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Solar Financing Solutions
for
The City of Napa
Gopal ShankerDecember 12, 2008
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Outline of Presentation
• Global Energy Issues and Implications
• The City of Napa's Energy Situation
• The City of Napa's Energy Solution
• Next Steps
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Global Energy Issues
AB 32Kyoto Protocol
Carbon Tax/Trading
Demand
Supply
Climate Change
BRIC Nations
Peak OilPeak Natural Gas
Petropolitics“Foreign Oil”
Black / Brown outs
Security
SmogMonoculture
Soil DepletionFertilizer Runoff
Health Effects
AsthmaCancer
Agricultural / EcologicalConsequences
On its own, each issue increases the costs of fossil fuels or of using fossil fuels
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Who we are determines what we focus on
Demand
Supply
Climate Change Security
“OldEnvironmentalist”
Health Effects
“MedicalProfessional”
Agricultural / EcologicalConsequences
“Patriot”“New
Environmentalist” “Businessman”
“Oil-man”
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Solutions for these Energy Issues
Nuclear, Renewable Energy,
“Clean” Coal…
Demand
Supply
Climate Change
Energy from all sources, wars…
All renewable energy, coal…
Security
All renewableenergy except
large scale hydro…
Health Effects
Energy from all sources,
wars…
All renewable energy except
biomass…
Agricultural / EcologicalConsequences
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These Issues are Converging!
Demand
Supply
Climate Change Security
Health Effects Agricultural / EcologicalConsequences
Only renewable energy fits in the
intersection of these circles
We can no longer develop/afford
solutions that solve one problem but
exacerbate others
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As the convergence accelerates
Demand
Supply
Climate ChangeSecurity
Health Effects
Agricultural / EcologicalConsequences
The problems merge into a single issue
ENERGY TRANSITION
Renewable energyreplaces fossil fuels
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We have made energy transitions before
• Whale blubber kerosene
• Kerosene electricity
• Warships: wind wood coal oil
• Electricity from coal electricity from natural gas
• And now…fossil fuels to alternatives
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Why not make the transition now?
• Our biases prevent us from recognizing this as a problem of energy transition
• Until we eliminate these biases, we will engage in ineffectual arguments and develop ineffective solutions– Is Climate Change anthropogenic or not?– Food or fuel?– Drill, baby, drill!
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Implications
• The transition is not just for a dedicated few, but for all
• If we don’t make the transition, we will be at serious local and global, economic, environmental, and social risk
• We need to accelerate the transition, because the convergence is accelerating
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We are on the right track in Napa County but need to accelerate
• Goal: Energy Independence by 2012
• Napa Valley wineries have adopted solar (PV) at an extraordinary rate
• They have done so because the COMBINATION of federal, state, and utility incentives made solar affordable
• Non-tax paying entities can also benefit from these incentives now
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Client’s Perspective on Solar
High Risk / High Return
Low Risk / Low Return
Can use tax credits and/or depreciation
Can use tax credits and/or depreciation
Cannot use tax credits and/or
depreciation
Cannot use tax credits and/or
depreciation
• Until now, the PPA was the only viable solar financing option for non-tax paying clients. But it provides little more than a hedge against inflation, because the benefits of going solar have to be shared with the PPA provider.
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Recent developments benefiting local governments and schools
• 30% Investment Tax Credit for solar photovoltaics has been extended for 8 years
• California AB 2466– Local governments and schools can receive a bill
credit (based on the TOU electricity generation component only) for electricity produced off-site
• National Development Council has pioneered, using The Gasser Foundation as a pilot, a solar financing solution for non-tax paying entities
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Outline of Presentation
• Global Energy Issues and Implications• The City of Napa's Energy Situation• The City of Napa's Energy Solution• Next Steps
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Electricity Benchmark forThe City of Napa
• Annual Usage (kWh): 2,645,926• Annual Bill: $393,958• Average Rate (per kWh): $0.15
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Electricity Projections
Period Cost of Electricity
• Last 12 Months (~) $393,958• In 25th year $1,595,110• Over 25 years $21,614,313
Assumptions
6% annual escalation rate
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Annual Energy Bill
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Cumulative Energy Bill
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Outline of Presentation
• Global Energy Issues and Implications• The City of Napa's Energy Situation• The City of Napa's Energy Solution• Next Steps
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PV System Metrics
Current Energy BillElectricity $393,958
PV SystemPV System Size (kW DC) 1,484 Unit Cost of PV System (per DC kW) $8,000
Cost of PV System $11,875,520
Unsubsidized, simple payback (in years) 30
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NDC Proposals
$0.15/kWh $0.22/kWhPayment at Closing $12,280,520 $12,280,520
Investor Equity Contribution $4,767,142 $5,345,314Local Bank Contribution $6,000,000 $6,000,000City of Napa Contribution $1,513,378 $935,206
+ 5 annual payments to NDC each of $524,000 $524,000+15 annual payments to local bank each of $524,000 $524,000
Rebate Level
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Cumulative Energy Bill
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Cumulative Energy Bill(NDC Proposal @ 22 cents/kWh)
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Cumulative Energy Savings (NDC Proposal @ 22 cents/kWh)
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Cumulative Energy Savings (NDC Proposal @ 15 cents/kWh)
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Cumulative Energy Savings(Both NDC Proposals)
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National Development Council Proposal
$0.22/kWh $0.15/kWh DifferencePayment at Closing $12,280,520 $12,280,520 $0
Investor Equity Contribution $5,345,314 $4,767,142 $578,172Local Bank Contribution $6,000,000 $6,000,000 $0City of Napa Contribution $935,206 $1,513,378 -$578,172
+ 5 annual payments to NDC each of $524,000 $524,000 $0+15 annual payments to local bank each of $524,000 $524,000 $0
0Cumulative Payments -$11,415,206 -$11,993,378 $578,172Cumulative Savings $10,199,107 $9,620,935 $578,172
Rebate Level
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Outline of Presentation
• Global Energy Issues and Implications• The City of Napa's Energy Situation• The City of Napa's Energy Solution• Next Steps
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Next Steps
• Sign Letter of Intent with NDC / Récolte to develop turnkey solar installation and financing solutions
• File solar rebate applications (Récolte)• Study sites/bills to determine whether on-site
or off-site generation makes more sense– Compensation at full retail versus TOU generation
• Get pre-qualified for financing
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California Solar Initiative Trigger Tracker (http://sgip-ca.com)