Solar Energy Proposal City of Galesburg WORK SESSION FEBRUARY 26, 2018

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1 Solar Energy Proposal City of Galesburg WORK SESSION FEBRUARY 26, 2018

2 Illinois Solar Overview December 2016 new legislation paves way for solar in the State of Illinois Requires utilities to have 3.0 GW of solar in energy mix Utilities required to buy Solar Renewable Energy Credits SRECs generated from solar to validate solar is in their energy mix The proceeds from the sale of SRECs to the utilities is used to offset cost of solar Established different incentives for categories of solar types (residential, community solar gardens, utility, brownfield, behind the meter, etc.) Categories most relevant to City of Galesburg are: i) Community Solar Gardens, and; ii) Behind the meter (explained more later) Within each category there are different incentives for different sizes and different end users 1

3 Background City developed internal working group in March 2017 to review solar. Working group met with initial solar company to discuss the new solar program in Illinois. Auction type program. Difficult to know profitability. Program rules changed throughout 2017 to a new declining block program where prices are fixed and economic models are easier to estimate. 2

4 Background (Cont.) Working group reviewed proposals from 3 different solar companies. Each proposal included installing 2 Megawatt solar systems in four locations and possibly a smaller solar system for a total of 5 systems. All proposals included leasing property from the City and selling the City power from the solar systems at a reduced rate. 3

5 Community Solar Gardens (CSGs) Gardens of solar panels of approximately 15 acres The CSG receives a credit for the amount of energy it puts back to the Grid Those credits are sold back to the community at a discount to their value Credits have a value equal to the per watt Energy Supply Cost on your Ameren bill Credit shown as a separate line item on customers bill Customers are limited to buying a maximum of 40% of the credits from a single CSG 4

6 Community Solar Gardens 1 The sun shines and the solar panels generate power that is sent to the grid 2 Ameren creates a monetary credit for each kwh of solar produced by the solar panels and put on the grid. 3 The owner of the community solar garden instructs the utility to allocate those credits to the utility bills of the Community Solar Garden Subscribers One subscriber cannot take more than 40% of the power from a solar garden 4 The Community Solar Garden Subscribers utility bill is reduced by the value of the credits received and they pay the Community Solar Garden owner for those credits. 5

7 Behind the Meter Solar Solar is on a building or field adjacent to where it will be used ( Host ) Energy is used on site and reduces Host electric used from the Grid Excess electric used is put back to the Grid and Host receives a Credit from Ameren The value of the Credit equals the per watt energy supply and transmission costs Host pays for solar energy through a Power Purchase Agreement ( PPA ) 6

8 RECOMMENDATION Working group considered Past Experience Familiarity with State of Illinois rules and procedures Financial ability to complete the project Overall Economic Benefit to the City Working group selected Community Power Group (CPG) to recommend to City Council to develop solar for the City based on their proposal.

9 CPG Proposal Install two 2 MW Community Solar Systems at Logistics Park acres each location, one on west side and one on east side. Install one 2 MW Community Solar System at Airport acres SE of runways. Install one 2 MW and one 1.7 MW Behind the Meter systems in Oquawka acres. 8

10 Letter of intent CPG Proposal (Cont.) Provides for CPG to have 120 day exclusive right to negotiate PPA and Lease agreement During 120 day period, CPG begin interconnection and permit process at no cost to City. CPG will pay a $5,000 fee to the City once PPA and Lease agreements are negotiated and approved. Not binding After 120 day period if can t reach agreement on PPA and Lease agreements then can walk away. 9

11 Benefits City owned property will be leased: City to collect almost 5 times more rent in the Logistics Park and at the airport than current rent amounts. City also will collect rent on vacant ground by Water Treatment plant. Reduced Electric Rate City will receive an estimated 35 40% reduction in the cost of electricity for City owned buildings for 25 years. City will receive an estimate 40 50% reduction in the cost of electricity for the Water Treatment Plant and well field in Oquawka. Savings Overall projected savings over 25 year period estimated at over $10 million. (Includes energy savings and leases) 10

12 Next Steps Enter into Letter of Intent with CPG CPG files interconnection agreement with Ameren City to negotiate and approve Lease Agreement and Power Purchase Agreement (PPA) CPG takes care of all permitting, applications, approvals, and engineering design. CPG anticipated construction fall of 2018 or spring of

13 Who Pays What? The solar company pays for the installation and maintenance of the Solar Facility (for both a Community Solar Garden or Behind the Meter) City of Galesburg only pays for power that is actually used on site or for which a net meter credit is actually received (e.g., no benefit no cost) 12

14 Frequently Asked Questions 13

15 How long is construction? This can vary depending on many factors such as size of the project, design parameters, how much concrete needs to be poured, etc. In general for a 2MW site the time can range from 3 to 5 months 14

16 Ground Cover and Maintenance CPG looks to plant pollinator friendly vegetation CPG responsible for all maintenance Facility is monitored remotely and visited twice during summers for cleaning and ground cover maintenance Spare part inventory is maintained at local central location 15

17 Other Timing Construction to start in late 2018 early 2019 Interconnection location of onsite meters is important to understand cost of interconnecting Security Facility will be fenced, low light security cameras can be put in place Local Labor CPG uses every effort to employ local labor in the construction and maintenance of the facility Power benefits CPG will work with the City of Galesburg to identify local customers to be the beneficiaries of the discounted power 16