RENEWABLE ENERGY PROCUREMENT (REP) is a project of the Joint Venture Public Sector Climate Task Force.
The Challenge
Two of the major challenges regarding public sector adoption of renewable energy include the barrier of high upfront costs associated with the purchase and installation of these technologies, and a history of roadblocks in the development of successful agreements. The goal of this project is to address both challenges via a regional aggregated Renewable Energy Procurement including Power Purchase Agreement (PPA) financing.
Although purchasing a renewable energy system outright is generally considered to be the most cost effective strategy in the long-term, the high capital costs are often prohibitive. An alternative method of financing is needed in order to utilize renewable energy and thereby decrease energy costs and aid in the reduction of carbon emissions in compliance with AB32. In the past five years, the financial sector and renewable energy providers have developed innovative third party ownership financing structures (Power Purchase Agreements) to take advantage of the tax incentives available to the private sector. However, these financing structures require significant legal, procurement, property management, and engineering expertise to execute and therefore have high transaction costs that present a barrier to local governments.
The Opportunity
In order to support the public sector adoption of renewable energy generation and reduce transaction costs, the members of the Joint Venture Climate Protection Task Force have suggested a regional collaborative procurement, lead by Santa Clara County. By leveraging the contractual resource investment of the lead agency and creating a procurement pool, all will benefit by reducing or eliminating a barrier to adoption of renewable power.
A regional Power Purchase Agreement (PPA) will be made available, providing an opportunity to break down both the upfront capital barriers to direct ownership and the transaction costs associated with third party financing and move our region forward in municipal renewable energy usage. Additionally, by doing an aggregated procurement rather than individual ones for each city, the costs of developing the agreement are reduced significantly for all parties involved. This method not only conserves funds, but also accelerates the financing process and deployment of renewable energy technologies, promotes compliance of AB32, and supports local economic development.
Project Goal
To combine the efforts of local governmental agencies by identifying potential sites for renewable energy usage on government land/facilities, and create a PPA which will be made available to provide financing for appropriate individual projects within the larger, overall plan.
Benefits
- Conserve government funds available for capital equipment.
- Reduce greenhouse gas emissions from local government operations.
- Reduce dependence on fossil fuels.
- Stabilize the cost of electrical energy during a time when we expect prices to rise sharply (hedge against rising and volatile electricity rates).
- Reduce the cost of photovoltaic systems through volume purchasing/ aggregated projects.
- Reduce vendor costs through economics of scale and standardization of purchasing methods.
- Help smaller cities access technical expertise that they cannot afford to hire.
- Minimize workload for cities through the use of turnkey installations of solar systems including financing, installation, maintenance, and operation.
- Support / stimulate the creation of local clean tech jobs.
- Encourage use of local technologies and resources.
Project Outcomes
- Renewable energy generation systems installed on public sector facilities and land throughout Silicon Valley.
- Stimulate the local economy by using local vendors thereby creating more jobs.
- Procurement documents and lessons learned that can be shared with schools, landlords, and other organizations considering renewable energy systems to help them reduce their greenhouse gas emissions and stabilize their cost of electricity.
- A case study to share with other regions looking to do similar projects.
Leadership Team
- Siva Darbhamulla, Chief of Design Services, County of Santa Clara
- Ben Foster, Vice President, Optony
- Caroline Judy, Assistant Director, Government Support Services, County of Alameda
- Jerry Lahr, Power Program Manager, Association of Bay Area Governments
- Kara Gross, Vice President, Joint Venture: Silicon Valley Network
- Rachel Massaro, Associate Director of Climate Initiatives, Joint Venture: Silicon Valley Network
- Steve Mitra, County Counsel, County of Santa Clara
- Lin Ortega, Utilities Engineer/Program Manager, County of Santa Clara
- Chris Schroeder, Purchasing Agent, City of Milpitas
- Mary Tucker, Energy Program Manager, City of San Jose
Where do I find out more?
For more information please contact Rachel Massaro (
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).
Request for Proposals (RFP) and Site Listing
Final RFP Document posted on BidSync
Request for Information (RFI)
RFI Questions/Answers (BidSync)
The following is a brief summary of the RFI results:
- 19 vendors responded.
- Most respondents indicated that their firm had been in business between 2 and 5 years. The significance of this finding is that traditional municipal government procurement criteria require extensive years of experience. Doing so in the renewable energy market would preclude most firms from competition.
- Most respondents are specialized into either solar ground mount or roof top systems. A few firms indicated expertise in two or more technology areas but these firms tended to be very large vendors.
- The majority of respondents indicated that the installed cost of power for systems in general was below $0.19 per kwH. Many firms in the lower cost ranges were newer market entrants.
- Most respondents indicated that economies of scale exist in collaborative procurement, and that these are quantifiable around 5% for bundled project packages of 10 MW, 15 % for packages of 20 MW, and 20% for packages of 50 MW. These discounts need to be compared to the cost per kwH of PG&E rates and potential increases over the 20 year period.
Additional Resources
Video, 3-30-2010 Press Conference
Media Coverage
Santa Clara County News Release 3-30-2010
Media Advisory for RFP Release/March 30 Press Conference
3/30/2010 Article in the Silicon Valley / San Jose Business Journal
3/30/2010 Article on PublicCEO.com
Video of 3/30/2010 Press Conference on KTSF (in Chinese)
5/11/10 Greentech Media Coverage of Agrion Event, Anatomy of a Power Purchase Agreement
County of Santa Clara Board of Supervisors / Board Committee Meeting Documents (link)
Events
Upcoming
[No currently scheduled events]
Past
Project Management Workshop. In partnership with San Jose's Solar America City Program, Silicon Valley Energy Watch, and the County of Santa Clara. Thursday, August 5, 2010. San Jose City Hall.
Webinar on Improving Solar PV Results through Collaborative Procurement. Rachel Massaro (Joint Venture), Ben Foster (Optony), and Siva Darbhamulla (County of Santa Clara) participated in a webinar on our REP Project hosted by the US EPA Green Power Partnership on Wednesday, August 4, from 11:00 am – 12:30 pm. More information is available at http://www.epa.gov/greenpower/events/4aug10_webinar.htm, and the presentation is available using this link.
AGRION Event. Members of the REP Project Leadership Team (Rachel Massaro, Ben Foster, and Siva Darbhamulla) spoke on a panel about the Anatomy of a Power Purchase Agreement. Press at http://www.greentechmedia.com/articles/read/anatomy-of-a-power-purchase-agreement/.
Pre-Bid Conference. Tuesday, April 13, 2010. County of Santa Clara Center at Charcot, San Jose.
Press Conference. Tuesday, March 30, 2010. Sheriff’s Auditorium, San Jose.
Request for Information Meeting. Tuesday, November 10, 2010. County of Santa Clara Center at Charcot, San Jose.