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Home My WebLink About[08] Sunshare, Solar Proposal Council Agenda Item 8 MEETING DATE: December 7, 2015 AGENDA ITEM: Community Solar Garden—Kyle Roach: SunShare, LLC SUBMITTED BY: Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: N/A PREVIOUS COUNCIL ACTION: Council approved a non-binding letter of intent and authorize staff to work on a final service agreement to subscribe in SunShare's community solar gardens in August. BACKGROUND INFORMATION: The City has been approached by SunShare to provide solar energy to the City of St.Joseph on a subscription basis. SunShare is building two community solar gardens in Stearns County and Pope County. They are looking for both commercial and residential subscribers for their 89 megawatt Minnesota community solar gardens. SunShare will build the solar gardens, partner with Xcel Energy to add to the energy grid for solar energy credits, and contract with subscribers to earn energy credits. The program has been available in Colorado for several years. Minnesota Legislators recently passed similar legislation in 2013 to begin building the solar gardens. A history of SunShare and the solar gardens is included in the attached proposal. After reviewing the program and seeing what our neighbors are considering, staff requested SunShare to consider building a solar garden in the City of St.Joseph on the land next to the new water treatment facility. The land would be leased to SunShare. The City would still receive the subscriber credits at a better rate and also benefit from lease revenue for the land over the next 25 years. The land lease is still be reviewed by SunShare and S.E.H. A land lease could add $4,900-$6,300/year(plus escalation rates). Staff will bring back this option at a later date. In the packet includes an updated subscriber proposal from SunShare. There was a correction in the calculation completed in August along with better rates with the consideration of the land lease. The subscriber benefits can start once SunShare builds their Stearns County solar garden in 2016. If/when a solar garden is added to St.Joseph, the subscriber credits received by the City of St.Joseph will switch to the new plant. Kyle Roach from SunShare will be present at the meeting to discuss the proposal. BUDGET/FISCAL IMPACT: $ 5,300-$9,000 energy savings potential—year 1 $393,600 - $435,000 energy savings—following 25 years Land lease forthcoming ATTACHMENTS: Request for Council Action—Community Solar Garden SunShare Cl Proposal REQUESTED COUNCIL ACTION: Consider approving the non-binding letter of intent and authorize staff to work on a final service agreement to subscribe in SunShare's community solar gardens. This page intentionally left blank City of St. Joseph Proposal for Subscription to a SunShare Community Solar Garden '1SunShare THE POWER TO CHOOSE December 3, 2015 Ms. Lori Bartlett Finance Director City of St. Joseph 25 College Avenue N, PO Box 6687 St. Joseph, MN 56374 Dear Ms. Bartlett, SunShare is pleased to present a solar energy proposal to City of St. Joseph for a subscription to SunShare's Community Solar Gardens. We believe our offer is uniquely positioned to provide City of St. Joseph with the best possible access to Community Solar energy. Our proposal features a subscription of 532 kW, which will begin construction in 2016. SunShare currently has 89 MW of the Community Garden applications deemed complete by Xcel Energy, making us an ideal partner for City of St. Joseph to move forward with this year. As a subscriber,the company can begin saving on its utility bills and meeting its environmental goals. As part of our subscription with City of St. Joseph, we are also offering several additional programs, including an employee benefit program that would allow all City of St. Joseph employees serviced byXcel Energy an opportunity to source their energy from the sun. At the end of this proposal, you will find a Letter of Intent. This reservation form reserves your capacity in our gardens to ensure our ability to service you. As SunShare is in the process of reserving our final capacity for 2015, signing by January 18, 2016 will insure your capacity is reserved. After that date, we will start assigning customers to our 2016 capacity. We look forward to helping City of St. Joseph achieving its renewable energy goals, engaging its employees and community, and fostering global leadership in renewable energy and local environmental sustainability. Should you have any questions or comments about this proposal, please contact me at any time. Best regards, Kyle Roach Commercial Sales Associate 612.325.4918 kroach@mysunshare.co m 609 S. 10'Street, Suite 210 1 Minneapolis, MN 55404 1 612.345.8881 1 contactmn@mysunshare.com 1 2 Table of Contents Backgroundand Qualifications..........................................................................................................................................4 AboutCommunity Solar.................................................................................................................................................4 AboutSunShare................................................................................................................................................................4 Partnerships........................................................................................................................................................................ 5 Site Management, Monitoring, and Maintenance ...................................................................................................6 ProposalOptions...................................................................................................................................................................7 PricingDetails ....................................................................................................................................................................8 EnvironmentalImpacts..................................................................................................................................................10 City of St. Joseph's Employee Benefit Program......................................................................................................13 Attachment A: Subscription Reservation Letter ..........................................................................................................14 Attachment B: Historical Xcel Rate Increases...............................................................................................................15 609 S. 10'Street, Suite 210 1 Minneapolis, MN 55404 1 612.345.8881 1 contactmn@mysunshare.com 1 3 Background and Qualifications About Community Solar In 2013, the Minnesota State Legislature passed a landmark Community Solar Gardens law that established a new market in the solar industry. Community Solar Gardens are simply solar energy systems that are connected directly to Xcel Energy's grid. Residents, businesses, institutions, and governmental customers can opt to purchase electricity from a Community Solar Garden and receive the benefits of clean without having to install panels on their roof or property. Community Solar subscribers receive solar credits which lower their overall electricity costs. In addition, Community Solar arrays are typically larger than residential or commercial-scale systems, which means that subscribers benefit from economies of scale and lower solar costs. Community Solar companies handle the land acquisition, solar arraydesign, construction, financing, customer enrollment, and ongoing maintenance of the solar energysystems. Community Solar allows more energy users to utilize solar energy than ever before, and it is the easiest way to procure clean, affordable, locally generated energy. About SunShare Founded in 2011, SunShare is one of the first and largest Community Solar companies in the United States. Our mission is to make solar energy simple, affordable, and accessible to everyone. We helped Colorado Springs Utilities establish its pilot Community Solar Gardens program in 2011 and we are Xcel Energy's partner in Colorado, having won 100% of its competitive RFP awards in 2013. In Minnesota, SunShare currently has 89 MW of the Community Garden applications deemed complete by Xcel Energy, SunShare's success has been gained by engaging churches, schools, and local governments, while building a local presence through community relationships. Our ability to develop Community Solar Gardens with a wide subscriber base of diverse community members is highly unique within the solar industry. We have years of experience engaging the communities where we operate. Our experience and expertise will provide the added benefit of brand recognition and public relations to City of St. Joseph as an anchor customer. o 609 S. 10'Street, Suite 210 1 Minneapolis, MN 55404 1 612.345.8881 1 contactmn@mysunshare.com 1 4 Partnerships SunShare hasartnered with Mortenson one of the nation's largest p g construction companies to provide engineering, procurement,and Mortenson construction (EPC) for our Gardens. SunShare's and Mortenson's construction collective experience with financing,construction, operations, and maintenance creates an unsurpassed partnership and ability to execute successful Community SolarGardens. With revenues surpassing $2.3 billion, Mortenson is recognized nationally as 14th in power construction, according to Engineering News Record's (ENR) 2014 ranking, and the 3rd largest solar EPC contractor, according to Bloomberg New Energy Finance's 2014 ranking. Having secured over 1,200 MW of solar energy facilities, Mortenson has proven to be a reliable and bankable EPC partner. Below is a sample of projects completed by SunShare and Mortenson: Company Project Location Size Status Mortenson Alamosa Alamosa,CO 3oMWAC Complete Mortenson Saint John's Abbey&University Collegeville,MN 400kW AC Complete Mortenson Solar Star I Rosamond,CA 318MW AC Ongoing Mortenson I Solar Star II Rosamond,CA 279MW AC Ongoing Mortenson Quinto Solar Los Banos,CA 11oMW AC Ongoing Mortenson Alamo 4 Bracketville,TX 39.6MW AC Ongoing SunShare Venetucci Solar Garden Colorado Springs,CO 5ookW AC Complete SunShare Good Shepherd Solar Garden Colorado Springs,CO 5ookW AC Complete SunShare Imboden Solar Garden Watkins,CO 4MW DC Ongoing SunShare PPSG1 Solar Garden Colorado Springs,CO 2.6MW DC Ongoing SunShare White Ranch Garden Golden,CO 1.5MW AC Ongoing SunShare Colorado Springs Solar Garden Colorado Springs,CO 50okW AC Ongoing SunShare Arapahoe County Watkins,CO 50okW DC Ongoing A Sample of Our Customers 609 S. 10'Street, Suite 210 1 Minneapolis, MN 55404 1 612.345.8881 contactmn@mysunshare.com 1 5 HYLAND HILLS ADAMS COUNTY C1 &COMMUNITY OF Goan �►/1�LJ (1�V SHEPHERD s�u.am.•cao.eosPn,e:.coea.n �,1417tA2b92 UNIVERSITY COLORADO 4H,, ar .OF- COLLEGE COLORADO {1TkLfTY = AT COLORADO SPRINGS QI5TRICT$ C ti. CU PIKfS PERK L10RRRY 01B1Yt14TDAMS ■ 4 1 �p�ld WESTMINSTER Inspire.Educate.Empower. 609S. 101h Street, Suite 210 1 Minneapolis, MN 55404 612.345.8881 contactmn@mysunshare.com 1 6 Site Management, Monitoring, and Maintenance SunShare and our partners are responsible for ongoing monitoring, maintenance, and repair of the Community Solar Gardens. Solar arrays have few moving parts, which means maintenance is fairlylimited. SunShare maintains a maintenance & repair budget and adheres to a standard operations and maintenance plan, which includes the following: 1) Monitoring: SunShare's remote monitoring systems provides notice when a module or inverter repair is needed. When this occurs, we dispatch a licensed electrician to make the equipment repair or replacement. The rest of the system continues to function even if one of our panels goes down. 2) System preventative maintenance: This includes visual inspection of PV arrays, electrical equipment, mounting structure, foreign debris, fence, shading, trackers, corrosion, and discolored panels.In addition, SunShare's maintenance team inspects mounting system and components for abnormal wear or excess corrosion, inspects modules for signs of degradation, inspects string wiring and electrical connectors, and inspects visible conduit and raceways for signs of damage or wear. 3) Inverter preventative maintenance: SunShare's maintenance team inspects and cleans the interiorof inverters, inspects air filters, replaces and cleans air filters, inspects seals and replaces them if necessary, inspects electrical connections and wiring, mechanically inspects connections and wiring,re- torques electrical connections as needed, and completes IR scans of inverter connections, writing, and electronics. 4) Other site maintenance: SunShare's team inspects general site conditions regularly. We maintain vegetation within the fence line including under panels to prevent shading and risk of fire, cleardebris within the fenced area, and clean modules if necessary due to excessive dust or soil buildup. Wealso conduct regular system testing and verification, and have emergency response procedures in placeto respond 24 hours a day if something happens at one of our Gardens. SunShare also pledges to maintain or add value to the land we use to host our Gardens, including a pledge to plant pollinator-friendly habitat as described below. SunShare Pollinator Pledge We recognize and acknowledge that Community Solar developers can play an important role in creating on-site habitats that support and generate environmentally beneficial pollinators, including monarch butterflies and various bee species. For this reason, we pledge to evaluate (and when feasible, adopt) the use of pollinator-friendly ground-cover and vegetation-management practices for all the solar PVsites that we develop and/or manage in Minnesota. Co-locating solar arrays with native wildflowers is a well-established _ practice and offers a wide range of habitats both around garden " g, perimeters and beneath the arrays. Pollinator plants are known to enrich soils, increase rainwater infiltration and prevent erosion.These native grasslands can be maintained without the use of fertilizers or pesticides. 609 S. 10' Street, Suite 210 1 Minneapolis, MN 55404 1 612.345.8881 contactmn@mysunshare.com 6 Proposal Options We are pleased to present City of St. Joseph with plans for 100% offset of your energy use with Community Solar.Our offer gives City of St. Joseph access to clean solar energy at no upfront cost and minimal risk,while providing long-term savings for 25 years. This option also allows for an unlimited amount of employee subscriptions. Option Description T Benefits to the City of St. Joseph Option 1: ■ 532 kW subscription . $8,917 estimated savings in year 1 Fixed Rate ■ $o.11 per-kWh SunShare solar - $393,678 estimated cumulative savings electricity rate ■ $o down ■ 2% annual escalation on SunShare rate Option 2: ■ 532 kW subscription N $5,364 estimated savings in year 1 Fixed Rate ■ $0.115 per-kWh SunShare ■ $434,777 estimated cumulative savings solar electricity rate by year 25 ■ 1.5% annual escalation on ■ $o down SunShare rate *AII pricing is subject to final site due diligence, engineering, and market factors at time of contract closing. **Savings assume 2.75%annual utility escalation. 609 S. 10' Street, Suite 210 1 Minneapolis, MN 55404 1 612.345.8881 1 contactmn@mysunshare.com 7 Pricing Details Option 1 - 0.532 MW 11-cent SunShare SSA with 2%escalator, $o upfront pre-pay 0.532 MW Solar Services Agreement Year 1 5 10 25 Est.Annual Panel Degradation Rate:0.5% Estimated kWh Production 710,752 696,643 679,400 630,191 Est.Annual Utility Rate Increase:2.75% Xcel Est. Electricity Solar Rewards Credit/kWh $0.123 $0.134 $0.151 $0.217 Projected Annual Credit $87,100 $93,56o $102,525 $136,528 Annual SunShare SSA Rate Increase:2% SunShare SSA Price/kWh $0.110 $0.119 $0.131 $0.177 SunShare SSA Payments $78,183 $82,948 $89,314 $111,498 Savings(S*RC Credit vs. Est.Xcel Rates) Estimated Annual Savings $8,917 $1o,612 $13,211 $25,030 Estimated Cumulative Savings $8,917 $48,723 $109,353 $393,678 Savings Profile - 0.532 MW $400,000 Xcel Est.Electricity Solar Rewards Credit @a 2.75%annual utility rate escalation $350,000 - SunShare SSA Payments C Cumulative Savings @a 2.75%annual utility rate escalation Q) E, $300,000 - ra Q_ $250,000 - v L V $200,000 Q $150,000 - LU nnual Savin s $100,000 - $50,000 - $0 I I I I I I I I I I I I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Year 609 S. 1011 Street, Suite 210 Minneapolis, MN 55404 1 612.345.8881 1 contactmn@mysunshare.com 8 The following charts are alternative utility rate tests, demonstrating the savings City of St. Josephwould achieve under various utility rate increases: CUMULATIVE SAVINGS with Alternative Xcel Rate Increases Year 1 5 10 25 Estimated kWh Production 710,752 696,643 679,400 630,191 Annual Utility Rate Increase:4% Estimated Net Savings/year vs.Xcel $8,917 $14,558 $23,436 $66,756 Estimated Cumulative Savings $8,917 $58,318 $156,861 $818,719 Annual Utility Rate Increase:1% Estimated Net Savings/year vs.Xcel $8,917 $5,324 $471 -$16,840 Estimated Cumulative Savings $8,917 $35,682 $47,910 -$78,021 Cumulative Savings - 0.532 MW, $o Upfront Payment $900,000 $800,000 Cumulative Savings @a 4%annual utility rate escalation $700,000 Cumulative Savings @a 1%annual $600,000 utility rate escalation $500,000 $400,000 $300,000 $200,000 $100,000 $o -$100,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 5 -$z00,0o0 Year 609 S. 1011 Street, Suite 210 Minneapolis, MN 55404 1 612.345.8881 1 contactmn@mysunshare.com 9 Pricing Details Option 2 - 0.532 MW 11.5-cent SunShare SSA with 1.5%escalator,$o upfront pre-pay 0.532 MW Solar Services Agreement Year 1 5 10 25 Est.Annual Panel Degradation Rate:0.5% Estimated kWh Production 710,752 696,643 679,400 630,191 Est.Annual Utility Rate Increase:2.75% Xcel Est. Electricity Solar Rewards Credit/kWh $0.123 $0.134 $0.151 $0.217 Projected Annual Credit $87,100 $93,56o $102,525 $136,528 Annual SunShare SSA Rate Increase:1.5% SunShare SSA Price/kWh $0.115 $0.122 $0.131 $o.164 SunShare SSA Payments $81,736 $85,030 $89,334 $103,599 Savings(S*RC Credit vs. Est.Xcel Rates) Estimated Annual Savings $5,364 $8,529 $13,191 $32,929 Estimated Cumulative Savings $5,364 $34,585 $9o,887 $434,777 Savings Profile - 0.532 MW $450,000 - Xcel Est.Electricity Solar Rewards Credit @a 2.75%annual utility rate escalation $400,000 SunShare SSA Payments C Cumulative Savings @a 2.75%annual utility rate escalation Q) $350,000 - E a. $300,000 - VI v $250,000 - L V $200,000 C Q $150,000 LnLU nnual Savings $100,000 - $50,000 - $o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Year 609 S. 1011 Street, Suite 210 Minneapolis, MN 55404 1 612.345.8881 1 contactmn@mysunshare.com The following charts are alternative utility rate tests, demonstrating the savings City of St. Josephwould achieve under various utility rate increases: CUMULATIVE SAVINGS with Alternative Xcel Rate Increases Year 1 5 10 25 1 Estimated kWh Production 710,752 696,643 679,400 630,191 Annual Utility Rate Increase:4% Estimated Net Savings/year vs.Xcel $5,364 $12,476 $23,416 $74,656 Estimated Cumulative Savings $5,364 $44,18o $138,395 $859,818 Annual Utility Rate Increase:1% Estimated Net Savings/year vs.Xcel $5,364 $3,242 $451 -$8,940 Estimated Cumulative Savings $5,364 $21,544 $29,443 -$36,923 Cumulative Savings - 0.532 MW, $o Upfront Payment $1,000,000 $900,000 Cumulative Savings @a 4%annual utility rate escalation $800,000 Cumulative Savings dal 1%annual utility rate escalation $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $o -$100,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Year 609 S. 10' Street, Suite 210 Minneapolis, MN 55404 612.345.8881 1 contactmn@mysunshare.com Environmental Impacts Community Solar projects create significant benefit to the environment, including avoidance ofemissions of pollutants such as CO2, NOx, and SO2. These pollutants impact climate change, pulmonary diseases, and acid rain. With any subscription size City of St. Joseph chooses, City of St. Joseph can realize significant impacts on the environment and the communities in which itoperates. Here we have listed sample projected cumulative emission offsets for a 532 kW option. Your Offset Impact Equivalent to: 34,712,722 - = 34,951,418 lbs Of CO2 miles of driving avoided a leading cause of climate change 94,411 7,160,374 lbs of SO, gallons of water saved from use » in coal plants a leading cause of acid rain �r 56,534 403,771 lbs of NOx CO,-absorbing trees planted a leading cause of smog 609 S. 10tH Street, Suite 210 Minneapolis, MN 55404 612.345.8881 1 contactmn@mysunshare.com City of St. Joseph's Employee Benefit Program We are excited to invite City of St. Joseph's employees the opportunity to participate in a City of St. Joseph-branded Community Solar benefits program, which SunShare will develop to City of St. Joseph's specifications and in line with its existing benefits programs foremployees. With City of St. Joseph as an anchor customer, SunShare will provide City of St. Joseph employees with a unique recruitment story for employees to integrate Community Solar seamlessly with City of St. Joseph's existing benefits programs so that employees can choose discounted solar energyjust as theywould select a health care plan. While the program will be developed to City of St. Joseph's specifications, minimal effort or responsibility will be required on City of St. Joseph's part to enroll participants intothe program. SunShare will work closely with City of St. Joseph's sustainability or human resources team to develop a co-branded program that will engage employees, educate them about the benefits of Community Solar, and congratulate City of St. Joseph for its continued global leadership in sustainability. Events can include, at City of St. Joseph's request, breakfast, lunch, and after-work/school social events; video, animation, and other digital educational tools; social media engagement including Twitter, Facebook, and YouTube; outreach and education, including visits to a Community Solar Garden; marketing materials; and full public relations and media support to externally educate and message City of St. Joseph's leadership in sustainability. WQ 609 S. 10tH Street, Suite 210 Minneapolis, MN 55404 612.345.8881 contactmn@mysunshare.com Attachment A: Subscription Reservation Letter NON-BINDING LETTER OF INTENT Reservation for Subscription to a SunShare Community Solar Garden December 3, 2015 Ms. Lori Bartlett Finance Director City of St. Joseph 25 College Avenue N, PO Box 6687 St. Joseph, MN 56374 Dear Ms. Bartlett, SunShare is excited that you have expressed interest in subscription to our Community Solar program in Minnesota and we look forward to moving forward with you as a subscriber. This letter of intent reserves capacity in a program under which you would enter into subscription agreement with SunShare, LLC. This letter is not a formal or binding agreement for you nor for SunShare. However, it reflects both of our intentions to enter into a binding agreement foryour subscription to one of our Community Solar gardens of 532 kW in size within 45 days. If the above arrangement is acceptable, please sign below and return a copy to the address below. We look forward to continuing discussions with you! Sincerely, Matthew Bowers Director of Commercial Sales mbowers@mysunshare.com 970-658-7490 SunShare, LLC City of St. Joseph By: By: Printed Name: Printed Name: Date: Date: 609 S. 1011 Street, Suite 210 Minneapolis, MN 55404 1 612.345.8881 contactmn@mysunshare.com Attachment B: Historical Xcel Rate Increases Our projected Xcel rate increase (2.75%) is a conservative estimate based on Xcel's 10-year historical rate increases. Xcel Energy Annual Rate Increases _ 0.120 L 0.110 H 4.3551 0.100 �er,irat rate in�r ease. v 0.090 rQs+ a 0.080 Pvet� OM 0.070 te•� pweragr'i 0.070 4% LU 0,060 e indcsstrial rate increase:4.9 p,,er ag 0.050 0.040 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year Source: U.S. Energy Information Administration 609 S. 1011 Street, Suite 210 1 Minneapolis, MN 55404 1 612.345.8881 1 contactmn@mysunshare.com