Panels, efficient lights help city meet ‘major strategic objectives’; 4.8M kWh produced
Benicia City Council will hear an accounting Tuesday of the Energy Conservation Measure Project that installed solar arrays on 10 city properties and made 3,427 city lights operate more efficiently.
“The city will clearly meet major strategic objectives, and is on track to achieve 2030 greenhouse gas reduction targets outlined in the adopted Climate Action Plan,” interim Finance Director Brenda Olwin wrote in a report to City Manager Brad Kilger on Wednesday.
To date, the system has produced about 4.8 million kilowatt hours of electricity. Because weather has been sunnier than expected, that number is better than had been predicted, she wrote.
Based on her analysis the combined energy projects have a current net value of $600,000.
Olwin wrote that the energy project originally was approved as a collective undertaking designed to meet those objectives at little or no cost to the city.
The Council originally adopted greenhouse gas emissions reduction targets in 2008, she wrote. Two years later, the Council contracted with Chevron Energy Solutions for the project that would start providing city operations with renewable power sources, Olwin wrote.
In April 2011, the Council approved issuing $13.2 million in certificates of participation to underwrite the project, as well as to add photovoltaic arrays at Pump Station 3 and retrofit its street lights.
Also added to the project was improving the City Hall parking lot and installing two wind turbines.
The Council created an Energy Conservation Fund; user charges received are used to pay for the project’s debt and operating costs, depending on whether the money comes from the solar arrays or the lighting retrofit.
Olwin wrote that the Council had assumed that even with the capital, financing and operating costs associated with installing the photovoltaic arrays, it would save money in the long run by avoiding anticipated increased costs of electricity from Pacific Gas and Electric, a conventional energy provider.
She wrote that the 10 solar array sites are treated collectively as an internal electric utility provider, which means the city owns and distributes the solar-produced energy.
Solar panels have been put on canopies at City Hall, the James Lemos Aquatics Center, the Benicia Community Center, the Community Park parking lot, the Corporation Yard, the roof of Fire Station 12 and at ground level at the Water Treatment Plant and Pump Stations 1, 2 and 3.
“Since the city incurs costs to produce and provide solar energy, an adequate level of solar utility user fees are charged based on the relative annual use of solar energy at each site,” Olwin wrote.
The baseline cost of the 10 solar sites is $550,160, the actual cost of PG&E energy in Fiscal Year 2010-11, Olwin wrote. Those baseline costs are presumed to grow at 4.5 percent, though energy consumption at the sites is expected to remain flat, she wrote.
For the first five years of the arrays’ operation, PG&E also pays an additional 90-cent rebate for each kilowatt hour of solar power generated.
“This rebate defrays a significant portion of the cost of the system,” an expected $2.3 million in savings, Olwin wrote.
The costs include debt service payments, or the cost to finance the project, at 5.868 percent for 25 years; $35,000 in annual operation and maintenance costs beginning in Fiscal Year 2014-15; a $40,000 replacement reserve that would start accumulating in 2014-15; and about $2,500 in miscellaneous other costs.
Construction delays, which Olwin wrote were caused by problems with buying additional land to provide the Pump Station 3 array, and panel design changes at the James Lemos Aquatic Center meant those sites didn’t start producing electricity for six months after the other sites began operating. In addition, during 2012-13 the PG&E rebates were delayed, reducing the Net Present Value by $200,000, she wrote.
Design changes at the pool and at Pump Station 2 reduced the city’s savings at those sites, though some of that drop has been compensated by additional capacity at other sites, Olwin wrote.
She noted that the city must follow the mandates of California Proposition 218 in making a financial assessment of the energy conservation project’s operations.
That proposition prevents Benicia from charging the Water Fund solar sites more than the calculated share of the city’s cost to operate and maintain the collective solar system, she wrote.
In fact, the act states that revenue from the water fee or charge can’t be used for any other purpose than the reason for which the fee or charge was imposed, Olwin explained.
Accounting for the lighting retrofit is handled differently than the solar arrays, she wrote. “The lighting retrofit sites do not pay for any costs related to the PV-arrays,” she wrote.
Only capital financing costs were incurred to reduce PG&E electricity and maintenance costs by changing 3,427 lights.
The lighting project is expected to save the city $2,812,588 in expenses while costing the city $1,126,118 in debt costs, $651,075 in replacement costs, for a net value of $1,035,395.
“On a net present value basis, the analysis confirms significant savings,” Olwin wrote.
“The savings will remain with the funds where the projects occurred. For the streetlight replacement, this consists of the Gas Tax and Landscape and Lighting District restricted funds.”
The lights were modified at City Hall, Community Park, the Corporation Yard, the Water Treatment Plant, the Benicia Historical Museum, the Benicia Library, Benicia Police Department, the Wastewater Treatment Plant and along city streets.
Olwin wrote that calculations of the original project’s cash flow “involve engineering and cost calculations requiring a high degree of industry knowledge,” and while city employees tested its cash flow assumptions with outside consultants, those assumptions “may vary from actual experiences over the operating life of the system.”
After all, some of the predictions about the project’s fiscal performance depend on such variables as weather and changing state regulations.
Some of those factors may favor Benicia, she wrote.
“For example, current energy metering contracts for PV-systems have been under scrutiny, and the California Public Utilities Commission recently ruled that the current contracts would be grandfathered for a period of 25 years from the time of system interconnection,” she wrote. “This is excellent news in terms of cash flows for the next 25 years.”
On the other hand, she wrote, “No firm information exists regarding contract terms during the last five years of the city’s project, where a high degree of positive cash flow resides.”
Olwin wrote that Benicia owns the system, and needs to focus on operating it “diligently and effectively.” She said it’s likely the solar panels will still be productive beyond 25 years.
She wrote that an independent solar expert, Sage Renewables, has examined the arrays’ construction and reported that “the systems were installed in a professional manner and designed to generate maximum production within the constraints of aesthetic, structural and site limitations.”
The Council won’t be voting on the report, which will be presented at the panel’s request.
The special meeting of the City Council will start at 6 p.m. Tuesday in the Council Chamber of City Hall, 250 East L St.
Stan Golovich says
Prior to the adoption of the Climate Action Plan, we paid a consultant to examine wind turbine deployment at our two water-processing facilities. This project also addresses two wind turbines. The consultant study concluded a significant amount of energy costs would be reduced with a 250 kilowatt wind turbine, very small by today’s standards. This was at a time when “distributed generation” systems had to be on or adjacent to off-taker site. This would have meant a small turbine at both sites. But now the rules for distributed generation allow for the generating system to be off-site, putting the energy in the grid for transportation and distribution.
Our CAP cites the “incredible wind resources” available to us, most notably on the ridges of the properties the City of Benicia owns north of Lake Herman Road. It is an approved Wind Resource Area by the county. The county presently has a moratorium on new wind turbines on ag land, but it is not expected to become a permanent ban.
My observation is that very little has been discussed at the public policy level with regard to deploying wind turbines on our properties. Our Open Space zoning allows for “minor” utilities of up to 5 megawatts output. The cost savings of wind turbines has been demonstrated by study. Our Strategic Plan speaks of a minor/micro utility north of Lake Herman Road someday, as does our CAP. Wind is by far more efficient than solar, both energy output and land use wise. Major environmental groups support properly sited wind turbines.
The presentation of this report should present an opportunity to open the door on discussion about wind turbines north of Lake Herman Road. I’ve been told that “people will complain”, a member of a city commission mentioned that “citizens would raise holy hell” (about wind turbines). I believe council level discussion on the subject needs to get started. In my opinion we are not implementing the full scope of the CAP by continuing to ignore the potential in the “incredible wind resources” on our properties.
Roger Straw says
I agree with Stan – wind turbines are graceful things of beauty, powerful silent giants providing clean energy from windy hilltops. I am sure there will be some who dislike their looks, and others who worry about bird casualties. Most of us will recognize the much uglier and more lethal options for energy production in fossil fuel refineries. The pendulum is swinging to clean energy, and we will learn to embrace the look and feel of the wind giants sooner or later. I’m in favor of now. Get on this, City Council and City staff!
Bob Livesay says
I believe this solar project was a waste of valuable city time and resources to save $24,000 a year for 25 years. Remember the e-credits were tax payer money. and are now all gone. Renewable energy should come from the producer like PG&E the same way you make catr producers make cars to meet mileage standards. The city is not in the energy business unless they want to be a self relient source for their own energy. They do not AND should not. It is the responsibility of the producer not the city. What happens in say 25 years when they have to replace the panels. Guess what it is going to cost the city an arm and a leg. So while you are fuzzy and huggy about it now justy start to think long term not just an immediate rush.It is not the city responsibility let the producer/provider bare that expeince which will be then divide up the cost with the users at a much less cost or savings. Just my thoughts..
Stan Golovich says
I was unable to find the Energy Conservation Measures Project anywhere on the city’s web site, or at Chevron Energy Solutions web site. The staff report mentions “two wind turbines for meteorological conditions in anticipation of future wind generation projects”, but there are no locations indicated. I believe the staff report meant to indicate anemometers to measure wind resources at both water treatment facilities. Whether future turbines are sited adjacent to our water treatment facilities or on our properties north of Lake Herman Road, the wind resources would have to be assessed. Maybe some “good neighbor” funds can be used to accomplish this task with a company specializing in wind resource met tower installations, before the funds are depleted.
Thomas Petersen says
The idea of wind turbines up on that ridge is a slam dunk. It seems that the wind never stops blowing up there. I’m surprised this has not been done a long time ago. There was at one point, as I recall, a PG&E wind turbine on that ridge line closer to Hwy 80. The bottom line is that we need to start taking advantage of all possible energy resources. It does not make any sense that this in not the case.
Stan Golovich says
One of my favorite Winter Olympics sport is the ski jump. I had the pleasure of going to the ridges on our properties courtesy of a visit facilitated by former City Manager Jim Erikson. The wind stream up there is so powerful that you can lean into it, like a ski jumper. It’s even stronger higher up off the ground.
Hopefully, there will be some political leadership soon to lead the discussion on wind turbines where the best winds are. We have two planning documents pointing to a minor utility, what else but wind turbines, north of Lake Herman Road. Our Measure K protects the open space from growth inducing and service extending development, not wind turbines.