City of FlagstaffRenewable Energy Development

April 30, 2015

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Renewable Energy Development Presentation

Renewable Energy Portfolio City’s Financing Mechanisms

Energy Service Company Power purchase agreement Lease to Own

Lessons Learned

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Renewable Energy Portfolio 2.135 MW Location Size kW Type System COD

City Hall 14.4 Custom Solar PV Film 2006

Wildcat WWTP 292 Cogeneration 2007

Aquaplex 140 Solar Thermal 2009

Fire Station 7.5 Solar PV Roof Mount 2009

Wildcat WWTP 285.23 Solar PV Tracking Ground Mount

2011

Wildcat WWTP 283.25 Solar PV Tracking Ground Mount

2011

City Hall 200.5 Solar PV Carport 2011

Aquaplex 93.51 Solar PV Rooftop 2011

Wildcat WWTP 231 Solar PV Ground Mount 2013

Rio de Flag 310.2 Solar PV Roof and Ground Mount

2013

Aquaplex 277.2 Solar PV Carport 2013

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Financing Mechanisms

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Energy Service Company(ESCO)

15 year contract initiated in 2004:- Cogeneration unit- Solar film- City secured loan- Performance

guaranteed in year 1

- Bundled efficiency and renewable projects for economy of scale

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Power Purchase Agreement (PPA)- Long-term energy

planning- No up-front capital cost

- 3rd party incurs risk- responsible for operation and

maintenance - utilizes utility, federal and

state tax incentives

- Project initiated in 2010- Projects cash positive in year- APS incentives vary between

$0.9 and $0.12 per kWh

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Lease to Own

15 year contract initiated in 2013.- Secured financing

at low interest rate

- Utility incentives, no sales tax and financing made project cash positive in year 1

- Outsource operation and maintenance

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Lessons Learned

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Thoughts on Financing Models

PPA Lease to Own

Customer service Pay sales tax Must provide 24 hour access

to site Option to purchase

equipment at fair market value

Pending property tax issues Read the fine print

Customer service No sales tax APS incentives Outsource Operation and

Maintenance outsourced Cash positive in year 1 (out

performed pro-forma) 3rd quarter of the fiscal year $117 received in incentives