Purdue University Solar Endowment Campus PV …€¦ · • Purdue University Departments ......

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Purdue University Solar Endowment Campus PV Roadmap

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1. Describe the team of faculty, staff, students, and other stakeholders that will lead the development of the Roadmap.

Identification of key points of contact:

• Professor William Hutzel – Principal Investigator – [email protected] o https://polytechnic.purdue.edu/profile/hutzelw

• William Arnett – Graduate Research Assistant – [email protected] • Experimental Learning Initiative Team – List of Participants in Figure 1.1

o The ELI is a project-based class managed by Professor Matthew Lynall in the Krannert School of Business. The course builds multidisciplinary teams to tackle real world projects: https://www.krannert.purdue.edu/eli/home.php

Description of size and organization of team, including roles and responsibilities:

Figure 1.1 is a list of Purdue’s Solar Endowment team for Fall of 2015. Roles and responsibilities are assigned, but not limited by the table below.

Figure 1.1 – Solar Endowment Team Members

Team Member Role Responsibility

Professor William Hutzel Principal Investigator Guiding and reviewing PV development team, including identifying stakeholders and stakeholder engagement.

Professor Matthew Lynall ELI coordinator Recruits multidisciplinary teams for project-based learning. Provides

feedback on student work

William Arnett RA for Solar Endowment Project/ELI Team Member

Primary contact for Experimental Learning Initiative (ELI) team. This includes, but is not limited to, site selection, feasibility design layout, and energy analysis. Works part time at the Purdue Power Plant.

Cindy Karina ELI Team Member Lead organizational team member in charge of identifying stakeholders, key contacts, and stakeholder confirmation.

Kuldeep Kumar Patro Gouri ELI Team Member Focusing on the development of PV sites, such as interconnection,

land development studies, and site selection.

Praneet Singh Arshi ELI Team Member Risk and legal/regulatory contact. This includes permitting, permitting and interconnection qualifications, and policy and incentive analysis.

Ravi Rajesvaran ELI Team Member

Understanding the projects financial goals and university investment opportunities. Examples of this include financial structuring and direction, financing confirmation, economic analysis and procuring financing.

Sam Landry ELI Team Member RA for project that is nearing graduation. Has worked in the Purdue Power Plant to evaluate solar electricity.

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Description of relationships between university departments, offices, campuses, utilities, solar development companies, project investors and other stakeholders:

The Purdue Solar Endowment team’s engagement with stakeholders includes:

• Purdue Energy Office – Cooperation with the Energy office is helping define electrical limitations of PV sites, along with personal input with stakeholders.

• Purdue’s Master Planning Division – Brad Bowen, Purdue’s master planner, is assisting in prioritizing sites and providing a list of future site development, helping define acceptable areas.

• Purdue University Departments o Wally Tyner, a Purdue professor of Agricultural Economics, is designing

financial models for the feasibility of PV deployment. o Matthew Lynall, a Professor in Krannert, is recruiting students with

business/technical backgrounds to assist the project.

• Purdue Research Foundation – Branch of Purdue University that owns much of the real estate around the campus.

• Purdue Investment Office – Branch of PRF that invests $100 million annually to make a profit from the university’s $2.5 billion endowment.

• Purdue Office of Sustainability – Coordinates university initiatives for recycling, green week, and many other environmentally friendly initiatives.

• Faculty/Student Organizations – University Resources Policy Committee of the Faculty Senate, Purdue Student Government, and Graduate Student Government are campus organizations that can help build grass roots support for the project.

• Solar Development Companies – Inovateus, Telamon, and Solar City have discussed the process of PV site assessing with the team

• Duke Energy – Local utility that provides Purdue with any electrical needs that Wade power plant cannot.

• Indiana Utility Regulatory Commission (IURC) – Oversight organization that could get involved if the project involves Duke Energy

• State Utility Forecasting Group – State organization that provides energy forecasts to the IURC and other governmental organizations

• Solar Endowment Team – Organization funded through the MREA that provides access to technical, development, and investment expertise for the project

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Description of student engagement and retention strategy: The principal investigator advertises and recruits undergraduate and graduate students through normal university channels, which includes direct email, campus flyers, and electronic messages upon logging into university-owned computers. Students interested in renewable energy sign up to get relevant technical expertise that enhances a resume. Students earn course credit or research credit for participating. There is a constant turnover of students in the class. Students join the project for at least one semester and stay active based on their level of interest. The principal investigator and research assistant who are on this project for the long haul are constantly recruiting and training new students who join the solar endowment team. The site assessor credential available through the MREA is of great interest to students as a resume builder. Description of academic credit or other benefits provided to students or other stakeholders for their participation: All ELI team members were assigned to the Solar Endowment Project through a graduate level MBA class, ELI Corporate Consulting. This is a four credit course which contains both graduate and undergraduate students. Research credit is also available through the Discovery Park Undergraduate Research program http://discoverypark.itap.purdue.edu/learningcenter/duri/ https://www.krannert.purdue.edu/eli/home.php Identification of professional development needs of team members and strategies to improve campus capacity for PV development and investment: Team members of the Solar Endowment Project are receiving professional assistance through the MREA, campus personnel, stakeholders, and third party contractors who specialize in PV deployment and design. Some needs of the team involve accessing information on legal considerations, permitting, and financial analysis of priority sites. Solar photovoltaics are a tough sell at Purdue because the university has its own power plant that makes low cost electricity. The main strategy for improving the environment for PV deployment and investment at Purdue is to work closely with the Purdue Energy Office. Once the Energy Office and Purdue University are convinced that solar photovoltaics is a cost effective strategy for mitigating the cost of energy increases over time, solar deployments could occur rapidly. Another aspect of improving the environment for solar includes outreach to faculty and students on campus who are generally supportive of green technologies. The Solar Endowment team will present their findings to Purdue’s student council, both undergraduate and graduate, to help raise student awareness of PV systems and gain support. The Solar Endowment team will continue raising awareness and support for PV systems by engaging with the respective parties at the university.

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2. Decision-Making Process and Key Stakeholders University Current Standing on Sustainable Energy Purdue University currently has a Sustainability Strategic Plan established. This plan lists long and short term goals for sustainability on campus, varying from renewable energy to reducing carbon emissions. According to the long term goals, Purdue will have 10% of its total energy demand satisfied by renewable energy by 2025. Additional campus goals include reducing greenhouse gases and pollutants. Another key component for establishing sustainable energy on campus is the EPA’s Clean Power Plan. This regulation, specific to Indiana, requires power plants to reduce their carbon emissions by 30% by 2030, compared to the 2005 carbon emission data. Reducing these emissions is a combined effort through regulating electricity and transportation sectors. The Sustainability Strategic Plan and Clean Power Plan are helpful driving forces for constructing photovoltaic systems. Both of these criteria can be benefited by establishing PV on campus. These plans will help provide a close second look at the proposal of solar energy when proposed to stakeholders. Identification of key offices, positions, committees, and individual contacts: Figure 2.1 is a list of individual contacts, key offices, and committees involved with the decision making process for the Solar Endowment project. This hierarchy is subject to minor change in tier 3 based on PV site selection. Figure 2.1 provides not only the key points of contact, but provides the tiers that the Solar Endowment must go through. Each tier will need to be completed before progressing to the next level.

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Figure 2.1 – Decision Making Hierarchy at Purdue

Identification of key concerns and responsibilities of priority decision makers:

Key concerns and responsibilities are tier based, as shown in Figure 2.1. The following is a flow list that addresses each sections key concerns and responsibilities.

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Tier1KeyConcerns KeyResponsibilities

• FutureLandDevelopment• InterconnectionLocations• PVMountingStyles

• PVPrioritySiteSelection• ObtainingStakeholderInput• ConsultingThirdPartyContractorsfor

Expertise


• EducatingonSolarEndowmentProject• ExpressingtheDifficultyofPVatPurdue• AddressingAnyConcerns

• PromotionofPVDeploymenttoStudentBody

• InputonPVSelectedSites


• AddressingInterconnectIssues• ApprovalofSelectedSite(s)• AcceptanceofFinancialStructuring

• ApprovalfromEachOrganization


• FinancialJustificationofProject• ApprovalofPVSite(s)• AcknowledgingStudentBodySupport

• ConfirmationofFinancingModel• AgreementofSelectedSite(s)• ProgressingProjecttoNextTier


FinancialJustificationofProjectApprovalofPVSite(s)AcknowledgingCampusSupport

DeterminingifProjectWillProgressEstablishingaMeetingwithBoardofTrustees


• FinancialJustificationofProject• ApprovalofPVSite(s)• AcknowledgingCampusSupport

• DeterminingifProjectisJustifiable• ImplementationofProject

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Description of relationships of parties, including hierarchies, committee compositions, and influential players:

The Solar Endowment relationship with parties is compiled of two basic elements; current involvement and influence over the project. Figure 2.2 provides a visual demonstration of the projects current relationship status with stakeholders. As the project progresses current classification are subject to change.

Current Participation Direct Influence Indirect Influence

Involved

• Purdue Research Foundation

• Energy Office • Purdue Athletics • University Master

Planners • Solar Endowment Team

• Office of Sustainability • Faculty and Staff • Duke Energy

Not Involved

• Board of Trustees • Purdue President • Vice President of

Physical Facilities • Treasurer • Student Governments • Buildings and Grounds

Department

• Graduate Student Government

• Undergraduate Student • Government

Figure 2.2 – University Party Relationships with Solar Endowment

Definition of meeting calendars, decision cycles, and agenda management for all relevant parties:

The ELI team meets twice every week, one of which includes Professor William Hutzel for updates on the projects status. These meetings alternate every week due to student class scheduling, as shown in Figure 2.3. All times listed are subject to change with respect to stakeholder and related party meetings.

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Figure 2.3 – Team Calendar

3. Priority PV Development Sites Electrical Infrastructure

All of the highlighted portions in Figure 3.1 below list possible priority photovoltaic sites. Each site has been assessed for electrical needs with the assistance of the Purdue Energy Office, and has a close proximity to a substation or interconnects to the buildings grid. Due to the security nature of Purdue’s grid a visual representation cannot be provided.

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Figure 3.1 – PV and Substation Locations

Figure 3.1 shows the close proximity of each photovoltaic site to a substation. Areas not directly near a substation will be tied into the grid through the current electrical structure located at that building. Other possible interconnects are plausible, but substation locations provide lower interconnect costs. For security reason the substation locations will not be provided.

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Analysis of Electrical Rates and Usage The analysis of Purdue’s electrical consummation and rates were compiled in conjunction with the Wade power plant. Through obtaining and normalizing Purdue’s consumption data a seasonal energy usage was acquired, as show in Figure 3.2. This graph provides insight on the seasonal and hourly energy use by Purdue. Even though summer has a higher average consumption it doesn’t have the highest peak, instead fall has the highest values generally. Generally speaking this is due to the lack of student activity on campus.

Figure 3.2 – Purdue Seasonal Hourly Energy Consumption Another energy analysis concerns the Real Time Pricing purchasing by Purdue. The scatter plot graph in Figure 3.3 lists individual readings through 2014, along with a cumulative consumption rate.

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Figure 3.3 – 2014 Real Time Pricing vs Consumption Scatter Plot

Figure 3.3 provides an average of electrical Real Time Pricing usage and price throughout 2014, showing the electricity was purchased. An annual average graph of Real Time Pricing can be demonstrated in Figure 3.4 below. This summarizes a years’ worth of RTP energy consumption data and compares it directly to the annual RTP pricing.

Figure 3.4 – 2014 Summary of Energy Consumption and Pricing

As seen from the table the average peak consumption is during peak sun hours (9:00am – 3:00pm), which is when a photovoltaic system provides the most energy. In addition, the RTP rate is near its highest cost.

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Mackey Arena Parking Area:

PV Characteristics Mounting

Style System Size

(kWDC) Annual AC Energy

(kWh) Area (m^2) $/WDC System Cost

Canopy Style 3,137 4,181,811 20,911 $2.75 – $3.25 $ 5,960,300

Land and Interconnect Characteristics Current Use Development Plans Possible Interconnection Location

Parking Lot None Substation Interconnect

Electrical and Mechanical Integration

• Designing and implementing canopy style; including pole locations. • Running interconnects underground to substation.

Non-Financial Benefits

• Shading • Great Aesthetic Visualization • High Power Generation • Single Location

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Site I

PV Characteristics

Mounting Style

System Size (kWDC)

Annual AC Energy (kWh)

Area (m^2) $/WDC System Cost

Canopy Style 3,924 5,133,289 26,162 $2.75 – $3.25 $ 7,455,600

Land and Interconnect Characteristics Current Use Development Plans Possible Interconnection Location Parking Lot None, Prime Development Site Substation Interconnect


• Designing and implementing canopy style; including pole locations. • Running interconnects underground to substation. • Paving parking lot.


• Shading • Moderate Aesthetic Visualization • High Power Generation • Single Location

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Hilltop Apartments (x3)


Style System Size



Rooftop Mount 179 1,197 14,923 $ 1.90 $ 340,860


None None Building interconnect


• Designing and implementing rooftop style, including weight baring issues.

• Running interconnects; building.


• Low interconnect costs. • Energy used primarily at site.

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France A. Cordova Recreational Sports Center

PV Characteristics

Mounting Style System Size (kWDC)

Annual AC Energy (kWh)

Area (m^2) $/WDC System Cost

Rooftop Mount 2,069 2,536,096 13,795 $ 1.90 $ 3,931,100


None. None. Substation Interconnect.


• Designing and implementing rooftop style, including weight baring issues.

• Running interconnects; building and/or substation.


• Promoting energy efficient buildings at Purdue. • High Power Generation • Single Location

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SITE B


Style System Size



Ground Mount 2,239 3,792,904 14,923 $ 1.90 $ 4,254,100


None. None. Prime Development Site. Substation Interconnect.


• Designing and implementing ground mount, including soil analysis. • Running interconnects to a substation.


• High Power Generation • Single Location

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4. Costs and Risk: Approvals and Legal/Regulatory Considerations

Utility interconnection requirements and fees

Two possibilities have been considered in terms of utility interconnection. The first involves the solar power plant being connected to Purdue’s in-house substations which will not have any establishment or interconnection fee. The second involves connecting it to one of Duke Energy’s substations. After contacting representatives from the company, it was found that Duke Energy Indiana does not currently charge interconnection fee.

Furthermore, as stated by Nancy Connelly, a Duke Energy representative, “According to the Indiana Administrative Code 170 IAC 4-4.3-4, a utility may charge an application fee of $100 plus $2 per kW, so that would be up to $10,100 for a 5 MW project, if they were to charge. The utility may also charge fees for engineering studies such as system impact studies or facilities studies, not to exceed $100 per hour, at perhaps 16-52 hours depending on the complexity of the study. The customer would also be responsible for the cost of any system upgrades needed to accommodate the introduction of such a large amount of generation onto the electric distribution system”.

Joe Knowles, another Duke Energy representative commented that at a level of 5 MW, in most locations, would need to be analyzed by the utility to ensure that the specific location can support that much generation. If connecting at a distribution level voltage of 12 KV or similar there would need to be a distribution level transformer in the substation - the typical interconnection for a 5 MW solar plant. If connecting at a transmission level voltage of 138 KV or above it is likely that an Independent System Operator (ISO) such as MISO would process the interconnection request. Interconnection fees will be assessed based off site location, distance to substations, and the time of implementation.

Permitting and inspection requirements and fees

Permitting varies with the requirements of the county or other local authority. This would be required whether it was a substation serving load capacity or a customer generator. There also may be easements that the customer and/or the utility would need to acquire.

Duke Energy Indiana's electric distribution system serves primarily rural areas, and there are very few parts of it that can easily accommodate 5 MW of generation without major equipment upgrades. If one is looking at utility scale projects it makes

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more sense to do something large enough to connect to the transmission system instead as stated by Nancy Connelly, a Duke Energy Representative.

Joe Knowles, another Duke Energy employee who handles transmission systems to Purdue stated, “Assuming that the interconnection application was approved by the utility and any system upgrades were completed and physical interconnection equipment was satisfactory to the utility, the remaining permits and inspection requirements would be through the local, state and federal authorities. At a local level, zoning and ordinances may be involved”.

Planning and zoning restrictions

The planning and zoning restrictions that need to be addressed for the desired site locations include aesthetics, weight-bearing issues, interconnection concerns and remodeling dates. The above mentioned affecting factors were discussed with the ‘Master Planners’ of Purdue University, along with various other stakeholders. These restrictions are the only considerations since the PV system will be built on Purdue property.

State and Federal policies/incentives

The following policies, laws, and incentives are available at state and federal level. This information was obtained from the NC Clean Energy, Technology Centre.

1. Net Metering

The Indiana Utility Regulatory Commission (IURC) adopted rules for net metering in September 2004, requiring the state's investor-owned utilities (IOUs) to offer net metering to all electric customers. The rules, which apply to renewable energy resource projects [defined by IC 8-1-37-4(a)(1) - (8)] with a maximum capacity of 1 megawatt (MW), include the following provisions:

A utility may limit the aggregate amount of net-metering (nameplate) capacity to 1% of its most recent summer peak load. At least 40% of a utility's net metering capacity must be residential customers. An interconnection agreement between the utility and the customer must be executed before the facility may be interconnected. Net-metered systems must comply with Indiana's interconnection standards (170 IAC 4-4.3). Either a single meter or a dual-meter arrangement may be used. Utilities may not charge customers any fees for additional metering for single-phase configurations installed by the utility, for customers' requests to net meter, or for an initial net-metering facility inspection.

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In May 2011, the IURC approved final rules (effective July 13, 2011) increasing the maximum net metering capacity from 10 kW to 1 MW, and increasing the aggregate capacity limit from 0.1% to 1.0% of the most recent summer peak load. All electric customers are now eligible to net meter. In addition, the rulemaking defined "name plate capacity" for inverter-based net metering facilities to be "the aggregate output rating of all inverters in the facility, measured in kW." Government entities are now exempt from the indemnification provision. Lastly, the rulemaking allows all "renewable energy resources" as defined by IC 8-1-37-4(a)(1) through IC 8-1-37-4(a)(8).

2. Business Energy Investment Tax Credit (ITC)

The federal business energy investment tax credit available under 26 USC 48 was expanded significantly by the Energy Improvement and Extension Act of 2008 (H.R. 1424), enacted in October 2008. This law extended the duration -- by eight years -- of the existing credits for solar energy, fuel cells and microturbines; increased the credit amount for fuel cells; established new credits for small wind-energy systems, geothermal heat pumps, and combined heat and power (CHP) systems; allowed utilities to use the credits, and allowed taxpayers to take the credit against the alternative minimum tax (AMT), subject to certain limitations. The credit was further expanded by the American Recovery and Reinvestment Act of 2009, enacted in February 2009.

The credit available for solar systems placed in service on or before December 31, 2016 is:

The credit is equal to 30% of expenditures, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible.

In general, the original use of the equipment must begin with the taxpayer, or the system must be constructed by the taxpayer. The equipment must also meet any performance and quality standards in effect at the time the equipment is acquired. The energy property must be operational in the year in which the credit is first taken.

Significantly, the American Recovery and Reinvestment Act of 2009 repealed a previous restriction on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31,

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2008, this limitation no longer applies. Businesses that receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit.

3. Solar Easements and Rights Laws

Indiana state law includes both covenant restrictions and solar easement provisions. The state's covenant restrictions prevent planning and zoning authorities from prohibiting or unreasonably restricting the use of solar energy. Indiana's solar easement provisions are similar to those in many other states. Although they do not create an automatic right to sunlight they allow parties to voluntarily enter into solar easement contracts which are enforceable by law. Passive solar structures are explicitly included in the type of solar-collection equipment that may be protected by solar easements.

4. Green Power and Purchasing Goal for Federal Government

The federal Energy Policy Act of 2005 (EPAct 2005) extended and expanded several previous goals and standards to reduce energy use in existing and new federal buildings. Section 203 of EPAct 2005 required that, to the extent it is economically feasible and technically practicable; the total amount of renewable electric energy consumed by the federal government during 2013 and thereafter shall not be less than 7.5%. That target was updated and expanded by a Presidential Memorandum on December 5, 2013, and again by an Executive Order on March 19, 2015. This order states that, where life-cycle cost-effective, the following percentages of the total amount of electric energy consumed by each agency during any fiscal year shall come from renewable energy:

• 10% in fiscal years 2016 and 2017 • 15% in fiscal years 2018 and 2019 • 20% in fiscal years 2020 and 2021 • 25% in fiscal years 2022 and 2023 • 30% in fiscal year 2025 and thereafter

The order also states that, where life-cycle cost-effective, the following percentages of the total combined amount of electric and thermal energy consumed by each agency during any fiscal year shall come from renewable electric energy and alternative energy:

• 10% in fiscal years 2016 and 2017 • 13% in fiscal years 2018 and 2019

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• 16% in fiscal years 2020 and 2021 • 20% in fiscal years 2022 and 2023 • 25% in fiscal year 2025 and thereafter

Renewable electrical energy technologies are defined as solar, wind, biomass, landfill gas, ocean (including tidal, wave, current, and thermal), geothermal, geothermal heat pumps, microturbines, municipal solid waste, and new hydroelectric generation capacity achieved from increased efficiency or additions of new capacity at an existing hydroelectric project. Alternative energy technologies are defined as biomass, solar thermal, geothermal, waste heat, combined heat and power, small modular nuclear reactor technologies, fuel cell energy systems, and energy generation that includes verified capture and storage of carbon dioxide emissions associated with that generation.

The Executive Order also re-establishes the Federal Environmental Executive as the Federal Chief Sustainability Officer. This officer will monitor progress and advise the Chair of the Council on Environmental Quality (CEQ) on the clean energy goals set forth in the order.

Within 45 days of this order, the Chair of CEQ and the Director of the Office of Management and Budget (OMB) will establish a Federal Interagency Sustainability Steering Committee to advise on the progress of agencies toward meeting the goals set forth in the order. The Chair of CEQ and Director of OMB will also prepare metrics to evaluate each agency's progress toward meeting these goals, in addition to other tasks aimed at ensuring these goals are met.

5. Clean Energy Portfolio Goal

In May 2011, Indiana enacted SB 251, creating the Clean Energy Portfolio Standard (CPS). The program sets a voluntary goal of 10% clean energy by 2025, based on the amount of electricity supplied by the utility in 2010. The Indiana Utility Regulatory Commission (IURC) adopted emergency rules (RM #11-05) for the CPS in December 2011. Final rules were adopted in June 2012, effective July 9, 2012.

Up to 30% of the goal may be met with clean coal technology; nuclear energy; combined heat and power systems; natural gas that displaces electricity from coal; clean coal technology; and net-metered distributed generation facilities. Fifty percent of qualifying energy obtained by Indiana utilities participating in the CPS must come from within the state. Thermal energy used for heating, cooling, or mechanical work is eligible for the goal. In order to measure thermal energy for the purpose of goal compliance, it may be measured directly through a meter, calculated using an equation

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set forth in IAC 17.1, or a utility may seek approval from the commission to use an alternative equation.

Requirements

In order to participate in the program, electric utilities must apply directly to the IURC no later than two years after the beginning of Goal Periods I or II, as outlined below. Only public utilities may participate in the program; municipally-owned utilities, rural electric cooperatives or electric cooperatives with at least one rural electric cooperative member may not participate in the program. Applications must include a plan to meet the goals, including a detailed business plan and the identification of specific projects and resources. Participating utilities must meet the following goals in order to stay in the program and continue receiving incentives:

• Goal Period I: January 1, 2013 - December 31, 2018, an average of at least 4% of electricity supplied must be from clean energy.

• Goal Period II: January 1, 2019 - December 31, 2024, an average of at least 7% of electricity supplied must be from clean energy.

• Goal Period III: January 1, 2025 - December 31, 2025, an average of at least 10% of electricity supplied must be from clean energy.

Utilities that participate in the program and meet the program goals are eligible for incentives which are used to pay for the compliance projects. A utility may apply to the commission to increase its Return on Equity by as much as 50 basis points over its current rate of return, or request a periodic rate adjustment mechanism. Applications to receive incentives must be filed no later than 6 months after the end of each Goal Period.

Program reports from each utility are due annually on March 1 beginning in 2014. Reports must include a detailed explanation and supporting documentation of any requests for rate adjustments for cost recovery associated with the CPS program.

Credit Multipliers

Utilities may purchase, sell, or trade Clean Energy Credits, which are defined as 1 MW of clean energy (as defined above) or 3,412,000 BTUs. Any excess amounts of clean energy supplied during a specific goal period or any Clean Energy Credits purchased from another supplier may be counted toward the next goal period. Other than this exception all clean energy sources must be in service, purchased or contracted for by the effective dates of the CPS program goals. – dsireusa.org

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Utility tariffs and incentive programs

State incentives for net metering incentives are mandated up to 1MW. Any additional energy production sold to the local utility, Duke Energy, will be at a reduced rate by default. This default option can be overridden to provide a larger net metering option with an agreement between Purdue University and Duke Energy. According to Duke Energy they do not offer a feed in tariff incentive.

Campus rules and procedures

The campus rules and procedures are primarily concerned with the selection of the site, and the orientation of the mounting style. Ground mounted solar panels must not be above sewers, power cables and other utility lines that run underground. Rooftop mounted systems must pass structural integrity and age test. The future plans of sites and remodeling plans need to be discuss with Purdue’s “Master Planners” to prevent research on ineligible sites.

According to the Energy Office, Purdue follows the National Electric Code (NEC), along with complying with any other local or state enforced criteria. Due to the new nature of photovoltaic systems on campus no standard procedure, other than structural and aesthetics, are implemented.

Equipment warranties, operation and maintenance considerations, and safety requirements

Discussion with third party contractors led to possible photovoltaic equipment, including panels and invertors. The following equipment specifications were obtained from ‘Inovateus’:

PV Module

• Manufacturer: Canadian Solar Inc. • Model: CS6X – 300M • Nominal Output: 300 W • Efficiency (STC): 15.6% • MPP Voltage (STC): 402 V

The specifications obtained contained 11 modules connected in series, having an inclination of 250 and are free standing with no obstructing shade. ‘Canadian Solar Inc.’ gives a 10 year product warranty with a 25 year linear performance warranty and insurance.

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Inverter

• Manufacturer: Solectria Renewables LLC. • Model: SGI 500kW - 480VAC • MPP Voltage (STC): 402 V Output: 500.00 kW • Orientation: 0.0 ° • European Efficiency: 97.0 % • Inclination: 25.0 ° • No. of MPP Trackers: 1 • Mount: Free-Standing • MPP Tracking: 300 V To 500 V

The inverter comes with a basic manufacturer’s warranty of 5 years.

Related liens, restrictions, and agreements affecting property use

All priority photovoltaic sites are Purdue owned, which eliminates permission for land use, but requires permission from the respected stakeholders. Any related liens are unknown and negligible for current PV site development. Final approval for the selected site(s) chosen will be approved by the appropriate authorities at Purdue University.

Structural, mechanical, and environmental characteristics that increase cost or risk of the project

Various design configurations are being considered for the mounting of the solar panel, including large ground mounted array, canopy style array, and roof top solar panels. All of these configurations have positive and negative characteristics.

For a large ground mounted array, initial cost will be comparatively cheaper but acquiring the land may prove difficult. This requires more involvement with Purdue’s “Master Planners” to better understand how the land is or will be used, thus making it more difficult. Also the Purdue electrical grid substations are comparatively far from the proposed spots compared to rooftop mounted systems, increasing the cost of the system.

Canopy style array mounting has similar characteristics as a ground mount system, with the benefit of providing shading and protection from the elements. Due to the increase height and more complex structural engineering requirements there is an increase of roughly 20-30% of the system. In return, proper site selection could promote PV deployment and increase aesthetics.

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A roof mounted system is attractive and preferred by the Purdue Energy Office since connecting it with the electrical grid is faster, easier, and cheaper. The size of the system will also need to be considered since weight-bearing is a concern, along with renovations. In general the cost per kW is more expensive.

Draft policy recommendations for campus PV projects, including contractor selection, monitoring, O&M, US-made products, etc.

Contractors will go through the university policy on contractor bidding, if the project is taken forward. Monitoring systems will be done by Wade Power Plant and/or Purdue. Policy recommendations will be made by various stakeholders, master planners, along with the executive board at Purdue.

Purdue has its own CHP plant, where they produce reliable heat and electricity. A solar system’s location and availability contributes to the difficulty of its implementation. Never before has a system of this magnitude been attempted, due to economic decisions, on campus. Only one instance of a photovoltaic system has been implemented at Purdue, which is on Knoy Hall of Technology.

5. Project Financial Goals and University Investment Opportunities

Detailed description of proposed financial models, including legal, tax, and liability considerations

According to the Purdue University Agricultural News article “Chances of saving with solar energy greater for Indiana farms than homes”, a cost benefit analysis found that businesses have a very high probability of saving money by using solar energy instead of using standard grid electricity. Businesses can achieve this through utilizing a tax policy called depreciation. Under this policy, commercial entities can deduct their investment in installing solar energy systems from their revenues.

Consequently, the most viable financial model for financing the installation of a solar energy system at Purdue is through a private party donor who takes advantage of this tax incentive. This option, which is a Public Private Project (PPP/P3), is an alternative to traditional methods of project financing and comprises of an agreement between private and public entities. P3s are a relatively new concept in the United States but are quickly becoming widespread. This model is suitable because it will encourage the use of a new technology, in this case solar power, by lowering the upfront installation costs through the involvement of a private party donor who utilizes the available tax incentives.

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Under this option, the private party donor will finance the installation of the solar energy system, take ownership of it and act as a second utility by selling energy to Purdue in a Purchasing Power Agreement (PPA). A PPA defines the contract between the buyer and the seller of electricity. It will essentially specify all the terms for sale and secures the payment stream between the two entities. In Purdue’s case, it is estimated that the private party donor could provide solar energy to Purdue at a contracted rate for $/kWh, with an annual escalation. The donor would subsequently depreciate the solar energy system asset and sell it to Purdue.

The specific federal and state tax incentives for commercial entities in Indiana that can be leveraged in this project include the Business Energy Investment Tax Credit, which is a credit is equal to 30% of expenditures with no maximum credit. The expenditure covered by this tax credit include solar energy equipment that generates electricity, to heat or cool a structure, or to provide solar process heat. However, this credit falls to 10% of expenditures after December 31 2016.

Additionally, the Modified Accelerated Cost Recovery System (MACRS) allows businesses to recover solar energy investments in certain property through depreciation deductions for period of five years. Photovoltaic system equipment can use Investment Tax Credit, where the owner must reduce the project's depreciable basis by one-half the value of the 30% ITC. This means the owner is able to deduct 85% of his or her tax basis.

Other state incentives include the Renewable Energy Property Tax Exemption which exempts any solar thermal, photovoltaic, and other solar energy systems installed after December 31, 2011 from property taxes based on its assessed value. There is also the Indiana Sales Tax Incentive for Electrical Generating Equipment which exempts equipment, machinery, and tools used in the production of renewable electricity.

One challenge in the adoption of solar energy at Purdue is that electricity prices in Indiana are cheaper than that of many other states. This is because about 95% of Indiana’s electricity comes from coal, which is the cheapest energy source. Purdue has an added challenge as it has its own power plant, Wade, which provides roughly 30% - 50% of annual electricity consumed by Purdue. This source of electricity can be produced fairly cheap, compared to local utility price.

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Financial analysis of project benefits for each model

Although the complete precise specifications of this project are yet to be confirmed, the solar energy system at Purdue will require the consideration of several identified inputs and resources. To begin with, the project will require solar panel arrays which could either be small-scale or larger-scale systems. The location at which the solar energy system is installed will affect the type of solar panel array system that’s used. For instance, a ground based solar energy system would differ from a rooftop-canopy based system. Additionally, the lifespan of the solar panels have to be considered. It is estimated that the capital investment required for this project could range anywhere between $200,000 and $16,000,000 depending on the scale of the project. Other inputs that have to be consider include the utility inflation rate which affects the pricing of electricity. The labor that is required to install the solar energy system as well as the operating and maintenance costs are other considerations.

Based on a financial analysis conducted in the Spring 2015 semester, the total cost of a 5MW solar energy system would be roughly $9,500,000, with the possibility of increasing rate due to electrical interconnection cost. The Net Present Value of this project is estimated to be $3750000 whereas simple payback period for this project is estimated to be 8.5 years. These estimates are based on the assumption that there is a Power Purchase Agreement (PPA) at a rate of $0.06/kWh, solar panels with 20 year life spans, a utility inflation rate of 2% and the installation occurs after 2016.

Description of budget, priorities, and process for university capital investments

The Board of Directors of the Research Foundation establishes the investment policy. Subsequently, the Investment Committee and the Chief Investment Officer are delegated the authority by the Treasurer of the Foundation, or a designee to implement and administer all policies on the behalf of the Foundation. The Purdue Investment Pool (PIP) worth $2.397 billion and the Purdue Investment Pool- Cash (PIPC) worth $1.514 billion are managed by the Office of Investments according to the Board of the Purdue Research Foundation under the direction of its Investment Committee. The priority and approach of the Investment Committee involves taking a diversified investing method that balances the goals of maximizing returns and preserving purchasing power. The Investment Committee intends to enhance the PIP's and PIPC's real market value and provide a significant long-term funding source for Purdue’s spending requirements through diversifying among asset classes and rebalancing toward policy target allocations. Its current

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funds under management include endowed funds, trusts, annuities and cash. The PIP and PIPC are broken down as follows:

Purdue Investment Pool (PIP)

The current asset allocation priorities and targeted allocation percentage for the PIP consists of the following:

Asset Class Target Allocation % Equity 18.0% Non U.S-Equity 13.0%

Emerging Markets 5.0% Total Equities 36.0% Hedge Funds 25.0% Private Equity and Venture Capital 10.0%

Real Estate 7.0% Natural Resources 7.0% Total Alternatives 49.0% Fixed Income, High Yield and Cash 15.0%

Figure 5.1 – Purdue Investment Pool Target Allocation Percentage

The solar energy investment would fall into the alternative investments category and would most likely fit into the Real Estate or Natural Resources subcategory.

Purdue Investment Pool- Cash (PIPC)

The current asset allocation priorities and targets for the PIPC are:

Asset Class Target

Allocation Percentage

Range

Cash and Cash Equivalents (mutual and/or commingled) 15.0% $50M-$100M

U.S. Treasury Bills, Notes, Bonds, and all Agencies

30.0% 0-$100M

Corporate Bonds 20.0% 0-$50M Mortgage-Backed Securities 25.0% 0-$30M

Asset-Backed Securities 5.0% 0-$25M High Yield Bonds, including Bank Loans 5.0% 0-$5M

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Figure 5.2 – Purdue Investment Allocation and Percentage

The solar energy system investment does not fit into any of the asset categories that are in the PIPC as it will be a longer term project. However, it does reflect how the university manages its short-term cash and could help in developing a budget.

Description of current university foundation portfolio, including size, returns, goals, restrictions, major investments, management and decision-making

As of June 30 2014, Purdue University’s overall endowment stood at $2.473 billion. Moreover, the overall endowment is comprised of 4350 individual endowments. Collectively, this investment pool distributes over $100 million annually for designated donor purposes.

The endowment is subject to management under the Uniform Prudent Management of Institutional Funds Act (UPMIFA) which has some conditions. These conditions include protecting the donor’s gift and designated purpose as well as acting in good faith in accordance prudent person rule. Additionally, this act also requires the risk and return objectives of the fund be reasonably suited to the institution and specifies that distributions above 7% are not prudent.

The investment strategy for Purdue’s investment pool that asset allocation decisions take the perspective of a long-term investor instead of a market-timer. The investment strategy makes the preservation of capital its top priority. The asset allocation decision-making strategy specify $100 million annual spending distributions. Additionally, asset allocation decisions take into consideration the policy of generating annual returns greater than inflation plus all spending and are comparable to other billion dollar endowments. The assets are also placed with external investment managers and no funds are actively-traded by Purdue staff.

Description of potential PV project investment scenarios

There are currently two potential PV investment scenarios; both of which are public private projects with a power purchase agreement (P3 with a PPA). Essentially, these scenarios involve a donor funding the project cost to gain federal tax credits, owning the PV assets for a period of time, depreciating them and the selling them back to Purdue. The investment scenarios are as follow:

Scenario 1: Small Scale and Near Term

This scenario will take 8 to 12 months from negotiation to “power on”. Under this plan, the solar photovoltaic arrays will be located on the rooftop of a building and

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would generate between 50kW to 2MW of electricity that would cost between $200,000 and $8,000,000. The donor would own the PV asset and earn a ROI on the order of 2%. Additionally, the donor would have to depreciate the asset before selling it to Purdue. The main incentive is that the donor would qualify for federal tax credits valued at 30% of the total project cost. The risk in this option is mitigated because Purdue controls all aspects of the installation and operation.

Scenario 2: Utility Scale and Longer Term

This scenario on the other hand, will take 18 to 24 months from negotiation to “power on”. Under this plan, the solar photovoltaic arrays will be installed in multiple locations across campus and would generate between 3MW to 8MW of electricity that would cost between $6,000,000 and $16,000,000. The donor would own the PV asset and earn a ROI on the order of 3%. Additionally, the donor would have to depreciate the asset before selling it to Purdue. Similarly, the donor would qualify for federal tax credits valued at 30% of the total project cost provided that the federal tax credit is extended beyond 2016. This option is more complex and will require substantially more technical, logistical and financial review.

6. MREA Grant: Department of Energy Deliverables The following is a detailed list of the deliverables required by the Department of Energy for budget period 1 in the fourth quarter. This list includes Purdue’s current progression with each deliverable, along with the current strategy for pursing it.

D6. Approved framework for delivery of 3rd party certificate and engagement/retention strategy for Student Solar Deployment Team participants.

• Purdue’s Solar Endowment team is enrolled in the MREA’s “Residential PV Site Assessment” certification.

o Course modules will be completed by the end of November, then students will begin their practice site assessments.

D7. Selection of priority PV deployment sites at each partnering university campus.

• A list of 5 potential sites have been reviewed by the student team, o Sites have had input from various stakeholders including the Energy

Office and Purdue’s Master Planner. These sites are still subject to change.

• Priority Decision Matrix draft has been constructed by the Solar Endowment team.

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o Matrix draft will be reviewed by stakeholders to confirm traits and the weight of each trait.

D8. Complete site assessments for priority deployment sites on partner university campuses.

• Site assessments will be started by the Solar Endowment team during December for the listed potential photovoltaic sites.

o Roof mounted systems will require additional permission from respected Purdue personnel.

o Ground mounted locations will be reviewed by the Energy Office to ensure it is not located over utility lines.

D9. Legal, regulatory, and financial analysis for PV deployment on each partnering university campus with preliminary recommendations for development pathways.

• Legal and regulatory analysis for PV deployment was conducted by Solar Endowment team, and is listed in this campus roadmap.

o Additional information and confirmation will need to be completed by Purdue offices upon approval.

• Financial analysis research is being conducted by various firms for comparison purposes.

o Third party financial Analysis § TurningPoint Energy

o SAM Financial Modeling § Conducted by Solar Endowment team and the Energy Office.

o Purdue Faculty Members

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7. Project Executive Summary and Timeline

Introduction and overview of project

The Solar Endowment is a research project, funded by the Department of Energy, on constructing utility scale photovoltaic systems on universities. Purdue offers a unique circumstance because it produces a portion of its electricity on campus.

Project goals and leadership

Project goals for this project is checking the feasibility of PV systems at Purdue University, and implementing it if acceptable.

Leadership roles include:

• Professor William Hutzel – Principle Investigator/Adviser • William Arnett – Graduate Research Assistant Assigned to Project

Description of project benefits and risks

Benefits of the project will show if Purdue, while producing its own electricity, can justify purchasing a photovoltaic system. Another key benefit of the project is it offers research opportunities for both graduate and undergraduate students in sustainable energies.

Some risks include low Return on Investment and acquiring space for the PV system. Either of these two conditions can stop the project, or hinder the progress of the project.

Key considerations for maximizing project benefits

For maximization of the project the following considerations need to be assessed:

• Aesthetics – Promoting sustainable energy and the campus’s pursuit of green energy.

• Financing – Comparing different financing methods for a maximum ROI. • Research – Opportunities for student research will be present throughout the

Solar Endowment project, including energy analysis and financing.

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Recommendations for priority development sites

Priority PV sites suggestions include multiple rooftop arrays or single ground mount systems close to a substation. Both of these styles will help reduce interconnection costs. Some rooftop examples include Yong and Hawkins Hall, due to newer rooftop structures.

Recommendations for project financial structure

Purdue is a non-profit organization, which means it cannot partake in the 30% federal tax credit. So a donor (alumni, developer, or utility company) could purchase an array, get the tax credit, depreciate the system over time, and sell power back to Purdue through a Power Purchase Agreement (PPA) until the system can be sold back to Purdue, at a financially justifiable cost.

Timeline and benchmarks for project implementation

All timeline and benchmarks for this project are outlined in the MREA Milestones document associated with this project.

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