"Power Generation Sales Proposal"
Public Benefits Program Proposal for FY 2007 to 2008, Goals for Energy Efficiency for Years FY 2007 to 2017, And Modifications to Solar Electric (PV) Rebate Program Silicon Valley Power City of Santa Clara 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -1- Table of Contents Introduction ............................................................................................................................... 3 Qualitative Goals & Objectives of the Public Benefit Programs ................................................ 3 Quantitative Goals & Objectives of the Public Benefit Programs .............................................. 4 Discussion on How Goals Will Be Achieved ...................................................................... 5 Program Summaries ................................................................................................................. 6 Proposed New and Modified Programs for FY 2007 to 2008 ................................................ 6 Changes to the Solar Electric Rebate to Meet SB1 Requirements .................................... 6 Program Measurement and Verification ............................................................................ 9 Third Party Programs for Business Customers ............................................................... 10 Ongoing Programs: ................................................................................................................ 10 Updated Budgeted Program Costs and Goals for Fiscal Year 2007-2008 (Operating & Capital); Scenario 2 Projections ............................................................................................. 13 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -2- Public Benefits Program Proposal for FY 2007 to 2008, Goals for Energy Efficiency for Years FY 2007 to 2017, and Changes to the Solar Electric (PV) Rebate Program Introduction The Silicon Valley Power Public Benefit Programs for Fiscal Year 2007 to 2008 need to be increased over the previous year’s authorization and actual expenditures. The City is required to collect and spend 2.85% of its electric sales revenues on cost effective energy efficiency, new renewable generation, low-income energy programs, and new electric technologies research and development. In addition, SB1 requires the utility to set a goal of rebating the installation of about 30 MW of photovoltaic systems over the next 10 years. Since customers have not been accessing current programs at sufficient rates to meet efficiency kilowatt hour savings goals, programs will be enhanced. Further, legislation passed in 2006 (AB 2021) requires the City Council to approve energy efficiency savings goals for the next 10 years and report this information to the California Energy Commission (CEC). After a study done by the Rocky Mountain Institute (RMI) this year, staff has included recommended goals for energy savings in kilowatt-hours and kilowatt demand for the next fiscal year by major customer class. In order to meet these goals, programs will need to achieve over twice the energy savings completed in previous years. Another requirement in this piece of legislation was that a third party audit programs. NCPA put out a Request for Proposals (RFP) last year, and three vendors were selected as having sufficient qualifications to perform this service to member utilities. A contract will developed in the upcoming fiscal year between the City and one of the contractors to meet this state requirement for a third party audit of our PBC programs. Qualitative Goals & Objectives of the Public Benefit Programs 1. Implement cost-effective energy efficiency programs to lower energy use. The cost to implement energy efficiency programs should be lower than the capital cost to build new generation and benefits of the total programs should exceed costs under the Total Resource Cost (TRC) test under the methodology reviewed and approved by the Northern California Public Agency (NCPA) Public Benefits Committee, of which Silicon Valley Power’s PBC program manager is a member. 2. Provide the PBC programs in a manner that creates value to the community and meets all applicable legal requirements. 3. Assist Divisions and City Departments in achieving optimal energy efficiency at City facilities by paying a portion of costs to reduce energy use through rebates and assist in implementing new energy related technologies for the benefit of the City and community. 4. Implement programs to support renewable power generation that increase resource diversity and minimize adverse environmental impacts from electric generation and operation of the electric system. 5. Support emerging technologies to speed up market acceptance, allowing energy efficiency services and products to compete in the open market. 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -3- 6. Assist low-income residents in helping them to pay their electric bills and in installing energy efficient appliances and other measures. 7. Determine the best energy programs to offer Santa Clara customers by collecting input from community organizations, businesses and other City departments. Quantitative Goals & Objectives of the Public Benefit Programs First Year Megawatt Hour By Class Reductions Year Total Utility Residential Commercial Industrial Historical Net 2005-2006 4,687 445 921 3,322 2006-07 to 4/30/07 6,610 1,348 1,231 3,933 Budget Target 2007-2008 11,979 1,812 2,8481 7,3192 Forecast from RMI Historical Utility Specified Upper Bound Cumulative Option Feasible Goal (1.41% of Savings (Based on (0.89% of Sales) Sales) 2005-06) 2007-2008 4,687 25,765 40,683 2008-2009 9,503 51,849 81,931 2009-2010 14,385 78,209 123,268 2010-2011 19,336 104,750 164,681 2011-2012 24,356 131,477 206,178 2012-2013 29,446 158,394 247,770 2013-2014 34,607 185,508 289,465 2014-2015 39,840 212,822 331,273 2015-2016 45,147 240,343 373,202 2016-2017 50,529 268,074 415,268 1 Additional savings come from the new third party program Keep Your Cool. 2 Additional savings come from the new third party programs Retrocommissioning and Compressed Air Management Program (CAMP). 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -4- Chart shows annual electric consumption in MWh at different levels of energy efficiency Discussion on How Goals Will Be Achieved According to RMI’s final report (attached as Appendix “A” to this report3), The amount of cost-effective potential that can actually be achieved is dependent upon a number of factors, including funding levels, customer awareness and willingness to participate, climate, type of load, and degree of experience in implementing programs. Determining what is actually achievable is, therefore, uncertain. The American Council for an Energy Efficient Economy (ACEEE) conducted an analysis of actual efficiency gains in states around the country, and found that between 0.5 and 2 percent savings per year have been achieved, with a median value of 1.2 percent per year. However, SVP has several distinguishing factors that may limit its ability to achieve efficiency potential. These include: Climate—SVP’s moderate climate means that there is likely a lower prevalence of low cost air conditioning efficiency potential in the residential and commercial sectors. Type of Load—SVP has a high level of 24/7 must-run industrial loads, with limited ability to influence the efficiency of the industrial tooling and process (as compared to the process support systems like HVAC). Further, many of SVP’s high-tech industrial customers have expressed disinterest in efficiency measures due, in part, to lack of time or financial need for an SVP rebate. Load Forecast—In the medium- and long-term, SVP has a relatively low level of forecasted new construction (as compared to increases in energy intensity). New construction generally has a higher efficiency potential than energy intensity increases due to the ability to fully integrate efficiency measures into the building design. 3 Demand Response and Energy Efficiency for Silicon Valley Power, Final Report, Volume 2 of 4: Preliminary Energy Efficiency Potential Estimates (May 2007), Rocky Mountain Institute. 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -5- On the other hand, the total cost-effective efficiency potential estimated in this analysis is based on technologies that are currently commercially available. Additional advanced technologies will no doubt come to market in the coming years that will increase the amount of cost-effective efficiency potential. Due to these factors, RMI has given three potential scenarios with estimated savings ranging from 0.16 percent to 1.41 percent incremental savings annually. The lower figure is from FY 05-06 and the higher number is about 40% above what the investor owned utilities in the state have goals to achieve in savings. Because SVP has less feasible savings potential then the IOUs, for the reasons mentioned above, reaching this higher number of energy savings is very unlikely to be feasible. Staff recommends that the City Council adopt Scenario 2. This would place energy efficiency goals at 0.89% of annual load in first year savings. These energy efficiency goals will be reported to the CEC, as required by law (AB 2021 in 2006). Program Summaries Proposed New and Modified Programs for FY 2007 to 2008 Changes to the Solar Electric Rebate to Meet SB1 Requirements Due to legislative requirements, a few changes will be put into place into the photovoltaic (solar electric or PV) rebate. State law requirements include the following items: Funds for the rebate will be paid out of the PBC funds up to the level of the previous years’ budgeted amounts. If rebates exceed that amount, further funding from other utility sources will be necessary. There will be no dollar limit on the amount of rebate or incentive payments for individual PV systems, up to 1 MW in size, provided that customers meet all other program requirements. Rebates will begin at $4.50 per watt for residents and $3.00 per watt for commercial customers under 100 kW. Both will decline at a rate shown below. SVP is required to work toward its portion of the state goal of 3,000 MW of installed solar system (about 30 MW) over 10 years. SVP has a funding cap that it is required to budget to reach this goal. This cap is $27,158,557 for these rebates at SVP. All PV systems that are rebated or incentivized must be sited on efficient buildings. Metering requirements for systems are increased. In order to achieve these requirements, the following changes to the program will be put into place: Suggested New PV Rebate Program: 1. For all systems: An energy efficiency audit is required, whether the system is to be installed on a residential or nonresidential facility. The audit requirement will only be waived for buildings that have received LEED-Certification, Energy Star- Certification, or a previous SVP energy efficiency audit within the past 3 years. Customers are strongly encouraged, but not required, to implement the findings of this audit. All systems must have a dedicated revenue-grade meter and have some type of reporting system, either web-based or utility read. Meters for systems over 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -6- 100 kW will have the option to attach a wireless modem and be able to communicate remotely through the internet. Built in performance monitors on the inverter (rather than separate revenue grade meters) are acceptable for customers not applying for Performance Based Rebates. All PV systems must have a warranty of not less than 10 years to protect against defects and undue degradation of electrical generation output. 2. For systems under 10 output kilowatts: For systems under 10 output kilowatts, rebate payments will be upfront and in the form of net metering. The upfront rebate will increase to $4.50 per output watt for the upcoming fiscal year. This amount will decrease at 7% per year, beginning with July 1, 2008. This will mean that the rebate will be decreased to $4.19 per output watt on July 1, 2008, and continue to decrease annually as shown below (unless state law requirements change): Residential Customer % 3 mW goal 10% Rebate Program 2007-2017 Residential Installed Rebate $/Watt Rebate Expenditures per Step Capacity mW 0.2 $4.50 $900,000 0.4 $3.75 $750,000 0.6 $3.00 $600,000 0.8 $2.50 $500,000 1.0 $2.00 $400,000 1.2 $1.75 $350,000 1.5 $1.50 $450,000 2.0 $1.25 $625,000 2.5 $1.00 $500,000 3.0 $0.75 $375,000 Rebate amounts per customer or installation will not be limited; however, customers who install systems larger than their required load will not be paid for the output of this excess production. Systems under 10 output kilowatts will be paid for production on a net meter basis in addition to the upfront rebate. Any excess power provided into the system will be zeroed out on an annual basis, in accordance with state law. All customers who install these PV systems will continue to have to sign interconnection agreements with the City of Santa Clara, have the system permitted and meet National Energy Code (NEC) and City regulations for these systems. No customer will be allowed to install a system or receive a rebate without the agreement and permits being appropriately signed by both the City and the customer. Funding for these rebates will come out of the Public Benefit Program up to a total of $500,000 per fiscal year. Any rebate amounts above that level in a fiscal year will come from the utility’s generation procurement funds, as required by state law. 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -7- 3. For systems between 10 and 100 output kilowatts: Program implementation will be the same as for smaller systems, except that rebate payment will begin at $3.00 per output watt in July 1, 2007. Following the same declination path shown below, the rebate amount will decrease to $0.25 by the time installations reach 27 mW. Commercial/Industrial Customer % 27 mW goal 90% Rebate Program 2007-2017 Commercial Installed Rebate $/Watt Rebate Expenditures per Capacity MW Step 2 $3.00 $6,000,000 4 $2.25 $4,500,000 6 $1.50 $3,000,000 8 $1.30 $2,600,000 10 $1.10 $2,200,000 12 $0.90 $1,800,000 15 $0.65 $1,950,000 18 $0.45 $1,350,000 22 $0.35 $1,400,000 27 $0.25 $1,250,000 4. For systems 100 output kilowatts and greater: Installations over 100 kW will receive payment on a performance basis. Performance incentives will be paid in place of the upfront rebate and net meter revenues that smaller systems receive. These incentives will pay the customer based on the measured electricity output in kilowatt-hours of their solar system over a five-year period. Pay under this incentive model is for expected system performance, not simple capacity. The payments will remain level for a particular customer during the entire time of the contract for incentives (five years). However, the amount of incentive available for performance-based payments will be reduced by 7% when installations reach certain pre-defined levels, each of which is 10% of Santa Clara’s percentage of the state goal. This means that any new systems signing up for the performance based rebate would have payments reduced by 7% when the total installed capacity of PV systems in Santa Clara reaches 30 megawatts. This is explained in the table below: 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -8- Commercial/Industrial Customer % 27 mW 90% Rebate Program 2007-2017 Commercial Installed Capacity MW $ per kWh PBI Incentive Payment 2 $0.40000 4 $0.36000 6 $0.33480 8 $0.31136 10 $0.28957 12 $0.26930 15 $0.25045 18 $0.23292 22 $0.21661 27 $0.20145 Notification on the utility’s website will be made at least 30 days prior to the change in rebate level. Incentive paid will equal the incentive rate (as shown above) times the system rating times the design factor. System rating and design factor will be based on a site analysis that factors in installation and shading variables. All things being equal, a location with 15% shading will receive a 15% lower rebate. Payments will be distributed quarterly Further details about the Performance Based Incentive: Verification • Verification of the system installation and shading variables will be performed both pre-installation and post-installation. At both times, customers will be notified of their expected incentive level. Verification must be done on-site. No customer will receive an incentive of any kind if the PV system equipment and warranty levels do not meet the program requirements. Payment of Performance Based Incentives • System capacity factor is assumed to be of 0.2 (flat panel) or 0.3 (tracking system). • Performance based incentive payments will fixed and flat on a per kilowatt-hour basis for each customer installation over a 5-year period. • Payment of the incentive will be based on actual metered solar system output. Program Measurement and Verification We have combined efforts with other NCPA utilities to develop a joint measurement and verification effort and report on the energy savings from all programs. We will develop a contract with one or more of these contractors for Council approval. This contractor will then conduct an audit of the programs to meet the requirements of AB 2021. 96f51a0b-4dc4-4090-88e6-52150e43e108.doc -9- Third Party Programs for Business Customers As one of the ways to enhance energy savings through the PBC programs and meet our kilowatt hour and kilowatt demand reduction goals, an RFP was sent out to over 100 potential providers of third party energy efficiency programs. Of the responses received, a review team picked three responses as being the most likely to help our customers without overlapping with programs already being provided. These three programs are direct install replacement of gaskets in refrigeration systems, compressed air system maintenance and repair, and building commissioning. The programs are briefly outlined below. Refrigeration Gaskets; Keep Your Cool The goal of the Keep Your Cool program by Bay Area Gasket Guy is to save 3.9 million kWh in the first year. The program does this by focusing on refrigeration within the food and beverage industry in the City of Santa Clara. Between 30% and 50% of the electricity used in restaurants, grocery stores, liquor stores, convenience stores, and bars is consumed by their refrigeration equipment. Broken door gaskets (the seal around the door) cause refrigerators and freezers to run excessively as the cold air simply leaks into the hot kitchen or store. Missing strip curtains allow the cold air to pour out of a walk-in cooler every time the door is opened. The Keep Your Cool program addresses these problems by offering Santa Clara businesses the opportunity to replace broken door gaskets and install new strip curtains at no cost. Combining Bay Area Gasket Guy's low cost gasket and strip curtain installations with SVP's incentive money makes these no cost to the customer installations possible. Compressed Air (CAMP) CAMP uses a measurement-based audit approach to determine the conditions and performance of the compressed air system and to identify possible efficiency improvements. The detailed audit is performed to provide reliable cost and savings estimates for possible energy efficiency improvements and to determine which should be recommended to the customer for implementation. Once the baseline model is established, a list of possible measures for improving performance is developed. The customer makes the decision about what to implement and the incentive amount will be adjusted accordingly. The customer is responsible for implementing the selected improvements. They may accomplish this work by any combination of efforts from compressed air system contractors and their own staff. The program’s goal is to save about 1 million kilowatt hours in the first year. Commissioning The SVP Commissioning Program (SVP RCx Program) is an innovative cost-effective program to generate substantial energy savings by providing commissioning and retro commissioning services for businesses, commercial buildings, educational facilities, and hotels. The program includes sub-metering and demand responsive strategies. Commissioning services identify measures that improve the energy performance of existing building systems and equipment, often at very low cost. They are typically the most cost- effective method for achieving energy savings. Including program incentives, customer investment typically would have a payback of less than one year. The program’s goal is to save about 1 million kilowatt hours in the first year. Ongoing Programs: In order to achieve greater savings from the industrial customers, as recommended by RMI’s report (referenced above), we will increase the maximum rebate allowed per customer from $600,000 per year to $2,000,000 per year. 96f51a0b-4dc4-4090-88e6-52150e43e108.doc - 10 - In addition to the changes and new programs discussed above, the following energy efficiency and renewable energy programs are available to customers: Santa Clara Green Power: Residents and businesses can purchase 100% renewable energy credits (wind and solar) through this program at an additional cost of $0.15 per kilowatt hour. Residential Appliance Rebates: The program encourages residents to purchase and install ENERGY STAR® labeled refrigerators. Customers receive $50 rebates for new refrigerators if they also participate in the refrigerator-recycling program. Under the recycling program, residents receive $35 rebates for turning in old working air conditioners or refrigerators. Low-Income Refrigerator Replacements: Replaces up to 100 old, energy wasting refrigerators for residents in the financial low-income program with new, energy-saving appliances. Residential Insulation Rebates: The program encourages the installation of attic insulation. Single-family dwellers receive rebates of $175 for installing insulation, while rebates for multi- family units are $100 per unit. All homes are inspected to ensure installation has been completed. Residential In-Home Energy Audits, Education, and Hot Line: The program encourages residents to become more energy efficient and reduce their energy bills. Staff members visit homes and provide information and energy saving items (four compact fluorescent lights, “lime lites,” and programmable thermostats). Also, the Solar Explorer and the SVP information booth will continue to be displayed at several city events, providing education on energy efficiency and solar electric generation systems to residents. With the Police Department, compact fluorescent light bulbs (CFL’s) and educational materials are given to residents participating in the National Night Out Program in August. Solar Electric Project: A capital project to install a 125+ kilowatt PV carport at the Great America Train Station is underway. Neighborhood Solar Program: Customers pay into a special fund to support the installation of solar electric systems at community buildings. The second installation at Valley Village Retirement Center was completed this past April. Of the funds given for this installation, $10,000 came from industrial customers. Member voting will soon be underway for a third location. SVP Plug-ins Catalog: The energy-efficient product catalogs are delivered four times per year to residents. Regular monthly promotions are available to customers who order over the web. The printing of catalogs and fulfillment of customer orders is done by Energy Federation, Inc. Rate Assistance Program: Customers receive a 25% discount on their electric bill if they qualify through low income or needing high electric use for medical reasons. The financial program is administered by the state, while the medical discount is managed in-house. Business Audits: Provides free energy efficiency audits to business customers. Lockheed Martin Aspen administers this and other business PBC programs. OPUSSM: Gives implementation services for small to medium sized businesses installing energy efficient lighting or air conditioning. Business Energy Information: Management Information and education on energy usage through 15-minute interval meters, Itron’s The Utility Manager software, training, and other sources. Business Rebates: Encourages businesses to install energy efficient lighting, motors, air conditioners, motion sensors, programmable thermostats, cool roofs, and customized energy-efficiency/peak load reduction installations. The programs are occasionally changed 96f51a0b-4dc4-4090-88e6-52150e43e108.doc - 11 - to match statewide programs. Lockheed Martin Aspen administers all of these except for the washing machine rebates, which are administered by the Santa Clara Valley Water District. RD&D Showcase Grant: The program encourages businesses to develop new energy-related technologies by paying grants to companies that demonstrate applicable technologies. Public Facilities’ Energy Efficiency Program: SVP provides technical assistance and financial incentives for the expansion, remodel, and new construction of City of Santa Clara buildings. Included in this program are higher levels of rebates for qualifying equipment, energy management assistance, and a small budget for retro commissioning. Demand Response: In 2005, Silicon Valley Power had a load factor of 72.7%. This unusually flat profile is primarily due to the high percentage of sales to large high tech firms that operate on three shifts daily, 365 days per year. In addition, because of the relatively mild climate, residential and commercial customers do not have the peak in energy usage that they show in others parts of the state. This is particularly true for residents, who very often do not have air conditioning. Due to this very high load factor, Silicon Valley Power’s demand response consists of a voluntary load-shedding program called the “Power Reduction Pool.” In a voluntary arrangement, these customers reduce their load by at least 1 megawatt during system emergencies. The communication network of customers and SVP staff for these shutdowns is tested at least once per year. 96f51a0b-4dc4-4090-88e6-52150e43e108.doc - 12 - Updated Budgeted Program Costs and Goals for Fiscal Year 2007-2008 (Operating & Capital); Scenario 2 Projections Rebates to Program # kWh Saved kW Saved Customer Total Budgeted REVENUE PBC Charges $ 6,700,000 Subtotal Revenue $ 6,700,000 EXPENDITURES Energy Efficiency Residential Audits 200 79,600 25.96 $ - $ 125,000 Ref. Rebates 250 21,750 3.75 $ 12,500 $ 25,000 CFL Giveaway 10,000 320,000 60.00 $ - $ 15,000 Attic Insulation Rebates 100 35,100 30.40 $ 17,500 $ 25,000 MF Insulation - 0 -$ - $ - Ceiling Fan Rebates 50 9,000 0.65 $ 1,000 $ 1,000 Plug-ins Rebates (Lights) 400 12,800 2.40 $ 6,000 $ 125,000 Low Inc Refr Replacement 100 194,600 0.80 $ - $ 60,000 Refrigerator Recycling 500 973,000 4.00 $ 17,500 $ 75,000 Window AC Recycling 50 3,800 5.70 $ 1,750 $ 25,000 Whole House Fan Rebates 15 7,755 11.70 $ 3,000 $ 5,000 LCD Rebate 200 8,600 1.00 $ 4,000 $ 5,000 Business All Audits 100 39,800 6.49 $ - $ 700,000 Light Rebates 150 4,672,510 761.99 $ 350,000 $ 600,000 HVAC Rebates 25 500,000 81.54 $ 200,000 $ 400,000 VFD Rebates 50 2,000,000 326.16 $ 500,000 $ 500,000 Motor Rebates 5 350,000 57.08 $ 15,000 $ 20,000 New Const. Rebates 2 550,000 89.69 $ 200,000 $ 220,000 Washer Rebates 75 95,000 54.00 $ 7,500 $ 12,500 CDR's 5 7,500,000 1,223.09 $ 750,000 $ 750,000 LCD Rebates 500 69,000 11.25 $ 10,000 $ 20,000 Third Party Energy Efficiency 15 6,000,000 978.47 $ 500,000 $ 750,000 Energy Info & Web - -$ - $ 350,000 City Programs 5 250,000 40.77 $ 100,000 $ 125,000 Refrigeration/Gasket 25 500,000 81.54 $ - $ 50,000 Renewable Green Power (most paid by Member Fees - $ - $ 25,000 Habitat Solar 6 18,000 8.40 $ - $ 100,000 Solar Project--new capital funds 150,000 20.00 $ - $ 500,000 Solar Rebate--Residential 20 60,000 28.00 $ 240,000 $ 250,000 Solar Rebate--Business 10 150,000 40.00 $ 500,000 $ 540,500 NSP/Valley Village 1 6,000 3.00 $ - $ 25,000 Low Income RAP 2,000 - $ 140,000 $ 150,000 EM&V $ 150,000 Community Education $ - $ 50,000 Total Expenditures 14,858 25,765,000 4,439.92 $3,975,750 $ 6,699,000 REVENUES - EXPENDITURES $ - 96f51a0b-4dc4-4090-88e6-52150e43e108.doc - 13 -