Item 4.3 - Award of Contract to Borrego Solar Systems, Inc.; Bid No. 17-010 Gl of •ip APPROVED •
City of Poway APPROVED AS AMENDED ❑
(SEE MINUTES)
� +�i COUNCIL AGENDA REPORT DENIED ❑
�F c -
, REMOVED ❑
CONTINUED
RESOLUTION NO.
DATE: February 21, 2017
TO: Honorable Mayor and Members of the City Council
FROM: Robert Manis, Director of Development Services*
CONTACT: Christine Pawlik, Conservation Administrator`'
(858) 668-4605, cpawlik @poway.orq
SUBJECT: Award of Contract for the Ground Mounted Photovoltaic
System — Fire Station #3, Bid No. 17-010
Summary:
In April 2016, the City Council set aside funding to pursue energy efficient systems to
reduce energy costs at City facilities. The installation of a ground mounted photovoltaic
(PV) system at Fire Station #3 would produce renewable energy to offset the electrical
charges at City facilities.
Recommended Action:
It is recommended that City Council:
1. Award the project to Borrego Solar Systems, Inc. in the form of a power purchase
agreement (PPA)for the design and construction of a ground mounted PV system
to be located on City owned, undeveloped property west of Fire Station #3 and
south of Ted Williams Parkway for the term of the PPA (25 years).
2. Appropriate $177,000 from capital facilities improvement fund, 0106-8912,
$158,000 for fees to SDG&E including but not limited to removal and installation
of a transformer, a generation output meter, system upgrades, and application fees
and $19,000 for permitting.
3. Authorize the City Manager to execute the PPA and associated lease agreement
between the City and Borrego Solar Systems, Inc. in a form acceptable to the City
Attorney.
Discussion:
During the January 28, 2016, City Council workshop, staff presented energy efficient
options and received Council feedback. Council support for energy efficient projects was
confirmed on April 19. With assistance from a consultant, staff began to explore options
to move the City towards the goal of reducing electricity costs.
Staff compiled a list of City facilities with the highest electricity costs to determine the
optimal choice for each site. During the exploration phase, it was discovered that a
Citywide solution which incorporates distributed savings throughout the City is the most
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Award of Contract for the Ground Mounted Photovoltaic System — Fire Station #3
February 21, 2017
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efficient solution and allows for the addition of other energy efficient technologies in the
future.
Building a PV array in the form of a field on undeveloped land allows for the generation
of large amounts of energy at the site that can be transferred directly to Fire Station #3
electric bills. Overgeneration during daylight hours will be credited back to Fire Station
#3 and other City facilities through bill credits. SDG&E's Renewable Energy Self-
Generation Bill Credit Transfer(RES-BCT)tariff allows for bill credits on up to 50 accounts
within the City for the overgeneration of renewable energy.
A request for bids (RFB) was issued and evaluated for the design and build of a PV array
on the undeveloped City owned land west of Fire Station #3 and south of Ted Williams
Parkway. The RFB required submission of two (2) pricing options: the first option is for a
traditional design-build project with the City responsible for payment to the contractor for
the PV system that would be owned by the City; the second for the design-build of a PV
system by a contractor, who would then sell the generated power to the City at a reduced
price for a fixed term through a PPA. A PPA is a financial arrangement whereby the
contractor designs, finances, installs, owns, and maintains the PV system at little to no
cost to the customer. The customer then purchases the system's electricity from the
contractor. This arrangement allows the customer to receive stable, low-cost electricity
while the contractor acquires tax credits and income from the sale of electricity
generation.
Bids were opened on December 22, 2016. The City received the following three bids:
Company System Cash Price 25 Year PPA Leveled Cost
Size (kW Price of Energy
DC) ($/kWh) ($/kWh)
Borrego Solar 1,252.35 $2,122,110.64 0.0755 0.0959
Systems, Inc.
NRG Solar LLC/Baker 1,222.20 $2,698,272.00 0.0852 Unknown
Electric, Inc.
T and M Solar, Inc. 1,300.00 $2,306,642.00 0.09 Unknown
Borrego Solar Systems, Inc. was the low bidder under both cash and PPA options.
Per California Public Contract Code 20170, bidders are required to obtain and include
with their bids a bid security payable to the awarding authority.
T and M Solar Inc., did not provide a bid security. T and M Solar also did not list
subcontractors that will perform the work on this project as required by the California
Public Contract Code, Code Section 4104 (a) (1). Due to the conflict with Sections 20170
and 4104 of the California Public Contract Code, the bid from T and M Solar was deemed
unresponsive.
The RFB required that the PV system connect to an existing City billed meter and be
compliant with SDG&E's RES-BCT tariffs. Baker Electric proposed the PV system ��
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Award of Contract for the Ground Mounted Photovoltaic System — Fire Station #3
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connect to an SDG&E meter, which is not allowed in the RES-BCT tariff. Due to the
conflict with the RFB requirements and the RES-BCT tariff, the bid from Baker Electric
was deemed unresponsive.
While the opportunity for savings with the traditional design-build option was determined
to be slightly better than a PPA, the risk of an SDG&E tariff escalation, lack of
performance guarantee, and operating and maintenance costs led to the determination
that the PPA option provided the largest return on investment with less risk.
Under the proposed PPA, the City must purchase all energy produced by the PV system
and the contractor provides guaranteed energy production. The system is expected to
overgenerate the electrical needs of Fire Station #3. The overgeneration at Fire Station
#3 will be transferred through bill credits to other sites owned by the City. The City will still
need to pay SDG&E for taxes, fees, and nonbypassable charges at Fire Station #3. The
per kilowatt hourly rate is established at the beginning of the contract and will escalate at
a rate of 3% each year over the 25-year term of the PPA. The City would have the option
to purchase the system at a future date.
The contract time for this project is estimated at 350 working days. Using a PPA, the
City's estimated costs are $177,000 for SDG&E fees, equipment modifications, and
permitting. Design and environmental review is scheduled to be complete in early June
2017 and a Conditional Use Permit(CUP)for the project will be submitted for City Council
approval. Construction is scheduled to be complete in December 2017 and final
commissioning in January 2018.
Environmental Review:
The award of a design/build contract is not subject to the California Environmental Quality
Act. Implementation of the project requires subsequent approval of a CUP and an
environmental assessment, which will occur with the design of the PV system, prior to
City Council approval.
Fiscal Impact:
Approval of staff recommendation authorizes the appropriation of $177,000 from the
capital facilities improvement fund (0106-8912) to the Ground Mounted Photovoltaic
System — Fire Station #3 project account.
The first-year production for the PV system is estimated at $455,022, based on current
electrical bills and tariffs, which can be applied to Fire Station #3 and additional City
facilities to reduce electrical bills.
Public Notification:
Borrego Solar Systems, Inc., 5005 Texas Street, Suite 400, San Diego, CA 92108
Attachments:
3 of 4 February 21, 2017, Item #1.13
Award of Contract for the Ground Mounted Photovoltaic System — Fire Station #3
February 21, 2017
Page 4
None.
Reviewed/Approved By: Reviewed By: Approved B •
11°166k-
Wendy Kaserman Morgan Foley Tina M. White
Assistant City Manager City Attorney City Manager
4 of 4 February 21, 2017, Item # ' J