20180822 MMC Community Solar Program Plan Discussion Corrected

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COMMUNITY SOLAR
PURCHASING PROGRAM
PROPOSAL TO METROPOLITAN MAYORS CAUCUS
OVERVIEW
Quick Pitch
Background
Potential Program Outline
Conclusions & Discussion
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QUICK PITCH
METROPOLITAN MAYORS CAUCUS CALL TO ACTION
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QUICK PITCH
Community Solar Development in Illinois
◦ Illinois will fund 222 MW of community solar projects in 2019
◦ Approximately 78 projects in the ComEd region
◦ Consumers may subscribe to these projects to have generation from the
community solar projects applied to their monthly utility bills
Metropolitan Mayors Caucus Call to Action
◦ Call to action at July 9 Environment Committee for a plan to facilitate
Community Solar access for MMC members
Program Proposal
◦ Developed by MMC and Power Bureau
◦ Competitive procurement, qualified bidders, single program price,
guaranteed savings, streamlined transactions, ongoing program support
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BACKGROUND
FEJA, COMMUNITY SOLAR, ECONOMICS, STATUS
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BACKGROUND: FUTURE ENERGY JOBS ACT
Primary components
◦ Zero Emissions Credits ($2.35 billion over 10 years)
◦ Purchased from Exelon’s Quad Cities an Clinton plants
◦ Energy Efficiency ($350 million/year)
◦ Lifts cost cap and places efficiency expenses into utility ratebase
◦ Renewable Portfolio Standard
◦
◦
◦
◦
Utilities to purchase wind and solar through 15-year contracts
Increases the carve out for solar purchases from 6% to 50%
Establishes goals for utility, community, brownfield and residential solar projects
Establishes special funding for ‘income qualified’ communities & consumers
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BACKGROUND: COMMUNITY SOLAR
1 Community Solar
asset delivers energy
to the Local Utility.
2 Local Utility delivers
blended energy to
consumers
3 Local Utility applies
on-bill credits to
Community Solar
Subscribers.
4 Subscribers pay a
portion of their on-bill
credits to the
Community Solar
developer
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BACKGROUND: COMMUNITY SOLAR ECONOMICS
PRICING VARIABLES
A. ENERGY SUPPLY COST
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Transmission (¢/kWh)
Energy Supply Cost (¢/kWh)
UNIT PRICE (¢/KWH)
DEFAULT
SUPPLY
3.6
2.5
1.5
7.6
$/2,000,000 KWH
DEFAULT
SUPPLY
3.0
2.5
1.5
7.0
B. SUBSCRIPTION CREDIT
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Subscription Value (¢/kWh)
C. NET PRICE TO CONSUMER
Energy Supply Cost (¢/kWh)
Subscription Credit (¢/kWh)
Subscription Cost (¢/kWh)
Net Cost to Consumer (¢/kWh)
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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BACKGROUND: COMMUNITY SOLAR ECONOMICS
PRICING VARIABLES
A. ENERGY SUPPLY COST
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Transmission (¢/kWh)
Energy Supply Cost (¢/kWh)
UNIT PRICE (¢/KWH)
DEFAULT
SUPPLY
3.6
2.5
1.5
7.6
$/2,000,000 KWH
DEFAULT
SUPPLY
3.0
2.5
1.5
7.0
B. SUBSCRIPTION CREDIT
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Subscription Value (¢/kWh)
C. NET PRICE TO CONSUMER
Energy Supply Cost (¢/kWh)
Subscription Credit (¢/kWh)
Subscription Cost (¢/kWh)
Net Cost to Consumer (¢/kWh)
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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BACKGROUND: COMMUNITY SOLAR ECONOMICS
PRICING VARIABLES
A. ENERGY SUPPLY COST
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Transmission (¢/kWh)
Energy Supply Cost (¢/kWh)
UNIT PRICE (¢/KWH)
DEFAULT
SUPPLY
3.6
2.5
1.5
7.6
3.0
2.5
1.5
7.0
(3.6)
(2.5)
(6.1)
(3.0)
(0.0)
(3.0)
$/2,000,000 KWH
DEFAULT
SUPPLY
B. SUBSCRIPTION CREDIT
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Subscription Value (¢/kWh)
C. NET PRICE TO CONSUMER
Energy Supply Cost (¢/kWh)
Subscription Credit (¢/kWh)
Subscription Cost (¢/kWh)
Net Cost to Consumer (¢/kWh)
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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BACKGROUND: COMMUNITY SOLAR ECONOMICS
PRICING VARIABLES
A. ENERGY SUPPLY COST
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Transmission (¢/kWh)
Energy Supply Cost (¢/kWh)
UNIT PRICE (¢/KWH)
DEFAULT
SUPPLY
3.6
2.5
1.5
7.6
3.0
2.5
1.5
7.0
(3.6)
(2.5)
(6.1)
(3.0)
(0.0)
(3.0)
7.6
(6.1)
4.5
6.0
7.0
(3.0)
4.5
8.5
$/2,000,000 KWH
DEFAULT
SUPPLY
B. SUBSCRIPTION CREDIT
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Subscription Value (¢/kWh)
C. NET PRICE TO CONSUMER
Energy Supply Cost (¢/kWh)
Subscription Credit (¢/kWh)
Subscription Cost (¢/kWh)
Net Cost to Consumer (¢/kWh)
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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BACKGROUND: COMMUNITY SOLAR ECONOMICS
PRICING VARIABLES
A. ENERGY SUPPLY COST
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Transmission (¢/kWh)
Energy Supply Cost (¢/kWh)
UNIT PRICE (¢/KWH)
DEFAULT
SUPPLY
3.6
2.5
1.5
7.6
3.0
2.5
1.5
7.0
(3.6)
(2.5)
(6.1)
(3.0)
(0.0)
(3.0)
7.6
(6.1)
4.5
6.0
7.0
(3.0)
4.5
8.5
$/2,000,000 KWH
DEFAULT
SUPPLY
B. SUBSCRIPTION CREDIT
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Subscription Value (¢/kWh)
C. NET PRICE TO CONSUMER
Energy Supply Cost (¢/kWh)
Subscription Credit (¢/kWh)
Subscription Cost (¢/kWh)
Net Cost to Consumer (¢/kWh)
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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BACKGROUND: COMMUNITY SOLAR ECONOMICS
PRICING VARIABLES
A. ENERGY SUPPLY COST
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Transmission (¢/kWh)
Energy Supply Cost (¢/kWh)
UNIT PRICE (¢/KWH)
DEFAULT
SUPPLY
$/2,000,000 KWH
DEFAULT
SUPPLY
3.6
2.5
1.5
7.6
3.0
2.5
1.5
7.0
$72,000
$50,000
$30,000
$152,000
$60,000
$50,000
$30,000
$140,000
(3.6)
(2.5)
(6.1)
(3.0)
(0.0)
(3.0)
($72,000)
($50,000)
($122,000)
($60,000)
($60,000)
7.6
(6.1)
4.5
6.0
7.0
(3.0)
4.5
8.5
$152,000
($122,000)
$90,000
$120,000
$140,000
($60,000)
90,000
$170,000
B. SUBSCRIPTION CREDIT
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Subscription Value (¢/kWh)
C. NET PRICE TO CONSUMER
Energy Supply Cost (¢/kWh)
Subscription Credit (¢/kWh)
Subscription Cost (¢/kWh)
Net Cost to Consumer (¢/kWh)
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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BACKGROUND: COMMUNITY SOLAR ECONOMICS
PRICING VARIABLES
A. ENERGY SUPPLY COST
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Transmission (¢/kWh)
Energy Supply Cost (¢/kWh)
UNIT PRICE (¢/KWH)
DEFAULT
SUPPLY
$/2,000,000 KWH
DEFAULT
SUPPLY
3.6
2.5
1.5
7.6
3.0
2.5
1.5
7.0
$72,000
$50,000
$30,000
$152,000
$60,000
$50,000
$30,000
$140,000
(3.6)
(2.5)
(6.1)
(3.0)
(0.0)
(3.0)
($72,000)
($50,000)
($122,000)
($60,000)
($60,000)
7.6
(6.1)
4.5
6.0
7.0
(3.0)
4.5
8.5
$152,000
($122,000)
$90,000
$120,000
$140,000
($60,000)
90,000
$170,000
B. SUBSCRIPTION CREDIT
Energy Commodity (¢/kWh)
Capacity (¢/kWh)
Subscription Value (¢/kWh)
C. NET PRICE TO CONSUMER
Energy Supply Cost (¢/kWh)
Subscription Credit (¢/kWh)
Subscription Cost (¢/kWh)
Net Cost to Consumer (¢/kWh)
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BACKGROUND: COMMUNITY SOLAR STATUS
Regulatory Process
IPA Plan Approved
Incentives finalized
Program Manager
retained
Project selection:
1/2019 to 3/2019
Project Development
156 MW Approved in
ComEd
1,200 MW Proposed
A Lottery will be used to
select projects
Developer Mood
Tense:
High interconnection
costs
Uncertain lottery
selection process
Challenging economics
foremost consumers
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BACKGROUND: WRAP UP
Community Solar Program will happen
◦ Funding through utilities
◦ Program manager hired by Illinois Power Agency
Community Solar is more challenging for Developers
◦ Development costs are higher than expected
◦ Massive oversupply
◦ Marginal to negative economics for most consumers
Challenges for Developers means Opportunities for MMC
◦ Qualified and committed buyers are the only lifeline for Developers
◦ A pool of buyers formed by MMC can negotiate preferential terms and
prices from Developers
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POTENTIAL PROGRAM
OUTLINE
PREMISE, OBJECTIVES, APPROACH
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PROGRAM CHARTER: CALL TO ACTION
DEVELOP A PROGRAM TO ASSIST MUNICIPALITIES CAPTURE
COMMUNITY SOLAR OPPORTUNITIES
Promote Sustainability
Protect Consumers
• Demonstrate progress
• Technical Analysis to
towards GRC and for
identify savings
‘100% Renewable’
• Procurement Approach
to competitively source • Support renewable
energy development in
subscriptions
Illinois
• Secure long-term cost
savings
• Acquire community
solar on behalf of
residents
• Prevent door-to-door
solicitations
Capture Cost Savings
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PROGRAM PREMISE: MUNICIPAL PROFILE
•Municipalities have
rated credit – better
for project financing
•Municipalities change
accounts less
frequently than
consumers
Credit
aaaaaaaaa
Reduce
project
finance costs
Accounts
Incentives for
small accounts
•Municipalities have
small accounts (both
paid and franchise)
Stability
aaaaaaa
Reduce project
management costs
Volume aaaaa
Reduce account
acquisition costs
• Municipalities have
dozens of accounts
in their portfolio
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
Municipal profile
supports financing:
•
•
•
•
Good Credit
Stability
Volume
Account Size
MMC presents value to
Community Solar
Developers:
•
•
•
•
Access
Scale
Timeliness
Standardization
19
PROGRAM PREMISE: MUNICIPAL LEVERAGE
Almost 10:1 over-subscription
in the ComEd region
Proposed Community Solar Projects
(1,200 MW)
Projects must have interconnection
agreements to qualify for selection
Interconnection Filter
Projects must have local permits to qualify
for selection
Permit Filter
Subscriber Filter
>50% Small Subscribers
Lottery
Final
156 MW
Projects with >50% small subscribers prioritized
for selection, receive higher incentives.
The Lottery will select from the >50% Small
Subscriber pool, then the <50% Small Subscriber pool
Projects selected for funding have 2 years to start
delivering electricity to the ComEd system
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PROGRAM OBJECTIVES
DEVELOPERS
MUNICIPALITIES
Pool of Qualified Subscribers
Identify accounts that benefit
Long-term Subscriptions
Resources that will be built
Sufficient pricing
Guaranteed savings
>50% Small Subscribers
Competitive selection process
yielding a single price for all
participants
Streamlined payment process &
ongoing support
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PROGRAM APPROACH: ACCOUNT IDENTIFICATION
Subscription
Cost
Energy Supplier
Retail Supply
Contract Type
Pricing
Structure
Subscription
Value Basis
Subscription
Value
Fixed Price
Energy Only
~3.0¢/kWh
Hourly Price
Energy Only
~2.8¢/kWh
Fixed Price
Capacity +
Energy
6.1¢/kWh
Hourly
Energy Only
~2.8¢/kWh
Fixed Price
Capacity +
Energy
6.1¢/kWh
Hourly
Energy Only
~2.8¢/kWh
Paid
Subscription
Paid
Default Supply
Franchise
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PROGRAM APPROACH: PROJECT CERTAINTY
Entry to the Developer / Bidder Pool will require:
◦ Developer Qualifications
◦ Experience in developing similar projects
◦ Financial stability
◦ Commitment to hold projects long-term
◦ Project Qualifications
◦ Land control
◦ Local permits
◦ Interconnection agreement
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PROGRAM APPROACH: GUARANTEED SAVINGS
Community
Solar
Development
Subscription Fees
(Developer - Annual)
Bill Credits:
$ 65,000
x Share Rate:
80%
= Revenue Share $ 52,000
1,000 MWh of electricity to Utility Annually
(Small default rate accounts)
Subscription Benefit
(Municipal - Annual)
Bill Credits: :
$ 65,000
x Share Rate:
20%
= Revenue Share $ 13,000
Annual Bill Credits
(Total Subscriptions)
Volume:
1,000 MWh
Bill Credits
$ 65,000
Municipality
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PROGRAM APPROACH: COMPETITIVE PROCESS
Reverse Auction - Single Clearing Price Approach
100%
95%
90%
90%
80%
Developer Discount
80%
77,50%
70%
75%
72%
70%
69%
67%
65%
60%
60%
50%
40%
30%
20%
10%
0%
100
90
80
70
60
50
40
30
MW of Community Solar Supply
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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10
0
25
PROGRAM APPROACH: ONGOING SERVICES
CLEARINGHOUSE
Billing Function
B•
Receive invoices from all
Community Solar assets
C•
Allocate invoices between
Subscribing Municipalities
D•
Issue Consolidated Invoices
DEVELOPER POOL
MUNICIPAL POOL
A• Issue consolidated invoice for all
Subscriptions to Clearinghouse
Payment Function
G
•
J• Receive consolidated invoice for all
Subscriptions to Clearinghouse
H•
Receive payments from all
Municipalities
Allocate payments to Community
Solar assets
•E Receive consolidated invoice for all
Subscriptions from Clearinghouse
•F Issue consolidated payment for all
Subscriptions to Clearinghouse
•I Issue Consolidated Payment to
Community Solar assets
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PROGRAM APPROACH: MMC CLEARINGHOUSE
MUNICIPAL POOL
• 50-100 municipalities;
600-1200 accounts
MMC CLEARINGHOUSE
DEVELOPER POOL
Coordinate conditional
commitments
• 8-10 Developers; 50-100
Community Solar assets
• Maximum Subscription
volume & price for each
municipality’s account
portfolio (LOI)
Allocate Subscriptions on a
lowest price / first placed
basis per availability,
volume, price & other limits
• Maximum generation
volume & Minimum
subscription price per
Community Solar asset
• 50% to 75% of entire
portfolio consisting of
small accounts
Facilitate Subscription
Agreements between
Municipalities & Developers
• Pricing options for 50%
to 75% small account
Subscriptions
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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PROGRAM APPROACH: RESULTS
LEVERAGE BENEFITS
MITIGATE RISKS
Lower Subscription Prices
Balance Unbilled / Billed accounts
Nominal Program Cost
Hedge against the IPA lottery
Access to Clean Local Energy
Avoid the 40% subscription cap
Simplified Billing / Payment
Guarantees Savings Structure
 Municipalities have access to the pool’s
lowest price community solar resources
 Small fee to register
 Developers pay for ongoing program costs
 Municipalities have access to multiple
community solar resources in Illinois
 Consolidated billing process offers all
parties single monthly transactions
 Expert analysis will allow for a low-risk
subscription strategy
 The pool will prevent the IPA lottery from
eliminating all supply options
 Allocating subscriptions in the pool
ensures compliance with requirements
 Pricing structure delivers a set % discount
from the ComEd Default Rate
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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CONCLUSIONS
Community Solar has potential value for municipalities
 Sustainability: Sourcing electricity from local solar resources
 Financial: Lower operating costs for municipal facilities
Several barriers may prevent municipalities from capturing value
 Account balancing, IPA Lottery, 40% maximum subscription cap
 Complexity may prevent municipalities from capturing a fair share of the potential
benefits from Community Solar projects
The MMC Clearinghouse removes barriers to community solar
 Mitigates Account balancing, IPA Lottery, 40% maximum subscription cap issues
 A no-cost option to position the municipality to capture lower costs while
accessing higher volumes of community solar resources
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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THANK YOU VERY MUCH
Mark J. Pruitt
The Power Bureau
P. 219/921-3828
E. [email protected]
THE POWER BUREAU, LLC | METROPOLITAN MAYORS CAUCUS
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