REPORT RENEWABLE ENERGY ASSESSMENT...FINAL REPORT RENEWABLE ENERGY ASSESSMENT PREPARED FOR San...

FINAL REPORT

RENEWABLE ENERGY ASSESSMENT

PREPARED FOR

San Francisco Public Utilities Commission

10 JANUARY 2014

©Black & Veatch Holding Company 2014. A

ll rights reserved.

San Francisco Public Utilities Commission | RENEWABLE ENERGY ASSESSMENT

BLACK & VEATCH | i

Black & Veatch Principal Investigators ScottOlson,ProjectManager JonPietruszkiewicz,ProjectManager

SteveBlock

MarcCoats TrevorCurry

RobinDempsey

SeemaGhosh MonHong

KevinJoyce

RyanPletka AlfonsoTovar

ElizabethWaldren


BLACK & VEATCH | Table of Contents ii

Table of Contents Black&VeatchPrincipalInvestigators..........................................................................................................iLegalNotice..............................................................................................................................................................11.0 ExecutiveSummary............................................................................................................................1‐1

1.1 BackgroundandObjectives.............................................................................................................1‐11.2 ScopeandStudyArea.........................................................................................................................1‐11.3 ResourceAssessmentandSupplyCurves..................................................................................1‐1

1.3.1 SolarPhotovoltaicAssessmentandResults..........................................................1‐21.3.2 WindAssessmentandResults.....................................................................................1‐41.3.3 GeothermalAssessmentandResults........................................................................1‐51.3.4 IncentivesandFinancialStructures..........................................................................1‐61.3.5 SupplyCurve.......................................................................................................................1‐7

1.4 ConclusionsandRecommendations..........................................................................................1‐102.0 Introduction..........................................................................................................................................2‐1

2.1 Objective..................................................................................................................................................2‐12.2 Approach.................................................................................................................................................2‐1

3.0 Methodology.........................................................................................................................................3‐13.1 ResourceAssessmentandProjectIdentification...................................................................3‐1

3.1.1 SolarPhotovoltaicProjectAssessment....................................................................3‐23.1.2 WindProjectAssessment..............................................................................................3‐23.1.3 GeotechnicalProjectAssessment...............................................................................3‐2

3.2 TransmissionandInterconnection..............................................................................................3‐33.3 IncentivesandFinancialStructures.............................................................................................3‐43.4 ResourceValuation.............................................................................................................................3‐43.5 SupplyCurveDevelopment.............................................................................................................3‐4

4.0 SolarPhotovoltaicResourceAssessment...................................................................................4‐14.1 SolarResourceAnalysis....................................................................................................................4‐14.2 TechnologyDescription....................................................................................................................4‐4

4.2.1 ResidentialRooftopSystems........................................................................................4‐44.2.2 CommercialRooftopSystems......................................................................................4‐44.2.3 LargeRooftopSystemsforReservoirs.....................................................................4‐54.2.4 UtilityScaleGroundMountedSystems....................................................................4‐6

4.3 ResourceAvailability..........................................................................................................................4‐74.3.1 CaliforniaSolarResourcePotential...........................................................................4‐74.3.2 SanFranciscoSolarResourcePotential..................................................................4‐7

4.4 InCityCostandPerformanceCharacteristics..........................................................................4‐94.4.1 HuntersPointDevelopment.......................................................................................4‐114.4.2 SchoolBuildings..............................................................................................................4‐124.4.3 Reservoirs..........................................................................................................................4‐13


BLACK & VEATCH | Table of Contents iii

4.5 UpcountryCostandPerformanceEstimates..........................................................................4‐214.5.1 TeslaPortal........................................................................................................................4‐224.5.2 SunolValley.......................................................................................................................4‐234.5.3 Warnerville........................................................................................................................4‐23

4.6 CostandPerformanceEstimatesforOtherIn‐StateLocations......................................4‐234.6.1 SystemParameters.........................................................................................................4‐244.6.2 SystemCosts.....................................................................................................................4‐244.6.3 ProjectLocations.............................................................................................................4‐254.6.4 SystemPerformance......................................................................................................4‐25

4.7 ComparisonBetweenLocations..................................................................................................4‐264.8 DevelopmentChallenges.................................................................................................................4‐27

5.0 WindResourceAssessment.............................................................................................................5‐15.1 TechnologyDescription....................................................................................................................5‐15.2 ResourceAvailability..........................................................................................................................5‐2

5.2.1 In‐City....................................................................................................................................5‐25.2.2 Statewide..............................................................................................................................5‐35.2.3 LocationalAnalysis...........................................................................................................5‐6

5.3 CostBasis.................................................................................................................................................5‐75.3.1 BaseCosts.............................................................................................................................5‐75.3.2 SlopeMultipliers...............................................................................................................5‐85.3.3 EconomiesofScale...........................................................................................................5‐85.3.4 OperationandMaintenancecosts..............................................................................5‐9

5.4 CostandPerformanceCharacteristics........................................................................................5‐95.4.1 SFPUCControlledLands(Oceanside,Sunol,Tesla)............................................5‐95.4.2 StatewideProjects..........................................................................................................5‐155.4.3 Conclusions........................................................................................................................5‐24

5.5 DevelopmentChallenges.................................................................................................................5‐256.0 GeothermalResourceAssessment................................................................................................6‐1

6.1 TechnologyDescription....................................................................................................................6‐16.2 ResourceAvailability..........................................................................................................................6‐16.3 CostandPerformanceCharacteristics........................................................................................6‐46.4 DevelopmentChallenges...................................................................................................................6‐4

7.0 EconomicAnalysis..............................................................................................................................7‐67.1 RenewableEnergyFinancialIncentives.....................................................................................7‐6

7.1.1 U.S.FederalGovernmentTaxIncentives.................................................................7‐67.1.2 U.S.FederalGovernmentNon‐TaxRelatedIncentives......................................7‐97.1.3 StateandLocalFinancialIncentives.......................................................................7‐107.1.4 FutureTermandIncentiveSummary....................................................................7‐12

7.2 PotentialOwnershipStructures..................................................................................................7‐127.2.1 HistoricalApproachtoRenewableEnergyProjectOwnership...................7‐13


BLACK & VEATCH | Table of Contents iv

7.2.2 MunicipalOwnership....................................................................................................7‐157.2.3 PowerPurchaseAgreement.......................................................................................7‐177.2.4 PowerPurchaseAgreementwithTransfer..........................................................7‐187.2.5 Pre‐PaidPowerPurchaseAgreement....................................................................7‐197.2.6 RealEstateInvestmentTrust.....................................................................................7‐20

7.3 EconomicandFinancingAssumptions.....................................................................................7‐227.4 EconomicAnalysisResults.............................................................................................................7‐24

7.4.1 SolarPhotovoltaic...........................................................................................................7‐247.4.2 Wind.....................................................................................................................................7‐267.4.3 Geothermal........................................................................................................................7‐277.4.4 OwnershipOptions.........................................................................................................7‐28

7.5 SupplyCurveofResources.............................................................................................................7‐317.5.1 ComparisonwithRenewableEnergyCredits......................................................7‐347.5.2 ComparisonwithDeveloperProposals.................................................................7‐34


BLACK & VEATCH | Table of Contents v

LIST OF TABLES Table1‐1 PhotovoltaicCostsandPerformanceComparison.................................................................1‐3Table1‐2 WindCostsandPerformanceComparison................................................................................1‐4Table1‐3 GeothermalCostsandPerformanceComparison...................................................................1‐5Table1‐4 TabularComparisonofAllResources(PPAwithTransfer)...............................................1‐9Table4‐1 SolarResourceData............................................................................................................................4‐1Table4‐2 SatelliteBasedGHI[kWh/m2/yr]bySource............................................................................4‐2Table4‐3 SolarSystemApplications................................................................................................................4‐4Table4‐4 In‐CitySolarSystemApplications.................................................................................................4‐9Table4‐5 HuntersPointDevelopmentPVDesignandPerformanceAssumptions....................4‐12Table4‐6 SchoolBuildingsPVDesignandPerformanceAssumptions...........................................4‐13Table4‐7 CollegeHillReservoirDesignandPerformanceAssumptions.......................................4‐15Table4‐8 SummitReservoirDesignandPerformanceAssumptions...............................................4‐16Table4‐9 StanfordHeightsReservoirDesignandPerformanceAssumptions............................4‐17Table4‐10 SutroReservoirDesignandPerformanceAssumptions....................................................4‐18Table4‐11 UniversityMoundReservoirDesignandPerformanceAssumptions..........................4‐19Table4‐12 PulgasBalancingReservoirDesignandPerformanceAssumptions............................4‐20Table4‐13 TeslaPortalPhotovoltaicDesignandPerformanceAssumptions................................4‐22Table4‐14 SunolValleyPhotovoltaicDesignandPerformanceAssumptions................................4‐23Table4‐15 FixedTiltDesignAssumptionsforStatewideProjects......................................................4‐24Table4‐16 TrackingDesignAssumptionsforStatewideProjects........................................................4‐24Table4‐17 SystemCostsforStatewideProjects..........................................................................................4‐25Table4‐18 StatewideProjectLocations..........................................................................................................4‐25Table4‐19 StatewideFixedTiltSystemPerformance...............................................................................4‐26Table4‐20 StatewideSingleAxisTrackingSystemPerformance.........................................................4‐26Table4‐21 In‐CityPhotovoltaicCostsandPerformanceComparison................................................4‐26Table4‐22 UpcountryPhotovoltaicCostsandPerformanceComparison........................................4‐27Table4‐23 StatewidePhotovoltaicCostsandPerformanceComparison.........................................4‐27Table5‐1 ComparisonofAnnualWindSpeeds............................................................................................5‐7Table5‐2 ComparisonCostsforClassIIandIIImachines......................................................................5‐8Table5‐3 SlopeCostMultipliers........................................................................................................................5‐8Table5‐4 OceansideWindFacilityDesign,Cost,PerformanceAssumptions...............................5‐11Table5‐5 SunolWindFacilityDesign,Cost,PerformanceAssumptions.........................................5‐14Table5‐6 TeslaWindFacilityDesign,Cost,PerformanceAssumptions.........................................5‐15Table5‐7 MontezumaHillsWindFacilityDesign,Cost,PerformanceAssumptions.................5‐17Table5‐8 AltamontWindFacilityDesign,Cost,PerformanceAssumptions.................................5‐19Table5‐9 WalnutGroveWindFacilityDesign,Cost,PerformanceAssumptions........................5‐21Table5‐10 LeonaValleyWindFacilityDesign,Cost,PerformanceAssumptions..........................5‐22Table5‐11 NewberrySpringsWindFacilityDesign,Cost,PerformanceAssumptions...............5‐24Table5‐12 ComparisonofWindDesign,Cost,PerformanceParametersforAllSites.................5‐25


BLACK & VEATCH | Table of Contents vi

Table6‐1 GeothermalDevelopablePotential...............................................................................................6‐2Table6‐2 GeothermalProjectCostandPerformanceParameters......................................................6‐4Table7‐1 MajorProductionTaxCreditProvisions....................................................................................7‐7Table7‐2 EconomicAnalysisAssumptions.................................................................................................7‐23Table7‐3 SolarLCOEs($/MWh),DifferentOwnershipOptions........................................................7‐25Table7‐4 WindLCOEs($/MWh),DifferentOwnershipOptions........................................................7‐26Table7‐5 GeothermalLCOEs($/MWh),DifferentOwnershipOptions...........................................7‐27Table7‐6 SensitivityAnalysisofDeveloperFinancingAssumptionsforWindhubPV.............7‐30Table7‐7 TabularComparisonofAllResources(PPAwithTransfer).............................................7‐32


BLACK & VEATCH | Table of Contents vii

LIST OF FIGURES Figure1‐1 OwnershipOptionComparison,BestResources....................................................................1‐7Figure1‐2 ModeledResourceSupplyCurve(PPAwithTransfer)........................................................1‐8Figure1‐3 ModeledResourceSupplyCurve(PPAOnly).........................................................................1‐10Figure4‐1 NRELSolarAnywhere10kmGrid................................................................................................4‐3Figure4‐2 AnnualGlobalHorizontalIrradianceinCalifornia.................................................................4‐8Figure4‐3 MapofIn‐CityLocationsandPulgas..........................................................................................4‐10Figure4‐4 CSIAverage2013SolarPVCapitalCosts,0to250kW($/kWdc).................................4‐11Figure4‐5 CollegeHillReservoir.......................................................................................................................4‐15Figure4‐6 SummitHillReservoir......................................................................................................................4‐16Figure4‐7 StanfordHeightsReservoir............................................................................................................4‐17Figure4‐8 SutroReservoir...................................................................................................................................4‐18Figure4‐9 UniversityMoundReservoir.........................................................................................................4‐19Figure4‐10 PulgasBalancingReservoir...........................................................................................................4‐20Figure4‐11 MapofUpcountryProjectSites....................................................................................................4‐21Figure5‐1 100MeterWindSpeedsintheSanFranciscoRegion...........................................................5‐3Figure5‐2 100MeterWindSpeedsinCalifornia..........................................................................................5‐5Figure5‐3 AvailableLandatOceanside..........................................................................................................5‐10Figure5‐4 AvailableLandatSunol...................................................................................................................5‐12Figure5‐5 MostFeasibleProjectOptionsatSunol....................................................................................5‐13Figure5‐6 AvailableLandatTesla....................................................................................................................5‐14Figure5‐7 AvailableLandatMontezumaHills............................................................................................5‐16Figure5‐8 RepresentativeAreaatAltamont................................................................................................5‐18Figure5‐9 AvailableLandatWalnutGrove..................................................................................................5‐20Figure5‐10 AvailableLandatLeonaValley....................................................................................................5‐21Figure5‐11 AvailableLandatNewberrySprings.........................................................................................5‐23Figure6‐1 CaliforniaGeothermalProjects......................................................................................................6‐3Figure7‐1 ElementsComprisingtheVariousProjectOwnershipOptions......................................7‐14Figure7‐2 CumulativeRenewableEnergyOwnership.............................................................................7‐16Figure7‐3 OwnershipOptionComparison,BestResources..................................................................7‐28Figure7‐4 ModeledResourceSupplyCurve(PPAwithTransfer)......................................................7‐31Figure7‐5 ModeledResourceSupplyCurve(PPAOnly).........................................................................7‐33


BLACK & VEATCH | Table of Contents viii

LIST OF ABBREVIATIONS

ac AlternatingCurrentARRA AmericanRecoveryandReinvestmentActBLM BureauofLandManagementBOP BalanceofplantC CelsiusCAISO CaliforniaIndependentSystemOperatorCARB CaliforniaAirResourceBoardCF CapacityFactorCREB CleanRenewableEnergyBondsCRR CongestionRevenueRightsCSI CaliforniaSolarInitiativedc DirectcurrentDOE DepartmentofEnergyEBIT EarningsBeforeInterestandTaxesEGS EnhancedGeothermalSystemEIA EnergyInformationAgencyFIT FeedInTariffFMV FairMarketValueFTR FirmTransmissionRightsGHI GlobalHorizontalIrradianceGO GeneralObligationIOU InvestorOwnedUtilityIPP IndependentPowerProducerIRS InternalRevenueServiceITC InvestmentTaxCreditkW,kWh,kWp Kilowatt,KilowattHour,KilowattPeakLADWP LosAngelesDepartmentofWaterandPowerLCOE LevelizedCostofElectricitym/s Meterspersecond

m2 SquareMeterMACRS ModifiedAcceleratedCostRecoverySystemMW,MWh,MWp Megawatt,MegawattHour,MegawattPeakNMTC NewMarketTaxCreditsO&M OperationsandMaintenancePACE PropertyAssessedCleanEnergyPG&E PacificGas&ElectricPIER PublicInterestEnergyResearchPIRP ParticipatingIntermittentResourceProgramPPA PowerPurchaseAgreementpsf poundspersquarefootPTC ProductionTaxCredit


BLACK & VEATCH | Table of Contents ix

PURPA PublicUtilitiesRegulatoryPolicyActof1978PV PhotovoltaicQECB QualifiedEnergyConservationBondsQZAB QualifiedZoneAcademyBondsRAM RenewableAuctionMechanismREAP RuralEnergyforAmericaREC RenewableEnergyCreditsREIT RealEstateInvestmentTrustREPI RenewableEnergyProductionIncentivesRETI RenewableEnergyTransmissionInitiativeRPS RenewablePortfolioStandardSAT SingleAxisTrackingSCADA SupervisoryControlandDataAcquisitionSGIP Self‐GenerationIncentiveProgramsq.ft. SquareFootSSE SurfacemeteorologyandSolarEnergyTEPPC TransmissionExpansionPlanningPolicyCommitteeTMY TypicalMeanYearV,kV Volt,KilovoltW,Wh,Wp Watt,WattHour,WattPeakWECC WesternElectricityCoordinatingCouncilWREZ WesternRenewableEnergyZonesWWTP WastewaterTreatmentPlant


BLACK & VEATCH | Legal Notice LN‐1

Legal Notice This report was prepared for the San Francisco Public Utilities Commission (Client) by

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believed that the information, data and opinions contained herein will be reliable under the

conditions and subject to the limitations set forth in this report, B&V does not guarantee theaccuracy thereof. B&V has assumed that the information provided by others, both verbal and

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BLACK & VEATCH | Executive Summary 1‐1

1.0 Executive Summary Black&VeatchispleasedtoprovidethisreporttoassisttheSanFranciscoPublicUtilities

Commission(SFPUC)inplanningtoachievelong‐termrenewableenergygoals.

1.1 BACKGROUND AND OBJECTIVES TheSFPUCisconsideringarangeofpotentialoptionstomeetfuturerenewableenergy

targetsandloadgrowthneeds.SFPUCstaffandcontractorshavepreviouslyidentifiedseveral

promisingtechnologiesanddevelopmentlocations.Inthisreport,Black&Veatchbuildsuponthepreviousanalysisbydevelopingupdatedcostandperformanceestimatesfordeploymentof

representativesolarphotovoltaic(PV),wind,andgeothermaltechnologiesinpotentially

developablelocations.TheobjectiveofthisreportistoidentifyandcharacterizethecostandperformanceoffacilitiesthatcouldbeusedtodeliverpowertotheSFPUCinthefuture.Whilean

effortwasmadetoselectprojectsizesandlocationstorepresentawiderangeofoptionsavailable

totheSFPUC,thelistexploredinthisstudyshouldnotbeconsideredanexhaustivereviewofallavailableoptions.

1.2 SCOPE AND STUDY AREA Wind,solarPV,andgeothermalprojectswereevaluatedwithinSanFrancisco(“in‐city”),on

SFPUCcontrolledlands,andthroughoutthestate.Analysisofin‐cityandprojectsonSFPUCcontrolledlandswasperformedusinglocaldataforprojectsizingandresourcepotential.

StatewideprojectanalysisisbaseduponworkrecentlyconductedbyBlack&Veatchaspartofthe

CaliforniaRenewableEnergyTransmissionInitiative1(RETI)andWesternRenewableEnergyZones2(WREZ)projects.Previouslyperformedresourceassessmentsforwind,solar,and

geothermalprojectswereupdatedtoidentifyareasthroughoutthestatewhereeconomically

feasibleprojectscouldbedevelopedfortheSFPUC.Transmissionconstraintswerealsoconsideredwhenselectingprojectsizesandlocations.Areviewofavailableincentivesandownership

structureswasperformed,andthelevelizedcostofenergywasmodeledforeachproject.Supply

curvesweredevelopedtorepresentthecostandperformanceofselectedrenewableenergyoptionsavailabletotheSFPUCthroughoutthestate.

1.3 RESOURCE ASSESSMENT AND SUPPLY CURVES Wind,solarPV,andgeothermalprojectsinCaliforniawereconsideredforthisanalysis.

WhileotherrenewableenergyoptionsmaybeavailabletotheSFPUC,suchasbiogasandocean

wavegeneration,theseopportunitiesareeithertoolimitedortooexpensivetorepresentamajor

portionoffuturerequirementsatthistime.

1 The RETI reports are available online: http://www.energy.ca.gov/reti/documents/index.html 2 The WREZ report is available online: http://www.nrel.gov/docs/fy10osti/46877.pdf



1.3.1 Solar Photovoltaic Assessment and Results

ThisassessmentconsistedofcostandperformanceanalysisforsolarPVoptionson

rooftopsinSanFrancisco(assumingnewbuildingconstructionornomajorbuildingupgradesatexistingsites),atSFPUCownedreservoirs,ground‐mountprojectsonSFPUCland,andlarge

ground‐mountprojectselsewhereinthestate.DatafrompaststudiesperformedfortheSFPUCby

otherconsultantswerereviewedandupdatedforsixSFPUCreservoirrooftopsandtwootherSFPUCownedsites(SunolandTesla).Costandperformanceofrooftopfacilitieswithinthecitywas

developedbyBlack&Veatchforfourrooftopsizesandthreeneighborhoods.Estimatedcostsfor

in‐citysystemswerebasedontypicalindustrycostsadjustedforhigherdevelopmentcostsinSanFrancisco.ThesecostswerecomparedtocurrentmarketpricingforSanFranciscoinstallations

basedonCaliforniaSolarInitiative(CSI)data.ForSanFrancisco,thisdataindicatesthatformany

rooftopprojects,thecapitalcostaveragedroughly$6/Wdc,equivalenttoabout$7.7/Wac.3WhileprojectsthatwillbeinstalledonSFPUCreservoirswillbelargerthanthesystemsreportedbythe

CSI,SanFranciscospecificcostfactorsremainrelevantforSFPUCdevelopedprojectsperinput

fromSFPUCstaff.Finally,costsweredevelopedforimportingsolarPVpowerfromafew

representativelargeprojectslocatedoutsideofSanFrancisco.Thesewerelocatednearlargeelectricsubstations:Midway,Windhub,andImperialValley.ProjectdatadevelopedfortheRETI

andWREZprojectswereusedforestimatingcostandperformance.Theseprojectshavelower

capitalcoststhanthein‐cityprojects,butwillincurtransmissioncoststodeliverthepowertoSanFrancisco.

Theplantsize,performance,costfactors,andestimatedlevelizedcostofelectricity(LCOE)

usingapowerpurchaseagreement(PPA)withtransferownershipstructureforallsolarPVprojectscanbeseenbelow.ThePPAwithtransferstructureinvolvesexecutingaPPAwitha

privatecompanywitheventualtransferofownershipoftheprojecttoSFPUC.Whilearangeof

otherownershipoptionswereexplored,thePPAwithtransferfinancestructureprovidedthelowestcostwithoutaddingconsiderablecomplexitytotheagreement.

3 While industry data is often reported in Wdc, for consistency with the other resources covered in this report, all solar cost and performance data is shown on an AC basis.



Table 1‐1 Photovoltaic Costs and Performance Comparison

LOCATION

PLANT CAPACITY (KWAC)

AC CAP. FACTOR

(PERCENT)

CAPITAL COST

($/KWAC) O&M COST ($/KW‐YR)

LCOE ($/MWh)

SAN FRANCISCO ROOFTOPS AND SFPUC RESERVOIRS

HuntersPoint 2.5 20.3 7,365 45 222.67

HuntersPoint 5 20.3 7,365 45 222.67

MarinaMiddleSchool 50 21.1 7,245 27 198.39

ThurgoodMarshall 200 22.3 6,165 27 162.58

CollegeHillReservoir 895 20.8 6,000 27 170.27

SummitReservoir 664 19.7 6,075 27 182.15

StanfordHts.Reservoir 704 19.6 6,060 27 181.98

SutroReservoir 2,010 19.7 5,550 27 168.09

UniversityReservoir 2,883 20.8 5,385 27 154.39

PulgasReservoir 2,650 21.5 5,385 27 149.64

GROUND MOUNT AT UP‐COUNTRY LOCATIONS

Tesla 1,600 24.8 3,420 22 85.40

Sunol 19,200 23.9 2,930 22 80.48

OTHER IN‐STATE GROUND MOUNT LOCATIONS

MidwayFixedTilt 20,000 26.7 3,289 29 80.49

WindhubFixedTilt 20,000 29.2 3,289 29 73.60

ImperialFixedTilt 20,000 28.2 3,289 29 76.21

MidwayTracking 20,000 31.6 3,536 32 73.50

WindhubTracking 20,000 35.9 3,536 32 64.70

ImperialTracking 20,000 33.4 3,536 32 69.54

Notes: Fornon‐rooftopprojects,thisdoesnotreflectdeliveredpricesatload.Thesenumbersare

notnecessarilywhattheSFPUCwillpayduetomarketfactorsandSFPUCdevelopmentconsiderations.

Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectanyincentivesortaxcredits;thesearetakenintoaccountintheLCOEcalculation.



TheresultsofthesolarPVanalysisshowsthattheup‐countrySFPUClocationsandlarge

statewidegroundmountedfacilitieshaveLCOEsroughlyhalfthoseofrooftopdevelopmentlocationsinSanFranciscooranyoftheSFPUCwaterreservoirs.Thisisduetothelargersizeand

bettersolarresourcefortheprojectssitedawayfromSanFrancisco.Thecostsfortheprojects

locatedoutsideofSanFranciscoreflectcoststointerconnectthepowerintotheCaliforniaIndependentSystemOperator(CAISO).AfteranychargesfromtheCAISOandPG&Etobringthe

powerintoSanFranciscoareincluded,theLCOEsforthelargegroundmountprojectsremainmuch

lowerthanforin‐cityprojects.

1.3.2 Wind Assessment and Results

Black&Veatchperformedcost,technology,andproductionassessmentsforwindprojects

atSFPUCownedfacilitiesanddevelopedcomparisonstoprojectsbuiltinotherareasofCalifornia.

Costandperformanceestimatesweremadeforwindsitedattwoup‐countrylocations(SunolandTesla),aswellasforonein‐citylocation(OceansideWWTP).Theteamalsoidentified

thecostforimportingpowerfromafewrepresentativelargewindprojectslocatedatgoodwind

resourcesinCaliforniawithintheCAISO.ProjectdatadevelopedfortheRETIandWREZprojects

wasusedinthisanalysis.Theplantsize,performance,costfactors,andestimatedLCOEusingaPPAwithtransferfinancestructurecanbeseenbelow.

Table 1‐2 Wind Costs and Performance Comparison

LOCATION

PLANT CAPACITY (KWAC)

CAPACITY FACTOR

(PERCENT)

CAPITAL COST

($/KWAC)

FIXED O&M COST ($/KW‐YR)

VARIABLE O&M

($/MWh) LCOE

($/MWh)

Oceanside 2,000 29 2,738 60 0 82.01

Sunol 30,000 15 2,577 35 0 129.85

Tesla 6,000 20 2,820 35 0 104.33

MontezumaHills 100,000 31 2,043 35 2.66 56.13

AltamontPass 20,000 34 2,349 35 2.68 56.63

WalnutGrove 170,000 34 2,244 35 2.70 54.89

LeonaValley 100,000 37 2,649 35 2.62 56.85

NewberrySprings 100,000 34 2,332 35 2.68 56.34

Notes: Reflectscostofnewgenerationusingtypicalindustrydevelopmentassumptionsatsites

withfewbarrierstoconstruction. LCOEsareatthesiteanddonotreflectdeliveredpricesatload.Thesenumbersarenot

necessarilywhattheSFPUCwillpayduetomarketfactorsandSFPUCdevelopmentcosts. Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectany

incentivesortaxcredits;thesearetakenintoaccountintheLCOEcalculation.



Theresultsofthewindanalysisshowsthatthein‐cityandup‐countrylocationsonSFPUC

landarelocatedinmuchpoorerwindresourcesareas,leadingtoconsiderablyhigherLCOEs.Inaddition,theselocationshavelesslandfordevelopmentwhencomparedtotheotherlocations

analyzedthroughoutthestate,whichcouldsupportalargefacilityandtakeadvantageofeconomies

ofscale.Finally,theoperatingcostoftheOceansidefacilityhasbeenraisedtotrytoreflecttheuniqueoperatingconditionsforanurbansingle‐turbinewindfacilitybecausetheabilitytopermit

andobtainlocalacceptanceofawindprojectinthislocationwouldbemuchmorechallengingthan

theotherprojectsites.

1.3.3 Geothermal Assessment and Results

Cost,technology,andproductionassessmentsweredevelopedforseveralCalifornia

geothermalprojectsthatcouldimportpowertotheSFPUC.Theresourceassessmentperformed

fortheSFPUCbyGeothermExin2010wasusedalongwithRETIandWREZresourceandcostcomparisonsfortheanalysis.Thisstudyupdatescostsforeachoftheareaspreviouslyidentified

andalsoidentifiesthethreelowestcostlocationsbasedoncapitalcostsandtransmission

constraints.Theplantsize,performance,costfactors,andestimatedLCOEusingaPPAwith

transferfinancestructurecanbeseenbelow.

Table 1‐3 Geothermal Costs and Performance Comparison

LOCATION

NET PLANT CAPACITY (KWAC)

CAPACITY FACTOR

(PERCENT) CAPITAL COST ($/KWAC)

VARIABLE O&M

($/MWh) LCOE

($/MWh)

Brawley‐Binary 50,000 80 4,963 30 61.91

Geysers‐Flash 50,000 90 4,467 27 53.37

LongValley–Binary 40,000 80 4,283 34 63.81

Notes: LCOEsareatthebusbaranddonotreflectdeliveredpricesatload.Thesenumbersarenot

necessarilywhattheSFPUCwillpayduetomarketfactors. Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflect

anyincentivesortaxcredits;thesearetakenintoaccountintheLCOEcalculation. Thegeothermalresourceattheselocationsiswellunderstood;itisassumedthat

predictionsoftheheatavailablewillberealized.Lessunderstoodresourceswillhavehighercosts.

Allofthegeothermalprojectsanalyzedarepromisingandcouldprovidelowcostpowerto

theSFPUC.However,thechallengewithanynewgeothermalprojectisassurancethatthe

geothermalheatresourcecanproduceattheprojectedoutputlevelsandcostprojectionsovertheentirelifeoftheproject,aswellasthelongleadtimesfordevelopment.



BasedonBlack&VeatchandSFPUC’sexperiencewithrecentmarketpricingforgeothermal

projects,thecostsestimatedinthisreportaresignificantlybelowthepricesbeingofferedinthemarket.Whilethepricesshownabovemayreflectthedevelopmentcostforthebestknown

resourceareas,anumberoffactors,includingdevelopmentrisk,higherinvestorreturn

expectations,projectcosts,uncertaintyofpricinggiventhethinmarketforavailableprojects,andresourceavailabilitywouldlikelydrivepricesupbeyondthecostsestimatedinthisreport.

Furthermore,asadependablebaseloadresource,geothermaldevelopersmayfeeltheyofferamore

valuableproductthanvariablewindandsolarresources.Duetothisuncertainty,itwasdecidedthatthefocusoftheeconomiccomparisonsinthesupplycurvelaterinthisreportshouldbeon

resources(windandsolar)thathaveagreaterchanceofdevelopmentatcostsconsistentwithon

actualtransactionprices.Nevertheless,SFPUCshouldstillconsidergeothermalasapotentiallycompetitiveresourceoption.

1.3.4 Incentives and Financial Structures

Theeconomicsofrenewableenergyarestronglytiedtoavailableincentivesandthe

financingandownershipstructureoftheproject.Black&Veatchidentifiedthemainfinancial

incentivesavailabletotheSFPUCandprivatedevelopers,includingfederal,state,andlocaloptions.Inthebasecasefinancialmodeldevelopedforthisstudy,a30percentinvestmenttaxcredit(ITC)

andaccelerateddepreciationisassumedinallcaseswhereownershipisbyataxableentity.While

thiscreditexpiredattheendof2013forwindandgeothermalprojects,projectsthatarecurrentlyunderconstructionwouldstillbeabletocapturethesecredits.

Theownershipstructureofaprojectcanhaveamaterialimpactontheelectricitycostpaid

bytheSFPUCduetoeligibilityforincentives,costoffinancing,andtaxtreatment.ThemajorstructuresconsideredinthisstudyareSFPUCownership,PPAwithandwithouttransfer,prepay

PPA(alsowithandwithouttransfer),andrealestateinvestmenttrust(REIT).Thefinancialmodel

providedwiththisreportdemonstratesthedifferencesbetweensomeofthemajorstructures.Todemonstratethedifferencesbetweenthebestresourceandownershipoptions,the

LCOEsin$/MWhforthelowestLCOEsolarPVreservoir(Pulgas),single‐axistracking(SAT)ground

mountsolarPV(WindhubSAT),wind(WalnutGrove),andgeothermal(Geysers)sitesmodeledaspartofthisanalysisforeachofthefiveownershipoptions4arecomparedinthefigurebelow.

4 Given the barriers to the use of REITs and the uncertainty regarding their viability in the current market, this financial structure is not recommended as an option for near‐term project financing.



Figure 1‐1 Ownership Option Comparison, Best Resources

1.3.5 Supply Curve

Asupplycurveforwindandsolarprojectsidentifiedduringtheresourceassessmentwas

developedtocomparethecosttotheSFPUCofeachresource.Thesupplycurvereflectsthecostofgenerationversustheenergygenerationpotential.Thetotalamountoflargescalewindenergy

wasnormalizedtoequaltheamountofenergyfromlargescalesolartoprovideanequal

comparison.Fromthis,anoverallcomparisonofthecostforeachresourceoptionismade,withrecommendationsfortheoptionsthatshouldbepursuedinthefuturebytheSFPUC.

Thisanalysisonlyreflectsaportionoftheoutputfromprojectsmodeledaspartofthis

assessment.TherearealargenumberofadditionalrenewableresourceoptionsthatcouldbeavailabletotheSFPUC.Theintentistoprovidearelativeunderstandingforhowthedifferent

resourcetypescomparetooneanother.ThesupplycurveshowingtheLCOEsunderthepreferred

financingoption(PPAwithtransfer)ispresentedinFigure1‐2.

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Table 1‐4 Tabular Comparison of All Resources (PPA with Transfer)

NAME TECHNOLOGY LOCATION SIZE (MW) LCOE ($/MWh)

WalnutGrove Wind Yolo 170 54.89

MontezumaHills Wind Solano 100 56.13

NewberrySprings Wind SanBernardino 100 56.34

Altamont Wind(Repower) Alameda 20 56.63

LeonaValley Wind LosAngeles 100 56.85

Windhub TrackingPV Kern 20 64.70

ImperialValley TrackingPV Imperial 20 69.54

Midway TrackingPV Kern 20 73.50

SunolPV FixedPV SFPUCLand,Alameda 19.2 80.48

Oceanside Wind SanFrancisco 2 82.01

TeslaPV FixedPV SFPUCLand,SanJoaquin 1.6 85.40

TeslaWind Wind SFPUCLand,SanJoaquin 6 104.33

SunolWind Wind SFPUCLand,Alameda 30 129.85

PulgasRes. RooftopPV SanMateo 2.7 149.64

UniversityRes. RooftopPV SanFrancisco 2.9 154.39

SutroRes. RooftopPV SanFrancisco 2.0 168.09

ThurgoodMarsh. RooftopPV SanFrancisco 0.2 168.65

CollegeHillRes. RooftopPV SanFrancisco 0.9 170.27

StanfordHeights RooftopPV SanFrancisco 0.7 181.98

SummitRes. RooftopPV SanFrancisco 0.7 182.15

MarinaSchool RooftopPV SanFrancisco 0.05 198.39

HuntersPoint RooftopPV SanFrancisco 0.005 222.67

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capitalwouldnotbeappliedtowardsownershipasitwouldinthePPAwithtransferstructure.

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agreementforaprepayscenario.PrepayPPAsarecomplicated,havehigherstructuringexpenses,

mayencountergreaterIRSauditrisk,arebettersuitedforlargerprojects,andmayplacesomeproductionriskonSFPUC.Notethatifthefederaltaxcreditsareremoved,thiswouldgreatly

reducetheincentivefortheSFPUCtoconsideranytypeofPPAstructure.Inthiscase,thelowcost

ofcapitalavailabletotheSFPUCwouldfavorself‐ownershipasthepreferredoption.Notethatthisanalysisispreliminaryandisnotintendedtosubstituteforfinancialadvisoryserviceswhichthe

SFPUCshouldsecureifanyoftheseoptionsarepursued.

Whencomparingdifferenttechnologiesandlocations,large,utility‐scalefacilitiesconnectedtotheCAISOtendtohavelowerLCOEsrelativetolocal,smaller‐scalewindandsolarprojects

locatedinandaroundSanFrancisco.However,otherfactorsnotquantifiedheresuchaslocal

developmentandjobs,visibility,andeaseofdevelopmentcouldjustifythedevelopmentofmorelocalresources.

Ifavailablefordevelopment,largewindprojectsareestimatedtohaveaslightcost

advantageoverlargesolarfacilities,althoughtheprojectedLCOEsareveryclose.However,bothgeothermalandwindfacegreaterdevelopmentchallengesrelativetosolar.Theavailabilityofnew

oroperatinggeothermalfacilitiesislimited,andwindprojectsfacemorechallengingsitingand

permittingissuesrelativetonewsolarunits.Inaddition,thewindoutputcanbemorevariable;acloserlookattheoutputprofilesfordifferentwindandsolarprojectscanhelptheSFPUCto

determineiftherearetimeofgenerationadvantagesthatwouldfavoroneoftheseresourcesover

another.AnotheroptionavailabletotheSFPUCtomeetfuturerenewableenergyandpower

requirementsistopurchasebothonthewholesalemarket.Currently,bothwholesalepowerand

RECpricesinNorthernCaliforniaarelow:USDOEEIAdatafor2013showstheaveragemarketclearingwholesalepriceatnearly$44/MWh,andCategory3RECsarecurrentlytradingataround

$1/MWh.Ifalonger‐termperspectiveistakenintoaccount,theeconomicprospectsforthe

developmentofnewgenerationimproves.Black&Veatchforecaststhatthe2020wholesaleNorthernCaliforniapowerpricewillberoughly$54/MWh(in2013$).RECpricesareexpectedto

remainlowunlesshighergoalsareestablishedfortheCaliforniaRPS.Itisbecomingincreasingly

likelythatRPStargetswillrise,whichmayleadtohigherfutureRECvalues.ThebestrenewableenergyresourcesidentifiedinthisanalysishaveLCOEsof$55to60/MWh,makingthem

competitivewithlong‐termpurchasesofgreenpower.Lockinginapriceatthislevelinalong‐term

PPAwouldactasaneffectivehedgeagainstvolatilepowerandRECpricesprovidedthattheSFPUCpredictsasteadyfuturedemandforadditionalgeneration.


BLACK & VEATCH | Introduction 2‐1

2.0 Introduction TheSFPUCisconsideringarangeofpotentialgenerationoptionstomeetfuturerenewable

energytargetsandloadgrowthneeds.SFPUCstaffandcontractorshavepreviouslyidentified

severalofthebestpotentialtechnologiesanddevelopmentlocations.Inthisreport,Black&Veatchbuildsuponthepreviousanalysisbydevelopingupdatedcostandperformanceestimatesfor

deploymentofsolarPV,wind,andgeothermaltechnologiesinareasidentifiedassuitable.

Representativelowcostlocationsandtechnologiesareidentified,alongwiththeownershipoptionsandfinancialstructuresthatmaybeattractivetotheSFPUC.Supplycurvesprovideeasy

comparisonsbetweenthetechnologiesandlocationsbeingconsidered.

2.1 OBJECTIVE TheobjectiveofthisreportistoidentifyandcharacterizevarioussolarPV,wind,and

geothermalpowerfacilitiesthatcouldbeusedtodeliverpowertotheSFPUCinthefuture.An

effortwasmadetoselectprojectsizesandlocationstorepresentawiderangeofoptionsavailabletotheSFPUC,rangingfrom2.5kWrooftopPVfacilitiesinSanFranciscoto100MWwindprojectsin

southernCalifornia.

2.2 APPROACH UtilizingworkpreviouslyperformedbyBlack&VeatchaswellasbytheSFPUCandtheir

consultants,resourceassessmentswereperformedforsolarPV,wind,andgeothermalpower

facilitiestoidentifyprojectlocationsandsizesthatcouldeconomicallydeliverrenewableenergyto

theSFPUC.Theresourceassessmentsincludedcost,technology,andproductionassessmentsforeachproject.Basedontheseassessmentsprojectcapitalandoperatingcostsweredeveloped.

Black&Veatchthenreviewedavailableincentivesthatcouldbeutilizedandassessedvarious

ownershipstructuresfortheprojects.Thecosts,productionestimates,incentives,andownershipsstructureswereusedtocalculatetheLCOEforeachoption.Supplycurveswerethendevelopedto

provideabasisofcomparisonforthevariousprojectsandownershipstructuresconsideredinthis

analysis.


BLACK & VEATCH | Methodology 3‐1

3.0 Methodology ProjectswereevaluatedwithinSanFrancisco,onSFPUCcontrolledlands,andthroughout

thestate.StatewideprojectanalysisisbaseduponworkrecentlyconductedbyBlack&Veatchas

partoftheRETIandWREZprojectstoassessrenewableresourcesavailabletoachieveCaliforniaRPSgoals.Previouslyperformedresourceassessmentsforwind,solar,andgeothermalprojects

wereupdatedtoidentifyareaswhereeconomicallyfeasibleprojectscouldbedevelopedforthe

SFPUC.Transmissionconstraintswerealsoconsideredwhenselectingprojectsizesandlocations.Areviewofavailableincentivesandownershipstructureswasperformed,andthelevelizedcostof

energywasmodeledforeachproject.Supplycurvesweredevelopedtorepresenttherangeof

renewableenergyoptionsavailabletotheSFPUC.Thisreportsectiondetailsthemethodologyusedinthisassessment.

Detailedcapitalcostassessmentswereperformedforeachsolarandwindsite,takinginto

accountallfactorsincludedindevelopinganewproject.Whilesitespecificfactors,suchasslope,terrain,andresourcepotentialweretakenintoaccountasmuchaspossible,itwasassumedthat

eachsitewouldbesuitablefordevelopmentwithfewbarriers.Typicalprivateindustry

developmentcostsforcomparableprojectswereusedasastartingpoint,withadjustmentsmadefortheprevailingwage.Morestringentdesignrequirements,differencesinlaborproductivity,

greaterenvironmentalandpermittingcosts,andunforeseensitetechnicalrestrictionswould

increasethecostsbeyondthoseestimatedinthisreport.Forin‐citysolarPVprojects,adjustmentsweremadetotheestimatedcapitalcoststoreflectactualcostdatareportedbytheCaliforniaSolar

Initiative.Geothermalcostassessmentsperformedinpreviousstudiesforeachspecificlocation

werereviewedandupdated.Estimatedcostsreflecttherequirementstoproduceanddeliverthepowertolocalloador

transmission,butwillnotreflectthedeliveredcostofpowertoSanFranciscoforprojectsoutsideof

thecity.RenewableresourcesdeliveringpowerusingtheCAISOgridwillpayatransmissionwheelingchargetobringthepowertoSanFrancisco.Ifthegeneratorisavariableresource,aslong

astheresourceisparticipatingintheCAISOParticipatingIntermittentResourceProgram(PIRP)

therearenoadditionalcostsforgenerationvariability(i.e.scheduledeviationpenaltiesorancillaryservicescharges).Theresourceshouldhavea“fullcapacity”interconnectionagreementwiththe

CAISO.NoFirmTransmissionRights(FTR)arerequiredtodelivertheenergy,butdependingon

thelocationoftheresource,congestionrevenuerights(CRRs)mayberequiredtoensurefulldeliveryoftheenergyfromthegeneratingresourcetoSFPUC.

Inaddition,thecostofpowerreflectsthecosttothedeveloperoftheprojectbutnot

necessarilywhattheSFPUCwillpay.Otherfactors,suchasthelevelofsupplyanddemandforrenewableenergyinCalifornia,willimpactthefinalpricing.

3.1 RESOURCE ASSESSMENT AND PROJECT IDENTIFICATION Wind,solarPV,andgeothermalprojectsinCaliforniawereconsideredforthisanalysis.



3.1.1 Solar Photovoltaic Project Assessment

Black&Veatchperformedacost,technology,andproductionassessmentforsolarPV

projectsthatcouldpotentiallybebuiltatSFPUCownedfacilities,aswellasprovidedcomparisonstothecostofsolarPVbuiltonSanFranciscorooftopsandprojectsbuiltoutsideoftheservice

territory.Thecostsincludetransmissionanddistributionchargesbutdoesnotincludeanycharges

totransmitpowerfromtheCAISOortheHetchHetchydistributionsystemintoSanFrancisco.Thefirstpartofthisassessmentincludesareviewandupdateofpaststudiesperformedfor

theSFPUCbyotherconsultants.ProjectsizesandcapitalcostsweredevelopedforsixSFPUC

reservoirsandtwoupcountrylocations(SunolandTesla);thetechnologyassumptionsandcostswereupdatedforthisstudy.

ForcomparisontofacilitieslocatedonSFPUCproperties,anestimatefortheaveragecost

andperformanceofrooftopfacilitieswithinthecitywasdeveloped.Fourrooftopsizesandthreeneighborhoodsweremodeledtoprovidearangeofcostandperformanceestimatesforrooftop

facilities.TwosizesofresidentialrooftopsweremodeledinHuntersPoint,andtwocommercial

rooftopsweremodeledattheMarinaMiddleSchoolandThurgoodMarshallSchoollocations.

Asafurtherpointofcomparison,theteamdevelopedcostsforimportingsolarPVpowerfromafewrepresentativelargeprojectslocatedoutsideofSanFrancisco.Projectdatadeveloped

fortheRETIandWREZprojectswasusedforthestatewideprojectassessments.

3.1.2 Wind Project Assessment

Black&Veatchperformedcost,technology,andproductionassessmentsforwindprojectsthatcouldpotentiallybebuiltatSFPUCownedfacilities,anddevelopedcomparisonstoprojects

builtoutsideoftheserviceterritory.Thecostsincludetransmissionanddistributioncharges;as

withthesolarwork,coststobringthepowerintoSanFranciscofromthepointofinterconnectisnotincluded.

Costandperformanceestimatesweremadeforwindsitedattwoupcountrylocations

(SunolandTesla),aswellasforonein‐citylocation(OceansideWWTP).Theteamalsoidentifiedthecostforimportingpowerfromafewrepresentativelargewindprojectslocatedatgoodwind

resourcesinCaliforniawithintheCAISO.ProjectdatadevelopedfortheRETIandWREZprojects

wasusedinthisanalysis.

3.1.3 Geotechnical Project Assessment

Cost,technology,andproductionassessmentsweredevelopedforseveralCalifornia

geothermalprojectsthatcouldimportpowertotheSFPUC.Theresourceassessmentperformed

fortheSFPUCbyGeothermExin2010wasusedalongwithRETIandWREZresourceandcostcomparisons5fortheanalysis.Thisstudyupdatescostsforeachoftheareaspreviouslyidentified

andalsoconsidersavailabletransmissioncapacitiesandinterconnectioncostsforeachofthe

resourceareas.

5 Note that GeothermEx and Black & Veatch collaborated on the original RETI and WREZ geothermal assessments.



3.2 TRANSMISSION AND INTERCONNECTION Availabletransmissioncapacitywasconsideredwhensitingeachofthelargescalewind,

solarPV,andgeothermalprojects.Windandgeothermalresourceassessmentswerefirst

performedtoidentifythemostattractivelocationsandthenpubliclyavailableinformationwas

consultedtoverifythepresenceofadequatetransmissioncapacityforeachsite.Interconnection

costsweredevelopedandlocationswithuneconomicinterconnectionandtransmissioncostswerefilteredout.ForsolarPV,sincetheentirestatehasadequateresourcestosupportdevelopmentof

commercialfacilities,thetransmissionandinterconnectionscreenidentifiedtheleastcost

interconnectionpoints.Fromthesescreens,projectsizesweredevelopedandproductionassessmentswereperformed.Thefollowingparagraphspresentadditionalinformationonhow

interconnectioncostswereassessed.

UsingpublicinformationfortheCaliforniainvestorownedutilities,availabletransmissioncapacitycanbeidentifiedatmajorprojectsubstations.Foreachsite,basedontheanticipated

lengthofthegenerationtieline,andinterconnectionsubstationavailabilitywithrespectto

proposedcapacity,themosteconomicalsubstationshavebeenidentified.Substationinterconnectioncostswereestimatedprimarilyusingthe2012Western

ElectricityCoordinatingCouncil(WECC)TransmissionExpansionPlanningPolicyCommittee

(TEPPC)transmissioncostestimatingtool.Thetoolprovidesstakeholdervettedhighlevelcapitalcostestimatesforsubstationequipmentrated230kVandabove6.Forthepurposeofthisstudy,the

toolwasexpandedinaccordancewiththe2013CAISOParticipatingTransmissionOwnerPerUnit

CostsandBlack&Veatchindustryexperience,toaccommodatecalculationofcapitalcostsatvoltagelevelstypicalofinterconnectionsubstations7.

The115kVclasssubstationbaseandequipmentcostsweredevelopedbyapplyinga25

percentreductionfactortothe2012WECC230kVsubstationbaseandequipmentvalues.Thisreductionfactoraccountsfordecreaseinequipmentsizeandclearancerequirementsandisin

accordancewiththerelativecostsofthe115kVand230kVCompleteLoop‐inSubstationsproposed

inthePG&E2013ProposedGeneratorInterconnectionperUnitCostGuide8.ThoughmediumvoltagecostsarenotprovidedintheCAISOParticipatingTransmission

OwnerPerUnitCostestimates,mediumvoltagefeederprotectionandbusequipmentcostswere

includedbasedonaveragevaluesseenbyBlack&VeatchforCaliforniainterconnectionprojects.Mediumvoltagecostsincluderiserstands,switches,switchstands,circuitbreaker,andbuswork

andarerepresentativeofequipmentcostsofmediumvoltageACcollectionfromthesubstation

fencetothesecondarywindingofthesubstationstepuptransformer.

6 WECC Transmission Capital Cost Report – Black & Veatch: http://www.wecc.biz/committees/BOD/TEPPC/External/BV_WECC_TransCostReport_Final.pdf 7 Investor Owned Utilities Per Unit Costs – CAISO Website: http://www.caiso.com/informed/Pages/StakeholderProcesses/ParticipatingTransmissionOwnerPerUnitCosts.aspx 8 2013 PG&E Per Unit Cost Guide: http://www.caiso.com/Documents/PGE_2013ProposedPerUnitCostGuide.xls



3.3 INCENTIVES AND FINANCIAL STRUCTURES Black&VeatchdevelopedalistofthemainfinancialincentivesavailabletotheSFPUCand

privatedevelopers,includingfederal,state,andlocaloptions.Therestrictionsandeligibilityfor

eachhasbeenhighlighted.

ArangeofpossibleownershipoptionsforrenewableenergyprojectssupplyingtheSFPUC

wasthenconsidered.Thisassessmenthighlightsthestructure,requirements,andpotentialbenefits/drawbacksofeach.ThemajorstructuresconsideredareSFPUCownership,PPAwithand

withouttransfer,prepayPPA(alsowithandwithouttransfer),andREIT.

3.4 RESOURCE VALUATION Aproformaeconomicmodelwasdevelopedtoestimatethelevelizedcostofelectricityfor

themajorresourceoptionsdeliveredtotheSFPUCserviceterritory.Thedifferentownership

structuresaremodeledtoprovidecomparisonsandrecommendationsforthemostattractiveoptionstoconsider.Thefinancialmodelisadetailedproformathatallowsentryofawiderangeof

projectspecifictechnicalcostsandfinanceassumptionstodeterminearangeofpotentiallevelized

costs.Majorinputstothemodelincludetechnicalassumptions(capitalcost,operatingcosts,capacityfactor,escalationrates,etc.),ownerassumptions(prepayamount,bondcosts,discount

rate,additionalfees,etc.),anddeveloperfinancialassumptions(incentives,costofdebt,costof

equity,economiclife,depreciation,flipstructure,etc.).

3.5 SUPPLY CURVE DEVELOPMENT Supplycurvesbasedontheprojectsidentifiedaspartoftheresourceassessmentwere

producedtocomparethedevelopmentcostofeachresource.Thesesupplycurvesreflectthecost

ofgeneration(notnecessarilythepricethattheSFPUCwouldpay)versustheenergygenerationpotential.Fromthesecurves,acomparisonofthecostforeachresourceoptionismade,with

recommendationsfortheoptionsthatshouldbepursuedinthefuturebytheSFPUC.


BLACK & VEATCH | Solar Photovoltaic Resource Assessment 4‐1

4.0 Solar Photovoltaic Resource Assessment Aselectionofprojectlocationsandsizeswereconsideredinthisassessmenttodevelopthe

technicalbasisforestimatingcostandperformanceforsolarPVfacilitiesthatarerepresentativeof

theopportunitiesavailabletotheSFPUC.

4.1 SOLAR RESOURCE ANALYSIS ToestimatesolarresourcesandenergyproductioninSanFrancisco,upcountry,andin‐

statelocations,Black&VeatchusedsatellitedatabenchmarkedagainstthemetstationdatathathasbeenmadeavailablebytheSFPUC.SolarAnywherewasselectedasthesatellitedatasourcefor

thisassessment.SolarAnywhereisafree,publiclyavailabledatasourcethatoffers1kmresolution

solardatayearlyfrom1998topresentinCalifornia.UsingaconsistentdatasourceandformatprovidesabasisforcomparisonofsiteswithinSanFrancisco,upcountry,andotherstatewide

locations.SolarAnywheremeasurementshavelowuncertainty(+/‐5percentforglobalhorizontal

irradiance(GHI))whichiscomparabletomostofthemetstationinstrumentation.Inaddition,satellitedatadoesnotintroducequestionsaroundcalibration,maintenance,ormissingdatapoints

thataccompanysomeofthegroundbasedmeasurements.

Black&Veatchcreatedatypicalmeanyear(TMY)fileforeachprojectlocationusingmultipleyearsofsatellitedata,asshownbelow.

Table 4‐1 Solar Resource Data

SITE ANNUAL TYPICAL GHI (kWh/m2/year)

HuntersPoint 1757

ThurgoodMarshallSchool 1730

MarinaMiddleSchool 1673

CollegeHillReservoir 1730

PulgasBalancingReservoir 1827

SutroReservoir* 1639

UniversityMoundReservoir 1735

StanfordHeightsReservoir 1635

SummitReservoir* 1639

Sunol 1854

Tesla 1893

WindHub 2114

ImperialValley 2143

Midway 1992

*DuetotheproximityofSutroandSummitreservoirsthesameTMYfilewasusedforthesesites.



Toprovideabasisforcomparison,theGHImeasurementsobtainedfromSolarAnywherearecomparedtotwootherpubliclyavailablesatellitedatasets,SolarProspectorandNASASurface

meteorologyandSolarEnergy(SSE),inTable4‐2.SolarAnywhereusesneweralgorithmsthan

whatwasusedwhenderivingtheSolarProspectordataset.TheNASASSEdatasetusesadifferentalgorithmforestimatingGHIandamuchcoarsergridsize,leadingtohigheruncertainty.

Table 4‐2 Satellite Based GHI [kWh/m2/yr] by Source

LOCATION SOLAR

ANYWHERE SOLAR

PROSPECTOR NASA SSE

HuntersPoint 1757 1745 1670

ThurgoodMarshallSchool 1730 1745 1670

MarinaMiddleSchool 1673 1768 1670

CollegeHillReservoir 1730 1588 1670

SutroandSummitReservoirs 1639 1588 1670

UniversityMoundReservoir 1735 1588 1670

StanfordHeightsReservoir 1635 1588 1670

Eachsatellitedatasourceaveragesreadingsacrossageographicarea.SolarAnywheredata

isaveragedacross1kmgridsquares,whichprovidesenoughgranularitytomodelindividualneighborhoodswithinSanFrancisco.SolarProspectordataaggregatesdataonaroughly10km

grid.TheSolarProspectorgridthatcapturestheCollegeHill,Sutro,Summit,UniversityMound,and

StanfordHeightsreservoirscoversmuchofSanFranciscoandaggregatesreadingsfromneighborhoodsthatarelargelysunnywiththosethatexperiencegreateramountsoffogcover(Grid

Number1inFigure4‐1).InFigure4‐1,theHuntersPointandThurgoodMarshallSchoollocations

arecapturedinGridNumber2,whileMarinaMiddleSchoolislocatedinGridNumber3.NASASSEdataisaggregatedonalargerscale,andalloftherepresentativeSanFranciscoprojectlocationsare

characterizedwiththesamegridinthatdataset.AcomparisonoftheSolarAnywhereGHIvalues

withtheSolarProspectorGHIvaluesforsiteslocatedinGridNumber1showsthattheSolarAnywherevaluesareequivalentorhigherformostsites.Howeverthesevaluesarelikelytobe

morerepresentativeofthesolarresourceinthoseneighborhoodsthanSolarProspectorbecauseof

theaveragingeffectofthelargergridsquare.



Figure 4‐1 NREL Solar Anywhere 10 km Grid

Forthesereasons,Black&VeatchchosethemoregranularSolarAnywheredataforthe

analysis.However,theoutputandcapacityfactorestimateshowninthisreportmaybehigherthan

paststudiesandinstallationsfortwomainfactors.Thefirstisthedifferenceindatasetsoutlinedabove.Second,thedesignsdevelopedinthisstudyreflectstate‐of‐the‐art,newdesignswhichare

likelytohavehigheroutputthanolderfacilities.Thisislargelyduetothelowercapitalcostfor

solarpanels,whichleadtohigherinverterloadingratios.Currentdesignsfinditeconomictoincreasethenumberofpanelsinagivenfacilitytoincreaseoutputduringtheshoulderperiodsof

theday.Whilethissacrificesasmallamountofoutputatthepeak,theneteffectisgreateroverall

outputandimprovedsystemeconomics.OnefinalitemtokeepinmindisthatallsolarPVanalysisisbasedontheassumptionthat

thesiteswouldbegoodcandidatesforPV:southfacing,noroofupgrades,fewobstructions,and

typicallossesandmaintenancerequirements.Recentin‐citydesignswhichareprojectedtopotentiallyhavelowercapacityfactorsthanthoseestimatedinthisreportarenotduetomajor

differencesinthesolarresourcedata,butratherdifferentassumptionsfortilt,azimuth,shading,

andsoiling.



4.2 TECHNOLOGY DESCRIPTION TherewerefourdifferentapplicationsidentifiedinthisprojectaslistedinTable4‐3.The

moduletechnologyassumedforallsystemsiscrystallinesiliconmodules.Thetechnical

characteristicsofthephotovoltaicsystemsinthistablearedescribedinthesectionsbelow.Black&

Veatchnotesthatthetechnologydescriptionsareofgeneralnatureandthesystemsdevelopedwith

thesefeaturesareataconceptuallevel.Theobjectiveinthisstudyistoprovideanindicationofthesystemssizeandcostbasedoncommerciallyavailableequipmentandtypicalconstruction

methodsusedinthesolarindustryasofthewritingofthisreport.

Table 4‐3 Solar System Applications

TYPE SIZE

Residentialrooftops 2.5 – 5kWac

Largerooftopsystemsforschools 50– 200kWac

Largerooftopsystemsforreservoirs 0.7 – 2.9 MWac

Utilityscale,groundmountedsystems 1.6– 20 MWac

4.2.1 Residential Rooftop Systems

Thisreportconsiderstworesidentialrooftopoptions–a2.5kWacsystemanda5kWac

system.ThesizeofthesystemsistypicalofresidentialapplicationsinCalifornia.Theexpectedlife

timeofthesystemis25yearsusingpoly‐crystallinesiliconmodulesratedat230Wdceach.Thetotalnumberofmodulesis13forthe2.5kWacsystem,requiringabout230squarefeetofavailable

area.Thissystemsizeandrooftopspacerequirementsaredoubledforthe5kWacsystem.The

modulesareflushmountedonanaluminumrack,elevatedlessthan12inchesfromthehouse’sroof,followingtheroof’stilt.Tomodelproductiontheroofwasassumedtohaveatiltof10degrees.

Forconstructionproductivityandinstallationcosts,itwasassumedthatthesupportofthesolar

rackwasbuilt‐intheroofatthetimeofthehouse’sconstruction(solarreadyroof).Thereisone

inverterpersystemwhichwillhavetobereplacedapproximatelyatyear12aftercommissioning.Thetypicalstandardwarrantyfortheseinvertersis10years.Theinvertersareservicefree,and

requirefullreplacementincaseoffailureorattheendofinverterlife.Thisisincontrasttolarger

inverterswhichcanberepairedandmaintainedduringtheirlifetime.Theinverterstieintothehouseholdelectricalmains,onthehousesideofthemeter.Themeterhasbi‐directional(net

metering)capabilities.

4.2.2 Commercial Rooftop Systems

Thisreportconsiderstwocommercialrooftopoptions–a50kWacsystemanda200kWacsystem.ThesizeofthesystemswasdefinedusingasareferencetwospecificschoolsinSan

Francisco:MarinaMiddleSchoolintheMarinaDistrictandThurgoodMarshallHighSchoolinthe

SilverTerraceDistrict.Theexpectedlifetimeofthesystemsis25yearsusingpoly‐crystallinesiliconmodulesratedat250Wdceach.The50kWacsystemcomprises224modules,requiringless



than4,000squarefeetofavailableroofarea.The200kWacsystemutilizes896modules,requiring

about15,750squarefeetofrooftopspace.Themodulesaremountedonmetalstructureswithonemodulemountedonlandscapepositionandtilted10degrees.Thestructuresselectedaretypically

usedonrooftopapplications.Theyareattachedtotheroofthroughballasts(concreteblocks)and

fewanchorpointstothestructuralmembersoftheroof.Itisassumedthatbuildingstructureisabletosupporttheaddedweightofthesolarsystem.Itisalsoassumedthattheroofmembraneis

ingoodconditionsandthatonlyminimalroofpreparationsarerequiredbeforeinstallingthe

system.Nostructuralorroofretrofitswereincludedinthecostestimates.Thereisone50kWacinverterforthesmallersystemandtwo100kWacinvertersforthelargersystem.Theinverters

canbeinstalledontheroofornexttotheinterconnectionpoint.Theinverterswillhavetobe

refurbished(somecomponentswillbereplaced)approximatelyatyear12aftercommissioningbuttheyareexpectedtolastthelifeofthePVsystem.Thetypicalwarrantyoftheseinvertersis5years

standardwithoptionalpurchaseofextendedwarrantiesforupto20yearsaftertheendofthefirst

5years.Thetypicalmaintenancescheduleisonetotwotimesperyear.Incaseoffailures,repairsaremadeonsite.Typically,theinverterswilltie‐intotheexistingelectricalinfrastructurewithno

majorretrofitsrequired.Anewmetermayhavetobeinstalledwithbi‐directionalcapabilitiesfor

net‐metering.

4.2.3 Large Rooftop Systems for Reservoirs

ThesizeofthesystemswasdefinedusingsixspecificwaterreservoirsinSanFrancisco,basedonavailableareaspreviouslydevelopedbyconsultantstotheSFPUC.Thereservoirs

consideredinthisstudyare:

● CollegeHill● Summit

● StanfordHeights

● Sutro● UniversityMound

● Pulgas

Thereservoirroofshavealowweightbearingcapacityandlimitedsurfacearea.Becauseofthis,thesystemspecificationsforthesecasesarebasedonstandardcomponentsbuiltbySunPower

Corporationspecificallyforlight‐weightrooftopapplications.Othervendorscanprovide

equivalentsystems.Theexpectedlifetimeofthesystemsis25yearsusingmono‐crystallinesiliconmodulesratedat320Wdceach.Thetotalnumberofmodulesrangesbetween2,696forthe

smallestsystem(666kWac)attheSummitreservoirto11,672forthelargestsystem(2,880kWac)

atUniversityMound.Themodulesaremountedonpre‐engineeredstructurebuiltofapolymermaterial.Themodulesaremountedata5degreetilttominimizewindloadsandmaximizesurface

areacoverage.Duetothelowtiltandinter‐lockingfeaturesoftheunits,thestructuresarenot

attachedtotheroof.Fewanchorpointstothestructuralmembersoftheroofwereconsidered.Itisassumedthatbuildingstructureisabletosupporttheaddedweightofthesolarsystem.Itisalso

assumedthattheroofmembraneisingoodconditionsandthatonlyminimalroofpreparationsare



requiredbeforeinstallingthesystem.Nostructuralorroofretrofitswereincludedinthecost

estimates.Theinvertersusedforthesesystemsareratedat100kWac,250kWacand500kWac.Theinverterswouldbeinstalledontheground.Theinverterswillhavetoberefurbished

approximatelyatyear12aftercommissioningbuttheyareexpectedtolastthelifeofthePV

system.Thetypicalwarrantyoftheseinvertersis5yearsstandardwithoptionalpurchaseofextendedwarrantiesforupto20yearsaftertheendofthefirst5years.Thetypicalmaintenance

scheduleisonetotwotimesperyear.Incaseoffailures,repairsaremadeonsite.Typically,the

inverterswilltie‐intotheexistingelectricalinfrastructurewithnomajorretrofitsrequired.Anewmetermayhavetobeinstalledwithbi‐directionalcapabilitiesfornet‐metering.

4.2.4 Utility Scale Ground Mounted Systems

ThesizeofthesystemswasdefinedfortwospecificSFPUCproperties–SunolandTesla.

Additionally,aconceptual20MWacsystemwasassumedaspartofthestatewideresourceassessment.

TheTeslaandSunolsitesareopenland.TheareaavailabletobuildaPVsystemateachsite

isapproximately100acresatSunoland8acresatTesla.Theareaforconstructionisassumedto

bemostlyflat.Theexpectedlifetimeofthesystemsis25yearsusingpoly‐crystallinesiliconmodulesratedat300Wdceach.Theconstructionapproachisbasedonbuildingblocks.Each

buildingblockisanindependentsystemratedat1.6MWacandintegratedby6,840modulesand

twoinverters,800kWaceach.Themodulesaremountedonmetalstructures.Bothfixedtiltandsingle‐axistrackersystemswereevaluated.

Forthefixedtiltsystem,twomodulesaremountedinportraitorientation(vertically

stacked)facingduesouthwithafixedtiltof27degreesattheSFPUClocationsand25degreesforthestatewidelocations.

Forthesingle‐axistrackersystem,onemoduleismountedonabeamthatrotatesthe

modulesEasttoWest,followingthedailysun‐path.Inthismanner,themoduleshaveagreaterexposuretothesunonadailybasis,whichincreasestheenergyproductionofthesystem.Single‐

axistrackersaremoreexpensivethanfixedtiltsystemsandrequiremoreland.

Thestructuresselectedforbothtypeofmountingstructuresaretypicallyusedonutility‐scaleapplications.Theyaresupportedbymetalbeamsthataredrivenintotheground.Itis

assumedthatthetopographyofthesiteismostlyflatsuchthatcoststoleveltheterrainarenot

significantrelativetothecostsoftheproject(lessthan2percent).Itisalsoassumedthatthesoilconditionsarenotcorrosiveandofadequateconsistencytousedrivenpilefoundations.Minimal

civilworksandminimalenvironmentalpermittingprocesseswereassumed.Thereisatotalof1

blockconsideredforTeslaand12blocksforSunol.Theestimatedsurfacearearequiredforthesesystemsis5.25acresperMWacforthefixedtiltand6.8acresperMWacforthesingle‐axis.The

inverterswouldbeinstalledoutdoorsorenclosedinsideaspecialcontainer.Theinverterswillhave

toberefurbished(somecriticalcomponentswillhavetobereplaced)approximatelyatyear12aftercommissioningbuttheyareexpectedtolastthelifeofthePVsystem.Thetypicalwarrantyof

theseinvertersis5yearsstandardwithoptionalpurchaseofextendedwarrantiesforupto20



yearsaftertheendofthefirst5years.Thetypicalmaintenancescheduleisonetotwotimesper

year.Incaseoffailures,repairsaremadeonsite.Inatypicalelectricaldesignofautility‐scalesystemtheoutputoftheinvertersisconnectedtoamediumvoltagetransformer.Thepoweroutput

ofalltheblocksinthesystemiscollectedinanACcollectorstationandthenroutedtothepointof

interconnection.ThePVsystemwasassumedtobeco‐locatedwiththepointofinterconnection.Nonewtransmissionlineinfrastructurewasincludedinthecostestimates.Thecostforasubstationto

interconnectwasincludedforSunol.

4.3 RESOURCE AVAILABILITY SolarPVtechnologiesusedirectandindirectirradiancetogenerateelectricity.Therefore

theGHIwascharacterizedforthisstudy.

4.3.1 California Solar Resource Potential

Figure4‐2presentstheGHIforCalifornia,withseveralprojectsidentifiedforreference.For

solarPVprojects,resourceavailabilityistypicallynotthedecidingfactorinchoosingwheretositeaproject.Transmissionconstraintstypicallyhavegreaterinfluenceonprojectsiting.

4.3.2 San Francisco Solar Resource Potential

SanFranciscohasgoodsolarresourcepotential,andbenefitsfromcoolerweatherduring

theclearestdayswhichenablessolarpanelstogenerateelectricitymoreefficientlythaninhotterclimates.AvarietyoflocationswithinSanFranciscoweremodeledforthisstudyandwerefoundto

havetypicalannualGHIreadingfrom1636kW/m2to1757kW/m2asshowninthefigurebelow

basedonNRELdata.



Figure 4‐2 Annual Global Horizontal Irradiance in California



4.4 IN CITY COST AND PERFORMANCE CHARACTERISTICS ThePVsystemsconsideredforthecitywerederivedfromdiscussionswithSFPUC.There

werethreedifferentapplicationsidentifiedinthisprojectaslistedinTable4‐4.Theseoptionsare

meanttorepresentsomeoftherooftypesavailablewithinthecity.Thelocationofeachapplication

isshowninFigure4‐3.

Table 4‐4 In‐City Solar System Applications

TYPE SIZE LOCATION

Residentialsize 2.5kWac/5kWac HuntersPoint– Residentialdevelopment

Largerooftopsystemsfor

schools

50kWac/

200kWac

MarinaMiddle‐School(MarinaDistrict)

ThurgoodMarshallHighSchool(SilverTerraceDistrict)

Largerooftopsystemsforreservoirs

670kWac‐2.9MWac

CollegeHillReservoirSummitReservoirStanfordHeightsReservoirSutroReservoir

UniversityMoundReservoirPulgasBalancingReservoir

Black&Veatchdevelopedconceptualdesignsforeachofthesystemstoestimateinstalled

costs.Thesedesignswerealsothebasistodevelopedelectricalenergyproductionestimatesusing

thesolarresourcedatadiscussedinSection4.3.Black&VeatchalsoreviewedsystemdesignandcostsestimatesmadeforthereservoirsandpreparedbyAEPCGroup,LLCinSeptember2011.This

sectionincludestheestimatesfoundinthosereportsandtheupdatesmadebyBlack&Veatch.

Majorupdatesincludethefollowing:● ThecostsestimatesprovidedbyAEPCGroupareoutdated.Thepriceofphotovoltaic

moduleshasdecreasedsignificantlysince2011.Inaddition,thepriceofbalanceofsystems

equipmenthasalsodroppedandtheconstructionmethodshaveimproved.● Theefficiencyofmoduleshasalsoincreased,whichprovidesahigherpowerdensity(W/sq.

ft.)thanthe2011modules.

● TherearesomedifferencesintheestimatesofsurfaceareaavailableasreportedbyAEPCGroupandfoundbyBlack&Veatchforseveralreservoirs.Basedonmeasurementsderived

fromaerialimages(GoogleEarth)anddiscussionswiththeSFPUC,Black&Veatchmade

updatestothepreviousestimateswhereappropriate.Inmostcasesthepreviousassumedareawasmaintainedforthisstudy.

● Black&VeatchreceivedguidancefromSFPUCtousetheinterconnectionandstructural

assumptionslaidoutintheAEPCreports.



Figure 4‐3 Map of In‐City Locations and Pulgas



Detailedcapitalcostassessmentswereperformedforeachsolarsite.Theinitialbasisforall

in‐citycostestimateswastypicalprivateindustrydevelopmentcostsandlaborproductivity.Thesecostestimateswerethenadjustedbasedonactualdevelopmentcostfactorsforprojectsinstalledin

SanFranciscoaspartoftheCSIprogram.9Asummaryofthe2013CSIcapitalcostdata,in$/kWdc,

forprojects250kWorsmallerinlocationsthroughoutCaliforniaisshownbelow.DifferencesbetweentheoriginalestimatesandtheCSIdatawereusedtoadjustin‐citycosts.

Figure 4‐4 CSI Average 2013 Solar PV Capital Costs, 0 to 250 kW ($/kWdc)

ForSanFrancisco,thisdataindicatesthatformanyrooftopprojects,thecapitalcost

averagedroughly$6/Wdc,equivalenttoabout$7.7/Wac.Thesecoststakeintoaccountprevailingwages,productivity,andsystemdesignrequirements.Whileprojectsthatwillbeinstalledon

SFPUCreservoirswillbelargerthanthesystemsreportedbytheCSI,similarcostfactor

adjustmentsforSanFranciscoremainrelevantforSFPUCdevelopedprojectsasconfirmedwithSFPUCstaff.

4.4.1 Hunters Point Development

DevelopmentofrooftopsolarPVonnewresidentialconstructionintheHuntersPoint

neighborhoodwasevaluated.Theresidentialsystemsarehighlyvariableintermsoforientation(tiltandazimuth)duetothediversityofroof’sorientations.BecausemostroofsinthecityofSan

9 Data is available at http://www.californiasolarstatistics.ca.gov/current_data_files/



Franciscoarebuiltwithsimilarstructuraldesignandmaterials,themountingfeaturesand

electricaldesignarerelativelysimilarindependentlyofthetiltandorientation.Therearevariationsininstalledsystemcostsduetodifferentsupplierandintegratorprices,designandconstruction

productivity,andeconomiesofscaleforlargeprocurementvolumes.Black&Veatch’sestimates

aremeanttoprovideanaveragesystemcost.

Table 4‐5 Hunters Point Development PV Design and Performance Assumptions

PARAMETER 2.5 KWAC SYSTEM 5 KWAC SYSTEM

TotalArea(sq.ft.) 230 460

ModuleType Poly‐crystalline(230W)

MountingType Flushmounted|10degrees|FacingSouth‐southwest(35deg. azimuth)

TMY‐GHI(W/m2) 1,757

PVSystemSize(kWac) 2.5 5

ACCapacityFactor(percent) 20.3 20.3

EnergyYield(kWh/kWp) 1,490 1,490

Production(kWh/yr) 4,455 8,910

CapitalCost(2013$) 18,410 36,825

TheremayalsobepotentialfordevelopmentofgroundmountedsolarintheHuntersPoint

area.ParcelE,a138acrepieceoflandlargelyusedforlandfillinthepast,couldhostalargesolararray.Detailedinvestigationofthepotentialforthissitetodevelopandinterconnectionwasnot

performed;however,thesizeandlocationofthesitecouldbeattractiveforalargescalesolar

projectclosetoSFPUCload.ThechallengesindevelopingaprojectonaformerSuperfundlandfillsiteandthelowersolarirradiancerelativetotheothergroundmountedsitesconsideredwould

likelyleadtohighercostsrelativetootherlarge‐scaleoptionsevaluatedinthisreport.

4.4.2 School Buildings

LargeflatroofsarefoundextensivelythroughoutthecityofSanFrancisco.Thesebuildingstendtobewarehousetypeofstructureorconcretebuildings.Thebuildingsconsideredforthis

studyareschoolbuildings(typicallyconcrete),whicharewithinSFPUC’sjurisdiction.The

orientationofthebuildingsmaynotbethebestrelativetooptimalsolargain(buildingroofalignedonatrueNorth‐Southaxis).Therefore,thegeometryofthesolarsystemrelativetothegeometry

andorientationofthebuildingmaybethesameordifferent.Matchingthegeometryofthesolar

systemtothegeometryoftheroof’sbuildingwillmaximizethepowerdensityofthesolarsystem.However,thiscancauseamisalignmentofthesolarsystemtotheoptimalorientation(modulesnot

facingtrueSouth),whichwillreducetheenergyproduction.Becausetheroofsareflat,itispossible

toalignthesolarsystemtotheoptimalorientationalthoughthiswouldreducethecapacityofthe



system.Black&Veatchassumedanoptimalorientationfortheschoolsystems,thatis,themodules

arefacingtrueSouth.Fortheelectricalinterconnection,Black&Veatchassumedthatthereisenoughspaceand

capacityforabustapattheexistingelectricalswitchgearofthebuilding.Onlyminorelectrical

infrastructureretrofitsareincludedinthecostsestimates.Theinterconnectionwouldbeat480Vac(3phases).

Black&Veatchassumedthatthebuildingshavethestructuralcapacitysupportthestatic

(weight)anddynamic(wind)loadsaddedbythesolarsystem.Nostructuralretrofitswereincludedinthesystemcostsestimates.Black&Veatchalsoassumedthattheroofmembraneisingood

conditionsandthatonlyminorrepairs,includingthosecausedbyconstructiondamagesand

anchoringofthemountingstructure,arerequiredbefore,duringandafterinstallingthesolarsystem.

Therearevariationsininstalledsystemcostsduetodifferentsupplierandsystem

integratorprices,designandconstructionproductivityandeconomiesofscaleforlargeprocurementvolumes.Black&Veatch’sestimatesaremeanttoprovideanaveragesystemcost.For

theschoolsystems,Black&Veatchdidnotassumedeconomiesofscaleandconsideredthatthe

equipmentandmaterialprocurementonlyappliedtothespecificproject.However,somediscountinequipmentprice,designandlaborproductivitywasgivenassumingtheprojectisdevelopedby

anexperiencedsolarintegrator.

Table 4‐6 School Buildings PV Design and Performance Assumptions

PARAMETER

MARINA MIDDLE SCHOOL

50 KWAC SYSTEM

THURGOOD MARSHALL

200 KWAC SYSTEM

TotalArea(sq.ft.) 4,000 15,800

ModuleType Poly‐crystalline(250W)

MountingType Fixedtilt|ballasted|10degrees|FacingSouth(0deg.azimuth)

TMY‐GHI(W/m2) 1673 1,730

PVSystemSize(kWac) 50 200

ACCapacityFactor(percent) 21.1 22.3

EnergyYield(kWh/kWp) 1,421 1,500

Production(kWh/yr) 92,337 390,014

CapitalCost(2013$) 362,250 1,233,000

4.4.3 Reservoirs

Black&VeatchconsideredsixspecificwaterreservoirswithinthecityofSanFranciscoasindicatedbytheSFPUC.Thewaterreservoirshavelargeflatroofs,whichmakesthemideal

candidatesforsolarsystems.However,asindicatedbytheAEPCGroup’sreports,thestructural

capacityoftheseroofsislimitedtolessthan6poundspersquarefoot(psf).Inthecaseofthe



CollegeHillreservoir,therecommendedloadisupto2.7psf.Black&Veatchdidnotreviewany

structuralinformationforthesebuildingsandusedtheguidelinesintheAEPCGroup’sreports.Toaddressthelowweightcapacityofthereservoirs’roof,Black&Veatchassumedtheuse

oftheT5productmanufacturedandsoldbySunPowerCorporation.Theselectionofthis

equipmenttodevelopconceptualdesignsdoesnotimplyanyrecommendationonthepartofBlack&Veatchtousethisequipment.Othervendorsmayofferanequivalentorbettersolution.Inthe

reportsdevelopedbyAEPCGroup,themoduleandmountingstructureselectedappeartonolonger

existinthemarket.Othermajorassumptionsincludethefollowing:● Optimalorientationofthemodules(Southfacing)andapproximately95percentcoverageof

thetotalroofsurface.Basedonaerialimages,theroofsappeartoberelativelyfreeof

equipment.Shadingfromnearbyobjectsthatmaylimitthesystemwasnotconsideredforthispreliminaryassessment.Roofconditions,roofobjects,shadingandstructuralcapacity

arekeyfeaturesthatwillhavetobeassessedindetailforprojectdevelopmentand

construction.● TheelectricalinterconnectioncharacteristicsweretakenfromtheAEPCGroup’sreports,

whichconsideredatie‐intoanearbyPG&Esubstationwitha480Vacdistributionsection.

Onlyminorelectricalinfrastructureretrofitsareincludedinthecostestimates.● Theroofisingoodconditionandthatonlyminorrepairs,includingthosecausedby

constructiondamagesandanchoringofthemountingstructure,arerequiredbefore,during

andafterinstallingthesolarsystem.● Therearevariationsininstalledsystemcostsduetodifferentsupplierandsystemintegrator

prices,designandconstructionproductivityandeconomiesofscaleforlargeprocurement

volumes.Estimatesaremeanttoprovideanaveragesystemcost.Discountsareappliedtothecostduetothelargescaleofeachreservoirsystem.

GoogleEarthimages,solarirradiance,systemsize,capacityfactor,production,andcost

estimatesforeachreservoirareshownonthefollowingpages.



CollegeHillReservoir‐CollegeHillreservoirisasingle,largeovalshapedbuildingwitha

flatroofasshowninFigure4‐5.

Figure 4‐5 College Hill Reservoir

Table 4‐7 College Hill Reservoir Design and Performance Assumptions

PARAMETER PREVIOUS ASSUMPTION UPDATED ASSUMPTION

NetareaforPV(sq.ft.) 104,000 Nochange

ModuleType Mono‐crystalline(450W) Mono‐crystalline(320W)

MountingType Roofingmembrane|Modulebuilt‐in|SolarSave

Polymerstructure,built‐in|SunPowerT5

TMY‐GHI(W/m2) NotReported 1,730


ACCapacityFactor(percent) NotReported 20.8

EnergyYield(kWh/kWp) NotReported 1,405

Production(kWh/yr) NotReported 1,628,788

CapitalCost(2013$) 6,500,000 5,370,000

CapitalCost($/Wp) 10.03 4.63

CapitalCost($/Wac) 13.00 6.00



SummitReservoir‐Summitreservoirisasingle,largerectangular/octagonalshaped

buildingwithaflatroofasshowninFigure4‐6.

Figure 4‐6 Summit Hill Reservoir

Table 4‐8 Summit Reservoir Design and Performance Assumptions











CapitalCost(2013$) 6,500,000 4,033,800





StanfordHeightsReservoir+‐StanfordHeightsreservoirisasingle,largetrapezoid

shapedbuildingwithaconcreteflatroofasshowninFigure4‐7.

Figure 4‐7 Stanford Heights Reservoir

Table 4‐9 Stanford Heights Reservoir Design and Performance Assumptions

PARAMETER PREVIOUSASSUMPTION UPDATEDASSUMPTION

NetareaforPV(sq.ft.) 138,000 81,750


MountingType Roofingmembrane|Module

built‐in|SolarSave

Polymerstructure,built‐in|

SunPowerT5


PVSystemSize(kWac) 1,000 704




CapitalCost(2013$) 6,500,000 4,266,240



Black&Veatchnotesthatthereisasignificantdiscrepancyintheestimatednetsurfacearea

forthesolarsystem.ApproximationsofavailablesurfaceroofareausingGoogleEarthindicatesamuchsmalleravailableareathanquotedbyAEPC.



SutroReservoir‐Sutroreservoirisasingle,largerectangularshapedbuildingwithaflat

roofasshowninFigure4‐8.

Figure 4‐8 Sutro Reservoir

Table 4‐10 Sutro Reservoir Design and Performance Assumptions







PVSystemSize(kWac) 1,500 2,010




CapitalCost(2013$) 19,500,000 11,155,500





UniversityMoundReservoir‐UniversityMoundreservoirisasingle,rectangularshaped


Figure 4‐9 University Mound Reservoir

Table 4‐11 University Mound Reservoir Design and Performance Assumptions


NetareaforPV(sq.ft.) 192,000 335,250









CapitalCost(2013$) 19,500,000 15,524,000



ItisunclearwhytheAEPCGroupconsideredasmallersurfacearearelativetothepotential

roofsize.



PulgasBalancingReservoir–PulgasBalancingreservoirisasingle,squareshaped


Figure 4‐10 Pulgas Balancing Reservoir

Table 4‐12 Pulgas Balancing Reservoir Design and Performance Assumptions











CapitalCost(2013$) 25,500,000 14,270,000





4.5 UPCOUNTRY COST AND PERFORMANCE ESTIMATES TheupcountrysitesconsideredforPVsystemdevelopmentwerederivedfromdiscussions

withSFPUC.Theupcountrysystemsaregroundmounted,utility‐scalesystemsattwolocations,

TeslaPortalandSunolValleyasshowinFigure4‐11.

Figure 4‐11 Map of Upcountry Project Sites

Black&Veatchdevelopedconceptualdesignsforthetwosystemstoestimateinstalled

costs.ThesedesignswerealsothebasistodevelopelectricalenergyproductionestimatesusingthesolarresourcedatadiscussedinSection4.3.Thekeyassumptionsmadeforeachofthesystemsand

theresultsaredescribedbelow.

● ThecostestimatesprovidedbyAEPCGroupareoutdated.Thepriceofphotovoltaicmoduleshasdecreasedsignificantlyinthelastfewyears.Inaddition,thepriceofbalanceofsystems

equipmenthasalsodroppedandtheconstructionmethodshaveimproved.Detailedcapital

costassessmentswereperformedforeachsolarsiteusingtypicalprivateindustry



developmentcostsandlaborproductivity.Unlikethein‐citycostestimates,noadjustments

weremadetoreflecthigherSFPUCprices.● Theefficiencyofmoduleshasalsoincreased,whichprovidesahigherpowerdensity(W/sq.

ft.)thanthe2011modules.Black&VeatchnotesthatAEPCGroup’sassumptionsonsurface

arearequiredforthePVsystemarenowunrealistic.● BasedonthemapsprovidedtoBlack&Veatch,itappearsthatthereisnotenoughland

availabletoreachthedesigncapacityidentifiedbyAEPC.

● Thesitesareassumedtoberelativelyflatwithadequatesoilconsistencyfortheuseofdrivenpiles.Relativelysimplesitepreparations(vegetationremoval,earthworks,grading,

etc.)wereconsidered.

● Afixedtiltsystemwasassumedforbothsites.Fixedtiltsystemsaremorecompactthansingle‐axistrackersystemsandhavealowercapitalexpenditure.Themodulesaremounted

atanoptimalorientation(Southfacing).

● TheelectricalinterconnectioncharacteristicsweretakenfromtheAEPCGroup’sreports,whichconsideredatie‐intoanearbyPG&Edistributionlinesat12kV.Notransmissionline

costswereconsideredasinterconnectioninfrastructurewasassumedtobeco‐locatedwith

thetransmissionlinesandattheedgeofthePVpowerplant.Theinterconnectionrequirementsandmethodsmustbereviewedindetailforprojectdevelopment.

4.5.1 Tesla Portal

Table4‐13presentsthefindingsforTeslaPortal.

Table 4‐13 Tesla Portal Photovoltaic Design and Performance Assumptions


AvailableArea(acre) 16.5 8

AcreperMWac 2.4 5.2

ModuleType Mono‐crystalline(210W) Poly‐crystalline(300W)

MountingType Fixedtilt(anglenotreported) Fixedtilt–27degrees






CapitalCost(2013$) 57,100,000 5,472,530





Black&VeatchnotesthatAEPCGroup’sassumptionsof2.4acreperMWacareunrealistic.

Also,inconsultationwithSFPUCtheavailableareawasreducedfromearlierestimatestotakeintoaccountrecentconstructionactivityatTeslaPortalthatreducedtheavailableareaforPV.

4.5.2 Sunol Valley

Table4‐14presentsthefindingsforSunolValley.

Table 4‐14 Sunol Valley Photovoltaic Design and Performance Assumptions


AvailableArea(acre) 100 NoChange

AcreperMWac 2.5 5.25

ModuleType Mono‐crystalline(210W) Poly‐crystalline(300W)

MountingType Fixedtilt(anglenotreported) Fixedtilt–27degrees






CapitalCost(2013$) 207,800,000 47,884,188



Black&VeatchnotesthatAEPCGroup’sassumptionsof2.5acreperMWacareunrealistic.

4.5.3 Warnerville

Unliketheothertwolocations,theSFPUCdoesnotownthelandthathoststheWarnervilleSwitchyard,butmaybeabletoobtainlong‐termleasesforprojectdevelopment.TheWarnerville

Switchyardislocatedat10501WarnervilleRd,Oakdale,CA95361andissurroundedprimarilyby

agriculturalland.ThesiteisrelativelyflatandcouldbesuitableforthedevelopmentofasolarPVfacility,possiblymoresothanSunolorTesladuetothefavorabletopography.Asiteassessment

wasnotperformedforthisstudybutmaybeconsideredinfutureupdates.

4.6 COST AND PERFORMANCE ESTIMATES FOR OTHER IN‐STATE LOCATIONS Toprovideabasisforcomparisontoin‐citycosts,severalpotentialprojectlocationswere

selectedinCalifornia.Black&Veatchdevelopedtwotypical,conceptualdesignsforutility‐scale

photovoltaicinstallations:fixedtiltandtracking.Bothdesignsweremodeledateachofthreerepresentativeprojectlocations.



4.6.1 System Parameters

Tobestrepresentallcommercialoptionsforutility‐scalesolar,Black&Veatchdeveloped

systemdesignsforbothfixedtiltandtrackingphotovoltaicsystems.Bothsystemsarebasedonpolycrystallinemodulesandaretypicalofthecurrentstateofutility‐scaledesign.

Table 4‐15 Fixed Tilt Design Assumptions for Statewide Projects

PARAMETER VALUE NOTES

Module 300Wattpolycrystalline Generic72‐cellmodule

Inverter 500kW Pairedinto1MWblocks

MountingType Fixedracks Orientedtwohighinportrait

MountingOrientation 25degreetilt;facingduesouth

MountingSpacing 15ft. clearrowspacing

PVSystemSize(MWac) 20MW Sumofinverternameplate

PVSystemSize(MWdc) 27.7MW Sumofmodulerating

Table 4‐16 Tracking Design Assumptions for Statewide Projects

PARAMETER VALUE NOTES

Module 300Watt polycrystalline Generic72‐cellmodule

Inverter 500kW Pairedinto1MWblocks

MountingType SingleAxisTracking Orientedonehighinportrait

MountingOrientation RowsorientedN‐S,trackingE‐W

GroundCoverageRatio 37 percent

PVSystemSize(MWac) 20MW Sumofinverternameplate

PVSystemSize(MWdc) 25.9MW Sumofmodulerating

4.6.2 System Costs

Black&Veatchdevelopedcostestimatesfortheconstructionandoperationofthe

conceptualutility‐scaleplantsinCalifornia.Capitalcostsarefortheovernightconstructionofthefacilityinthesecondhalfof2013byaprivatedeveloperusingtypicalindustryspecifications.

SpecificlocationandinterconnectiondetailswerenotdevelopedfortheconceptualPVsystems

becausethesitingofthesystemsisflexibletomakebestuseofavailabletransmission.Forthisreason,thecapitalcostsincludethecostofagenerictransmissioninterconnectionusinga34.5kV

onsitesubstationwithnosignificantgen‐tierequired.Itisassumedthatthiscostisrepresentative

ofopportunitiesinthevicinityoftheselectedprojectlocations.



Table 4‐17 System Costs for Statewide Projects

CAPITAL COST (2013$/KWAC)

FIXED ANNUAL COST

(2013$/KWAC/YR)

FixedTiltDesign $3,289 $29

TrackingDesign $3,536 $32

Note:O&Mcostsexcludepropertytaxes,butincludelandleasepaymentsandinsurance.

4.6.3 Project Locations

Forthepurposesofmodelingsystemperformance,Black&Veatchselectedproject

locationswhicharerepresentativeofutility‐scaleprojectsinCalifornia.Theselectedlocations

satisfythefollowingrequirements.● HasavailabletransmissioncapacitybasedonBlack&Veatch’sanalysisofmajorsubstations.

● HasdemonstratedcommercialinterestbasedonBlack&Veatchmarketexperience,PPA

contractinformation,andinterconnectionrequests● Islocatedinaregionwithasignificantamountofdevelopableland,basedonGISanalysisof

terrain,environmentalconcerns,farmlandprotection,militaryland,andotherconcerns.

Projectlocationswerechosentobethesitesofmajortransmissionsubstations.Black&Veatchdoesnotsuggestthatdevelopmentatthesubstationislikely,butnotesthatthesolar

resourceatthesubstationsitecanrepresenttheresourceforprojectsintheregion.Torepresent

thediversityofsystemperformanceavailableinCalifornia,onesubstationwaschosenfromeachofCalifornia’sthreeInvestorOwnedUtilities.Thisprovidedgoodrepresentationofthespectrumof

climateswhicharebeingdevelopedinCalifornia.

Table 4‐18 Statewide Project Locations

SUBSTATION /

LOCATION COUNTY

GLOBAL HORIZONTAL

IRRADIANCE

(KWH/SQM/DAY) NOTES

Midway(Path15) Kern 5.45 SouthernCentralValley

Windhub Kern 5.80 Tehachapi

ImperialValley Imperial 5.56 ImperialValley/Sunrise

4.6.4 System Performance

Black&Veatchmodeledtheperformanceofsystemsmatchingourconceptualdesignsat

eachoftheselectedlocations.TheperformancemodelwasbasedontheNationalRenewableEnergyLaboratory’sSolarAdvisorModelalongwithdatafromtheNationalSolarRadiation

Database.Themodelwasbasedonthedesignparametersdescribedaboveaswellasstandard

industryassumptions.



Table 4‐19 Statewide Fixed Tilt System Performance

LOCATION AC CAPACITY FACTOR ANNUAL GENERATION

Midway 26.7 percent 46.9MWh

Windhub 29.2 percent 51.2MWh

ImperialValley 28.2 percent 49.4MWh

Table 4‐20 Statewide Single Axis Tracking System Performance

LOCATION AC CAPACITY FACTOR ANNUAL GENERATION

Midway 31.6 percent 55.4MWh

Windhub 35.9 percent 62.8MWh

ImperialValley 33.4 percent 58.5MWh

4.7 COMPARISON BETWEEN LOCATIONS Thissectionsummarizescostandperformanceparametersestimatedtoin‐city,upcountry,

andstatewideprojectlocations.

Table 4‐21 In‐City Photovoltaic Costs and Performance Comparison

LOCATION

NET PLANT

CAPACITY

(KWAC)

AC CAPACITY

FACTOR

(PERCENT)

CAPITAL COST

($/KWAC)

O&M COST

($/KW‐YR)

HuntersPoint 2.5 20.3 7365 45

HuntersPoint 5 20.3 7365 45

MarinaMiddleSchool 50 21.1 7245 27

ThurgoodMarshall 200 22.3 6165 27

CollegeHillReservoir 895 20.8 6000 27

SummitReservoir 664 19.7 6075 27

StanfordHeightsReservoir 704 19.6 6060 27

SutroReservoir 2,010 19.7 5550 27

UniversityReservoir 2,883 20.8 5385 27

PulgasReservoir 2,650 21.5 5385 27

Notes:

Costsreflectallconstructionanddevelopmentrequirementsfornewconstructionwithfewsiteimprovements.Theydonotreflectanyincentivesortaxcredits

PulgasBalancingReservoirislocatedoutsideofSFCitylimits O&Mcostsexcludepropertytaxesandlandleasepayments,butincludeinsurance



Table 4‐22 Upcountry Photovoltaic Costs and Performance Comparison

LOCATION

NET PLANT

CAPACITY (KWAC)

AC CAPACITY

FACTOR (PERCENT)

CAPITAL COST

($/KWAC)

O&M COST

($/KW‐YR)

Sunol 19,200 23.9 2.930 22

Tesla 1,600 24.8 3,420 22

Notes:

Reflectscostsofnewgenerationusingtypicalindustrydevelopmentassumptions Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectany

incentivesortaxcredits O&Mcostsexcludepropertytaxesandlandleasepayments,butincludeinsurance

Table 4‐23 Statewide Photovoltaic Costs and Performance Comparison

LOCATION

NET PLANT

CAPACITY (KWAC)

AC CAPACITY

FACTOR (PERCENT)

CAPITAL COST

($/KWAC)

O&M COST

($/KW‐YR)

MidwayFixedTilt 20,000 26.7 3,289 29

MidwayTracking 20,000 31.6 3,536 32

WindhubFixedTilt 20,000 29.2 3,289 29

WindhubTracking 20,000 35.9 3,536 32

ImperialValleyFixedTilt 20,000 28.2 3,289 29

ImperialValleyTracking 20,000 33.4 3,536 32

Notes:

Reflectscostsofnewgenerationusingtypicalindustrydevelopmentassumptionsatsiteswithfewbarrierstoconstruction

Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectanyincentivesortaxcredits

O&Mcostsexcludepropertytaxesandlandleasepayments,butincludeinsurance

4.8 DEVELOPMENT CHALLENGES SolarPVprojectsfacemanytypesofdevelopmentchallenges.Thosecommontoanytypeof

developmentincludetechnicalrisks,suchastheadequacyofthepowergridtotransmitthepower,

thedistancefromtransmissioninterconnectionpoints,scheduledelays,developmentcost

overruns,andpowerplantperformance.Regulatoryandlegalrisksalsoapply,suchaspotentialenvironmentalimpacts,landuseandzoningconstraints,ownershipandaccessissues,permitting,

regulatoryapprovalofPPAterms,andavailabilityoftaxincentives.Commercialriskscommonto



manytypesofpowerplantsincludetheabilitytonegotiateacommerciallyviablePPAprice,the

creditworthinessoftheoff‐taker,macroeconomicriskssuchasgrowthrates,inflation,andpowerdemand,aswellastheabilitytoattractequityinvestmentandobtainprojectfinance.Someorallof

theseareusuallypresentinasolarproject.

Solarresourceuncertaintyisarisktosolarprojects.Thesolarresourceismorepredictableandstablethanotherrenewableresources,butitisstillspecifictotheprojectsite.Gooddataon

thesite‐specificresourcemaynotbeeasilyavailable,andexpectedinterannualvariabilitycanmean

thatalongdatahistoryisneededtoachieveconfidenceinthelong‐termperformanceoftheproject.Thereareafewrisksassociatedwiththesuitabilityoftheprojectsite.Shadingofthesolar

projectisarisktoprojectproduction.Foragroundmountedsite,thismaybetreesthatcannotbe

removedorfeaturesonthehorizon.Foraroof‐mountedsite,thiscouldbenearbystructures,equipment,orarchitecturalfeatures.

Foragroundmountedsite,thetopographyordrainagecouldbetoodemandingfor

economicsolaruse.Solarprojectstypicallyoccupylargeareasofland,butcannotbearthecostofsignificantcivilworks.Further,itcanbehardtopermitaprojectunlesslandfeaturesare

preserved,whichcanfragmenttheprojectsite.Afragmentedprojectsitecanbeprohibitively

complextodevelop.Forarooftopsite,thereisriskassociatedwiththeconditionoftheroof.Thestructureof

theroofmustbeprovenadequatefortheadditionalloadsassociatedwiththesolarsystem.These

includewindloadsinadditiontotheweightofthesystem.Alsothelifetimeofthesolarsystemcanextendbeyondtheremaininglifeoftheroofingmaterial,whichcanaddadditionallifetimecostto

theproject.


BLACK & VEATCH | Wind Resource Assessment 5‐1

5.0 Wind Resource Assessment Aselectionofprojectlocationsandsizeswereconsideredinthisassessmenttodevelopthe

technicalbasisforestimatingthecostandperformanceforwindresourcesthataretypicalofthe

typesofopportunitiesavailabletotheSFPUC.

5.1 TECHNOLOGY DESCRIPTION Windenergytechnologyhasmademajoradvancementssincetheproductionofwind

turbinesintheearly1980’s.Threedecadesoftechnologicalprogresshasresultedintoday’swindturbinesbeingacuttingedgetechnology.Amodern,singlewindturbinehastheabilitytoproduce

nearlytwohundredtimesmoreelectricityannuallyandatlessthanhalfthecostperkilowatt‐hour

thanitsequivalenttwentyyearsago.Thewindpowersectornowincludessomeoftheworld’slargestenergycompanies.

Awindfarmtypicallyconsistsofmanyindividualwindturbinesspreadacrossalargearea.

Theoverallshapeandsizeofawindfarmvarieswitheachindividualproject,buttheyaretypicallyarrangedinseveralrowsorclusterofturbines.Windresource,terrain,landcover,landownership,

residences,environmentalrestrictions,andexistingroadnetworksallinfluencethefinal

configurationofawindproject.Althoughalargeamountoflandisrequiredfordevelopmentandconstructionofawindproject,mostofthelandisundisturbedbytheprojectandcanremaininuse

foritsoriginalpurpose.Thismakeslargewindprojectshighlycompatiblewithagricultural

activities,withsomeexceptionssuchasaerialapplicationofpesticidesandfertilizers.Windturbinesgenerallyaremountedtorelativelyshallowoctagonalinvertedteespread

footingfoundations,typicallybetween50and60feetacross,withanchorboltsembeddedintoa

smallercircularpedestal10‐15feetacross,towhichtheturbinetowerismounted.Dependingonthespecificconfigurationofthewindturbinegenerators,asmalltransformermaybemounted

adjacenttotheturbinebase,insidethebaseoftheturbinetower,orintheturbinenacelle.This

transformerconvertspowerfromthetypical600Vgeneratingvoltagetothe35kVclasscollectionsystemvoltage(typically34.5kVintheUS).

Acentralcollectionsubstationisgenerallybuiltwithintheoverallfootprintofawindfarm.

Thiscollectionsubstationincludesthemainpowertransformer,whichconvertsthecollectionsystemvoltagetothevoltageoftheinterconnectiontransmissionline.Fromthiscollection

substationwindfarmisinterconnectedtothegrid.Theinterconnectionpointmaybeadjacentto

thesubstationifitisbuiltalongtheinterconnectingtransmissionline,ortheprojectmayconstructanewtransmissionlineandinterconnectionswitchyardadjacenttotheinterconnecting

transmissionline.

Althougheachturbineisfullycapableofautonomousoperation,allturbinesarelinkedtogethertoaprojectcontrolsystem(SCADA).ThecentralSCADAsystemcanmonitorandcontrol

theprojectasneeded,includedrecordingofallprojectoperatingdataandimplementationof

curtailmentcontrolsasneeded.



Inadditiontotheturbines,accessroads,collectionsystem,andsubstation,windprojects

typicallyincludeanoperationsandmaintenance(O&M)facility.Thisfacilityisoftenapre‐engineeredbuildingandwarehouse,withoffices,conferencerooms,restroomsandshowers,

storage,andwarehousing.

5.2 RESOURCE AVAILABILITY ThissectionsreviewsavailablewindresourcesinSanFranciscoandCalifornia.

5.2.1 In‐City

Black&VeatchreviewedthefindingsofthePublicInterestEnergyResearch(PIER)Cityand

CountyofSanFranciscoWindResourceAssessmentProject10forestimatingin‐cityperformance.

ThePIERstudydeterminedthatthemajorityofsitesinthein‐cityareawerenoteconomicallyfeasiblefora10kilowattmachineinstalledata10meterhub‐height.Thisfindingisinlinewith

Black&Veatch’sexperienceregardingsmall,urbanareainstallations.Generally,windregimesin

urbanareasareadverselyimpactedbylocalobstructions,andthecostscanbeveryhigh.Thisisinpartduetotheinabilitytoapplyeconomiesofscalefortheproject,resultinginhigher

manufacturingcostsper‐turbine,andengineering,mobilization,anddemobilizationcoststhatare

relativelyhigheronaper‐kilowattbasis.Duetothesechallenges,thereisalsoalimitedamountofdataforcomparisonandstudyregardingsmall,urbanprojects.

Black&Veatchhasperformedahigh‐levelreviewofthepotentialforasinglecommercially

sizedturbineattheOceansideWasteWaterTreatmentPlant.Anin‐depthassessmentofin‐citypotentialwasnotperformedforthisstudy.Anoverviewofthe100meterwindspeedpotentialin

theSanFranciscoregionisshownbelowinFigure5‐1basedonAWSTruepowerdata.

10 Available at http://www.energy.ca.gov/pier/project_reports/500‐04‐066.html



Figure 5‐1 100 Meter Wind Speeds in the San Francisco Region

5.2.2 Statewide

SFPUCisinterestedinthewinddevelopmentpotentialofseveralsitesonastate‐widelevel.

Thesizeoftheselocationsvariesfromapossiblesitecapacityof6megawattsto30megawatts.ThemajorityoftheselocationsareeastoftheSanFranciscoarea.Thisincludesproposedprojects

attheSunolandTeslafacilities,apossibleprojectintheMontezumaHillsbasedonaproposal

receivedbytheSFPUC,andapotentialre‐poweringsiteintheAltamontPass.InadditiontothesitescurrentlyunderconsiderationbySFPUC,Black&Veatchperformeda

high‐levelassessmentoftheavailablewindresourceandprojectdevelopmentpotentialacrossthe

stateofCaliforniatoidentifyotherpotentialsitesfordevelopment.NotallthelandinCaliforniacanbeconsideredavailable,so“exclusions”forexcludinglandthatmaynotbesuitableforwind

developmentweredevelopedforthisstudy.Theseexclusionsincludeurbanareas,nationalparks,

wetlands,militaryno‐flyzones,andothersensitiveareas.Areaswithwindspeedslowerthan5.5



meterspersecondwerealsoexcluded,asprojectswithwindspeedslowerthan5.5metersper

secondareunlikelytobeeconomicallyfeasible.Theseexclusionsensurethattheanalysisusesrealisticassumptionsaboutwherewindpowercanbedeveloped.

Black&Veatchselectedseveralpossiblecandidatewindprojectsfromtheavailableland

whichhadhighwindspeedsandlowestimatedbalanceofplant(BOP)/erectionandturbinecosts.Transmissioncostswerenotconsideredfortheinitialselection,butwerereviewedforeachofthe

identifiedcandidates.Basedonthisreview,thecandidateswerenarrowedtothreeprojects,which

arerepresentativesitesforlow,moderate,andhightransmissioncosts,asseeninNewberrySprings,WalnutGrove,andLeonaValley,respectively.

TheestimatedwindspeedregimeforCaliforniaandtheeightprojectsinvestigatedinthis

reportisshownbelowinFigure5‐2,basedonAWSTruepowerdata.



Figure 5‐2 100 Meter Wind Speeds in California



5.2.3 Locational Analysis

Thissectionprovidesanoverviewofwhatinformationwasusedandhowprojectswere

locatedforthisstudy.

5.2.3.1 Wind Resource

MeasureddatawasprovidedbytheclientattheSunolandTeslasites.Approximatelysixyearsofdata,fromFebruary2007toApril2013,wereavailablefromtheSunolsite.AttheTesla

location,7monthsofdatawereavailable.Theexactheightsandcoordinatesforeachdataresource

werenotknown,butareunderstoodtoberooftoporotherfacility‐mountedequipment.SincetheTeslasitehadonlyhalfayearofdata,Black&Veatchusedthelong‐termreferencedataatthe

airporttoobtainaroughestimationofthesite’swindcharacteristicsfortheentireyear.Black&

Veatchobtained10yearsofwindspeeddatafromthenearestavailableairportthathadadatarecorddatingbackto2009,theMetropolitanAirportinStockton.

AstudywasperformedbyAWSTruepowerin2007fortheCaliforniaEnergyCommission’s

IntermittencyAnalysisProject.AWSTruepowerusedtheirMesoscaleAtmosphericSimulationSystem(MASS)topredictwindspeedsatseveralheightsaboveground.Theatmosphericmodel

outputisgriddedwithaspatialresolutionof2km.Theresultsoftheatmosphericmodelarethen

interpolatedtoa200metergridbyAWSTruepowerbasedonlocalterrainandlandcover.Themodelwasruninnestedgridsforathreeyearperiodandhadreanalysis,rawinsonde11andsurface

weatherdataasinputs.ThisdatawasutilizedbyBlack&Veatchtocharacterizethewindspeeds

throughoutCalifornia.TheaveragewindspeedsatSunolandTeslawerecomparedtotheresultsobtainedusing

themodeledAWSTruepowerdata.WhilebothresourceswereinroughagreementattheSunol

site,indicatinglowwindspeeds,themeasuredTeslasiteshowedsignificantlyhigherwindspeedsatthemeasuredheightthantheAWSTruepowerdataat100metersabovegroundlevel.Thereare

severalpossibleexplanationsforthisdifference.Theremaybehighlylocalizedwindconditions

causedbythelocaltopographythatoccursonascaletoosmallforthemodeltoaccuratelycapture.TheAWSTruepowerwindmodelhasaresolutionof8kilometerswhichmaynotbefineenoughto

accuratelyrepresentthissite.Anotherexplanationisthattheplacementofthemastmaynotbe

suitableforwindcollection.Theinformationavailableindicatesthatthemeasurementsensorsareinstalledontopofastructure,perhapsatank,roughly20feetabovetheground.Dependingon

howtheequipmentwasinstalled,thisobstructionmaycausespeed‐upeffects.Theequipmentalso

mightbelocatedinthehighestwindspeedarea,whichmaynotberepresentativeforthesiteasawhole.

Thesuitabilityofthedataforthisstudywasevaluated,andBlack&Veatchchosetousethe

modeledresultsfromAWSTruepowertoestimatewindspeedsateachsite.TheuncertaintyinthemeasureddataattheTeslasiteistoogreattobasethisstudyon.However,itmaybeworthfurther

11 A method of upper‐atmosphere meteorological observation conducted by means of a radiosonde tracked by radar.



investigation,witha60meterorhighermetmast,toverifyiftheTeslasitedoeshavelocalizedhigh

windsthatwouldotherwisenotbecorrectlyestimatedinthehigh‐levelmodeleddata.

5.2.3.2 Additional Site Selection

Siteswerechosenfromtheavailablelandaftertheremovalofexclusionsbasedon

anticipatedproduction,aswellasfactorsthatcouldimpactcosts,suchasproximitytoexisting

transmission,landownership,andterrain.Representativesiteswerechosentoillustratelow,moderate,andhightransmissioncostscenarios.

ThewindspeedsexpectedateachsitearesummarizedbelowinTable5‐1.

Table 5‐1 Comparison of Annual Wind Speeds

SITE COUNTY WIND SPEED

SFOceansideWWTP SanFrancisco 5.97m/s

Sunol Alameda 4.52m/s

Tesla SanJoaquin 4.98m/s

MontezumaHills Solano 6.84m/s

Altamontre‐power Alameda 7.32m/s

WalnutGrove Yolo 6.53m/s

LeonaValley LosAngeles 6.99m/s

NewberrySprings SanBernardino 6.53m/s

5.3 COST BASIS Theapproachfordevelopingcapitalcostsandoperationsandmaintenancecostsare

outlinedinthissection.TransmissionscostswereassessedasdescribedinSection3.2.

5.3.1 Base Costs

Avarietyofcomponentsmustbeconsideredwhenestimatingcosts.Variousturbinetypes

andhubheightswillrequiredifferentamountsofrawmaterials.Tallerturbineswithlargerrotor

diametersnecessitatemorerobustfoundationsandlargercranesforinstallation.AsummaryofallthecostcategoriesconsideredforClassIIandIIImachinesisshownbelowinTable5‐2.TheClass

IImachinewasassumedtohavean80meterhubheight,whereastheClassIIIwasexaminedusing

a100meterhubheight.



Table 5‐2 Comparison Costs for Class II and III machines

CATEGORY CLASS II, 80 M HUB HEIGHT ($/KWAC) CLASS III, 100 M HUB HEIGHT ($/KWAC)

Turbine 1200 1350

BOP/erection 470 515

Owner’sCost (15percentDirectCosts) (15 percent DirectCosts)

5.3.2 Slope Multipliers

Thelocationofaprojectsitecanalsoimpactcosts.Steepslopescanmakeitdifficultto

constructawindfarm,asmuchofthelandmustbecutinordertocreatelevelsurfacesforfoundations,roads,andcranepads.Toaccountfortheimpactofterrain,Black&Veatchapplied

multiplierstoBOP/erectioncostsbasedontheaverageslopeofagivenarea.Thesemultipliersare

shownbelowinTable5‐3.

Table 5‐3 Slope Cost Multipliers

SLOPE MULTIPLIER

Slope<4 1.0

4<slope<8 1.16

8<slope<16 1.22

Slope>16 1.55

5.3.3 Economies of Scale

Economiesofscaleallowlargeprojectstoreducecostsonaperkilowattbasis,butthiseffectislostonceprojectsbecometoosmall.Black&Veatchhasassumedthataprojectof20

megawattsorlargerisabletobenefitfromeconomiesofscale.However,notalltheprojectsunder

considerationinthisreportmeetthatsizerequirement.BoththeOceansideandTeslasitesareonlylargeenoughforonetothreeturbines,atmostabout6MWofcapacity.Thiscausesincreases

inengineering,mobilization,demobilization,BOP,andowner’scostsrelativetothetotalcostofthe

project.Inthe2011WindTechnologiesMarketReportpublishedbytheU.S.DepartmentofEnergy,installedcostsareexaminedbyprojectsize,turbinesize,andregion.Thereportillustratedthat

smallprojectsoffivemegawattsandsmallerhaveatotalinstalledprojectcostroughly20percent

higherthanlargerprojects.Italsodemonstratedthattherewaslittlechangeinprojectcostindollarsperkilowattonceaprojectreached20megawattsormore.Assuch,Black&Veatchhas

assumedthateconomiesofscaleapplytoanyprojectwithratedcapacityof20megawattsor

greater,andhasappliedafactorof1.2tothetotalcostsofanyprojectbelow20megawattsinsize.



5.3.4 Operation and Maintenance costs

OperationandMaintenancecostshavebeendividedintofixedandvariablesegments.The

basecostis35dollarsperkilowatt‐year,whichincludesnormaloperations,scheduledandunscheduledmaintenance,projectmanagement,taxes,insurance,andsoon.Thesecostsarebased

oninformationfromthe2011WindTechnologiesMarketReportpublishedbytheU.S.Department

ofEnergy,alongwithreviewofseveraldetailedwindprojectoperatingbudgets.Landroyaltycostsarethenaddedtothisbasecostdependingonthetypeoflandtheprojectisexpectedtobeinstalled

on.IftheprojectisbuiltonfederallyownedBureauofLandManagement(BLM)land,afixedcostof

4.115dollarsperkilowattperyearisadded,basedonpublishedBLMlandleaserates.IftheprojectisbuiltonPrivateland,thecostisconsideredtobevariable,reportedindollarspermegawatt‐hour

basedon3.5percentofgrossrevenues.Thisiscalculatedfromestimatedgenerationandtypical

windprojectPPAcostsinCalifornia..Ingeneral,itismoreexpensivetoconstructaprojectonPrivatelandthanitisonBLMland.

5.4 COST AND PERFORMANCE CHARACTERISTICS ProjectspecificcostandperformancecharacteristicsareoutlinedforSFPUCcontrolled

landsandotherstatewidelocationsselectedforthisstudy.

5.4.1 SFPUC Controlled Lands (Oceanside, Sunol, Tesla)

Oceanside‐TheOceansidesiteislocatedattheOceansideWasteWaterTreatmentPlant,

justsouthoftheSanFranciscoZoo,inSanFranciscoCounty.Theavailablelandisroughly0.09

squarekilometers.AmapoftheareaisshownbelowinFigure5‐3.



Figure 5‐3 Available Land at Oceanside

Thisregionisinadeveloped,urbanarea.Neighboringbuildingsmayactasobstaclesthatwillcreatelocaldisruptionstothewindcharacteristicsoftheregion.Thesiteisverysmall,suitable

foronlyasinglecommerciallysizedturbine,andsetbackswouldhavetobecarefullyconsideredfor

safety.Thissitewouldbeanticipatedtohave2MWinnameplatecapacity,dependingontheturbineselected.

Theassumptionforinterconnectionatthissiteanticipatestieintooneofthetwo12kV

distributionfeedersservingtheOceansideplantload.DiscussionswithSFPUChaveindicatedthatoneofthefeedersprovidesredundantcapacityandcouldbeusedbythewindfacilitywhennot

neededforback‐uppowerservicebythetreatmentplant.

ThePIERstudyestimatedawindspeedof4.0m/sat10metersabovegroundlevel.TheAWSTruepowermodelpredictsanaveragewindspeedatthe100meterlevelforthetwositesnear

theSanAntonioReservoiris5.97m/s.Tocomparethefindingsofthesetwostudies,ifthe100m

windspeedisestimatedbasedonthePIERreportfindingsusingthewindshearpowerlaw



approximationandastandardwindshearcomponentassumptionof1/7,theresultis5.56m/s,

within10percentoftheAWSTruepowermodelresults.ThePIERstudyconcludedthatthewindspeedat10meterswasinsufficienttobuildan

economicalsitewitha10kWmachine.Thismightnotbethecaseforacommercialturbine

designedforlow‐windwithahub‐heightof100meters.However,sincetheprojectissosmall,economiesofscaledonotapply.Costsperkilowattatthissmallprojectaregoingtobehigherthan

theywouldbeforalargesitewiththesamewindspeedcharacteristics.Furthermore,the

proximitytobuildingsmayimpactthewindspeedsinwaysthatcannotbeproperlyrepresentedintheAWSTruepowermodel.Iftheclientchoosestofurtherinvestigatedevelopmentatthislocation,

adetailedwindresourcedatacollectioncampaignataminimummeasurementheightof60meters

foratleastayearwouldbeneededtoevaluatethelocalcharacteristicsofthislocation.UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated

theperformanceandcostexpectedforaprojectdevelopedinthecombinedOceansidesite.Note

thatthesmallsizeofthisprojectincreasesthecostsoftheprojectper‐kilowattaseconomiesofscalenolongerapply.ThisinformationissummarizedinTable5‐4.

Table 5‐4 Oceanside Wind Facility Design, Cost, Performance Assumptions

PARAMETER VALUE

TurbineModel ClassIII

SiteCapacity(MWac) 2MW

Height(m) 100m

CF(percent) 29

CapitalCost($/kW) $2,738

FixedO&MCost($/kW‐yr) $60.00

VariableO&MCost($/MWh) $0

5.4.1.1 Sunol

TheSunolsiteislocatedroughlysevenmileseastofFremont,California,inAlamedacounty.

Theavailablelandisroughly159squarekilometers,althoughnotallofthislandisappropriateforwinddevelopment.AmapoftheareaisshownbelowinFigure5‐4.



Figure 5‐4 Available Land at Sunol

Thisregionhasfairlycomplexterrain.Muchoftheareaiscomprisedofnarrowvalleysandreservoirssurroundedbyhillsandmountains.30percentto50percentgradesarenotuncommon,

particularlyinthesouthernportionoftheavailableland.Theflattestregionsofthesiteareinthe

northernsection,wherevalleysbroadenandaresurroundedbymoremoderate,rollinghills.Thevalleysaregenerallyflat,andthehillstypicallyhave5percentto10percentgrades.Focusingon

thisnorthernportioninterrainwithlessthana5percentgrade,themostfeasibleoptionsforthe

SunolsitearetworegionsneartheSanAntonioReservoir,onetotheeastandonetothewest.Thesetwoareascombinedareroughly15squarekilometers,withenoughspaceforapproximately

30MWofcapacity,20MWtothewestand10MWtotheeast.ThesesitesareshowninFigure5‐5

below.Pleasenotethatthesesiteshavenotbeenevaluatedforenvironmentalset‐backs,suchasexcludingareaswheregoldeneaglesmightroost.Theselocationswerechosenbasedonlyontheir

feasibilitybyterrain,forthepurposeofthishigh‐levelstudy.



Figure 5‐5 Most Feasible Project Options at Sunol

TheassumptionforinterconnectionatthissiteanticipatesnogenerationtielinefromtheprojectsubstationtotheSunolsubstation.Theprojectsubstationisassumedtobe69kV,basedon

publiclyavailableinformation,andassumesthereistransmissionavailabilityandonlyneedsan

additionallineposition.Thewindspeedsmodeledatthissitearelow,andunlikelytoyieldaneconomicallyviable

project,evenwiththenewestClassIIIlow‐windturbinetechnologies.TheAWSTruepowermodel

predictsanaveragewindspeedatthe100meterlevelforthetwositesneartheSanAntonioReservoiris4.52m/s.

UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated

theperformanceandcostexpectedforaprojectdevelopedinthecombinedSunolsite.ThisinformationissummarizedinTable5‐5.



Table 5‐5 Sunol Wind Facility Design, Cost, Performance Assumptions

PARAMETER VALUE



Height(m) 100m

CF(percent) 15




Tesla‐TheTeslasiteislocatedroughlysixmilessouthwestofLyoth,California,inSan

JoaquinCounty.ThesiteisadjacenttoaChlorinationStationanddisinfectionfacility.Theavailablelandisroughly0.21squarekilometers,althoughapreferencehasbeenexpressedfordevelopment

onlywithintheconstructionstagingarea,whichis0.04squarekilometers.Amapoftheareais

shownbelowinFigure5‐6,withtheconstructionstagingareahighlightedinred.

Figure 5‐6 Available Land at Tesla



Thisregionhassimple,flatterraininthenorthernpartofthesite.Thesouthernportionof

thesitehashillswith15percentto20percentslopes.Sincetheregionisverysmall,notmanyturbinescouldbeinstalledinthisarea.Ifonlytheconstructionstagingareaisutilized,asingle

turbinecouldbeinstalledatthislocation.Ifthefacilityasawholewasabletobeutilized,twoor

threeturbinesmightfitonthesite,forasmuchas6MWofcapacity.Theassumptionforinterconnectionatthissiteanticipatesalocaldistributionlevel

interconnectiontoanearby12kVsystem.Projectsofthissizearegenerallyuneconomicalif

additionalinterconnectioninfrastructureisrequired.Thewindspeedsmodeledatthissitearelow,andunlikelytoyieldaneconomicallyviable

project,evenwiththenewestClassIIIlow‐windturbinetechnologies.TheAWSTruepowermodel

predictsanaveragewindspeedatthe100meterlevelforthesitetobe4.98m/s.

UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&VeatchhasestimatedtheperformanceandcostexpectedforaprojectdevelopedintheTeslasite.Notethatthesmallsizeofthisprojectincreasesthecostsoftheprojectper‐kilowattaseconomiesofscalenolongerapply.ThisinformationissummarizedinTable 5‐6.

Table 5‐6 Tesla Wind Facility Design, Cost, Performance Assumptions

PARAMETER VALUE



Height(m) 100m

CF(percent) 20




5.4.2 Statewide Projects

MontezumaHills‐TheMontezumaHillssiteislocatedroughlyonemilesouthwestofBirdsLanding,California,inSolanoCounty.Thelayoutandsiteboundariesweresuggestedinthe

proposedMontezumaZephyrWindProjectpresentedbyMontezumaWetlands,LLC.Theavailable

landisroughly14.2squarekilometers.Basedondiscussionswithlocaldevelopersandoperators,Black&Veatchbelievesthatitisunlikelythisprojectwouldbeviableduetoenvironmental

concerns.However,thereareindicationsthatadditionalareastothenorthofhighway12may

opentodevelopmentinthefuturewithcomparable,ifnotbetter,windspeeds.Forthepurposesofthisstudy,Black&Veatchhasfocusedontheoriginallyproposedsite.Theresultsofthecost

estimatesforthisregionshouldberoughlycomparabletoasimilarprojectthatcouldbeinstalled

tothenorth.AmapoftheareaisshownbelowinFigure5‐7.



Figure 5‐7 Available Land at Montezuma Hills

Thisregionhassimple,flatterrain.Usingaturbinespacingtypicallyseeninmostprojects

acrossthenation,roughlythreerotordiametersbyeightrotordiameters,thissitewouldbe

suitableforover30MWofcapacity.However,giventhestrongwindsandunidirectionalwindtypicalforthisregion,itiscommonforturbinespacinginMontezumaHillsprojectstobemuch

narrower,aslittleas1.6rotordiametersby6rotordiameters.Ifthisnarrowerspacingisused,as

intheMontezumaZephyrWindProjectproposal,thissitecouldcontainasmuchas100MWofcapacity.

Theassumptionforinterconnectionatthissiteanticipatesnogenerationtielinefromthe

projectsubstationtotheMontezumaHillssubstation.Theprojectsubstationisassumedtobe230kV,basedonpubliclyavailableinformation,andassumesthereistransmissionavailabilityandonly

needsanadditionallineposition.

Thewindspeedsmodeledatthissitearestrong.TheZephyrWindProjectproposalindicatedanestimatedmeanwindspeedof6.7meterspersecondatthe90meterlevel,althoughit

isunclearifthisestimateisrepresentativeofthelong‐termwindcharacteristics.TheAWS

Truepowermodelpredictsanaveragewindspeedatthe100meterlevelforthesitetobe7.04m/s.ThisisintheupperrangeofwindspeedlimitsforaClassIIImachine,andClassIImachinesare

typicalforthisarea.Assuch,theClassIIturbinemodelwithan80meterhub‐heightwas



consideredmoreappropriateforthissite.TheAWSTruepowermodelpredictsanaveragewind

speedatthe80meterlevelforthesitetobe6.84m/s.

UsingaClassIIturbine‐typewithan80meterhub‐height,Black&VeatchhasestimatedtheperformanceandcostexpectedforaprojectdevelopedintheMontezumaHillssite.ThisinformationissummarizedinTable5‐7.

Table 5‐7 Montezuma Hills Wind Facility Design, Cost, Performance Assumptions

PARAMETER VALUE

TurbineModel ClassII


Height(m) 80m

CF(percent) 31



VariableO&MCost($/MWh) $2.66

Altamont(repower)‐TheAltamontrepowersiteislocatedwithinexistingdeveloped

areasnearBethanyReservoirroughlyeightmilesnortheastofLivermore,California,inAlameda

county.MuchofthisareaisownedbyNextEra,andiscurrentlypartofarepoweringeffort.However,severalregionsremainthathavenocurrentrepowerplans.Black&Veatchselecteda

generalareafromtheselocationsthatincludedmultipleexistingprojectsasarepresentativesite.

Theavailablelandisroughly9.9squarekilometers.AmapoftheareaisshownbelowinFigure5‐8.



Figure 5‐8 Representative Area at Altamont

Thisregionhascomplexterrain,comprisedofrollinghillswithslopesrangingfrom8

percentto25percentgradients.Usingaturbinespacingtypicallyseeninmostprojectsacrossthenation,roughlythreerotordiametersbyeightrotordiameters,thissitewouldbesuitablefor

approximately20MWofcapacity.

TheassumptionforinterconnectionatthissiteanticipatesnogenerationtielinefromtheprojectsubstationtotheAltamontsubstation.Theprojectsubstationisassumedtobe69kV,based

onpubliclyavailableinformation,andassumesthereistransmissionavailabilityandonlyneedsan

additionallineposition.Thewindspeedsmodeledatthissitearestrong.TheAWSTruepowermodelpredictsan

averagewindspeedatthe100meterlevelforthesitetobe7.32m/s.Thisisintheupperrangeof

windspeedlimitsforaClassIIImachine,andClassIImachinesaretypicalforthisarea.Assuch,theClassIIturbinemodelwithan80meterhub‐heightwasconsideredmoreappropriateforthis

site.TheAWSTruepowermodelpredictsanaveragewindspeedatthe80meterlevelforthesiteto

be7.28m/s.UsingaClassIIturbine‐typewithan80meterhub‐height,Black&Veatchhasestimatedthe

performanceandcostexpectedforaprojectdevelopedintheAltamontsite.Thisinformationis

summarizedinTable5‐8.



Table 5‐8 Altamont Wind Facility Design, Cost, Performance Assumptions

PARAMETER VALUE

TurbineModel ClassII


Height(m) 80m

CF(percent) 34




WalnutGrove(Low)‐TheWalnutGrovesiteislocatedroughlyninemilesnorthwestof

WalnutGrove,California,inYoloCounty.Theavailablelandissplitbyaman‐madewater‐waycalledtheSacramentoRiverDeepWaterShipChannel.Theavailablelandisapproximately71

squarekilometers.AmapoftheareaisshownbelowinFigure5‐9.



Figure 5‐9 Available Land at Walnut Grove

Thisregionhassimple,flatterrain,comprisedofpredominantlycultivatedland.Usinga

turbinespacingtypicallyseeninmostprojectsacrossthenation,roughlythreerotordiametersbyeightrotordiameters,thissitewouldbesuitableforupto170MWofcapacity,ortwosmaller

projectsofupto85MWoneithersideofthechannel.

Theassumptionforinterconnectionatthissiteanticipatesaone‐milegenerationtielinetothePG&EGrandIslandsubstation.Theprojectsubstationisassumedtobe115kV,basedon

publiclyavailability,andassumesthereistransmissionavailabilityandonlyneedsanadditional

lineposition.Thewindspeedsmodeledatthissitearefairlystrong.TheAWSTruepowermodel

predictsanaveragewindspeedatthe100meterlevelforthesitetobe6.53m/s.Whileinthe

upperrangeofwindspeedlimits,thisisstillanacceptablewindspeedforaClassIIImachine.UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated

theperformanceandcostexpectedforaprojectdevelopedintheWalnutGrovesite.This

informationissummarizedinTable5‐9.



Table 5‐9 Walnut Grove Wind Facility Design, Cost, Performance Assumptions

PARAMETER VALUE



Height(m) 100m

CF(percent) 34


FixedO&MCost($/kW‐yr) 35.00

VariableO&MCost($/MWh) 2.70

LeonaValley(Moderate)‐TheLeonaValleysiteislocatedintheareasurroundingLeona

Valley,California,inLosAngelescounty.TheavailablelandisoneithersideofandalongPortalRidge.Theavailablelandisapproximately101.5squarekilometers.Amapoftheareaisshown

belowinFigure5‐10.

Figure 5‐10 Available Land at Leona Valley



Thisregioncontainsbothsimpleandcomplexterrain.TheportionnorthofPortalRidgeis

flat,openplains.WithintheLeonaValleyaremoderatelyrollinghillswiththreepercenttoeightpercentgrades.Theridgeitselfhas20percentto35percentgrades.Usingaturbinespacing

typicallyseeninmostprojectsacrossthenation,roughlythreerotordiametersbyeightrotor

diameters,thissitecouldcontainover200MWofcapacity.Ifonlythenorthernplainwasconsidered,thatregioncouldsupportroughly70MWofproduction,whiletheLeonaValleycould

fitapproximately50MWofcapacity.Forthisassessmenta100MWprojectwascharacterized.

Theassumptionforinterconnectionatthissiteanticipatesa23‐milegenerationtielinetotheSCEWindhubsubstation.Theprojectsubstationisassumedtobe230kV,basedonpublicly

availability,andassumesthereistransmissionavailabilityandonlyneedsanadditionalline

position.Thewindspeedsmodeledatthissitearestrong.TheAWSTruepowermodelpredictsan

averagewindspeedatthe100meterlevelforthesitetobe6.99m/s.Whileintheupperrangeof

windspeedlimits,thisisstillanacceptablewindspeedforaClassIIImachine.UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated

theperformanceandcostexpectedforaprojectdevelopedintheLeonaValleysite.This

informationissummarizedinTable5‐10.

Table 5‐10 Leona Valley Wind Facility Design, Cost, Performance Assumptions

PARAMETER VALUE



Height(m) 100m

CF(percent) 37




NewberrySprings(High)‐TheNewberrySpringssiteislocatedtwomilesnortheastof

NewberrySprings,California,acrossinterstate40inSanBernardinoCounty.Theavailablelandis

approximately46squarekilometers.AmapoftheareaisshownbelowinFigure5‐11.



Figure 5‐11 Available Land at Newberry Springs

Thisregionisinsimpleterrain,predominantlyflat,openfieldsinterspersedwithcultivated

land.Usingaturbinespacingtypicallyseeninmostprojectsacrossthenation,roughlythreerotor

diametersbyeightrotordiameters,thissitecouldcontainaround100MWofcapacity.Theassumptionforinterconnectionatthissiteanticipatesa10‐milegenerationtielineto

theSCEGalesubstation.Theprojectsubstationisassumedtobe115kV,basedonpublicly

availability,andassumesthereistransmissionavailabilityandonlyneedsanadditionallineposition.

Thewindspeedsmodeledatthissitearefairlystrong.TheAWSTruepowermodel

predictsanaveragewindspeedatthe100meterlevelforthesitetobe6.53m/s,acceptableforaClassIIImachine.

UsingaClassIIIturbine‐typewitha100meterhub‐height,Black&Veatchhasestimated

theperformanceandcostexpectedforaprojectdevelopedintheNewberrySpringssite.ThisinformationissummarizedinTable5‐11.



Table 5‐11 Newberry Springs Wind Facility Design, Cost, Performance Assumptions

PARAMETER VALUE



Height(m) 100m

CF(percent) 34


FixedO&MCost($/kW‐yr) 35.08

VariableO&MCost($/MWh) 2.68

5.4.3 Conclusions

Mostprojectswithanetcapacityfactorabove25percenthavethepotentialtobe

economicallyfeasible,althoughthecostsmustbecarefullyconsideredinadditiontotheestimated

productionforanysite.Projectswithlessthan25percentcapacityfactors,suchastheSunolandTeslasites,maynotbeeconomicalforwinddevelopment.Othertechnologies,suchassolar,might

bemoreprofitablefordevelopmentintheseareas.Acomparisonoftheturbinetypes,capacity

factors,andcostsforeachsiteisincludedinTable5‐12.



Table 5‐12 Comparison of Wind Design, Cost, Performance Parameters for All Sites

TURBINE

MODEL

CAPACITY

(MW AC)

HEIGHT

(M)

CF

(PERCENT)

CAPITAL

COST

($/KW AC)

FIXED O&M

COST

($/KW‐YR)

VARIABLE

O&M COST

($/MWH)

Oceanside ClassIII 2 100m 29 2,738 60 0

Sunol ClassIII 30 100m 15 2,577 35 0

Tesla ClassIII 6 100m 20 2,820 35 0

Montezuma

Hills

ClassII 100 80 m 31 2,043 35 2.66

Altamont ClassII 20 80 m 34 2,349 35 2.68

WalnutGrove

ClassIII 170 100m 34 2,244 35 2.70

LeonaValley

ClassIII 100 100m 37 2,649 35 2.62

Newberry

Springs

ClassIII 100 100m 34 2,332 35 2.68

Notes:

Reflectscostofnewgenerationusingtypicalindustrydevelopmentassumptionsatsiteswithfewbarrierstoconstruction.Furtherenvironmentalpermittingviabilitymustbeperformedatallsites,especiallyOceansideandAltamont.

Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectanyincentivesortaxcredits

OceansideandTeslahavenoeconomyofscaleadvantageduetotheirsize.

5.5 DEVELOPMENT CHALLENGES Thetechnicalandcommercialchallengestowinddevelopmentarelimited.Whilehighwind

sitesinCaliforniaareincreasinglylimitedasdevelopmentcontinues,goodopportunitiesstillexist.Windisamaturetechnology,anddevelopmentcostsarewellknown.Developmenttimelinesand

requirementsarealsowellunderstood.Commercialandfinanceriskexists,butisgenerallylowas

well.Theprimarychallengestowinddevelopmentareenvironmentalandpermitting.While

someofthesechallengesmayrestmoreonperceptionthangenuinerisktheystillpresentareal

challengetowinddevelopment.Keyrisksforwinddevelopmentincludethepotentialforimpactstobirds,bothlocalandmigratory,andotherwildlife.Thisisespeciallytruefortheidentified

repoweringprojectintheAltamontPass,whichhaswellknownhistoricalavianissues.Highquality

environmentalstudiesmustbeperformed,andimpactstootherwildlife,includingbatsandthreatenedandendangeredground‐dwellinganimals,mustbewellstudied.Permitsonanational,



state,andlocallevelmustbeobtained.Commonly,thisincludesFederalAviationAdministration

review,anendangeredspeciesactreview,historicalpreservationandculturalstudies,stormwaterdischarge,highwayoccupancy,andconditionalusepermits.Anotherchallengeisthetransportation

oflargecomponents,bothtosomeofthemoreruggedsitesinCaliforniaandtourbanlocations.In

habitedregions,routesmustavoidlow‐hangingelectricallinesandnarrowturns.Inruralareas,roadsmayrequireenhancementtobeartheweight,oralteredtotheproperslopeandangleof

curvature.

Somepossibledevelopmentchallengesarespecifictotheidentifiedpotentialprojects.TheOceansidelocationislocatedwithinacity,relativelyclosetobusinessesanddwellings.Turbinesin

anurbansitecancausedisturbancesduetoshadowflicker,noise,orvisualskylinedisruptions.

Carefulsiting,robuststudies,andcooperationwiththelocalcommunitythroughouttheprocessareessential.Curtailmentduringcertaintimesofthedayoryearmayalsobecomenecessaryto

addresscommunityconcerns.Transportationcanpresentachallenge.Inadditiontopreviously

notedavianissues,theAltamontPassprojectmayalsobesubjecttoheightandsizerestrictionsthatcouldaffectusinglargeturbines.TheidentifiedprojectintheMontezumaHillsislocatedin

low‐lyinglandandmayhavepermittingandenvironmentalconstraints.Developmentinother

partsoftheMontezumaHillsmayhaveincreasedlossesandreducedabilitytomovepowertomarketbecauseofexistingheavydevelopmentintheregion.

Projectsareoftendependentonfederaltaxincentives,whichhistoricallyhavebeen

renewedonacycleshorterthantheaveragedevelopmenttimeforaproject,andcanleadtouncertainty.Procurementcanhavelongleadtimeintervals,uptoayearormoreforwindturbines,

and9‐12monthsforothermajorequipment.

Otherrisksrelatetouncertaintyabouttheresourceduringearlyphasesoftheproject,notablythoserelatedtothefollowingparameters:

● Turbineavailabilityforthefirstyearofoperation(typicallymoreproblemsinthisperiodthan

fortherestoftheinstallationlife‐span)● Long‐termwindresourcebehavior

● Wakelossesintroducedbynewneighboringdevelopments

● Environmentalissuesthatmaydeterioratetheblade’ssurface● Curtailmentduetoloadorcommunityconcerns


BLACK & VEATCH | Geothermal Resource Assessment 6‐1

6.0 Geothermal Resource Assessment Aselectionofprojectlocationsandsizeswasconsideredinthisassessmenttodevelopthe

technicalbasisforestimatingcostsandperformanceforgeothermalpowerfacilitiesthataretypical

ofopportunitiesavailabletotheSFPUC.

6.1 TECHNOLOGY DESCRIPTION Threemaintypesoffacilitiesareusedtogenerateelectricity–directsteamplants,flash

steamplants,andbinaryplants.Directsteamandflashsteamplantssupplysteamfromthegrounddirectlytoaturbinegenerator.Directsteamplantsaresuitablewherethegeothermalhydro

resourceisdominatedbyvapor.Flashsteamplantsareusedwhenhotwaterresourcesabove

about190Caredominatedbyliquidandmustbeflashedtoproducesteam.Steamexitingthesteamturbinegeneratoriscooledintoliquidformandistypicallyre‐injectedintotheearth.Binary

plantsareusedwhenwaterresourcetemperaturesarelowerthanabout190Cusingaworking

fluidthatisheatedtoitsboilingpointinaheatexchanger,wherethermalenergyistransferredtotheworkingfluidfromthehotwaterresource.Binarysystemsmayalsobeeconomicalinareas

withhighertemperaturefluidispresentthathashighscalingpotential.Inabinaryfacility,the

workingfluidandhotwaterareinseparateclosed‐loopsystems.Theworkingfluidvaporissuppliedtoaturbinegeneratorandisthencondensedtobeusedagainwhilethespenthotwateris

re‐injectedintotheearth.ThereareknowngeothermalresourcespresentinCaliforniatosupport

thedevelopmentofbothflashandbinaryfacilities.Enhancedgeothermalsystems(EGS)usethepresenceofgeothermalheatinareaswithno

fluidtoproducesteambyinjectingwaterintotheground.EGStechnologyisnotyetacommercially

proventechnology.EGSisthereforenotconsideredinthisstudy.

6.2 RESOURCE AVAILABILITY TwelveareaswithdevelopablegeothermalpotentialhavebeencharacterizedbyBlack&

Veatch.TheseareaswerepreviouslyidentifiedfortheRETIprojectwiththehelpofGeothermEx,asubcontractortoBlack&Veatch,throughareviewofpubliclyavailableinformation.Developable

potentialforeachareawasupdatedforthisstudytoreflectrecentprojectdevelopment.These

areasarelistedinTable6‐1.Themegawattpotentialidentifiedreflectswhatisavailablefornewdevelopment.



Table 6‐1 Geothermal Developable Potential

RESOURCE AREA TECHNOLOGY

MWAC

POTENTIAL NOTES

Brawley Binary 160 SumofBrawley,EastBrawley,andSouth

Brawley

EastMesa Binary 32 Includes Dunes&Glamis

Geysers Flash 135 Includes Calistoga&ClearLake[SulphurBank]

Heber Binary 32 Includes Border,MountSignal,&SuperstitionMountain

HoneyLake Binary 8

LakeCity/SurpriseValley Binary 32

LongValleyM‐PLeases Binary 40

MedicineLake Binary 384

Mt.Shasta Flash 45 Includes areasaroundLassen:Growler&Morgan

Randsburg Binary 24

SaltonSea Binary 1,120 Includes NilandandWestmoreland

Truckhaven Binary 40 Includes SanFelipeProspect

Theapproximatelocationofeachofthetwelveareaswithrespecttotransmissionwas

identified.Transmissioncapacitywasverifiedforeachlocation,andestimatedinterconnectionandtransmissioncostsweremodeledforeachlocation.Basedonthecostsandaccesstotransmission

foreachofthegeothermalresourceareas,threelocationswiththelowestinterconnectioncostsand

readilyavailabletransmissioncapacitywereselectedtoprovideabasisforcomparisontootherrenewableenergytechnologiesconsideredinthisstudy.Forthisstudy50MWwasselectedasthe

upperlimitforprojectsizesbasedoneconomicsandrecentprojectdevelopment.Typicalprojects

includeadditionalexpansionasafuturegoalbutthiswasnotmodeledforthecurrentstudy.Figure6‐1identifiesthelocationsofthethreeselectedprojects:

● Geysers–50MW

● LongValleyMammoth–Pacificleases–40MW● Brawley–50MW.



Figure 6‐1 California Geothermal Projects



6.3 COST AND PERFORMANCE CHARACTERISTICS Costsaredependentonmanyfactors.Costforwellsandresourcecharacterizationstudies

aresubstantialforgeothermalprojects,makingupabouthalfoftheoverallcapitalcost.Equipment

selectionsuchasturbinesizeandtype,whetherheatexchangersareused(e.g.forbinaryorhybrid

facilities),balanceofplantcosts,andcoolingtowerdesign.Thecostsdevelopedforthisreport

includeestimatedtransmissionandinterconnectioncosts.TheGeyserscostassumesinterconnectiontoanearby230kVlineatSonoma,LongValleyassumeda115kVinterconnection,

andBrawleyinterconnectstoa92kVline.Interconnectioncostsassumethereistransmission

availabilityandthereonlyneedstobeanadditionallinepositionO&Mcostsdependonmanyfactorsincludingthechemicalmakeupofthefeedwaterand

whetherithashighorlowpHandwhetheritcontainsanycorrosivesorscalingagents.Thetypeof

plantisafactoraswell.Table6‐2presentscostandperformancevaluesconsideredforthisstudy.

Table 6‐2 Geothermal Project Cost and Performance Parameters

PARAMETER GEYSERS LONG VALLEY BRAWLEY

PlantType Flash Binary Binary

Capacity(MWac) 50 40 50

GenerationMWh/yr 394,200 280,320 350,400

CF(percent) 90 80 80

CapitalCost($/kW) 4,467 4,823 4,963

O&MCost 27 34 30

Notes:

Reflectscostofnewgenerationusingtypicalindustrydevelopmentassumptions. Capitalcostscoverallconstructionanddevelopmentrequirements.Theydonotreflectany

incentivesortaxcredits. Thegeothermalresourceattheselocationsiswellunderstood;itisassumedthat

predictionsoftheheatavailablewillberealized.Lessunderstoodresourceswouldhavehighercosts.

6.4 DEVELOPMENT CHALLENGES Geothermalprojectsfacemanytypesofdevelopmentchallenges,someofwhichare

generallycommontoanytypeofpowerplantdevelopmentandsomewhichareuniquetogeothermalresourcedevelopment.

Thosecommontoanytypeofdevelopmentincludetechnicalrisks,suchastheadequacyof

thepowergridtotransmitthepower,thedistancefromtransmissioninterconnectionpoints,scheduledelays,developmentcostoverruns,andpowerplantperformance.Regulatoryandlegal

risksalsoapply,suchaspotentialenvironmentalimpacts,landuseandzoningconstraints,

ownershipandaccessissues,permitting,regulatoryapprovalofPPAterms,andavailabilityoftax



incentives.Commercialriskscommontomanytypesofpowerplantsincludetheabilityto

negotiateacommerciallyviablePPAprice,thecreditworthinessoftheoff‐taker,macroeconomicriskssuchasgrowthrates,inflation,andpowerdemand,aswellastheabilitytoattractequity

investmentandobtainprojectfinance.Someoralloftheseareusuallypresentinageothermal

project.However,therearesomeimportantrisksthatarespecifictogeothermaldevelopment.

Developmentcostsvaryconsiderablyforgeothermalpowerdevelopment.Costsfordrilling

productionwellsvaryconsiderablebecausedeeperwellscostmore.Alsothecharacterofthegeothermalresourcewillhaveanimpactondevelopmentcostsbecauseitinfluencesthetypeof

powerplantthatissuitableforthesite.Forexamplebinarypowerplantscanbemoreexpensive

perinstalledkWthanflashpowerplants.Geothermalprojectsrequirethatalmosttheentirewellfieldbedeveloped(i.e.,drillallthewells,whichcompriseabouthalfofthetotaldevelopmentcost)

beforeanyrevenueisrecognizedfrompowerproduction.Otherrisksrelatetouncertaintyabout

theresourceduringearlyphasesoftheproject,notablythoserelatedtothefollowingparameters:● resourcesizeandtemperature

● averagewellproductivity

● drillingcosts● drillingsuccessrate

● long‐termreservoirbehavior

● thenumberof“make‐up”wellsthatwillberequiredduetogradualresourcedegradationovertheprojectlife

● theoptimumproduction/injectionscheme(depthsandlocationsofproductionandinjection

wells)● pressuredeclineorcoolingduetooffsetproductionfromneighboringdevelopments(i.e.,the

situationregardingresourceaccess)

● fluidchemistryissues(corrosion,scaling,highnon‐condensablegases)Oftheaboveissueslisted,threekeyitemsspecifictolargerscalegeothermalresource

developmentforelectricityinCaliforniaincludeidentifyingproductiveresourceareas,dealingwith

competinguseoftheareas,andaccesstotransmissionlines.


BLACK & VEATCH | Economic Analysis 7‐6

7.0 Economic Analysis Aftercompletingtheresourceassessmentsandprojectcostanalysis,aproformafinancial

modelwasdevelopedfortheSFPUCthatestimatestheLCOEforthedifferentrenewableenergy

options.Anumberofassumptionsweremadeinthismodelregardingprojectfinancialstructuresandlikelyincentives.Thissectionprovidesanoverviewforthestructuresandincentives

considered,alongwithjustificationfortheassumptionsusedinthemodel.Themodelhasthe

flexibilitytotestarangeofdifferentscenarios,makingitadaptabletochangesthatmayoccurinthefinancingandsupportforrenewableenergytechnologies.

7.1 RENEWABLE ENERGY FINANCIAL INCENTIVES Anumberoffinancialincentivesareavailablefortheinstallationandoperationof

renewableenergytechnologies.Theseincentivescansubstantiallyinfluenceprofitabilityandcan

makealargeeconomicdifference.Thefollowingdiscussionprovidesabrieflistofexisting

incentivesthatareavailabletonewrenewableenergyfacilities.Itshouldbenotedthattheintentofthissectionistoprovidegeneralinformationonavailableincentives;theavailabilityofeach

incentivecanbedependentuponoverallenrollmentandlegislativeaction.

7.1.1 U.S. Federal Government Tax Incentives

ThepredominantfederalincentiveforrenewableenergyhasbeenofferedthroughtheU.S.

taxcodeintheformoftaxdeductions,taxcredits,oraccelerateddepreciation.Anadvantageofthisformofincentiveisthatitisdefinedinthetaxcodeandisnotsubjecttoannualcongressional

appropriationsorotherlimitedbudgetpools(suchasgrantsandloans).However,sunset

provisionsinthetaxcodecanimpactprojecteligibility.Tax‐relatedincentivesinclude:● Section45ProductionTaxCredit(PTC)

● Section48InvestmentTaxCredit(ITC)

● AcceleratedDepreciation● NewMarketTaxCredits(NMTC)

TheSection45PTCisavailabletoprivateentitiessubjecttotaxationfortheproductionof

electricityfromvariousrenewableenergytechnologies.Theincometaxcreditamountsto1.5cents/kWh(subjecttoannualinflationadjustmentandequalto2.3cents/kWhin2013)of

electricitygeneratedbywind,solar,geothermal,andclosed‐loopbiomass.Thecreditisequalto

0.75cents/kWh(inflationadjusted,equalto1.1cents/kWhin2013)forallotherrenewableenergytechnologies.Aproblemwiththecreditistheever‐presentthreatofexpiration,whichpromotes

boomandbustbuildingpatterns.ThePTCwasextendedinFebruary2009aspartofH.R.1,the

AmericanRecoveryandReinvestmentAct(ARRA,orthe“StimulusBill”),thenfurtherextendedandmodifiedinJanuary2013aspartoftheAmericanTaxpayerReliefActof2012(H.R.6).H.R.6

extendedtheeligibilityofwindforoneyearandreplacedtherequirementsthatprojectsbe“placed

in‐service”bysetdeadlinesforeligibilitywitharequirementthatprojectsonlyneedtohavebegunconstruction.Projectsthathavenotbegunconstructionbytheendof2013arenolongereligible

forthePTCasofJanuary2014.



MajorprovisionsoftheSection45PTCarepresentedinTable7‐1.

Table 7‐1 Major Production Tax Credit Provisions

RESOURCE

ELIGIBLE

CONSTRUCTION START

DATES

CREDIT SIZE* SPECIAL CONSIDERATIONS

Wind 12/31/93‐12/31/13 Full

Biomass

Closed‐Loop 12/31/92‐12/31/13 Full Cropsgrownspecificallyforenergy

Closed‐LoopCofiring 12/31/92‐12/31/13 Full Onlyspecificcoalpowerplants

Open‐Loop Before12/31/13 Half Doesnotincludecofiring

LivestockWaste Before12/31/13 Half >150kW.

Geothermal 12/31/99‐12/31/13 Full

SmallIrrigationHydro 10/22/04‐12/31/13 Half Nodamsorimpoundments;

150kW‐5MW

IncrementalHydro 10/22/04‐12/31/13 Half Increasedgenerationfromexistingsites

LandfillGas 8/8/05‐12/31/13 Half

MunicipalSolidWaste 10/22/04‐12/31/13 Half Includesnewunitsaddedatexistingplants

Notes:

AllPTCsareinflation‐adjustedandequaled$23/MWh(“Full”)or$11/MWh(“Half”)in2013.

TheSection48ITCeffectivelyoffsetsaportionoftheinitialcapitalinvestmentinaproject.

WhileinvestorownedutilitiesoriginallywerenoteligibletoreceivetheITC,theextensionofthe

ITCpassedin2008changedthiswordingtoallowutilitiestoclaimtheITCiftheyhaveataxburden.Inaddition,theARRAexpandedtheeligibilitytoabroaderrangeofresources.TheITCprovisions

arenow:

● Solar–Eligiblesolarequipmentincludessolarelectricandsolarthermalsystems.Thecreditamountforsolaris30percentforprojectsthatareplaceinservicepriortoDecember31,

2016;afterthat,thecreditdropsto10percent.

● Geothermal–Geothermalincludesequipmentusedtoproduce,distribute,oruseenergyderivedfromageothermaldeposit.TheARRAincreasedthecreditamountto30percentfor

unitsthatbeginconstructionbytheendof2013,exceptforheatpumpswherethecreditis

limitedto10percentthrough2016.



● Wind–ProjectseligibleforthePTCarealsoITCeligible.Unitsmusthavebegun

constructionbyDecember31,2013.● Biomass,LFG,hydro,andanaerobicdigestion–Unitsmusthavebegunconstructionby

December31,2013.

TheARRAlanguagethatexpandedthePTCdoesnotallowclaimingofboththePTCandthe

ITC.Projectdevelopersmustchooseoneortheother.Forcapital‐intensiveprojects,theITCis

typicallymoreattractive.Forprojectswithlowercapitalcostandhighercapacityfactors,thePTCmightbemoreadvantageous.2009analysisbyLawrenceBerkeleyLaboratoryhasquantifiedwhen

thePTCorITCismoreattractiveforaprojectinvestor.12Forthisproject,theITCwasusedfor

eligibleprojectsandstructures.TheITCalsointeractswithaccelerateddepreciation,asdiscussedfurtherbelow.

Section168oftheInternalRevenueCodecontainsaModifiedAcceleratedCostRecovery

System(MACRS)throughwhichcertaininvestmentscanberecoveredthroughaccelerateddepreciationdeductions.Thereisnoexpirationdatefortheprogram.Underthisprogram,certain

powerplantequipmentmayqualifyfor5‐year,200percent(i.e.,double)declining‐balance

depreciation,whileotherequipmentmayalsoreceivelessfavorabledepreciationtreatment.RenewableenergypropertythatwillreceiveMACRSincludessolar(5‐year),wind(5‐year),

geothermal(5‐year)andbiomass(7‐year).Typically,themajorityoftheprojectcapitalcost,but

notall,canbedepreciatedonanacceleratedschedule.TheARRAincludeda“bonusdepreciation”allowanceformostqualifiedrenewableenergyfacilitiesthatallowed50percentdepreciation

duringthefirstyearofoperation.TheAmericanTaxpayerReliefActof2012extendedthedeadline

sothatfacilitiesthatareplacedinservicebytheendof2013areeligible.Giventhelimitednumberofresourcesthatcouldqualifyforbonusdepreciation,itwasnotincludedinthecostevaluation.

Theaccelerateddepreciationlawalsospecifiesthatthedepreciablebasisisreducedbythevalueof

anycashincentivesreceivedbytheproject,andbyhalfofanyfederalinvestmenttaxcredits(e.g.,theITC).Thisprovisionhastheeffectofloweringthedepreciablebasisto95percentforprojects

thatreceivethe10percentITCand85percentforprojectsthattakethe30percentITC.

NewMarketTaxCredits(NMTC)arecreditsforupto39percentofthequalifiedinvestmentmadeinlow‐incomecommunities.TheNMTCisabroaddevelopmentsupportprogramthatis

opentoarangeofinvestments,notjustenergyprojects.Whilethespecificeligibilityrequirements

andapplicationprocessislengthy,thebenefitscanbesubstantial.AswiththeITC/PTC,onlytaxableentitiesareeligiblefortheNMTC.UnliketheITC/PTC,thereareverycomplicated

transactionrulesandnotallprojectsthatapplyforNMTCswillbegrantedanaward.TheUS

Treasuryholdsallocationroundsthenreviewsapplicationsandselectsawardees.Giventhecomplexity,competition,andveryspecifictermsrequiredforanNMTCaward,fewrenewable

energyprojectshavebeenabletoutilizethisincentive.ForthepurposesofSFPUCmodeling,the

NMTCwasexcludedfromtheanalysis. 12 “PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States.”, report NREL/TP‐6A2‐45359, March 2009.



7.1.2 U.S. Federal Government Non‐Tax Related Incentives

Arangeofdifferenttypesofnon‐taxincentiveshavebeenavailabletorenewableenergy

projectdevelopers,buttheytendtobemuchmorelimitedinfundingandofashortertimeframerelativetotax‐basedincentives.Themostwidelyrecentlyusedgrant,the1603program,was

passedaspartoftheARRAbillbuthassinceexpired.

Manyofthecurrentnon‐taxrelatedincentivesaretargetedatnon‐taxableentitiessuchasmunicipallyownedutilities.Government‐ownedutilitiesandothertax‐exemptentitiesarenotable

todirectlytakeadvantageoftaxincentives.Tax‐exemptentities,however,doenjoyanumberof

otherbenefitswhenfinancingandoperatingcapitalinvestments.Themostobviousbenefitisfreedomfromfederalandstateincometaxliability.Dependingonprojectlocationandlocallaws,

paymentofpropertytaxesmayalsobereducedoreliminated.Theseentitiesarealsoabletoissue

tax‐exemptdebt,whichcarrieslowerinterestratesthancomparablecorporatedebt.Non‐taxincentiveprogramsavailabletodaytosupportrenewableenergyincludethe

following:

● USDOERenewableEnergyProductionIncentives

● CleanRenewableEnergyBonds● QualifiedEnergyConservationBonds

● RuralEnergyforAmericaProgramGrantsandLoanGuarantees

● DOELoanGuaranteesThefederalgovernmenthasestablishedtwoprimaryincentiveprogramsfornon‐taxable

entities,butneitherofwhichiscurrentlyprovidinganysupport.ThesearetheRenewableEnergy

ProductionIncentive(REPI)andCleanRenewableEnergyBonds(CREBs).Neitherprogramisintendedforprivately‐ownedprojects,andbothrelyonlimitedcongressionalappropriations.

Originallyauthorizedin1992,theREPIprogramwasrenewedbytheEnergyPolicyActof2005but

hasnotreceivedanyfundingallocationsince2009.Theprogramprovidedpaymentstotaxexemptentities,buttheamountoffundingwaslimitedtowhateverwasprovidedduringannual

appropriations.In2009justone‐thirdofprojectpaymentrequestsreceivedfunding.

CREBswereintroducedaspartoftheEnergyPolicyActof2005asaresponsetotheperceivedproblemswiththeREPIprogram.CREBsprovideinterest‐freeloanstopublicutilities

(includingruralelectricco‐ops),whileprovidingtaxcreditstopurchasers(theinvestorswhobuy

thebonds).TheprogramispatternedaftertheQualifiedZoneAcademyBonds(QZABs)usedtofinanceschoolimprovements.Congressauthorized$2.4billioninbondsin2008and2009.The

IRShastypicallyindicatedthatprojectswouldbefundedstartingwiththesmallestrequestand

continuingwiththenextsmallestuntilthefundsareexhausted.ThismakestheCREBfundsmuchmorelikelytobeavailableforsmallprojects.Whileitisunclearifthefullfundingallocationhas

beenissued,thereisnocurrentpathwayforobtainingCREBs.Theapplicationdeadlineforthe

mostrecentroundofCREBswasNovember1,2010,andthereisnoindicationofanewroundoffundingavailableinthenearfuture.

AgovernmentbondfinancingprogramthatisopenistheQualifiedEnergyConservation

Bonds(QECBs).ThesearesimilartoCREBsinthattheyhavebeencreatedtohelpstateandlocal



governmententitiesfinanceenergyefficiencyandrenewableenergyprojects.OnceaQECBis

issued,thegovernmentagencyissuingthebondpaysbackthebondprincipal,whilethebondholderreceivesafederaltaxcreditinlieuoftraditionalbondinterest.UnlikeCREBs,thereisno

federalapplicationprocess.EachstateisallocatedacapfortheamountofQECBsthatmaybe

issued,withastateagencybeingresponsibleforadministrationoftheprogram.Californiahasbeenallocated$381millioninfundswhichisbeingadministeredbytheCaliforniaStateTreasurer.

Asoftheendof2012,itappearsthatfundingisstillavailableforinterestedqualifiedparties.

TheRuralEnergyforAmericaProgram(REAP)promotesenergyefficiencyandrenewableenergyforagriculturalproducersandruralsmallbusinesses.Federalgrantsandloanguarantees

areavailablethroughREAP.Congressmustallocategrantfundingonanannualbasis,andthelevel

ofoverallfundingandfundingperprojectislimited.Forthemostrecentsolicitation(April2013),individualprojectgrantsforupto25percentoftheprojectcostwereavailable,providedthatthey

didnotexceed$500,000.Loanguaranteesarenottoexceed$25million.Ifawardedbothagrant

andaloanguarantee,thecombinedtotalmustnotexceed75percentoftheproject’scost.ThepresentdeadlineforentitiestoapplyforgrantsandloanguaranteeswasJuly15,2013,although

additionalfundingperiodsarecurrentlybeingconsideredinthe2013FarmBill.Tobeeligiblefor

funding,theSFPUCwouldlikelyneedtopartnerwithadeveloperthatwouldbeeligibleforfundingundertheREAPprogramfordevelopmentofprojectsinrurallocations.Thelimitedfundinglevels

anduniquepartnershiprequirementsmaketheREAPprogramunlikelytobealikelyfunding

source.UndertheEnergyPolicyActof2005theDOEwasauthorizedtoissueloanguaranteesfor

projectsthatreducedgreenhousegasemissionsordemonstrated“neworsignificantlyimproved

technologies”.Largeprojectswithatotalcostgreaterthan$25millionweretheprimaryfocusofthisprogram.Loanguaranteerecipientsarerequiredtorepayloansinfullat90percentofthe

usefullifeoftheproject(or30years,whicheverissooner).Currentlytherearenosolicitations

open,butfuturesolicitationsmaybecomeavailable.

7.1.3 State and Local Financial Incentives

CaliforniaandtheCityofSanFranciscohaveanumberofpoliciesandincentivesthatsupportthedeploymentofrenewableenergyprojects.Themajorsupportmechanismsthatare

relevanttoprojectsthatmaybedevelopedbytheSFPUCorwithintheCityofSanFranciscoarethe

following:● RenewablePortfolioStandard(RPS)

● NetMetering

● GlobalWarmingSolutionsAct(AB32)CapandTradeProgram● GoSolarSF

● GreenFinanceSF

ThroughitsRPSprogramCaliforniahascreateddemandforrenewableenergyprojects.Utilitiesarerequiredtomeet33percentrenewableenergyby2020.UnderchangestotheRPSas

ofJanuary2011,RenewableEnergyCredits(RECs)maybeusedforRPScompliance.OneRECis



equivalentto1MWhofelectricitygeneratedbyrenewableresources.TradableRECsmaybeused

tomeetupto25percentofautility’scompliancerequirementthroughDecember21,2013;afterwardsthisthresholdisreduceduntilitreaches10percentin2017.TheRECpriceiscurrently

cappedat$50.

TheSFPUCisrequiredtomeetallitsretailsalesthroughpowergeneratedbyHetchHetchyandeligibleRPSresources.InyearswhereHetchHetchypowerdoesnotmeetthefullretailload,

theSFPUCcanmeetitsobligationthroughanycombinationofRECsandRPSeligiblepower.Ifthe

SFPUCbuildsrenewablesinexcesslocaldemand,therewillbearetailmarketforthepowerandRECsbeyondtheobligationsthattheSFPUChasforpowersales.However,atleastintheshort‐

term,thevaluefortheRECislikelytobelowgiventheaggressiveprocurementeffortsthathave

alreadybeenperformedbythestate’sutilities.DatafromtrackingorganizationsshowsthattradableRECs(Bucket3)arecurrentlypricedataround$1/MWh,roughlyequivalenttoGreen‐e

RECsthatareusedforvoluntarycompliance.13

WhiletheselowpriceslimitthevaluethattheRPSbringstonewrenewablegenerationprojectsthrough2020,proposedeffortstoraisetheCaliforniaRPSbeyond33percentmayprovide

greaterincentivesinthefuture.GiventhecaponRECprices,itmaybelessexpensivefortheSFPUC

topurchaseRECstomeetfutureRPSobligationsintheshort‐term.Allutilitiesinthestateprovidenetmeteringaccesstocustomers.Netmeteringisa

programwherecustomersareallowedtoinstallgenerationontheirpropertyandsellanyexcess

backtotheutility.Limitsexistonthemaximumsizeofagenerationunitatacustomer’spropertyandthetotalamountofaggregatecapacityonautility’ssystem.Uptonow,netmeteringhasnot

playedalargeroleattheSFPUCbecauseofthenatureofthecustomersthataresupplied.However,

ifthecustomerbaseattheSFPUCexpands,netmeteringisaprogramthatwillneedtobetakenintoaccountwhenestimatingthecostsandbenefitsofin‐cityrenewableprojects.

ThecapandtradeprogramimplementedbytheGlobalWarmingSolutionsAct(AB32)has

imposedacostonstatewidecarbonemissions.Beginningin2013,regulatedentitiesinCaliforniamustsubmitallowancesforcarbonemittedfromlargepointsourcesofCO2.Regulatedentities

includethosewithover25,000tonnesperyearofCO2emissions,impactingroughly600facilitiesin

thestate.Beginningin2015,transportationfuelsandnaturalgaswillalsobeincludedinthecomplianceobligations.Regulatedentitieshavethefollowingmajoroptionsformeetingtheir

obligations:reducetheiremissionsfootprint,usefreeCaliforniaAirResourceBoard(CARB)

allocations(whichdeclineovertime),buycredits,orobtainoffsets.CarboncreditsintheMay2013auctionaveraged$14.25/metrictonneforvintage2013creditsand$11.02/metrictonnefor

vintage2016credits,slightlyhigherthanthe$10/metrictonnefloordefinedbythestatute.

TheSFPUCreceivesafreeallocationofcreditsfromCARBanddoesnothaveacomplianceobligationduetoitssourcesofgeneration.Therefore,inclusionofadditionallowcarbonresources

haslittlevaluefortheSFPUCunderAB32.

13 See “Green‐e RECs Edge Up To Compliance Value”, available at http://www.renewableenergyworld.com/rea/blog/post/print/2013/05/green‐e‐recs‐edge‐up‐to‐compliance‐value



BoththeGoSolarSFandGreenFinanceSFaremeanttostimulatedevelopmentofsolar

energywithinSanFrancisco.TheGoSolarSFprogramprovidesincentivestoresidential,lowincomeresidential,andcommercialbuildingstodevelopsolarPVontheirproperties.Thebasic

benefitforresidentialpropertiesis$2,000;forcommercialpropertiesitis$1,500/kW(uptoa

maximumbenefitof$10,000),butthiscanchangebasedafewfactorssuchasincomelevelandownershipbynon‐profits.Fundingislimitedtoanoverallcapperfiscalyear.GreenFinanceSFisa

PropertyAssessedCleanEnergy(PACE)programwherethecostsforenergyefficiencyandsolar

projectsarerolledintothepropertyowner’syearlytaxburdeninsteadofbeingfullypaidattheoutset.SanFranciscocollectstheloanrepaymentsanddistributesthemdirectlytothelender.

Bothoftheseprogramhelptostimulateandlowerthecostofsmallscale,customersitedsolarPVin

SanFrancisco.Thereareotherstateprogramsin‐placewhichprovideincentivesorfixedpricestoprojects

forcustomersoftheinvestorownedutilities,butnottheSFPUC.TheseincludetheSelfGeneration

IncentiveProgram(SGIP),theCSI,theRenewableAuctionMechanism(RAM)andfeed‐intariffs(FIT).TheonlycomparableprogramavailabletoSFPUCcustomersistheGoSolarSFprogramwhich

providesanadditionalincentivetoSanFranciscoresidentsalreadyreceivingaCSIrebate.

7.1.4 Future Term and Incentive Summary

Thefutureoffinancialincentivesisasourceofuncertaintyfornewrenewableprojects.The

PTCandITCbothexpiredattheendof2013foralltechnologiesexceptsolar(whichwillfallfrom30to10percentattheendof2016).Projectsmusthavebegunconstructionbytheendofthese

yearstoqualify.Theseincentiveshaveasubstantialimpactonthecostofgenerationfrom

renewables;caseswithandwithouttheseincentiveswillhaveanappreciabledifferenceinthelevelizedcostofelectricity.

Thereislittlebasisonwhichtoforecastfutureincentives.Intheshort‐term,itisassumed

thattheSFPUCcouldlikelycontractwithprojectsbeginningconstructionin2013inanytechnologyandthuscapturetheITC.Theeconomicmodelaccompanyingthisreporthastheabilityto“toggle”

specificincentivestoseethesensitivityoftheresultstodifferentassumptions.Inthebasecase,the

ITCandaccelerateddepreciationareassumedforalltechnologieswhenownedbyataxableentity.IfthestateRPSrequirementincreasestomorethan33percentrenewablesby2020,this

willlikelyincreasethedemandfornewrenewableprojectsandthevalueforRECs.However,since

theSFPUCisalreadycommittedtoprocuringallnewgenerationfromrenewableresources,thispolicychangewouldhavelittleimpactoneithertheprojectincentivesorSFPUCprocurement

strategyunlesstheSFPUCdesiredtobeinapositiontosellexcessRECs.

7.2 POTENTIAL OWNERSHIP STRUCTURES Theownershipstructureofaprojectcanhaveamaterialimpactontheelectricitycostpaid

bytheSFPUCduetodifferentincentivestructures,costoffinancing,andtaxtreatment.Thissection

providesanoverviewofthemajorstructuresavailableandrecommendationsforstructuresthat



shouldbeconsideredbytheSFPUC.Thefinancialmodelprovidedwiththisreportwill

demonstratethedifferencesbetweensomeofthemajorstructures.

7.2.1 Historical Approach to Renewable Energy Project Ownership

Withthenotableexceptionofhydroelectricfacilities,renewableenergyprojectshavetypicallybeenownedbyindustrialandindependentpowerproducers(IPP)withexcesspowersold

toutilitiesthroughPPAs.TherearehistoricalreasonsforthepredominanceofIPPsinthe

renewableenergysector.RenewableenergygenerationbyIPPswasdrivenbytheenactmentofthePublicUtilitiesRegulatoryPolicyActof1978(PURPA),whichstimulatedthedevelopmentofalarge

numberofrenewableenergyprojectsinsubsequentyears.Manybiomass,wind,andgeothermal

plantscameonlineinthistimeperiodandwereallowedunderPURPAtosellexcesspowertotheutilityatavoidedcostorothernegotiatedrates.AstheinfluenceofPURPAwanedwithlower

electricitycostsinthe1990s,anewroundofrenewableenergydevelopmentwasspurredbythe

PTCandITC(discussedintheprevioussection).Publicutilitiesarenotabletodirectlyrealizethebenefitsofthesetaxincentives.ThePTCandITCreinforcedthetrendtocontractrenewableenergy

throughPPAsforbothpublicandinvestorownedutilities.Althoughtherehavebeensomeutility

ownedrenewableenergyprojectsbuiltintherecentpasttheseprojectshavebeentheexception,andnottherule.

Basedonpastexperience,interviewswithotherpublicutilities,andaliteraturereview,the

projectteamdevelopedalistofpotentialprojectownershipscenariosthatmaybeapplicabletotheSFPUC.Manydifferentpermutationsandvariationswereidentified,andincludethefollowing

projectelements:

● ProjectStructure–thebasicarrangementthatspecifiesownershipandoperatingcontrol,capitalflow,powerflow,etc.

● PartnersandCounterParties–forpublicownership,thevarioustypesofprojectpartners

andcounterpartiesthatmaybeinvolvedinprojects.TheseorganizationsmayfillvariousrolesincludingprojectownerssellingpowertotheSFPUC,jointparticipantsinownership,

poweroff‐takers,plantoperators,orotherowners.

● FinancingApproach–differentsourcesoffinancingsuchasretainedearnings,generalobligation(GO)bonds,orprojectfinance.

● DevelopmentApproach–degreeofinvolvementintheprojectdevelopmentprocess,ranging

fromcompleteself‐developmentofagreenfieldprojecttopurchaseofaturnkeyprojectatcommercialoperation.

AsillustratedinFigure7‐1,combinationsofthesedifferentelementsdefinedifferent

options.Notallelementsareusedtodefineeachoption.Forexample,forthepurposesofthisproject,therewouldbenorelevantcounter‐partyinSFPUCownershipprojects,andSFPUC’sactive

involvementindevelopmentwouldbeunusualforatypicalPPAproject,fromwhichitpurchased

power.

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● ProjectControl–AssessestherelativelevelofrisktheSFPUCwouldfaceformaintainingthe

levelofoperationsrequiredtoachieveplantgenerationtargets.● Prevalence–Indicatestherelativeindustryexperiencedevelopingprojectsaccordingtothe

givenownershipstructure.

7.2.2 Municipal Ownership

PerhapsthemoststraightforwardownershipoptionfortheSFPUCisdirectprojectownership.Inthisinstance,theSFPUCwouldbethesoleownerofthefacilityandwouldreceiveall

energygenerated.TheSFPUCcouldberesponsibleforthedevelopmentandconstructionofthe

project,orcouldpurchaseanalready‐constructedprojectdevelopedbyaprivateparty.Theseandotherdevelopmentoptionsinvolvevariouslevelsofdevelopmentactivitybytheultimateownerof

thefacility.Financingwouldbeobtainedthroughthemunicipalbondmarketwithgeneral

obligationbondsorrevenuebonds.Alternately,theprojectcanbefinancedwithinternalretainedearnings.

Anexampleofthisownershipoptionisthe120MWPineTreeWindFarmnearMohave,CA

whichwasthelargestmunicipallyownedwindprojectwhenfinishedin2009.Theprojectwas

developedbyHorizonWindEnergyunderdirectionandoversightofLADWP.LADWPactivelyparticipatedindevelopmentactivitiesandconstructedtheprojectsubstationandtransmissionline

interconnection.ThishelpedtoreduceprojectcostsandallowedLADWPtomaintaincontrolover

modificationsbeingmadewithintheirtransmissionsystem.SomemunicipalutilitiessuchasLADWPpreferthistypeofstructuretokeepmuchoftheprojectwork,operations,andcontrolof

theunitwithintheutility.Aftersuccessfulcommissioning,LADWPassumedownershipofthe

projectbymakingalumpsumpaymentfromtheirretainedearningstoHorizon.LADWPnowoperatesandmaintainsthewindfarm.Thegeneralattributesofthepublicutilityownershipoption

arecharacterizedbelow:

● FinancingCosts–Financingcostsforpubliclyownedrenewableenergyprojectsarenearlyalwaysmoreattractivethanforprivateprojectsduetotax‐exemptfinancing.Thefinancing

ratevariesslightlydependingonwhethergeneralobligationorrevenuebondsareissued.

● Development/ConstructionRisk–Asthesoleowneroftheproject,risksduringthedevelopmentandconstructionphaseoftheprojectarehigherformunicipalownership

versusotheroptions,suchasaPPA.Toacertainextent,theSFPUCcancontroltheserisksby

employingdifferentdevelopmentapproaches(forexample,self‐developmentversuspurchaseofaturnkeyfacility).

● FinancialRisk–Thefinancialriskprofileoftheprojectisrelativelyhighbecausethe

municipalutilityisthesolepartyresponsiblefordebtrepayment,operations,andmaintenanceoftheproject.

● UseofTaxIncentives–Becauseitisatax‐exemptentity,underthisstructuretheSFPUC

cannottakeadvantageofincentivesavailabletotaxableentities(e.g.,investorownedutilities(IOUs)).However,theSFPUCdoesnotpaystateorfederaltaxes.



● ProjectControl–TheSFPUChasthegreatestcontrolovertheprojectwiththisownership

option.Theownermayelecttoforfeitsomeofthiscontroltoothers,suchasaturnkeydeveloper,inexchangeforreducedexecutionrisk.

● Prevalence–Whiletherehasbeenafewlargemunicipallyownedrenewableenergyprojects

developedinthelastfewyears,municipalownershipremainsverylimited.Thereiscurrentlyroughly1300MWofmunicipallyownedrenewableenergyprojects,withthe

majorityconsistingofbiomassprojectsbuiltbeforetheyear2000.Figure7‐2showsthe

breakdownofownershipoptionsforcurrentlyoperatingrenewablefacilitiesbytechnologybasedondatafromEnergyVelocity.

Figure 7‐2 Cumulative Renewable Energy Ownership

PublicownershipisaconventionalprojectstructurethataffordstheSFPUCagreatdealofcontroloverprojectdevelopment,construction,andoperation.Inexchange,theSFPUCassumes

muchoftheprojectrisk.Theseriskscanbepartiallymanagedduringthedevelopmentphaseby

partneringwithothercompanies.Financingcostsforpublicownershipprojectsaregenerallylow;however,theSFPUCwouldnotbeabletotakeadvantageofthelucrativetaxcreditsavailableto

privatelyownedrenewableenergyprojects.

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7.2.3 Power Purchase Agreement

ThepurchaseofrenewableenergybyapublicutilitythroughaPPAwithanIPPisthemost

commonwayinwhichrenewableenergyprojectshavebeendevelopedintherecentpast.PPAsprovidelow‐riskdeliveryofpowertothepurchaser,usuallyforasetcostperunitofenergy,while

largelyshieldingthepurchaserfromprojectrisks.Inthisarrangement,anIPPwilleitherdevelopa

projectconceptandmarketthepowertovariousoff‐takers,orrespondtoanRFPfromautilityforprovidingnewgeneration.AftersecuringthePPA(s),theIPPwillclosefinancingontheprojectand

buildit.Thereafter,ownershipand/oroperationsmaybesoldortransferredtoanotherprivate

party.Ineitherevent,theutilitywouldcontinuetoreceiveandpayforpowerperthetermsofthePPA.ItisnotuncommonforrenewableenergyPPAstobeofferedwithfixedpricesovertheirfull

term.PPAsforrenewableenergyprojectsdonothavetobeexclusivelywithIPPs.Otherpotential

counterpartiesincludeotherpublicutilities,IOUs,individuals/communityorganizations,andfederalsuppliers.

TherearemanyexamplesofPPAsbetweenIPPsandpublicutilitiesinCalifornia.Recent

onesincludeSMUD’s30MWPPAwithGradientResourcesforpowerfromthePatuaGeothermal

PlantandLADWP’s250MWPPAwithKRoadMoapaSolar.ThefeaturesofatypicalPPAprojectaredescribedbelow.

● FinancingCosts–Thecostoffinancingistypicallyhigherforthisoptionthanmunicipal

ownership.Developerswillfinancetheprojectthroughfinancialmarkets,includingcommerciallypriceddebtandequity.

● Development/ConstructionRisk–ThedevelopmentandconstructionriskforthePPAoption

isthelowfortheutilitypurchasingthepowerbecausethecounter‐partybearsthefullresponsibilityfortheseactivities.

● FinancialRisk–Thisoptioncarriesthelowestfinancialriskofanyoftheoptionsconsidered

forthisstudysincetheSFPUCwouldonlypayforthepowerdelivered.PPAsarenottotallywithoutrisk;issuesmightariseinafewareassuchas(1)take‐or‐payagreementsifthe

SFPUCisnotabletoreceivetheentireoutputoftheproject,(2)anyagreementwherethe

SFPUCassumesresponsibilityforPTCpaymentsincaseofoutputcurtailment,and(3)failureofthepowerprovidertoperform,inwhichcasetheSFPUCmayneedtoturnto

alternativesuppliesofelectricity.Theseriskscanbecontrolledthroughcontractnegotiation

andprudentduediligenceofpotentialsuppliers.● UseofTaxIncentives–Taxablecounterpartiesareabletoclaimtaxincentives,andthese

benefitswould,intheory,bepassedontotheSFPUCintheformoflowerPPAprices.

● ProjectControl–Controloftheprojectdevelopment,construction,operationsandmaintenancewouldresidewiththeIPP.

● Prevalence–PPAsarethemostcommonmeansbywhichrenewableenergyprojectshave

beendeveloped.ItisverycommonforautilitytoobtainrenewableenergyfromanIPPthroughaPPA.

Doingsoallowstheutilitytoprocuretheenergyatverylittleriskwhileallowingtheprojectto

claimtaxincentivesthatareindirectlypassedtotheutilityintheformoflowerenergycosts.Other



benefitsincludelimitedexposuretodevelopmentcostandleveragingtheexperienceofa

knowledgeabledeveloper.ThetradeoffisalackofprojectcontrolandpossiblyupwardpressureonthePPApricefortwomainreasons.First,theprojectownerisnottypicallyabletouselow‐cost

tax‐exemptfinancing.Second,itshouldbeexpectedthatthepowerseller,whoassumesmostthe

risktodeveloptheproject,wouldchargetheutilityapricepremiumtocounterbalancethisrisk.AttheendofthePPAtermortheexpirationofthePTC,theutilitymaychoosetopurchase

theasset.Thisscenario(PPAwithtransfer)isdiscussedinmoredetailbelow.

7.2.4 Power Purchase Agreement with Transfer

ThisoptionissimilartothePPAoption,butaddsaprovisionforassettransfertotheSFPUC

attheendoforduringthePPAterm.Thedevelopermustownandoperatetheprojectforatleastsixyearstobeabletoclaimanyfederaltaxcredits.Thetransferpricemustbebasedon“fair

marketvalue”(FMV).Thisallowsataxablecounter‐partytoreceivealltaxbenefitsandrecover

someportionofthecapitalcostoftheproject.SFPUCthenbuysthedepreciatedassetandassumesoperation.Thisstructureispopularwithpublicandnon‐taxableagencies,andhasrecentlybeen

usedorconsideredbygroupssuchasSantaClaraUniversity,StanfordUniversity,andSaltRiver

Project.TheattributesofaPPAwithtransferstructurearedescribedbelow:● FinancingCosts–Theprojectwouldinitiallybefinancedwithhigher‐costcommercial

finance.Upontransfer,thetransferpricepaidbytheutilitymightbepaidusingretained

earningsorlow‐costtax‐exemptdebt,reducingtheaggregatecostofthefacility.However,thereissomeriskthattax‐exemptfinancingmaynotbeallowableforpurchasinganexisting

asset,andalegalopinionofthismattershouldbesoughtbeforeproceeding.

● Development/ConstructionRisk–Thedevelopmentandconstructionriskofthisstructurewouldbelow,similartothePPAoption.

● FinancialRisk–ThefinancialriskofthisoptionwouldbelowandsimilartothatofaPPAfor

theinitialterm.ThelargestriskwiththisoptionisthecostandconditionoftheassetupontransfertotheSFPUC.PerIRSguidelines,thedevelopermustowntheprojectforatleastsix

yearsandapre‐agreedtransferpriceisnotallowedifthedeveloperwouldliketocapture

federaltaxcredits.Therefore,thecostoftransferisnotknowninadvance.Further,theSFPUCwouldnothavedirectcontrolovertheoperationsandmaintenanceoftheplantwhen

ownedbytheprivateparty.Thereareseveralmethodstomitigatetheserisksincluding(1)

makingthetransferoptional,(2)specifyingrequiredO&MproceduresorathirdpartyO&Mcompany,and(3)defininghowFMVwillbecalculatedasawaytoreducetheuncertainty

whilestayingwithinIRSguidelines.

● UseofTaxIncentives–Taxablecounterpartiesareabletoclaimtaxincentives,andatleastaportionofthesebenefitsshouldbepassedontotheSFPUCintheformoflowerPPAprices.

● ProjectControl–TheprojectcontrolprofilewouldmirrorthatofthePPAbeforethetransfer

ofthefacilitytotheSFPUC,andwouldmirrorthatofdirectSFPUCownershipafterthatpoint.TheSFPUCmayassertcontroloversomeaspectsofO&MduringthePPAphaseto



assurethattheplantisingoodconditionwhentransferredorplacespecificcondition

requirementsinthecontract.● Prevalence–Whilefewexamplesofthisstructureexistedfiveyearsago,thistypeof

structureisbecomingmuchmorecommonamongstpublicagenciesasawaytodevelop

renewableenergyprojectsatalowcost.Takingownershipreducestherentandroyaltypaymentstothedeveloperandallowsthepublicagencymoreactivecontrolintheproject’s

operations.Theagencymustfeelcomfortableoperatingandmaintainingtheproject,and

thatcoststodothiswouldbecommensuratetothoseofthedeveloper.ThePPAwithtransfercombinesmanyoftheadvantagesofthePPAanddirectproject

ownershipoptions.TheuseofaPPAwithataxablecounter‐partyshouldallowtaxbenefitstobe

indirectlypassedtotheSFPUCintheformoflowerPPApayments.Further,developmentandconstructionriskisprimarilyassignedtotheprojectdeveloper,althoughthelackofutility

involvementindailyO&Mdecisionsmightincreaselongtermperformanceriskintheeventof

projectacquisition.TheSFPUCwouldneedtostructureprojectagreementscarefullytomanagethisrisk.Theuseoftax‐exemptdebttopurchasetheprojectatthetransferdatewouldfurther

improvetheeconomics.However,therearequestionsastowhethertax‐exemptdebtcouldbeused

forthispurpose.

7.2.5 Pre‐Paid Power Purchase Agreement

ThePPAprepaymentoptionfollowsthegeneralformofaconventionalPPA;however,paymentforpartofthepowerismadeinonelumpsumatthebeginningofthePPAterm.Forthe

remainderofthepowerthatisnotpre‐paid,theutilitywouldpayanongoing“tariff”tomakeupthe

difference.TheUSTreasuryDepartmentissuedarulingin2003allowingpubliclyownedutilitiestousetax‐exemptfinancingtoprepayfutureelectricsupplies.14Thistypeofstructureisnotvery

commoninthepublicpowersector,sinceittendstobecomplicatedandonlymakeseconomic

senseforlargerprojects.ExamplesincludeMemphisLight,GasandWater’s15‐year,$1.5billionagreementwithTennesseeValleyAuthorityin200315andSMUD’s2012agreementwithVestasand

CitigroupforPhase3oftheSolanoWindProject.16

Aprepaystructurecouldbecosteffectivesincethepublicagencyisineffectpayingalargeportionofthecapitalcostwithlowcosttax‐exemptdebtorretainedearnings.Thenetcostforthe

deliveredpowermaybepotentiallylowerifthemunicipaldebtrateislowerthantheeffectiveafter

taxdebtrateoftheprivatedeveloper.However,prepayingforelectricityinadvanceofdeliverycouldentailahighlevelofrisk.Thepublicagencymustcomeupwithalargepaymentatthestart

oftheprojectbeforeanypowerisdelivered.Anyagreementwouldneedtoincludesignificant

penaltiesforfailuretodeliverpowerandprovisionsintendedtominimizeriskstotheSFPUC.Also, 14 US Department of the Treasury, "Treasury Issues Final Regulations Regarding Pre‐payments Financed with Tax‐Exempt Bonds," available at http://www.ustreas.gov/press/releases/js629.htm, August 1, 2003. 15 Tennessee Valley Authority, “Treasury Approves Innovative TVA‐MLGW Pre‐pay Deal,” available at http://www.tva.gov/insidetva/august03/treasury.htm, August 2003 16 https://www.smud.org/en/about‐smud/news‐media/smud‐updates/2012‐05‐01‐solano‐expansion.htm



theIRShasguidelinesforthemaximumamountofpowerthatcanbepre‐paid;ifthelevelistoo

high,thepublicagencywillberuledtobethetrueowner,preventingthetaxincentivesfrombeingusedbythedeveloper.Thislimitisgeneralthoughttobearound50percent,althoughthereisno

explicitlimitandviewsonthelimitdiffer.Black&Veatchhighlyrecommendsdiscussionswitha

taxattorneybeforeengaginginaprepayPPA.ThecharacteristicsofaprojectemployingthePPAprepaymentstructurearedescribedbelow.

● FinancingCosts–Thoughtheprivateownerofthefacilitywouldhavetoaccessmorecostly

commercialmarketsfordebtandequity,theSFPUCwouldbeabletouselow‐costtax‐exemptbondstofundtheprepaymentofthePPA.BecausetheSFPUC’scostofcapitalis

lowerthanthatoftheIPP,suchaprepaymentcouldbeeconomicallyadvantageous.

● Development/ConstructionRisk–SimilartoaPPA,thedevelopmentandconstructionriskprofilefortheSFPUCisverylow;thecounter‐partyisresponsibleforallproject

developmentandconstructionrisk.

● FinancialRisk–Thereisconsiderablefinancialriskinthistypeoftransactionbecauseofthelargedebtburdenissuedattheoutsetofthetransaction,withapromiseoffuturedelivery

butariskofnon‐delivery.TheSFPUCisessentiallyacceptingtherolethatwould

traditionallybefilledbyprojectfinanciers.Prudentduediligenceoftheprojectandtheproposingcounter‐partywouldbenecessary.TheSFPUCcouldreduceriskbyonly

prepayingasmallpercentageofthetotalupfrontenergycosts,butthiswouldreducethe

valuethatthisstructurepromises.● UseofIncentives–Iftheprojectweredevelopedbyataxableentity,useoftaxincentives

shouldbepossible;theSMUDSolanoprojectisanexampleofthistypeofstructurebeing

successfullyarranged.Furtherinvestigationofincentiveapplicabilityandpotentialinteractionswithtaxexemptfinancingisprudent.

● ProjectControl–ProjectcontrolconsiderationsarethesameasatraditionalPPA.

● Prevalence–Thisstructurehasbeenusedforrenewableenergytechnologies,butisrare.Onlypublicagenciesthathavetheabilitytomakealargeupfrontpayment,arewillingto

acceptfinancialrisk,andthathaveaprojectlargeenough(atleast10MW,butpreferable

larger)tomakethistypeofstructureworththetimeandeffortshouldconsideraprepayPPA.

ItmaybepossiblefortheSFPUCtoprocurepoweratsubstantiallyreducedratesthrough

enhancednegotiatingleveragewiththePPAprepaymentoptionforlargeprojects.TheSFPUCwouldhavetomakeafairlylarge,upfrontfinancialcommitmenttoenterintosuchanagreement.

Therisksofdoingsowouldneedtobecarefullyweighedagainsttheadvantageofsecuringlow‐cost

power.

7.2.6 Real Estate Investment Trust

RenewableenergyinvestorshaverecentlyconsideredtheuseofREITsasatax‐efficientinvestmentstructure.AREITisaninvestmentfundthatallowssmallinvestorstopooltheirmoney

forpurchasesofrealproperty,similartoamutualfund.Thereareveryspecificrulesdefininghow



aREITmustoperatethatcoveritemssuchastheminimumnumberofinvestors,theamountofthe

REITthatcanbeheldbyanindividualinvestor,andmostimportantly,thetypesofassetsthatcanbeheldbyaREIT.Bylaw,75percentofaREIT’sassetsmustbe“realestateassets”,cash,and

governmentsecurities.Therearemajorquestionsonifrenewableenergyequipment,suchaswind

turbinesandsolarpanels,willpasstheIRSdefinitionof“realestateassets”sincemostofthisequipmentdoesnotpassthe“inherentlypermanent”test.Also,thesaleofinventoryfromREITsis

a“prohibitedtransaction”;itislikelythatthesaleofelectricitywillbeclassifiedas“inventory”if

heldinaREIT.TheadvantageofREITscomesinhowtheyaretreatedfortaxpurposes.Bylaw,atleast90

percentofaREIT’srevenuemustbedistributedasdividendstoshareholders.Thesedividendsare

deductedfromtheREIT’snettaxableincome.Byreducingcorporateincometaxandthustaxingmostrevenueatthepersonaldividendrate,thenettaxburdenislower.REITshavebeenusedin

theenergyindustrylargelyforoilandgasinvestments,byallowingthepurchasesoflandandnon‐

building,non‐machineryequipment.REITswillhavelimitedabilitytousethefederalPTCorITC;theamountofthetaxcreditisreducedbythelevelofdividenddistributions,andtheindividuals

whoreceivethedividendsareunabletoclaimthem.Therefore,whilethePTCandITCarestill

available,REITsareunlikelytoplayalargeroleintherenewableenergyindustry.AREITisnotreallyafullprojectfinancestructure,butlargelyawaytoobtaindevelopment

financingthatcanbeusedinaPPA,PPAwithtransfer,orpre‐paidPPAstructure.Thereareboth

companieslookingtoinvestspecificallyinrenewableenergyREITsandtraditionalREITslookingtoaddrenewableassetstotheirportfolio.TherearecurrentlytwoREITswithsomeinvestmentin

renewableenergy:HannonArmstrongandPowerREIT.WhilePowerREITisinvestingonlyin

propertythatmaybeusedforrenewableenergy,theHannonArmstrongREITholdslargelyenergyefficiencyinvestments,withlessthanone‐thirdoftheREITtargetedforinvestmentinrenewable

projects.HannonArmstrongrequestedaprivateletterruling(PLR)fromtheIRSthatallowedtheir

specificsituationtobeapproved.Thecurrentviewintheindustryisthatthisisa“boutiquestructure”thatisnotwidelyapplicabletoothers.ThecharacteristicsofaprojectemployingaREIT

aredescribedbelow.

● FinancingCosts–ItisunclearhowprojectfinancingbeingdevelopedbyaREITwillimpacttheoverallfinancingcost.Itmaybelowerthanbankfinancing,sincereturns(dividends)on

theprojectwillbetaxedatalowerratethancorporatefinancing.

● Development/ConstructionRisk–AREITwouldprovidefundingtoadeveloperwhocouldthenutilizeanytypeofprojectagreementtheywished.Thereisnoadditionalriskinthis

areacreatedthroughestablishmentofaREIT.

● FinancialRisk–ThereismajorriskwiththeuseofaREITforfinancingsincethereareanumberofhurdlestoacceptanceofthistypeofstructureforrenewableenergy.IfaREIT

wasfoundtobeappropriateforfinancing,thenthefinancialrisktotheSFPUCshouldbeno

differentthantheotherstructures,dependingonwhattypeofarrangementwasestablished.



● UseofIncentives–Unliketheotherstructuresevaluated,aREITwouldbeapoorvehiclefor

useoffederaltaxincentives.ThiscouldmakethecostoftheoverallprojecthigherthattheotheroptionsevaluatedwhiletheabilitytoclaimthePTCorITCexists.

● ProjectControl–Aswithdevelopment/constructionrisk,aREITdoesnotestablishany

additionalriskinthisarea.● Prevalence–TherearenoREITsthathavebeenestablishedpurelyforthedevelopmentof

newrenewables.Giventhe“realproperty”issuesandinabilitytofullyutilizethetaxcredits,

itisunlikelythatREITswillbewidelyusedforrenewableprojectsanytimesoon.GiventhebarrierstotheuseofREITsandtheuncertaintyregardingtheirviabilityinthe

currentmarket,itisnotrecommendedthattheSFPUCconsiderthisfundingmechanismasan

optionfornear‐termprojectfinancing.

7.3 ECONOMIC AND FINANCING ASSUMPTIONS Black&VeatchdevelopedafinancialmodeltoassisttheSFPUCinevaluationofdifferent

renewableenergyandfinancingoptions.Thismodelisprovidedasaseparatedeliverabletothis

report.ThemodelinputsforthecostandperformanceofdifferenttypesofsolarPV,wind,andgeothermalprojects,alongwithlettingtheusermodifytheseinputsasdesired.Inaddition,eachof

thedifferentprojecttypescanbepairedwithadifferentfinancingoption.Basedontheanalysis

above,SFPUCownership,PPA,PPAwithtransfer,prepayPPA,andprepayPPAwithtransferarealloptionsthatcanbechosenforevaluation.

MajorinputsfortheSFPUCandprivateownershipcasescanbeseenbelow.



Table 7‐2 Economic Analysis Assumptions

PARAMETER SFPUC OWNERSHIP PRIVATE OWNERSHIP

DebtPercentage 100percent 45 to50 percent

DebtRate 3.8percent 6.5 percent

DebtTerm(years) 30 15forsolarandwind,20forgeothermal

EconomicLife(years) 20forwind,25forsolar,30forgeothermal

DepreciationTerm(years) N/A 5years

PercentDepreciated N/A 85 percent

TaxRate N/A 40 percent

EquityPercentage 0percent 55 percent (60percentinthe

prepayscenario)

CostofEquity N/A 8 percent forprepay,10percentotherwise(12percentforgeothermal)

DiscountRate 3.8percent N/A

Inflation 2.0percent

DebtServiceCoverageRatio 1.2to1.3

Othermajorassumptionsandfunctionalityforthemodelincludethefollowing:

● ThediscountrateusedtocalculateLCOEisbasedonSFPUC’sweightedcostofcapitalof3.8percent.

● Generalinflationfactorof2percentperyearwasappliedtoallO&Mcosts.

● ThemodelisabletoaccommodateaPossessorTaxaspartofthelandleasefortheprivateownershipfinanceoptions.Forthebasecaseanalysis,noPossessorTaxwasassumed.

● Fortransferscenarios,transferisassumedtooccuratyear7,afterthetaxcreditshavebeen

monetized.Themethodologyforcalculatingthetransferpriceisbasedonthepresentvalueoftheearningsbeforeinterestandtaxes(EBIT)streamoftheprojectinyear7discountedat

thedeveloper’sequityreturnrate.

● ForprepayPPAs,itisassumedthat40percentoftheenergyispre‐paidattheoutsetoftheproject.

● Additionalincentives,eitherformunicipalownershiporprivateownership,canbeincluded

intheanalysis.TheITCandaccelerateddepreciationaretheonlyincentivesincludedintheresultspresentedhere,althoughchangestotheITC,PTC,orotherincentivescanbe

modeled.



TheestimatedLCOEforeachoftheprojectsmodeledunderthedifferentownershipoptionscanbeseeninthenextsection.

7.4 ECONOMIC ANALYSIS RESULTS TheLCOEestimatesforeachdifferenttechnologyareshownbelow,alongwithadiscussion

oftheresults.FollowingthetechnologyspecificresultsisacomparisonofownershipoptionsfortheprojectswiththelowestLCOEs.Finally,asupplycurvecomparingtheoptionsbetween

technologiesandrecommendationsforfutureSFPUCdevelopmentisprovidedinSection7.5.

Thecostsshownbelowreflectthebusbarcostofgeneration,butnotnecessarilywhatSFPUCwouldpaytoobtainenergyproducedfromeachproject.Thepriceofenergyisimpactedby

othermarketfactorssuchasoverallsupplyanddemand,sitespecificdevelopmentconsiderations

notreflectedhere,thevalueofthepowergivenitsgenerationprofile,andcostofpowerdeliverytotheload.Forexample,manygeothermalPPAsaresignedatvalueshigherthanthoseshownhere

giventhehigherdevelopmentriskfacedbygeothermalprojectsandloweramountofcompetition

forbaseloadrenewableresources.

7.4.1 Solar Photovoltaic

TheresultsofthesolarPVanalysisshowsthattheup‐countrySFPUClocationsandlarge

statewidegroundmountedfacilitieshaveconsiderablylowerLCOEswhencomparedtorooftop

developmentlocationsinSanFranciscooranyoftheSFPUCwaterreservoirs.ThisisduetothelargersizeandbettersolarresourcefortheprojectssitedawayfromSanFrancisco.Thecostsfor

theprojectslocatedoutsideofSanFranciscoreflecttransmissioncoststointertiethepowerinto

theCAISO.EvenonceanychargesfromPG&EtobringthepowerintoSanFranciscoareincluded,theLCOEsforthelargegroundmountprojectswillremainmuchlower.

Forthethreelargegroundmountprojects(Midway,Windhub,andImperialValley),LCOEs

forbothfixedandSATprojectslocatedonthesamesitewerecalculated.ThegoodsolarresourceatalltheselocationsjustifiesthehighercapitalcostofaSATsystem,withLCOEsroughly10

percentlower.Therefore,SATprojectsonlywillbecarriedforwardtofuturesupplycurveanalysis.

Whiletheresultsforalllocationsundereachownershipoptionislistedbelow,prepayPPAsaretypicallyonlyseenonlargerprojectsduetotheircomplexityanddevelopmentcosts.This

structurewouldonlybeviableforrooftop,reservoir,andsmallgroundmountsystemsifbundled

withinalargerportfolioofprojects.



Table 7‐3 Solar LCOEs ($/MWh), Different Ownership Options

PROJECT PPA PPA WITH

TRANSFER PREPAY PPA

PREPAY WITH

TRANSFER

SFPUC

OWNERSHIP

HuntersPoint $294.18 $222.67 $222.25 $226.66 $305.82

MarinaSchool $266.12 $198.39 $197.97 $202.14 $276.94

ThurgoodMarsh. $217.15 $162.58 $162.25 $165.61 $225.92

CollegeHillRes. $227.24 $170.27 $169.93 $173.43 $246.21

SummitRes. $243.18 $182.15 $181.78 $185.53 $252.99

StanfordHeights $242.94 $181.98 $181.62 $185.37 $252.74

SutroRes. $223.81 $168.09 $167.76 $171.19 $232.79

UniversityRes. $205.37 $154.39 $154.09 $157.23 $222.38

PulgasRes. $199.05 $149.64 $149.35 $152.39 $207.02

TeslaFixed $112.60 $85.40 $85.24 $86.92 $117.04

SunolFixed $101.93 $80.48 $77.66 $79.15 $105.90

MidwayFixed $104.69 $80.49 $80.35 $81.85 $108.71

WindhubFixed $95.73 $73.60 $73.47 $74.84 $99.40

ImperialValleyFixed $99.12 $76.21 $76.08 $77.50 $102.93

MidwaySAT $95.48 $73.50 $73.38 $74.74 $99.13

WindhubSAT $84.05 $64.70 $64.59 $65.78 $87.26

ImperialValleySAT $90.34 $69.54 $69.42 $70.71 $93.79

Notes:

Reflectsbusbarcostofnewgenerationusingtypicalindustrydevelopmentassumptions;SFandSFPUCownedsitesadjustedtoreflectlocalcosts.ThesenumbersarenotnecessarilywhattheSFPUCwillpayduetomarketfactorsandSFPUCdevelopmentconsiderations.

Rooftopandreservoirdevelopmentcostsassumenostructuralmodificationsarerequired.

PrepayPPAsareviableforlargescaleprojectsonly;smallprojectswouldneedtobebundledinalargerportfolio.

TheresultsshowthatPPAwithtransferandprepayoptionshaveLCOEsroughly25percent

lowerthanstraightPPAsorSFPUCownership.However,itisunlikelythataprepayoptioncouldbe

usedforthesmallerprojects(cityrooftops,reservoirs,andTesla)unlesstheywereaggregatedintoalargefinancingbundle.



7.4.2 Wind

Theresultsofthewindanalysisshowsthatthein‐cityandup‐countrylocationsonSFPUC

landarelocatedinmuchpoorerwindresourcesareas,leadingtoconsiderablyhigherLCOEs.Inaddition,theselocationshavelesslandfordevelopmentwhencomparedtotheotherlocations

analyzedthroughoutthestate,whichcouldbuildalargefacilityandtakeadvantageofeconomiesof

scale.Finally,whiletheoperatingcostoftheOceansidefacilityhasbeenraisedtotrytoreflecttheuniqueoperatingconditionsforanurbanwindfacility,theabilitytopermitandobtainlocal

acceptanceofawindprojectinthislocationwouldbemuchmorechallengingthantheother

projectsites.

Table 7‐4 Wind LCOEs ($/MWh), Different Ownership Options


TRANSFER

PREPAY

PPA

PREPAY WITH

TRANSFER

SFPUC

OWNERSHIP

Oceanside $96.77 $82.01 $82.59 $83.46 $105.91

Sunol $156.72 $129.85 $130.92 $134.36 $173.34

Tesla $126.38 $104.33 $105.21 $108.03 $140.02

MontezumaHills $66.44 $56.13 $56.54 $57.14 $72.81

AltamontRepower $67.43 $56.63 $57.06 $57.69 $74.12

WalnutGrove $65.22 $54.89 $55.30 $55.91 $71.60

LeonaValley $68.05 $56.85 $57.30 $57.96 $74.97

NewberrySprings $67.07 $56.34 $56.77 $57.40 $73.71

Notes: Reflectsbusbarcostofnewgenerationusingtypicalindustrydevelopmentassumptions.These

numbersarenotnecessarilywhattheSFPUCwillpayduetomarketfactorsandSFPUCdevelopmentconsiderations.

Furtherenvironmentalpermittingviabilitymustbeperformedatallsites,especiallyOceansideandMontezumaHills.

PrepayPPAsareviableforlargescaleprojectsonly;smallprojectswouldneedtobebundledinalargerportfolio.

Aswillbeseenintheothertechnologies,theprepayandtransferoptionshavelowerLCOEs

whencomparedtoeitherastraightPPAorSFPUCownership.ThisisduetotheuseofboththeITC

andtheSFPUC’slowcostofdebtineachoftheseownershipscenarios.Asmentionedabove,prepayPPAstructurestendtobecomplicatedandtypicallyofinteresttoonlylargerdeveloperspursuing

fairlylargeprojects.Giventheseissues,aPPAwithtransferappearstobethebestchoiceforwind

development.AnyofthestatewideprojectsoutsideofSanFranciscoorSFPUCcontrolledlandswouldbeofasizeandstructuresuitableforthistypeoffinancialarrangement.



7.4.3 Geothermal

Allofthegeothermalprojectsanalyzedarepromisingandcouldprovidelowcostpowerto

theSFPUC.However,thechallengewithanynewgeothermalprojectisassurancethattheheatresourcecanproduceattheprojectedoutputlevelsandcostprojections.Capitalcostsof

geothermalfacilitiescanvarywidelyforseveralreasons,butoneofthemostimportantvariablesis

thedrillingcosttodeveloptheresource.Duringtheexplorationphaseitiscommontohaveoneormoreholesthatarefoundtobeunabletoprovidetemperaturesorflowratesthatsupport

commerciallyattractivedevelopment.Oncedefinedandproven,thedevelopmentwells

(productionandinjection)aredrilled.Wellcostsincreasenon‐linearlywithdepth,soifaresourceisfoundtobedeeperthanexpectedcostswillincrease.Factorslikethis,aswellaspotentialscaling

andcorrosionissuesduringoperation,makecostestimateslesscertainthanforothertypesof

renewableenergy.Furthermore,geothermalprojectstendtohavelongleadtimesasexploratorywelldrillingcouldlastaslongas2to5yearsormore.

Table 7‐5 Geothermal LCOEs ($/MWh), Different Ownership Options


TRANSFER PREPAY PPA

PREPAY WITH

TRANSFER

SFPUC

OWNERSHIP

LongValleyBinary $77.39 $63.81 $67.47 $68.00 $78.02

GeysersFlash $65.96 $53.37 $56.77 $57.26 $66.54

BrawleyBinary $77.65 $61.91 $66.16 $66.77 $78.37

Notes: Reflectsbusbarcostofnewgenerationusingtypicalindustrydevelopmentassumptions.These

numbersarenotnecessarilywhattheSFPUCwillpayduetomarketfactors.

PPAwithtransferandtheprepayPPAcasesremainthemostattractiveownershipoptions.

ThelowcostofcapitalavailabletotheSFPUCmakesoptionswheretheutilitytakesoverownership

oftheprojectmoreattractivethanthistypeofstructureforothertechnologies.Thisisbecausetheinvestmentriskishighertoprivateinvestorsleadingtoahighercostofprivateequity.

BasedonBlack&VeatchandSFPUC’sexperiencewithrecentmarketpricingforgeothermal

projects,thecostsestimatedinthisreportaresignificantlybelowthepricesbeingofferedinthemarket.Whilethepricesshownabovemayreflectthedevelopmentcostforthebestknown

resourceareas,anumberoffactors,includingdevelopmentrisk,higherinvestorreturn

expectations,projectcosts,uncertaintyofpricinggiventhethinmarketforavailableprojects,andresourceavailabilitywouldlikelydrivepricesupbeyondthecostsestimatedinthisreport.

Furthermore,asadependablebaseloadresource,geothermaldevelopersmayfeeltheyofferamore

valuableproductthanvariablewindandsolarresources.Duetothisuncertainty,itwasdecidedthatthefocusoftheeconomiccomparisonsinthesupplycurvelatershouldbeonresources(wind

andsolar)thathaveagreaterchanceofdevelopmentatcostsconsistentwithonactualtransaction



prices.Nevertheless,SFPUCshouldstillconsidergeothermalasapotentiallycompetitiveresource

option.

7.4.4 Ownership Options

Tobetterdemonstratethedifferencesbetweenthebestresourceandownershipoptions,

theLCOEsforthebestsolarPVreservoir(Pulgas),groundmountsolarPV(WindhubSAT),wind

(WalnutGrove),andgeothermal(Geysers)sitesmodeledaspartofthisanalysisforeachofthefiveownershipoptionsarecomparedinFigure7‐3.

Figure 7‐3 Ownership Option Comparison, Best Resources

Fromthisanalysis,conclusionscanbemaderegardingthebestresourceandownershipoptions.Therelativeattractivenessofmunicipalself‐ownershipversusastraightPPAishighly

dependentonthespreadbetweenthecostofcapitalforSFPUCandthedeveloper.Theverylow

costofcapital(3.8percent)modeledfortheSFPUCmakesmunicipalownershipcomparabletoastraightPPA,albeitslightlymoreexpensive.IfthespreadbetweenthecostofcapitaltotheSFPUC

andprivatedeveloperswastoshrink,themunicipalownershipoptionwouldlooklessattractive.

Ingeneral,thePPAwithtransferandbothprepayPPAoptionshavelowerLCOEsforalltechnologieswhencomparedtostraightPPAsorSFPUCownershipbecausethemunicipalityisable

tobenefitintwoways:(1)thedeveloperisabletopassthroughthesavingsfromfederaltaxcredits

andaccelerateddepreciationintheformoflowerPPApricingwhile(2)themunicipalityisableto



utilizelowmunicipalcostofcapitaltofinancealargeportionofthecapitalcostoftheproject.

Thesethreeoptionsappearcomparabletoeachotherforthefollowingreasons:● Atsomepoint,whetheritisinthefirstyearasintheprepayoptionorinyearsevenasinthe

PPAwithTransferoption,theSFPUCwillfinanceaportionoftheprojectcost,eitherdirectlyor

indirectly,usingmunicipalbonds.● CostofdebtforSFPUCof3.8percentiscomparabletotheafter‐taxdebtrateofthedeveloper

inthePPAscenarioof3.9percent(6.5percentx(1‐TaxRate))inthePPAwithTransfer

scenario.● ThedebttermforthePPAscenarioisassumedtobe15yearsforsolarandwind.Longerdebt

termsenableprojectstohavelowerLCOEs.

● TheportionofequityinvestmentassumedinthePPAversusprepayscenariosare55percentand60percentrespectively,whiletheequityreturnrequirementsare10percent(levered)

and8percent(unlevered).Thecombinationsofassumedequitypercentageandequityreturn

requirementsforeachofthescenariosresultinsimilarLCOEs.Whiletheequityreturnrequirementsreflectreturnsinhighlycompetitivemarkets,thereturnrequirementsmaybe

higherforsomedevelopers,especiallyunderleveredstructures.

Sincetherelativerankingoftheseoptionsliesintheassumptions,Black&VeatchtestedtheimpacttoLCOEinthePPAwithtransferoptionasaresultofchangestofinancingassumptionsfor

theWindhubPVproject.Theanalysisfocusedonthedebtrate,debttermandequityreturn

requirements.BytestingthefinancingassumptionsforthePPAwithtransferscenario,onecanseetheLCOEchangerelativetotheprepayoptions.

Thesensitivityoftheprepayoptiontochangesinassumptionswasalsotested.Municipal

bondrateswerenotmodifiedsinceanychangeinthemunicipalbondratemaymeanacorrespondingchangeincommercialdebtrates.Theresultsofthesensitivitiesareshowninthe

tablebelow.Notethatinallcases,thedebtportionwasadjustedtoachievethesamelevelofdebt

coverageasthebasecase,whichiswhythedebtpercentisnotthesameinallinstances.



Table 7‐6 Sensitivity Analysis of Developer Financing Assumptions for Windhub PV

FINANCING SCENARIO

DEBT RATE/

PERCENT*

DEBT TERM

(YEARS)

EQUITY

RATE

(PERCENT)

LCOE

($ PER MWH)

Prepay

BaseCase(40PercentPrepay)

NA NA 8 $64.59withouttransfer$65.78withtransfer

50PercentPrepayNA NA 8 $56.26withouttransfer

$62.14withtransfer

PPA

withTransfer

BaseCase 6.5/45 15 10 $64.70

HighDebtRate 7.5/44 15 10 $69.58

ShortDebtTerm 6.5/38 10 10 $73.48

HighEquityRate* 6.5/50 15 14 $63.46

HighCombined 7.5/45 10 14 $77.89

Notes

HighequityratescenariohasahigherinitialPPApricebutlowertransfercostoftheprojectinyear7becausethenetpresentvalueofEBITisdiscountedatthehigherequityreturnrate.Thus,theLCOEappearsslightlylowerthanthebasecase.

Forthesensitivitytest,theprepayoptionsappeartobecomemoreattractiveiftheprepayportionisincreasedto50percent.Thebasecaseanalysisassumesamoreconservative40percent;

thelargeramountofprepay,thegreaterriskthattheIRSwillconsidertheSFPUCtheprepaythe

owner,potentiallyeliminatingtheabilitytoclaimanytaxcreditsbythedeveloper.Inaddition,theLCOEforthePPAwithtransferisfairlysensitivetothefinancial

assumptions,makingprepayoptionsappearmoreattractiveunderanumberofchangestothe

financingassumptions,suchashigherdebtrates,shorterloanperiods,andhigherleveredratesofreturn.However,SFPUCneedstoweighthosepotentialbenefitsagainstthecomplexityandrisksof

thecontractualagreementforaprepayscenario.PrepayPPAsarecomplicated,havehigher

structuringexpenses,arebettersuitedforlargerprojects,mayencountergreaterIRSauditrisk,andmayplacesomeproductionriskonSFPUC.

Notethatincrementallegalexpensesassociatedwithprepayoptionsarenotcapturedhere.

Inaddition,ifthefederaltaxcredits(ITCandPTC)areallowedtoexpire,thiswouldgreatlyreducetheincentivefortheSFPUCtoconsideranytypeofPPAstructure,prepayornot.Inthiscase,the

lowcostofcapitalavailabletotheSFPUCwouldfavorself‐ownershipasthepreferredoption.This

analysisispreliminaryandisnotintendedtosubstituteforfinancialadvisoryserviceswhichtheSFPUCshouldsecureifanyoftheseoptionsarepursued.

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Table 7‐7 Tabular Comparison of All Resources (PPA with Transfer)

NAME TECHNOLOGY LOCATION SIZE (MW) LCOE ($/MWh)

WalnutGrove Wind Yolo 170 54.89

MontezumaHills Wind Solano 100 56.13

NewberrySprings Wind SanBernardino 100 56.34

Altamont Wind(Repower) Alameda 20 56.63

LeonaValley Wind LosAngeles 100 56.85

Windhub TrackingPV Kern 20 64.70

ImperialValley TrackingPV Imperial 20 69.54

Midway TrackingPV Kern 20 73.50

SunolPV FixedPV SFPUCOwned,Alameda 19.2 80.48

Oceanside Wind SanFrancisco 2 82.01

TeslaPV FixedPV SFPUCOwned,SanJoaquin 1.6 85.40

TeslaWind Wind SFPUCOwned,SanJoaquin 6 104.33

SunolWind Wind SFPUCOwned,Alameda 30 129.85

PulgasRes. RooftopPV SanMateo 2.7 149.64

UniversityRes. RooftopPV SanFrancisco 2.9 154.39

SutroRes. RooftopPV SanFrancisco 2.0 168.09

ThurgoodMarsh. RooftopPV SanFrancisco 0.2 168.65

CollegeHillRes. RooftopPV SanFrancisco 0.9 170.27

StanfordHeights RooftopPV SanFrancisco 0.7 181.98

SummitRes. RooftopPV SanFrancisco 0.7 182.15

MarinaSchool RooftopPV SanFrancisco 0.05 198.39

HuntersPoint RooftopPV SanFrancisco 0.005 222.67

Ingeneral,large,utility‐scalefacilitiesconnectedtotheCAISOtendtohavelowerLCOEsrelativetolocal,smaller‐scalewindandsolarprojectslocatedinandaroundSanFrancisco.

However,otherfactorsnotquantifiedheresuchaslocaldevelopmentandjobs,visibility,andease

ofdevelopmentcouldjustifythedevelopmentofmorelocalresources.Ifavailablefordevelopment,largewindprojectsareestimatedtohaveaslightcost

advantageoverlargesolarfacilities,althoughtheprojectedLCOEsareveryclose.However,both

geothermalandwindfacegreaterdevelopmentchallengesrelativetosolar.Theavailabilityof

San Francis

BLACK & VE

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7.5.1 Comparison with Renewable Energy Credits

AnotheroptionavailabletotheSFPUCtomeetfuturerenewableenergyandpower

requirementsistopurchasebothonthewholesalemarket.Currently,bothwholesalepowerandRECpricesinNorthernCaliforniaarelow:USDOEEIAdatafor2013showstheaveragemarket

clearingwholesalepriceatnearly$44/MWh,whileSection7.1.3showsthatCategory3RECsare

currentlytradingataround$1/MWh.Intheshort‐term,marketpurchasesappeartobealowercostoptionwhencomparedtodevelopmentofeventhebestresourcesavailabletotheSFPUC.

Ifalonger‐termperspectiveistakenintoaccount,theeconomicprospectsforthe

developmentofnewgenerationimproves.Black&Veatchforecaststhatthe2020wholesaleNorthernCaliforniapowerpricewillberoughly$54/MWh(in2013$,equivalentto$60/MWhat2

percentinflation).RECpricesareexpectedtoremainlowunlesshighergoalsareestablishedfor

theCaliforniaRPS.ItisbecomingincreasinglylikelythatRPStargetswillrise,whichmayleadtohigherfutureRECvalues.EvenatlowRECprices,thebestrenewableenergyresourcesidentifiedin

thisanalysishaveLCOEsof$55to60/MWh,makingthemcompetitivewithlong‐termpurchasesof

greenpower.Lockinginapriceatthislevelinalong‐termPPAwouldactasaneffectivehedge

againstvolatilepowerandRECpricesprovidedthattheSFPUCprojectsasteadyfuturedemandforadditionalgeneration.AdditionalimprovementsinthedeliveredcostofpowerfromsolarPV

facilitiesmayfurtherimprovetheeconomicsofnewsolarplantsrelativetopurchasedpower.Even

withtheseimprovementshowever,developmentofin‐cityfacilitiesmayremainmoreexpensivethanwholesalepurchases,evenoveralong‐termplanninghorizon.

7.5.2 Comparison with Developer Proposals

DataprovidedtoBlack&VeatchbytheSFPUCfordeveloperproposalsshowaslightly

higherprojectedLCOErelativetotheresourcesconsideredbythisanalysis.Withoutseeingdetailontheassumptionsusedbythedevelopers,itishardtomakeadirectcomparisonwiththeprojects

madeinthisSection.Mostofthedeveloperproposalsaremorethanayearold,whichexplainsa

portionofthedifferenceduetochangesinfinancialassumptionsandtechnologies.Inaddition,manyofthedevelopersareusingstraightPPAassumptions,whichwillyieldahigheroverallLCOE

price.Theprojectionsusedinthisreportandthefinancialmodelshouldbeutilizedasadirect

comparisonagainstanyfutureofferingsmadebydeveloperstotheSFPUC.

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