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State Allocation Board HearingSolar Energy and Energy Efficiency Project Options for California Schools

Mark Johnson, Energy Solutions Manager - Schools Segment Pacific Gas & Electric Company

Kim Ngo, Program Manager – Solar and Customer GenerationPacific Gas & Electric Company

December 5, 2011

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Where does the savings come from?GWH Impacts from Programs Begun Prior to 2001

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Utility Programs

Building Standards

Appliance Standards

Source: California Energy Commission

Where does the savings come from?GWH Impacts from Programs Begun Prior to 2001

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Utility Programs

Building Standards

Appliance Standards

Source: California Energy Commission

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Long-standing State policies lower carbon footprint

30+ years of energy efficiency programs facilitated by “decoupling” of rates

California Energy Action Plan’s preferred loading order:

1. Customer Energy Efficiency and Demand Response

2. New Renewable and Distributed Generation

3. Clean gas-fired plants

Progressive Energy Policy

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PG&E Energy Efficiency Programs Impact on Schools Segment

From January 2010 – September 2011 Represents EE programs only (does not include DG programs) PG&E system wide, all projects under Schools segment NAICS codes.

YEAR PEAK KW SAVINGS

KWH SAVINGS

THERM SAVINGS

PAID INCENTIVES

2010 7,801 33,290,453 767,643 $ 6,811,483

2011 (9 months)

5,888 39,858,766 3,520,687 $ 10,953,148

Total

13,689 431,878,119 4,288,330 $ 17,764,631

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Energy Efficiency Integrated with Solar

Solar projects typically take 2 – 3 times longer to payback verses Energy Efficiency projects.

The “blended” financials (EE + Solar) typically result in EE making Solar more affordable when evaluated as an integrated project.

Solar / DG size and cost can be reduced ( less power required ).

This can result in lower overall project costs, less risk due to better financials, greater comfort & control usually result too!

Energy Energy EfficiencyEfficiency

Demand Demand ResponseResponse

Self - Self - GenerationGeneration

Carbon Carbon OffsetsOffsets

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PG&E Retrofit Incentive Programs

Energy Savings Rebates The fastest and easiest approach for common retrofits

Customized Retrofit Incentives Calculated approach for more comprehensive projects

Retrocommissioning incentive program Focuses on “tuning up” controls

Third Party Programs Over 80 select programs with offerings that address specific

needs of a market segment (i.e. schools) OR a specific technology (i.e. lighting, HVAC, etc).

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Energy Efficiency Supporting Programs

Energy Efficiency Financing Program

Bill Neutrality – Loan payments equal to estimated energy savings Zero Interest - no cost to customer for life of the loan Public Schools/Gov. - Up to 10 yr loan term, $250,000 per meter

Large Integrated Audit Program

Investment grade integrated energy audits for larger facilities (i.e. High Schools) that address evaluating Energy Efficiency, Demand Response, Solar, Distributed Generation.

Project Engineering & Calculation Assistance

Specialized local engineering support for project and energy saving calculation assistance.

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California Solar Initiative Program

Kim Ngo, Program Manager – Solar and Customer GenerationPacific Gas & Electric Company

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Integration of EE and Renewables

EE should be considered prior to Renewables

EE should be considered prior to Renewables

Why?Why?

California’s loading order encourages that EE be implemented prior to DG

EE is typically much more cost-effective than Renewables

Decreasing a facility’s consumption with EE reduces the size (and cost) of a Renewable system necessary to

offset facility’s load

The capital investment on EE projects are typically a lot less and easier to implement than a large solar

deployment.

California’s loading order encourages that EE be implemented prior to DG

EE is typically much more cost-effective than Renewables

Decreasing a facility’s consumption with EE reduces the size (and cost) of a Renewable system necessary to

offset facility’s load

The capital investment on EE projects are typically a lot less and easier to implement than a large solar

deployment.

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PG&E began administering program in 2007

PG&E will provide $1 billion in incentives over life of the program

Statewide Objective: 3,000 MW by 2016 (PG&E’s goal 764.8 MW)

Customers must perform energy efficiency audit to be eligible for incentives

Includes retrofit, low income, and new homes elements

PG&E CSI

• Received more than 39,000 applications Since January 2007

• Completed over 33,000 projects for a total of over 365 MW (CEC AC)

PG&E CSI

• Received more than 39,000 applications Since January 2007

• Completed over 33,000 projects for a total of over 365 MW (CEC AC)

The California Solar Initiative

Data as of 11/21/11

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The California Solar Initiative

Expected Performance-Based Buydown (EPBB)

Performance-Based Incentive

(PBI)

Payment basisPV system size and design

(expected production)PV system actual

energy output

System size < 30 kW Any

Payment frequency One time, up-front Monthly for 5 years

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The California Solar Initiative

Senate Bill 585:

• Increases the total cost of the CSI Program funded by customers of PG&E, Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) by $200 million statewide

• Revises the PBI payment rates for Steps 8, 9, and 10 for all new CSI applicants (both residential and non-residential) to incorporate a 4% discount rate rather than the 8% rate previously incorporated into PBI payments

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CSI Schools (K-12) Participation

Approximately 29% of Completed K-12 Projects are PPAs

*Active includes reserved and projects under review

73.33 32.24

214

211.84

73.21

738

0

100

200

300

400

500

600

700

800

900

1000

CSI Incentives ($mm) Capacity (MW) Number of Projects

Completed Active

Questions ?

Thank You !

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Appendix

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Customer Financing OverviewFinancing Option Cash Solar Lease Power Purchase

AgreementUpfront cost to school

Borrow $ or pay cash

Low down payment Low down payment or pre-payment options

System Ownership School Solar Company Solar Company

Payments Down payment and final payment upon completion

Down payment and Monthly lease payments

Monthly PV electricity payments

Operations & Maintenance

School Solar Company Solar Company

Federal Tax Credit N/A Solar Company Solar Company

Performance Guarantee

None Offered by Solar Company

Offered by Solar Company

Term of Financing N/A Up to 20 Years Up to 20 Years

Approximately 29% of Completed K-12 Projects are PPAs

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Financing OptionsFinancing Options

Full Purchase (Cash or Financing)

Owner of systemBorrow money or pay cash

Full payment up front

Maintain and monitor system

Economics:Cash / total savingsLoan pmt. / monthly savings

Design and install SellHonor warranties (equipment & labor)

School District Solar Company

$

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PPA

Low or no money down

Monthly power paymentPossible buyout in the future

Economics:Monthly pmt. / monthly savings

Owner of system Design and install Sell powerMaintain and monitor systemHonor warranties (equipment & labor)Remove system at end if needed

School District Solar Company

Common Financing Options Common Financing Options for Schoolsfor Schools

$