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HomeMy WebLinkAbout~Master - Energy Services Agreement to Construct and Maintain a 2-MW Community Solar Farm RESOLUTION NO. 19-380 RESOLUTION APPROVING ENERGY SERVICES AGREEMENT TO CONSTRUCT AND MAINTAIN A 2-MW COMMUNITY SOLAR FARM AT THE AIRPORT SITE FOR THE CITY OF AMES, IOWA WHEREAS, Ames electric customers have shown interest in the development of a community solar photovoltaic (PV)power project in Ames; and, WHEREAS, a community solar project allows electric customers the opportunity to share some of the benefits of solar power,even if they cannot,or prefer not to,install solar panels on their home,business, or property; and, WHEREAS, the City contracted with Wind Utility Consulting, PC to evaluate options for the development of a large community solar project in Ames; and, WHEREAS, three basic options were evaluated: 1. The City would develop, finance, and own the solar project. All costs would be essentially socialized or spread to all customers,just like the costs for the City's wind energy contract. In essence all customers would participate in the project. 2. The City would develop, finance, and own the solar project; however, Ames customers would have the option to participate in the project. Only those who participate would share in the costs of the project and the benefits. 3. A for-profit company would build and own the solar project, and sell the City the solar power. Since the City is a non-profit entity, it cannot take advantage of the federal income tax benefits available for solar projects. This option allows the private developer to benefit from the tax credits,which would reduce the cost of the project to the City. Any time after six years of operation, the City would have the option to purchasing the solar project from the for-profit company at a greatly reduced cost. Under this option, Ames customers would have the option to participate in the project. WHEREAS, on October 18, 2016, the Electric Utility Operations Review Advisory Board (EURORAB) and the City Council held a joint workshop regarding Community Solar; and, WHEREAS, staff,the public, and EUORAB were in favor of Option 3 and forwarded their recommendation to City Council, which was approved on December 14, 2016; and, WHEREAS, the City Council approved the issuance of a Request for Proposal (RFP) to contract with a third party developer to design, own, and operate a 2 MW community solar farm; and, WHEREAS,the Electric Services Department has been working to implement a community solar project in support of a City Council goal to expand sustainability efforts; and, WHEREAS,the project identified as SunSmart Ames,has three components;Site Selection, Power Purchase Agreement with the solar developer, and an Electric Customer Participation Program; and, WHEREAS, the recommended solar farm approach is for a private developer to take advantage of existing federal tax incentives and construct the solar farm and the City's role in the partnership is to purchase the power generated from this private facility through an Energy Services Agreement; and, WHEREAS, in addition, the City is expected to sell to interested electric customers shares of the energy output in the form of power pacts with the revenue obtained through these sales will be used to pay for the monthly financial obligation to the private developer under the Energy Services Agreement; and, WHEREAS,the preferred site for the community solar farm is located adjacent to the Ames Municipal Airport and the City has received initial approval from the Federal Aviation Administration (FAA) that a solar farm at this location causes no hazards to aviation traffic; and, WHEREAS, on May 2, 2017, a RFP was issued and staff received proposals from 14 developers; and, WHEREAS,based on the total scores and a unanimous decision by the evaluation team,staff has concluded that ForeFront Power provides the best value for the ratepayers, offering 13%more energy over the next best proposal for only a 6% increase in total project cost; and, WHEREAS, staff believes the system being offered by ForeFront Power will be able to handle peak demand better due to its design,the developer offers a stable financing package,and the panels will be more visible from Highway 30; and, WHEREAS, at the time the City approved the Letter of Intent with ForeFront Power, the project was not to move forward until at least 80% of the project has been committed to by the ratepayers; and, WHEREAS, at present, Electric Services has received "Intent to Purchase" forms for approximately 70% of full capacity of the project; and, WHEREAS,staff has received executed contracts from ForeFront Power with a flat cost rate of$60/MWh;however, staff has been able to negotiate a slightly lower contract price of$59/MWh with little no changes to the rest of the contract; and, WHEREAS,to accept this lower price,ForeFront is requiring that the City be the first party to sign the Agreement as a good faith indication of intent to proceed, which is atypical; and, WHEREAS,upon approval of the contract with ForeFront, staff will finalize the Customer Agreement that will convert the Power Pack"pledges"into"commitments," and payments will be requested from customers who indicated a willingness to participate; and, WHEREAS, because the project is not fully subscribed, any unallocated energy will be allocated to Ames electric customers and paid for from the Fuels and Energy budget in the same manner the Wind contract is allocated and paid. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ames, Iowa, that the Energy Services Agreement with ForeFront Power of San Francisco,California,to construct and maintain a 2-MW Community Solar Farm at the Airport site for a contract price of$59/MWh is hereby approved. ADOPTED THIS 23rd day of July, 2019. cr Diane . Voss, City Clerk John A. Haila, Mayor Introduced by: Beatty-Hansen Seconded by: Corrieri Voting aye: Beatty-Hansen, Betcher, Corrieri, Gartin, Martin Voting nay: None Absent: Nelson Resolution declared adopted and signed by the Mayor this 23rd day of July, 2019.