Practical Ways For Towns to Save Money With Clean Energy Projects

Paul MichaudMurtha Cullina LLP860.240.6131pmichaud@murthalaw.com April 30, 2014

Toolbox Items

Renewable Energy

• ZREC & LREC Program

• Net Metering Rule

• Virtual Net Metering Rule

• Microgrid Program

• Power Purchase

Agreements

Energy Efficiency

• CPACE Finance Program

• Energy Savings

Performance Contracting

• Small Business

Advantage Program

ZREC & LREC Program General Project Eligibility Criteria

• Class I renewable energy project

• Located behind the utility meter

ZRECs

• No larger than 1,000 kW

• Zero Emissions

• May include Solar, Hydro, Wind

LRECs

• No larger than 2,000 kW

• Must have low emissions

• May include fuels cells and other low emissions Class I resources, plus all

zero emission Class I resources

Z-REC & L-REC Program –continued

Bid Selection Process

• Project bids are ranked by REC price, with the lowest bid REC

price ranked first

• Projects are selected until the annual ZREC and LREC Program

budgets are met for each utility:

Large ZREC Project (250 kW to 1,000 kW) Budget: $2.7 million

Medium ZREC Project (101 kW to 249 kW) Budget: $2.7 million

LREC Project (1 kW to 2,000 kW) Budget: $4.0 million

Small ZREC Project (1 kW to 100 kW) Budget: $2.7 million

• Separate Solicitation under a utility tariff rider

Net Metering Rule

• Net Metering is a state policy incentive to encourage customers to install distributed renewable energy generation at their place of work

• Town’s offset own electricity usage with on-site renewable energy generation

• If monthly generation exceeds consumption, the net excess generation (surplus amount) is credited to customer’s next bill at retail rate, excess reconciled annually at either the avoided-cost rate, or time-of-use generation rate (Solar PV only)

• Delivery (kWh) charges are reduced by the amount of the on-site renewable generation

• 2 MW Limit

Municipal Virtual Net Metering

• Class I or Class III Renewable Resource

• Municipality can own, lease or enter into a long-term contract (Power Purchase Agreement) for the VNM facility

• 5 beneficial accounts

• Microgrid Exception:

– Municipal Host can serve an additional 5 non-municipal and non-state “critical facility” accounts if connected to the microgrid

• $10,000,000 VNM money cap (annual) with 40% sub-cap

Municipal Virtual Net Metering – continued

• Virtual Net Metering Bill Credit

Generation Service Charge (GSC)

• 100% allocation based on energy produced by the

renewable energy system

Distribution & Transmission Charges (D&T)

• 80% allocation – Operational Year 1

• 60% allocation – Operational Year 2

• 40% allocation starting on and after Operational Year 3

Municipal Virtual Net Metering – continued

Host

Fire Station200 kW

Town Library50 kW

Police Station200 kW

Middle School600 kW

Town Hall50 kW

High School900 kWCustomer Host:

- High School

Beneficial Accounts:- Town Hall- Fire Station- Town Library- Policy Station- Middle School

2,000 kW solar array

Municipal Microgrid Systems

• A Microgrid is a discrete energy system;

• Consisting of two distributed generation sources; and

• Tying critical facilities (e.g. Police Station, Fire Station,

Public Works Facility, Town Hall, Library and High

School) together electrically so that they can operate in

parallel with, or independently from, the main power grid.

Benefits of the Microgrid

• Reliability/Resiliency Engineered to “island” from the grid when the main grid goes down, the microgrid

will continue to provide critical services to residents at the Town Center and

Amity High School

• Price Stability

• Enhances the integration of distributed and renewable

energy sources

Who Pays for the Microgrid Capital Costs?

1. No out-of-pocket capital costs incurred by the Town

2. The State of Connecticut, under a competitive RFP,

may select a Town to receive a state grant to cover the

“distribution” related capital costs of the microgrid

3. Private Generation Developers will pay the “generation”

related capital costs of the microgrid under a Power

Purchase Agreement (PPA)

State of Connecticut: First Round RFP - Grant Results

Source: CT DEEP

Woodbridge Microgrid Diagram

Main Utility Electricity Grid

Centralized Generation Plant

Transmission LinesSubstation

Woodbridge Microgrid

UndergroundDistribution

LineMicrogrid controller

What is a Power Purchase Agreement?

• A Power Purchase Agreement (PPA) is a long-term power contract

between the Municipality and the PPA Provider for the energy

generated by the renewable energy system at a predetermined

price

• The PPA Provider absorbs the costs of designing, constructing,

operating and maintaining the renewable energy system

• The PPA Provider owns the renewable energy system and not the

Municipality

What are the Benefits of a PPA?

• Zero upfront capital costs to the Municipality

• Hedge against future electricity price increases

• Municipality does not operate or maintain the

generation equipment

• No performance risk for the Municipality

Energy Efficiency

• Energy Savings Performance Contracting

Implementation of comprehensive energy savings measures paid

for by guaranteed energy savings

• Small Business Energy Advantage

Cash incentives, and on bill payment, for smaller energy efficiency

measures

• CPACE

Enables property owners to access financing for energy upgrades

and repay through a benefit assessment on their property tax

Mr. Michaud leads the firm’s Renewable Energy practice group. Mr. Michaud’s experience

extends to all elements of renewable energy project development, operations, finance, and

permitting including drafting and negotiating complex power purchase agreements, real estate

leases, renewable energy certificate agreements, equipment procurement agreements, and

construction agreements. Mr. Michaud represents a diverse client-base, including local and

national solar, fuel cell, wind, CHP, small hydro and energy efficient companies, as well as

municipalities in renewable energy and microgrid RFP matters. Mr. Michaud also represents

renewable energy off takers, including municipalities, commercial and industrial companies,

hospitals and other health care facilities. In addition, Mr. Michaud represents renewable

energy clients on regulatory matters before state public utility commissions and siting councils.

He is the founder and Executive Director of the Renewable Energy and Efficiency Business

Association, Inc. where he has extensive experience as a certified lobbyist on renewable

energy policy matters.

Thank You!