credit to pay for the energy they purchase at night.
Formally known as the “NEM Successor Tariff”, NEM 2.0 is a policy created by the California Public Utility Commission which provides a framework for extending the capacity for solar PV projects connected to the grid in California.
In addition, energy projects must make certain findings with respect to the contracts being entered into. Applicable findings required by Government Code Sections 4217.12 and 4217.13, under which the City Council must find that the Energy Service Contract and its related financing are as follows:
The proposed systems installation is in the best interest of the City, The anticipated cost to the City for the thermal or electrical energy or conservation services provided by the energy conservation facility (the Equipment) under the Energy Services Contract will be less than the anticipated marginal cost to the City of thermal, electrical, or other energy that would have been consumed by City in the absence of the purchase of the Equipment, Funds for the repayment of the financing or the cost of design, construction, and operation of the energy conservation facility (i.e. Equipment), or both, as required by the Energy Services Contract, are projected to be available from revenues resulting from sales of electricity or thermal energy from the facility or from funding that otherwise would have been used for purchase of electrical, thermal, or other energy required by the City in the absence of the energy conservation facility, or both.
Should the Finance Committee recommend that the City continue to review this project, an agreement will be brought forward to Council for review and approval.
FISCAL AND SUSTAINABILITY IMPACT:
There is no direct fiscal impact to review and discuss the project.
ATTACHMENTS:
None.
CITY OF SALINASFinance CommitteeCITY OF SALINASFinance Committee
CITY OF SALINAS
Finance Committee
CITY OF SALINAS
Finance Committee