CITY OF SAN MATEO
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CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 11 Section Name: {{section.name}} Account Number: 10-1311 File ID: {{item.tracking_number}} TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: City Manager's Office
MEETING DATE: March 18, 2024
SUBJECT:
Peninsula Clean Energy Solar and Storage on Public Buildings Program – Power Purchase Agreement RECOMMENDATION:
Approve an agreement with Peninsula Clean Energy (PCE) for a Power Purchase Agreement (PPA) to procure, install, operate and maintain a solar photovoltaic system at the Beresford Park parking lot; approve an Interconnection Agreement with PG&E to connect to and operate the solar photovoltaic system in parallel with PG&E’s electric system; and authorize the City Manager to execute the agreements in substantially the form presented and to execute any amendments necessary to implement the solar photovoltaic system.
BACKGROUND:
Peninsula Clean Energy (PCE) is a joint powers authority developed in 2016 to reduce greenhouse gas emissions by providing electricity from clean energy sources. PCE’s Solar and Storage on Public Buildings Program assists cities in evaluating solar potential at municipal facilities. In addition, this program provides the option to enter into a Power Purchase Agreement (PPA) with PCE for the design, procurement, installation, and maintenance of solar systems at the identified facilities at no cost to public agencies. This program was developed to support PCE’s organizational objectives to increase local renewable generation, help reduce customer energy costs, and help its customers achieve their sustainability goals. This program also aligns with the City Climate Action Plan’s goal to reduce greenhouse gas emissions and support local renewable energy generation.
In November 2023, the City Council authorized the City Manager to enter into a Customer Participation Agreement with PCE to assess solar potential at City-owned sites. In Fall 2023, City staff evaluated PCE’s draft PPA terms and provisions.
Under the PPA model, the solar photovoltaic (PV) system would be installed at no cost to the City and financed through the PPA. PCE will lead the design, installation, operations and maintenance of the solar PV system, and the City would pay PCE an agreed upon price per kilowatt-hour (kWh) for power generated throughout the system’s life. The PPA will be provided “at cost” by PCE to cover equipment and installation. In addition, PCE will also retain a small $/kWh fee to cover its expenses. The contract term is 20 years, the expected lifespan of the solar system. A termination penalty payment schedule is delineated to ensure PCE recoups costs for their investment if the City chooses to terminate the PPA prior to the 20 year term.
The assessment phase evaluated five City sites in depth for consideration. Because of the 20-year term of the agreement and constraints therein, sites where there are planned major repairs or renovations which could have sitewide impacts were ultimately removed from the list. Staff identified the Beresford Park parking lot as the optimal site to move forward in the program because it affords the greatest degree of certainty that the City can maintain adherence to the terms of the agreement of the 20-year term.
CITY OF SAN MATEO
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Key elements of the PPA include:
•$/kWh price for energy produced by the system
•0% escalation over the contract term
•20-year initial term with option for up to two additional, five-year terms or customer buyout •PPA rate is projected to provide immediate savings in Year 1 •PCE provides operations and maintenance, which is included in the PPA price In Fall 2023, PCE ran a competitive Request for Proposals (RFP) process and selected McMillan and Intermountain Electric (IME) to be the engineering, procurement and construction (EPC) providers for the program. PCE’s program includes the solar installations in jurisdictions across San Mateo County including Daly City, Menlo Park and Redwood City. For next steps, City staff will facilitate additional site access, as needed. PCE will provide all construction administration and oversight with project construction anticipated for later 2024/early 2025.
As part of this project, the City is also required to execute an Interconnection Agreement with PG&E in order to connect the PV system to and operate in parallel with PG&E’s electric grid system. A copy of the standard template Interconnection Agreement is included as Attachment Two.
Based on the above, staff recommends for Council to approve of the PPA and the Interconnection Agreement and authorize the City Manager to execute the agreements.
BUDGET IMPACT:
There is no fiscal impact for entering the Power Purchase Agreement with Peninsula Clean Energy. There is no upfront cost to the City for entering into the Agreement. The solar photovoltaic system is anticipated to provide utility cost savings over the life of the project beginning in Year 1.
ENVIRONMENTAL DETERMINATION:
This agreement is exempt from CEQA as an “existing facility”, because it consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use. (CEQA Guidelines Section 15301.)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 - Power Purchase Agreement
Att 2 - PG&E Interconnection Agreement
STAFF CONTACT
Christina Horrisberger, Assistant City Manager
[email protected]
(650) 522-7210