In a special meeting June 1, Ramona Municipal Water District (RMWD) directors agreed to enter into a Power Purchase Agreement (PPA) with a private company that will construct two solar projects at the RMWD sewer plants which will cost the district nothing but could provide savings of $2.2 million in energy costs over 20 years.
“I think it’s pretty win-win for us,” said RMWD Board President Jim Robinson, who served on the Solar Ad Hoc Committee with Director George Boggs. “We’re going to save a considerable amount of money over the 20-year life. And it’s clear to us we don’t have to incur any (additional) payroll, any more employees, no more insurance costs, anything. I think it’s a pretty good deal for us.”
Under the PPA, a private company, known as the power provider, would construct a solar project on property owned by the water district at the power provider’s sole cost. In exchange, the water district would agree to purchase all electricity generated by the solar project for the length of the PPA at an agreed upon price. The price paid would be less than the amount paid to San Diego Gas and Electric (SDG&E).
The provider will be Alternative Energy Capital (AEC), which represents a group of investors that purchase and maintain solar power systems and sell the power generated by the solar panels to public agencies. AEC will hire Sequoia Solar and Hedges Electrical & Construction to install the project.
One solar project will be at the San Vicente Wastewater Reclamation Plant, where the photovoltaic panels will go on two existing shade structures above the evaporating ponds. The estimated savings at San Vicente over 20 years is about $700,000.
The other solar project will be at the Santa Maria Sewer Service Area, where panels will be mounted to steel racking systems that track the sun as it moves from east to west every day. The total solar savings for Santa Maria is estimated to be about $646,000 over 20 years.
Chris Willemin from Sequoia said they looked to see where they could get the most power at the sites.
The remainder of the estimated savings, $880,000, will come from switching from SDG&E’s demand charges of the current AL-TOU (commercial time of rate) tariff to the utility’s DG-R (Distributed-Generation Renewable) tariff after construction of the solar projects.
Additional revenue for the water district could be generated from renewable energy credits should future state laws or regulations allow RMWD to sell such credits under a cap and trade program or a tradable renewable energy credit program.
“I think it will improve our cash flow over the long term,” Boggs said of the solar projects. “By going with a private contractor it has been pointed out that we get the benefits, albeit indirectly, of all the tax incentives, appreciation, whatever the feds are going to give us upfront. The labor costs are less than if we had to do it as a government agency. I think from that standpoint it saves us some money.”
At the end of the 20-year agreement, Tim Walsh of AEC said RMWD would have three options:
•RMWD could buy the system from AEC;
•AEC could pick up the system and walk away; or
•RMWD could extend the terms of the agreement for five years and buy the power at a discounted rate.
RMWD attorney Sophie Akins has worked on PPAs for other solar projects in the state. In March, she suggested the board consider reserving a California Solar Initiative (CSI) rebate by paying a refundable $25,000 reservation fee. Akins explained that the CSI rates, which are established over 10 steps with Step 1 being the highest rebate amount, were decreasing as more applicants apply for and reserve the rebate funds.
By RMWD acting at that time, reserving at the Step 6 level, the water district secured approximately $935,000 in rebate funds for the construction, which allowed for more competitive proposals.
According to RMWD General Manager Ralph McIntosh, about a week after the district reserved the rebate, the level dropped to Step 7, which would have been a loss of about $374,000 in rebate funds.
The $25,000 reservation fee will be refunded to the district after completion of the projects.
One of the residents who spoke at the meeting was concerned that Sequoia is planning to use solar panels manufactured in China.
Willemin said the photovoltaic panels selected come from the largest Chinese manufacturer of solar panels.
“They’re all over Europe, all over the U.S,” Willemin said.
The panels are strong and the technology is pretty standardized, he said.
“From the standpoint of ‘buy American,’ I believe in that,” he said, adding that, if an American supplier could be competitive with pricing, Sequoia would look into it.
The Solar Ad Hoc Committee met multiple times to review proposals submitted by Sequoia, Borrego Solar and REC Solar. Boggs said it was difficult for the committee because the proposals weren’t “apples to apples.” However, the committee determined Sequoia had the most competitive price proposal.
“I’ll be honest, I was skeptical going into it,” said Boggs. “I’m not one for green energy in any form. I think we’ve gotten this down to the point where I can see some economic benefits for the district and that will ultimately be reflected in our rate structure, too.”