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DISCUSSION Consistent with the current solar system landscape, there are a number of options available to the City for acquiring the benefits of solar power. The two most viable options include the following: Enter into a Purchase Power Agreement (PPA) - In general, a PPA represents a long-term agreement to buy power from a separate entity that finances and owns the solar systems for the purpose of selling the end-user the electricity generated by the solar system. The ownership entity provides all system maintenance and assumes any ownership risk during the length of the PPA term. This options primary advantage is that it significantly limits or eliminates the initial capital cost of the PV related equipment while providing electricity to the client at a fixed fee, typically for the life of the 20 year agreement. In addition, the PPA's often includes language providing the client with an option to purchase the system at the end of the PPA term. The downside to this option is that the client is still purchasing power at a margin. Outright Purchase of Equipment -Under this option, the City would be responsible for purchasing, installing and maintaining the solar systems. The advantage of this option is a significant reduction of ongoing utility costs. The primary disadvantage is the initial capital investment. Cost of the proposed system is estimated at $2.5 million of which a portion could be off set by State and other grants and funding sources. Review of available funding options is currently in progress. Staff intends to draft the RFP to solicit proposals from companies involved in both of the options listed above and will make a recommendation to the City Council based on a complete evaluation including firm experience, ability to perform, long and short term costs and system design. In an effort to secure grant funding for the project, staff is intending to submit an application for the reservation of a solar system rebate from California Solar Initiative Program that is administered by the California Energy Commission. To qualify for this reservation, which is based on a State established formula, the City must reserve its rebate before the current allotment runs out or risks dropping to the next tier of lower rebates. The nonrefundable fee for this reservation is $10,000 which is intended to serve as an incentive for agencies to complete project within the one year time frame. Submitted by: ,~;~~~~~i ,~~~. Daniel Smith Operations Services Director Fiscal Review: Approve by: ~~. Nelson Fialho City Manager Attachments: 1. Consultant report ` ~ r ,~ ~, ~Da i~~{"Cu Finance Dire Page 3 of 3 ~~ ~`,,~.ti ~,C< <~ Iver ctor