The first event of a three-part Solar Opportunities Series, Fresh Energy’s annual Power Breakfast outlined new and exciting solar opportunities for business and property owners. Learn more at fresh-energy.org/solarseries.
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Fresh Energy's 2013 Power Breakfast | Jason Willett: Case Study
1. Metropolitan Council
Environmental Services (MCES)
Solar Project at Blue Lake
Wastewater Treatment Plant
Fresh Energy; 2013 Power Breakfast
September 24, 2013
Jason Willett, Director MCES Finance & Energy
2. • A regional governing body of 16
Metropolitan Council Members and
Chair Susan Haigh
• Operates Metro Transit, which carried
81 million bus & rail passengers in
2012
• Operates MCES, which collects &
treats wastewater at rates 40% lower
than peer regions
• Partners with communities & the
public in planning future growth
• Provides affordable housing
opportunities for low- and moderate-
income residents
Metropolitan Council
3. MCES Wastewater System
Seven
Treatment
Plants
600 miles of
Regional
Interceptors
Estimated $5
Billion
Replacement
Value
Capacity to
treat 372
million gallons
per day of
Wastewater
Flow
107
Communities
Connected
5. MCES Performance Awards
• National Association of Clean Water Agencies
(NACWA) – compliance with clean water discharge
permits
• All plants, most years
• MCES/Xcel Energy Awards
• 2009, 2010, 2012 Efficiency Partner Award
• 2011 Gold Award
• NACWA Operations Award for Environmental
Achievement (Inflow/Infiltration program)
• Metropolitan Plant Solids Management Building
design
• 2012 Governor’s Continuous Improvement Award
for the Council’s energy saving initiative
6. • Reduces costs for wastewater rate payers
• Reduces exposure to rising energy costs
• Improves our position for emissions
regulations
• Offers external societal & environmental
benefits (e.g. jobs & pollution reduction)
MCES Interests in Energy Work
7.
8. • Energy: Creates clean, renewable energy
• Energy: At site energy use eliminates utility line losses
• Capacity: Operates efficiently when utility grid has
most demand less need for other generation
• Capacity: Reduces need for utility reserves
• Environmental: No carbon or other air emissions
• Environmental: Uses little to no water
• Societal: Supports energy independence & security
• Societal: Creates jobs
• Societal: No use of limited fuel resources
Societal Benefits of Solar
9. • Lower life cycle cost (benefiting wastewater ratepayers)!
• Supports MCES Mission
• Provides beneficial use of buffer land around plant
• Provides price stability of some energy costs
• Reduced carbon emissions may save future costs
• Provides future opportunity to leverage facility
• Learning for MCES staff
• Visibility to encourage others
Benefits of Solar to the Council
10. Solar – Early Barriers
• High capital cost of solar panels
• Low electric rates meant avoided costs were low
• Federal tax incentives not available to government
agencies.
• Limited staff experience conservative assumptions.
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• Approaches tried:
– Traditional procurement/financing
– State bonding
– Public Facilities Authority’s “Green Reserve”
– Wind source proposal to Xcel
11. • Panel prices have dropped by 75%
• Electric rates and avoided costs have escalated
• New solar standby capacity credit was implemented
• New solar mandate, creating value for solar renewable
energy credits
• Council passed a new sustainability policy expanding the
definition of economic feasibility
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• Approach utilizes a competitively-selected 3rd party and PPA
helps procure Federal Solar Tax benefits and Renewable
Development Fund Grant
Solar – Now
12. Blue Lake Solar PV System
• 1.25 MW (ac)
• 5 to 10 acres
• Fixed panel system
• No Council capital;
and little risk
• Oak Leaf LLC
(private) takes
construction,
permitting,
connection,
technology, and
production risks
Minnesota River
Highway 101,
Shakopee, MN
New Anaerobic
Digesters
Future Solar Facility
13. • Production
• Avoided energy prices, including fuel
• Capacity Credits
• Value of Solar Tariff design
• Renewal Energy Credits (RECs)
Significant Uncertainties
14. Lessons Learned
• Engineering Assistance
– Electrical distribution & interconnect Specs
– Permitting
• Financial Assistance
– Firm vs. Interruptible Load
– On Peak vs. Off Peak load (impacts avoided costs)
– VOST, net metering, behind-the-meter
• Management Support
– Future Uses of Land
– Procurement decisions (Wages, MBE/WBE, local
content)
– Political Support
16. Council’s Sustainable Policy
Elements:
• Energy and Emissions
• Water
• Fleet
• Solid and Hazardous Waste
Economic Feasibility
• Expected present value payback over life cycle!
MCES is just one part of the Council, but.. 2013 Annual Budget is $228M
Metro is biggest plant/ located in St. Paul / like a college campusPays ~$800K/month to XcelGenerates electricity/heat by burning sewerage sludge solids
Re: 2011 Gold Award - Highest electrical savings of all the Xcel Energy’s large commercial and industrial MN customers over past 18 monthsElectrical reduction of 11,200,000 kWh (equivalent to unplugging 1,200 homes)Savings over $750,000 per year in electric costs
THIS SLIDE IS HIDDEN.Biosolids – FBI turbine at Metro, up to 4 MW; new non-condensing turbine 800Kw from pressure reliefScrubber Water heat recovery at Seneca.Eagles Point – Scott said Xcel did not rebate or help with the study for effluent recovery there
MCES has a goal to reduce energy purchases in facilities by 50% by 2020. Progress toward goal:Since 2006 ES has reduced its energy purchases by 20% (combined electric and gas purchases, mainly electric purchase); almost $4 million/year in savings for ratepayers.I believe we will meet the 25% reduction goal by 2015….still trying to figure how to get to 50% by 2020.
MCES has been pursuing energy conservation and renewable energy for many years. We think big solar can be a part. And here’s why we should look at it…ENERGY benefits; utility line losses (5-15%) mean less fuel/otherCAPACITY: about benefits to the public utility that benefit ratepayers, in generalENVIRONMENTAL: GHG reduction clearly important; other air (PM2.5, Nox) non-attainment could cost metro $100s millionsSECURITY: Diversity of system increases resilience; independence stops reduces our economic dependence ($Bs out of MN)FOSSIL FUELs: Conserved for other uses; also likely price reduction for other energy generation.
MCES Mission is provide wastewater services that protect public health and the environment while supporting regional growth, not just limited to water discharge pollution mitigation.
Starting looking at solar in 2007 (and I built an array at my house then)
Now..a paradigm shift….among the elementsInclusive costs dropped about 50% in the last 5 years…..Standby credit: $5.15/kw/month…interim. Permanent next year (this is informing VOST) Approach now requires Xcel to allow, because of exclusive franchise law. Necessary to get benefit of federal tax credits! City of Rosemount, Minneapolis (Convention Center) have also done so.
Last month we signed a PPA with Oak Leaf Energy Partners to develop, this…- We are paying a fixed price per kwh of delivered energy, for 25 years…..
Personal lesson – persistence is required!Distribution – We actually went to two separate systems to mirror the feeders from XcelInterconnection – Agreement is OL work, but specs done by MCES (e.g. duct panel for wiring, acceptance)Engineering had some challenges accepting that detail design would be done by private (we do have purchase options)Firm/Interruptible – is important – you could lose some of the Intrup. credit, if building more than firm amount of solar
If you are a peak control Time of Day customer bills are complicated.Yellow shows those components significantly impacted by solar addition. And this slide shows only ½ of the billing components. Also components are different before and after the 964 hour grace period for standby service.We feel the most accurate way to do a financial assessment of solar is to actually model a representative bill.The total amount difference is the avoided cost due to solar. (In the above case, about $7,000 per month)To insure accuracy we modeled a representative bill and then had Xcel Energy Validate it.1. Supplemental Charge. This is a component of the standby agreement. It is a base monthly charge for being on that rate and used by Xcel for administration purposes.2. Affordability Charge. This is an amount that Xcel charges per contract and it goes to subsidizing low income folks. Since the standby agreement is a new contract they get to charge us an additional $2.02 per month.3. Energy Charge Credit. This is the high load factor credit, reduced a bit by the introduction of more variability in load. Solar capacity does change. We use this bill model approach to figure out the true avoided cost per KWh. We then in a separate table adjust the KWh avoided cost for electric energy cost inflation and solar capacity degradation. The other thing that is hidden is the entire bill during the grace period. What is shown in this slide is how the bill looks for 10 months out of the year. It is different during the grace period, but that was too confusing to show with one slide.The energy charge credit rewards those customers with flat load.It is calculated like this {(total energy KWh – 400hrs x on peak demand KW) x $.011/KWh)}
Why:Make a difference in our own operationsLead by example in the Region,- And oh yes, respond to Governor’s Exec Order 11-13 (did not require from us, but encouraged).Each division of the Council is responsible and accountable for managing its own operations in such a way that meets the goals of the following procedures as economically feasible - and as can be implemented without materially diminishing the core mission of the division. This is a big deal…privates may be looking for a return in 3-5 years…for solar we can look at 25 years! Some will say we should do more to account for externalities….but this will keep us busy doing good things, that also are good for ratepayers!Energy and Greenhouse gases (Procedure 1-2a) Monitor and track energy usage Pursue opportunities to reduce energy consumption Manage energy costs by reviewing tariff and peak control options; and agreements with utilities Track and, when feasible, reduce carbon dioxide equivalent emissions from all Council owned and operated facilities. Water Use (Procedure 1-2b) monitor and track water uses and sources Identify and implement opportunities to reuse water Minimize the purchase of city water and groundwater Assure that all Council owned buildings do not contribute to the clear water inflow and infiltration into the sanitary sewer systemFleet (Procedure 1-2c) Consider vehicle efficiency and vehicle emission levels as selection criteria in vehicle procurement process Procure and assign vehicles that are suitable and properly sized for each type of service Implement program to ensure vehicles are properly maintained to maximize fuel efficiency Buy and use clean Minnesota-derived alternative fuels when feasibleSolid and Hazardous Waste (1-2d) Use environmentally friendly products in operations Manage solid waste according to Minnesota Statutes 115A.02 – Reduce waste, maximize reuse and recycle whenever possible. Track volume of recyclables collected
I hope I’ve shed a little sunshine on the opportunity and challenges!Questions?