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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 07/19/2011 - ITEMS RELATING TO A LONG-TERM SOLAR POWER ARRANGEMDATE: July 19, 2011 STAFF: Jim O’Neill Lisa Voytko, Steve Catanach AGENDA ITEM SUMMARY FORT COLLINS CITY COUNCIL 16 SUBJECT Items Relating to a Long-Term Solar Power Arrangement for the Water Treatment Facility. A. First Reading of Ordinance No. 092, 2011, Authorizing the Execution of a Power Purchase Agreement Contract with a Photovoltaic Provider at the Water Treatment Facility for a Term of Up to 20 Years. B. Resolution 2011-059 Authorizing a Revocable Permit to a Selected Solar Provider for the Use of the City Water Treatment Facility Property for a Solar Project. EXECUTIVE SUMMARY The Water Treatment Facility receives its electrical power from Xcel Energy. A solar power generation project, with a fixed electrical rate sold back to the City, allows the offset of a portion of electrical usage at the plant site. A third party Photovoltaic system developer will design, construct, operate and maintain for up to 20 years a solar power project. This Ordinance allows for a 20-year contract between the system developer and the City. The Resolution issues a revocable permit for use of a portion of land onsite of the Water Treatment Facility by the photovoltaic system developer. BACKGROUND / DISCUSSION The Water Treatment Facility is located in Larimer County and as such, receives its electrical power from Xcel Energy instead of City Light and Power. Xcel Energy has a Solar Rewards program that gives third party entities rebates and renewable energy credits for solar power generation. The City cannot take full advantage of the rebates and credits, and instead, selects through a competitive process, a photovoltaic (PV) system developer who designs, constructs, operates and maintains the solar system, and sells the power generated to the City, based on a negotiated fixed rate, through a power purchase agreement. The City received nine proposals, interviewed three firms, and is in the process of negotiating a power purchase agreement with the selected solar system developer. The proposed solar system will generate approximately 145,000 kWh per year. This system is not sized to supply the entire electrical demand for the Water Treatment Facility, but will contribute significantly to the energy savings at the plant. This power purchase agreement is a 20-year contract between the PV system developer and the City. The City Code provides that a multi-year contract for a period of 5 years must be authorized by ordinance. The advantages of the power purchase agreement are: • Fixed rate of electricity throughout the 20-year term, based on a negotiated initial price. • The power generated will only be sold to the City at the Water Treatment Facility. • No upfront capital costs for the City. • No operation and maintenance costs for the duration of the contract • Renewable energy on site to help attain the City’s sustainability goals. • Ability to purchase the system, at fair market value, after year 5, if desired. The Resolution authorizes the execution of a revocable permit to the Photovoltaic System Developer for the solar project. It addresses the project site at the Water Treatment Facility site and its use by the PV system developer to construct the solar system. The City Charter allows Council to grant a permit at any time for the use or occupation of any public place. July 19, 2011 -2- ITEM 16 The site where the solar project will be located is within the security of the water treatment facility, and on raw land that is not currently in use by the plant processes. FINANCIAL / ECONOMIC IMPACTS The Water Treatment Facility utilizes electricity to treat drinking water for its customers. The power purchased from the solar developer will offset a portion of that electrical power demand that must be purchased from Xcel Energy. The advantage is the fixed rate of this portion of the power versus the expected increases in electrical costs from Xcel. Over the 20-year term of the power purchase agreement, the estimated savings is $108,000. ENVIRONMENTAL IMPACTS This project will not impact the quantity and quality of drinking water produced. By replacing utility electricity with renewable solar power, the Water Treatment Facility will continue to work towards the City’s internal sustainability goal of reducing energy consumption by 20% of the 2005 baseline by 2020, and demand peak use by 15% by 2020. STAFF RECOMMENDATION Staff recommends adoption of the Resolution and the Ordinance on First Reading. ATTACHMENTS 1. Location map for the Solar Project area ORDINANCE NO. 092, 2011 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE EXECUTION OF A POWER PURCHASE AGREEMENT CONTRACT WITH A PHOTOVOLTAIC PROVIDER AT THE WATER TREATMENT FACILITY FOR A TERM OF UP TO 20 YEARS WHEREAS, the City’s Water Treatment Facility is located in Larimer County, and it receives electrical power service from Xcel Energy; and WHEREAS, the availability of solar power rebates from Xcel Energy provides an incentive for a photovoltaic (“PV”) supplier to design, construct, operate and maintain a photovoltaic system at the Water Treatment Facility at relatively low cost to the City; and WHEREAS, the Purchasing Agent has issued a Request for Proposals for a PV supplier, and is in the process of negotiating and completing the arrangements for the desired system, which would be installed on vacant property owned by Utilities as part of the Water Treatment Plant property; and WHEREAS, given the investment required to design and construct the PV system, staff has proposed that the City enter into a contract with the PV supplier to sell power to the Water Treatment Facility for a period of up to 20 years; and WHEREAS, the proposed arrangement would allow the City to implement an on-site renewable energy project at the Water Treatment Plant with no up-front capital costs; and WHEREAS, under the proposed arrangement, the City would purchase the power generated by the system at a fixed rate that is lower than the current Xcel Energy rate; and WHEREAS, this would result in a predictable and reduced cost of electricity over the 20- year contract; and WHEREAS, the proposed arrangement would also provide that the City would be entitled to purchase the solar project from the PV supplier after the fifth year of the agreement, at a calculated fair market value; and WHEREAS, this project would assist the City in meeting its internal sustainability goal of reducing electrical usage by 20 percent by the year 2020; and WHEREAS, pursuant to Section 8-186 of the City Code the Purchasing Agent must obtain approval of the City Council by ordinance in order to enter into any contract with a term longer than five years in length. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the Purchasing Agent is hereby authorized to enter into a 20-year power purchase agreement with the chosen PV supplier consistent with the terms of this Ordinance, together with such additional terms and conditions as the Purchasing Agent, in consultation with the City Manager and City Attorney, determines to be a necessary or appropriate to protect the interests of the City or advance the purposes set forth in this Ordinance. Introduced, considered favorably on first reading, and ordered published this 19th day of July, A.D. 2011, and to be presented for final passage on the 16th day of August, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on the 16th day of August, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk RESOLUTION 2011-059 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING A REVOCABLE PERMIT TO A SELECTED SOLAR PROVIDER FOR THE USE OF THE CITY WATER TREATMENT FACILITY PROPERTY FOR A SOLAR PROJECT WHEREAS, the City is the owner of a certain parcel of real property located at the City’s Water Treatment Facility in Larimer County, Colorado, which parcel is described on Exhibit “A”, attached and incorporated herein by this reference (the “Property”); and WHEREAS, the City wishes to enter into a power purchase agreement for up to 20 years with a photovoltaic system developer selected through a competitive purchasing process (“Developer”), to install a solar system on the Property and provide renewable solar energy to the Water Treatment Facility; and WHEREAS, the Developer would install the solar system on vacant land at the Water Treatment Facility that is currently not used for plant or City purposes; and WHEREAS the Developer would design, construct, own, operate and maintain the solar system, and would need access to the Property during construction and during the 20-year contract period for maintenance and periodic equipment replacement; and WHEREAS, as part of the power purchase agreement with the Developer, City staff is recommending that the City Council grant the Developer a revocable permit for access to and use of a portion of the Property identified on Exhibit “B”, attached and incorporated herein by this reference (the “Permit Area”); and WHEREAS, City staff believes that the solar system will not interfere with or adversely affect the Property; and WHEREAS, as a condition of the revocable permit, the Developer would be required to repair any damage to the Property caused by Developer’s activities; and WHEREAS, Article XI, Section 10 of the City Charter authorizes the City Council to permit the use of occupation of any street, alley, or public place, provided that such permit shall be revocable by the City Council at its pleasure, whether or not such right to revoke is expressly reserved in such permit. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the City Manager is hereby authorized to execute such documents as are necessary to grant a revocable permit to the Developer as part of a power purchase agreement, consistent with the terms of this Resolution, together with such additional terms and conditions as the City Manager, in consultation with the City Attorney, determines to be necessary and appropriate to protect the interests of the City or to effectuate the purposes of this Resolution, including any necessary corrections to the legal descriptions thereof that do not result in a material increase or change in character of the Permit Area. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 19th day of July A.D. 2011. Mayor ATTEST: City Clerk Exhibit “A” Page 1 of 1 City Property Description Parcel Number: 97070-00-913 Legal Description (Per County Assessor’s Records): PAR IN NE 7-7-69, AND NW 8-7-69, COM AT E 1/4 COR SEC 7, N 0 42' E ALG E LN NE 702.80 FT TPOB; N 85 55' 45" W ALG NRLY ROW LAPORTE AVE 1288.85 FT, N 0 42' 30" E ALG WRLY ROW OF A PAR DESC AT RECP NO. 852366 460.99 FT; N 89 16' 32" E ALG SRLY LN OF PAR DESC AT RECP NO. 573867 1286.95 FT; S 0 42' W ALG ERLY ROW LN OF PAR DESC AT RECP NO. 852366 320.92 FT; TH ALG SRLY LN OF PAR DESC AT RECP NO. 355173 S 85 56' E 619.33 FT; TH S 29 27' 15" E 298.66 FT; TH ALG NRLY ROW LN OF LAPORTE AVE N 85 49' W 767.90 FT; N 85 55' 45" W 1.80 FT TPOB