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Elizabeth McManus Deputy Superintendent San Mateo Union High School District

Elizabeth McManus Deputy Superintendent San Mateo Union High School District. San Mateo Union High School District Photovoltaic Project December 5, 2011. Agenda. District Goals Financial Consideration Existing kW usage Historical PGE increases Optimal project system size

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Elizabeth McManus Deputy Superintendent San Mateo Union High School District

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  1. Elizabeth McManus Deputy Superintendent San Mateo Union High School District San Mateo Union High School District Photovoltaic Project December 5, 2011

  2. Agenda • District Goals • Financial Consideration • Existing kW usage • Historical PGE increases • Optimal project system size • Revenue Opportunities • REC’s • PGE CSI PBI Credits • Financial funding mechanisms • Net Present Value • Net Metering • Construction methodology • Energy Efficiency • Environmental Benefits • Pubic Agency Needs and Lessons learned

  3. Goals • Determine viability of solar photovoltaic systems and best plan for implementation • Conduct comprehensive analysis to determine system feasibility including following considerations • Energy usage evaluation • Existing facility assessment • Energy audit of all facilities • Financial feasibility • Funding methods • Best construction delivery method - Future developments of solar PVs • Solar curriculum development- workforce & skills training program for students • Community leadership- sustainable living

  4. Financing Options • Ownership Strategies • Service agreement, not a financing • Utility service agreements • Power purchase agreements • Energy assets owned by third party • Lease roofs for up to 25 years • Lack of control on construction • Host customer purchases output at a fixed price • Model dependent upon annual utility escalation (risk) • PPA provider earns PGE CSI PBI’s • PPA provider earns Federal tax credits • PPA presents financial risks to Districts-5 year reality check • Acquisition Strategy • General Obligation Bonds (Max General Fund Relief) • Certificate of Participation (General Fund Stabilization) • Clean Renewable Energy Bonds (General Fund Stabilization)

  5. Funding Opportunities • California Solar Initiative • Performance Based Initiatives • Without PBI’s solar projects do not pencil • Financial tipping point • Renewable Energy Credits • Emerging markets • PUC market-uncertain

  6. Educational Benefits • 8,100 high school students and 14,000 adult education students will have hands-on experience of renewable energy • Design Build RFP required most responsible proposer to develop curriculum, purchase equipment and supplies and provide continued staff inservice • System includes kiosks that provide real time monitoring by entire community making it real and measurable • Specialized green career technology courses offered

  7. Energy Audits • Best practice combines energy efficiency programs with deployment of solar project allowing system to be appropriately sized and realize maximum cost benefit • PG&E conducted energy audit • Conducted CEC Bright Schools Audit • District created and implemented an “Energy Efficiency Plan” that integrates curriculum and operational behavior to ensure energy efficiency measures are sustained and enhanced

  8. Energy Audits • Energy efficiency audit forms required for Performance Based Incentives (PBI) rebate application • Board approved CHPS standards • Increased HVAC efficiency with controls • Dimming ballasts in classrooms • High efficiency T-5 lighting • Windows: • Insulated glass (higher R value, less noise) • Low E (infrared heat reflective) • Daylighting Controls: • Shading devices • Dimmable sola tubes replace large skylights • Efficient food service equipment

  9. Energy Measures Implemented • Boilers • Steam systems replaced with high efficiency hot water systems • CHS, HHS, MHS, SMHS) • Roofs • Higher R value • Reflective white cap sheet • Replacing Transite siding with higher R value materials • Improved weather stripping on replaced doors • Completed T-5 and dimming ballast retrofit of existing lighting • Add control points for HVAC systems • Outdoor air temperature sensors • Motorized air dampers • Door contactors • Pools • Solar thermal heating systems • Install and use pool covers • High efficiency pumps

  10. Energy Measures Pending • Exterior walls • Cover replace tranlite with higher R value materials • Improved pest control • Vending misers • Behavioral Changes • Under counter refrigerators • Radiant heaters • Microwaves and hot plates • Landscaping

  11. Environmental Benefits • Reduce need for new fossil fuel burning generating plants • System offset of CO2 into atmosphere each year: • 2,840,000 lbs • 1,420 tons • Equal to removing 36,800 cars from the road • Equal to planting 218,400 trees • Equal to planting 546 acres of forest

  12. Net metering would allow school districts to realize maximum financial benefits and ensure system success Solar projects do not work at all sites Offset the cost of electricity District is interconnected to the PG&E grid, and a "net meter" is installed to measure the difference between electricity supplied to the customer by PG&E, and the electricity the customer exports to the grid, over a billing month. Typically, solar systems export more energy during the summer months, generating credits for SMUHSD to use during the winter months. Net-Metering

  13. Offset the cost of electricity A "net meter" is installed to measure the difference between electricity supplied to the customer by PG&E, and electricity the customer exports to the grid, over a billing month. Typically, solar systems export more energy during the summer months, generating credits for SMUHSD to use during the winter months. Net-Metering

  14. Funding Opportunities • California Solar Initiative • Performance Based Initiatives • Net Metering • Renewable Energy Credits • Emerging markets

  15. Historical usages and future needs Future construction projects Other energy efficiency implementations Peak solar hours per year Future PG&E escalation Size and type of panels System economy of scale Final CPUC interpretation of AB2466 Criteria for Determining Optimum Solar Size

  16. RECOMMENDED APPROACH • 4-schools provided best PV opportunities for lowest cost • - Large roof areas create efficient panel layout • 2 schools provided with PV systems for educational purposes • Lower Installed Cost Per kWh (economy of scale) RECOMMENDED APPROACH ACHIEVES: • Substantial General Fund Relief • Maximum revenue from CSI PBI’s (at Step 6) • Minimal impact to site ground areas including parking • lots • 72% reduction in electric energy costs • Minimizes construction disruption by aligning with • existing projects

  17. Aragon High School Annual Electrical Cost $237,528 (in 2009) PV Location & Year 50% Roof Mount - 2010 51,100 sq. ft. Roof Mount - 2011 13,000 sq. ft. 75% 50% PV System Size 1,000 KW 60% General Fund Savings* N 35% Annual Energy Savings* Starting 2012 (81%)$193,447 50% Annual Electrical Cost * Starting 2012 (19%)$44,081 * Assumes no escalation in cost of energy Aragon High School

  18. Burlingame HS Annual Electrical Cost $193,233 (in 2009) PV Location & Year Roof Mount - 2010 19,600 sq. ft. 50% PV System Size 340 kW 50% 75% General Fund Savings* N Annual Energy Savings* Starting 2012 (31.4%)$60,675 Annual Electrical Cost * Starting 2012 (68.6%)$132,558 * Assumes no escalation in cost of energy Burlingame High School

  19. Capuchino HS Annual Electrical Cost $172,574 Roof Mount – Phase 1 PV System Size 41 kW DC General Fund Savings* Annual Energy Savings* Starting 2012 (4%) $6,903 N Annual Electrical Cost * Starting 2012 (96%)($165,671) * Assumes no escalation in the cost of energy

  20. Hillsdale HS Annual Electrical Cost = $198,643 (in 2009) PV Location & Year 50% 50% Roof Mount - 2010 31,850 sq. ft. 50% Roof Mount - 2011 41,200 sq. ft. 50% PV System Size 878 kW 50% 50% General Fund Savings* N Annual Energy Savings* Starting 2012 (87%)$175,754 Annual Electrical Cost * Starting 2012 ( 13%)$22,889 * Assumes no escalation in cost of energy Hillsdale High School

  21. Mills High School Annual Electrical Cost * $220,508 (in 2009) 50% 50% PV Location & Year 50% 50% Roof Mount – 2010 19,700 sq. ft. 75% 75% Roof Mount - 2011 20,540 sq. ft. PV System Size 843 kW 50% 50% General Fund Savings* N 40% Annual Energy Savings* Starting 2012 (71.7%)$188,960 40% Annual Electrical Cost * Starting 2012 (28.3%)$31,548 * Assumes no escalation in cost of energy Mills High School

  22. San Mateo HS Annual Electrical Cost $251,389 Roof Mount – Phase 1 PV System Size 9.7 kW DC General Fund Savings* N Annual Energy Savings* Starting 2012 (1%) $2,514 Annual Electrical Cost * Starting 2012 (99%) ($248,875) * Assumes no escalation in the cost of energy

  23. Key Points for Solar at SMUHSD • 2010 District electricity bill: $1,545,000 • Due to escalating energy costs alone: • $2,600,000 for 2019-2020 • $4,400,000 for 2029-2030 • Total PG&E bill for 25 years: $77,320,000 • Install 3.7 Mega-Watt Solar PV system: • Project cost: $28,000,000 (including roofs) • Financed using General Obligation Bonds • California Solar Initiative (CSI) pays 22% of cost • Offsets about 48% of District usage • Reduce PG&E bill by 72% • 25-year General Fund Savings: $58,000,000

  24. Aragon HS – Daily Electricity Usage

  25. Aragon HS – Daily PV Production

  26. Aragon HS – Solar PV Net Meter

  27. Aragon HS – Solar PV Annual Results

  28. Mills HS – Solar PV Installation

  29. 25-Year Assumptions • Total project cost: $3.1M • PG&E Escalation: 5.34% per year • 1978-2008 PG&E industrial electricity base rate CAGR • CSI incentive: $0.26/kWh for 5 years at Step 6 • 3% annual inflation of O&M costs • 10-year total system warranty • 10-year 95% Performance Guarantee • 25-year solar panel warranty • 25-year system lifetime • Renewable Energy Credits (RECs) valued at $0.00 • Opportunity for further income generation

  30. Baseline Model (most likely)

  31. MODIFIED DESIGN BUILD (DESIGN ASSIST) • Architect works for District • Solar world composed of manufactures/installers or sole source providers known as Integrators • PV panels • Different shapes and sizes • Produce different levels of electricity • Different lifespan and durability • PV integrators • Manufacture and install PV panels • Installer have agreements with PV panel manufactures as sole source providers • Type of panel must be known for accurate panel layout • Panel type will impact electrical projection levels • Design Assist allows District architect to work with PV integrator to determine type and panel and precise layout to generate maximum electric output • Design-Build allows contractor/integrators to submit proposal • Design Assist is the best delivery method to achieve reduced project costs and expedite project completion • Proposal may be awarded based on best value - not required to be lowest price

  32. DESIGN-BUILD • CONSTRUCTION CONTRACT PROCESS • Part I – Qualifications of Contractor • Experience, capability and capacity • Financial strength • Successful experience with large PV installations • Proven experience meeting budget and schedule • Experience with Division of State Architect • Reviewed by Capital Projects team • Reviewed by Construction Committee • Recommended to Board of Trustees • Approved by Board of Trustees

  33. DESIGN-BUILD • CONSTRUCTION CONTRACT PROCESS • Proposal Part II - Proposals • Review will be based on “best value” to District and may not the lowest price • Proposal will be reviewed: • Capital Facilities Project team • Construction Committee • Recommendation to Board of Trustees • Approved by Board of Trustees

  34. DESIGN- BUILD • CONSTRUCTION CONTRACT PROCESS • Contract Key Requirements • Performance and Payment Bonds • Performance guarantees of output and efficiencies for lifespan of panels • System maintenance and monitoring (clean PV panels) • Specify type of PV panels and inverters • Minimum of 3 sub-contracts at guaranteed price aligned with other construction project schedules • Develop curriculum, classroom delivery and staff training • Provide equipment and instructional materials for coursework • Inverter replacement - 10 Year Warranty • Panel Replacement - 25 Year Warranty

  35. Lessons Learned • No easy button, Districts must do their homework • All information provided must be validated for accuracy and reasonableness • Plenty of opportunists in this field. Schools if they do not do appropriate due diligence and validate assumptions will be rudely awaken at the end of 5 years when the PBI’s are no longer available and utility escalations were overstated and the savings do not materialize • Three prong approach • Attorney • Finance • Construction • Change in PGE invoicing procedure annual utility bill • Solar is a relatively new market, disappointment with the lack of sophistication and integrity demonstrated by integrator despite strong contractual language • Without PBI’s and net metering, concerns regarding the long term viability and benefits for schools in the future

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