Policies are Changing:
The Time for Solar is Now
May 12, 2015
About TerraVerde Renewable Partners
Since 2009, TerraVerde has been California’s leading
independent solar energy advisor for public agencies.
Recognized leader in project development consulting services, including:
Energy Conservation, Solar PV, Energy/Battery Storage
In house engineering, structured finance, financial modeling, Engineering
Procurement & Construction contracts & Power Purchase Agreements,
Owner’s Rep project management, and post-installation Asset Management
Services
92 solar projects completed for CA public agencies to date
25 projects currently under construction (scheduled for completion this
summer); and another 12 scheduled to begin construction during 2015; 16
including battery storage.
Completed over $105 Million in solar & energy efficiency projects, on time and
on budget; secured over $20 Million in competitive low-interest financing (CEC
Loans, Build America Bonds, QSCBs)
All projects performing at 97-101% of projected performance
Wide ranging experience with multi-site construction, specification driven RFQ
processes, public agency/education code policies and regulations, and turnkey
design/build management.
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Our Clients’ Challenge
How to achieve verifiable solar cost savings that
match projections and expectations, which requires
analyzing large quantities of complex data, multiple
variables, and site conditions across numerous
facilities/sites
evaluating many technologies and financing methods
accurately discerning highest value projects: achieving
net positive cash flow savings with minimal upfront
expense
minimizing burden on staff and disruption to operations:
from initial project development through implementation
providing on-going management of O&M, warranties,
and performance monitoring and reporting
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The Policy & Incentive Landscape
The Big Three Possible Changes
Net Metering (NEM) 1.0 and 2.0
Utility Rate Structures; i.e., Tariffs
Federal Investment Tax Credit (ITC)
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What is Net Metering (NEM)
The NEM option allows you to receive a credit for the surplus electricity you supply
to the electric grid. This credit is applied to your energy bill, to offset all or part of the
costs associated with the energy you consume each month.
Net Metering: Electricity Consumption vs. Solar Production
4,000
SUMMER PRICING
WINTER PRICING
WINTER
PRICING
3,500
kWh per day
3,000
HIGH VALUE
CREDIT
2,500
2,000
1,500
1,000
500
Jan
Feb
Mar
Apr
May
Jun
Solar Production
Jul
Aug
Sep
Electricity Consumption
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Oct
Nov
Dec
NEM Timeline
NEM 1.0 is available until your specific utility
provider (PG&E, SCE or SDG&E) reaches a cap of
5% of their usage comes from customer solar
production, or, June 30, 2017, whichever is first.
Any customer who comes on line with solar before
this timeline will be grandfathered under NEM 1.O
rules for 20 years.
NEM 2.0 regulations are currently being developed
within a California Public Utility Commission
proceeding scheduled to be complete by December
31, 2015.
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NEM Depletion
NEM 1.0 Projected Depletion Timing:
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NEM 1.0 Cap:
Reason 1: The Time for Solar is Now
We don’t yet know exactly how much NEM 2.0 is going to
reduce the benefits of solar; however, there is a high degree
of certainty that the benefits will be less under 2.0 than 1.0
If you were to launch a solar development process today,
best case scenario is achieving “interconnection” within 6-8
months.
In order to come in under NEM 1.0, your
solar project must be interconnected by
your utility before the deadline is reached.
As more people become aware of this
“ticking clock” there is a risk that an
interconnection backlog will occur, further
increasing the importance of moving
sooner rather than later.
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NEM 1.0 versus 2.0
Case Study: “Example USD” – 4.0MW PPA project
Assuming year-1 Avoided
Cost is reduced by ~20% for
NEM2.0, net savings are
reduced ~50% on a long-term
cumulative basis.
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Utility Rate Structures; i.e. Tariffs
PG&E
A6: no demand charges, high summer and peak hour rates; up
to 499 kW peak demand
E19R: reduced demand charges, increased summer and peak
hour rates, available July 1, 2015, up to 999 kW peak demand
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Utility Rate Structures; i.e. Tariffs
Southern California Edison (SCE)
Option R; reduced demand charges
San Diego Gas & Electric (SDG&E)
DGR Rate; “DISTRIBUTED GENERATION
RENEWABLE - TIME METERED”
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Solar Friendly Rates Going Away:
Reason 2: The Time for Solar is Now
PG&E
Most elementary and middle schools are eligible for A6
PG&E has applied to the CPUC to eliminate A6 for all but
customers with 75kW peak demand
SCE
From November, 2013- January, 2015 there was a 12 month gap
when Option R wasn’t available
On January 1, 2015, 250 MW of Option R was reauthorized by the
CPUC
250 MW in Option R is likely to be used up within 18 -24 months
SDG&E
January 1, 2015, significant increase in demand charges
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Tariffs Make a Difference
Case Study:
1.18 MW project;
impact to
cumulative gross
savings if A6 is
not available as
post-solar tariff
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Federal Investment Tax Credit (ITC)
Currently the IRS will provide any tax paying
investor a 30% credit for every dollar invested in a
solar facility
While schools and other public agencies can’t take
advantage of this incentive directly, for those who
enter into a Power Purchase Agreement (PPA) to
obtain the benefits of solar, the price they are
offered by the PPA provider is significantly reduced
by the fact that the PPA provider is able to capture
this benefit.
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ITC Going Down:
Reason 3: The Time for Solar is Now
On December 31, 2016, the 30% ITC is scheduled to
go down to 10% unless Congress acts.
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10% ITC versus 30% ITC
PPA providers will pass the pain of the ITC reduction along to
customers in the form of higher PPA prices…
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10% ITC versus 30% ITC
PPA providers will pass the pain of the ITC reduction along to
customers in the form of higher PPA prices…
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Don’t Jump…
It’s not all that bad…
The costs of solar has come down as the cost of electricity has
gone up (in some utilities as much as 25% over the past five
years).
Projects that didn’t “pencil” 2-3 years ago may now make
economic sense
While the cost of solar has come down, as the proportion of
labor in overall solar installation costs has gone up, further
dramatic cost reductions are unlikely.
Even more important, interest rates/borrowing costs are at
historic lows.
Even more reasons now is a good time to consider solar
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Other Options
RES-BCT
Advanced Energy (Battery) Storage
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Renewable Energy SystemBill Credit Transfer
“Allows a Local Government with one or more eligible
renewable generating facilities to export energy to the
grid and receive generation credits to benefitting
accounts of the same Local Government.”
In other words, you can build your own solar farm and
take advantage of economies of school in solar
installation costs, and offset usage at multiple meters.
Not governed by net metering rules; only offsets actual
usage.
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Battery Storage Paired With Solar PV
Peak demand charge is normally calculated as the highest peak demand during the monthly
billings cycle based on a 15 minute interval.
Adding solar energy generation reduces utility energy (kWh) use/cost, but often has little effect on peak
demand (kW) charges. Summer peak demands often occur during the late afternoon and early
evenings when solar energy output drops off.
For many
commercial
customers the
peak demand
part of their utility
bill can be 30–40
percent of their
total electric bill.
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Advocacy
Solar advocates (including CASBO) are not sitting
on their hands.
They are fighting to…
Keep A6,
Expand Option R and
Make sure NEM 2.0 is structured to meet the statutory
requirement to “ensure sustainable growth of distributed
generation” (i.e., solar provided at customer sites).
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TerraVerde’s Experience
Projects Completed To Date: $105 Million
Projects Under Construction/Development: $31 Million
Sample of Clients
• Visalia USD
• Clovis USD
• Burton City Schools
• Corcoran USD
• Sanger USD
• City of Woodland
• Rancho California Water Agency
• City of Lathrop
• City of Bishop
• Inyo County
• Firebaugh Las Deltas USD
• Golden Valley USD
• Monterey Peninsula USD
• Fowler USD
• Sonoma County Family YMCA 23
What Our Clients Say
“TerraVerde
emphasizes education and transparency. We feel confident that they provide us an
unbiased assessment of the risks and benefits.”
Don Ulrich, Assistant Superintendant, Clovis USD
“TerraVerde is the best partner I have ever worked with in my 28 years of school construction
experience.”
Eric Cederquist, Superintendent, Fowler Unified School District
“TVRP paid special attention to our unique needs and requirements throughout the
development and implementation process. Most importantly, they have worked as a true
partner, providing information in a fully transparent manner and have worked collaboratively
with us to address issues and problems that inevitably arise during the development process.”
Steve Bolman, Superintendant, Petaluma City Schools
“It is my pleasure to provide my highest recommendation for TerraVerde. As their name
implies, they have truly become our partner in all energy matters. Every person that we have
worked with at TVRP knows our particular issues and concerns and is an integral member of
our team as we evaluate both solar and now Prop 39 projects.”
Robert Groeber, Assistant Superintendent, Visalia USD
“While we were in the process of developing our solar project, we had over ten contractors
participate in the mandatory site walk. One of the contractors said to me how fortunate our
district is to be working with Terra Verde. They said that there is never a question as to what is
expected of the contractors and that Terra Verde is very well organized which leaves little room
for mistakes or issues once the project begins.”
Tracy Tucker, MOT Director, Burton City Schools
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Contact Information
Rick Brown, PhD, President
TerraVerde Renewable Partners, LLC
1100 Larkspur Landing, Suite 155
Larkspur, CA 94939
707-953-2885
Rick.Brown@TVRPLLC.com
www.TVRPLLC.com
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TerraVerde’s Mission
Assist California public agencies achieve energy independence, while
obtaining meaningful cost savings, and a reduced carbon footprint
Serve as an independent advisor and owner’s rep, to develop & implement
high value energy projects while mitigating risk
Set realistic goals & objectives
Educate clients about technologies, Utility tariffs/programs, project funding &
financing options, incentives, regulations, contracts
Leverage advanced knowledge, tools, methods, and experience
Develop Client-specific comprehensive energy management programs
Demand management
Energy efficiency measures
Renewable energy generation systems
Systematic analysis and evaluation to deliver maximum benefit projects
Client-centric services: from concepts & plans to life-long operations
management
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Best Practices:
Solar Project Development
Phase 1: Planning, Project Development, Analysis, Recommendations
Set goals & objectives
Gather all relevant data, perform in-depth discovery, develop projects for further
consideration
Prepare feasibility assessments and financial analysis for selected projects
Review finding & recommendations with Client, finalize execution plan
Phase 2: Competitive Bidding, Contractor Selection, Contracts
Develop RFP & run competitive bid process: performance and construction specs,
contract form documents and instructions that yield comparable scopes/pricing
Obtain best value at lowest possible cost and assist with contract negotiations
Phase 3 & 4: Owner’s Rep – Design/Build Process
Oversee design, construction, commissioning and performance validation process
Phase 5: Asset Management (see Slide 12 for more detail)
Perform O&M services, 24/7 systems performance monitoring, quarterly
performance reports & PM logs, and detailed annual financial reports
Note: For more information on Solar Best Practices, go to CASBO/TerraVerde
Webinar:
http://www.casbo.org/?page=Prop39Webinar&hhSearchTerms=%22Webinar+and+
Bid%22
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