1. Solar Electricity Generation: Government Leading by Example in Solar Deployment Federal Environmental Symposium June 5, 2007 U.S. Department of Energy Washington, D.C.

2. What you need: to fulfill goals of EO (and EPAct 2005) Executive Order 13423 Sec. 2. Goals for Agencies. In implementing the policy set forth in section 1 of this order, the head of each agency shall: … (b) ensure that (i) at least half of the statutorily required renewable energy consumed by the agency in a fiscal year comes from new renewable sources, and (ii) to the extent feasible, the agency implements renewable energy generation projects on agency property for agency use; The DOE Solar Program wants to give you ideas about how to accomplish this with solar projects.

3. Goal: Solar electricity cost-competitive by 2015 The President’s Solar America Initiative

4. Provide key partners with technical assistance on codes, standards and regulations. Promote the education and certification of solar installers and code officials. Promote improved financing for solar systems. Support large showcase projects with installations of solar systems using advanced or novel solar products or installation methods. COMMERCIAL PV Industry Commercial Users Industrial Users Building Community Finance/Insurance Community GOVERNMENT Federal Agencies Regional Entities States City / Local Tribal UTILITY Key Market Transformation Partners INSTITUTIONAL Educational Community Unions Standard- Development Organizations Independent Labs NGOs Investor-Owned Federal Municipal Rural Cooperatives Market Transformation activities include technical outreach, analysis, communication, facilitation, coordination, and educational efforts with key partners Solar Energy Technologies Program: Market Transformation

5. Agency desires to do “renewable energy generation projects on agency property for agency use” Capital appropriations available? YESNO Life is good Life is good (with the help of third party financing). ESPC UESC PPA Leases

6. Power Purchase Agreements (PPAs) “Power purchase agreements” are contracts between building owners, third-party financiers, and/or installers of solar technologies.  Agencies purchase electricity at a pre-determined rate from solar technologies installed on agency property by a third party solar provider.  Solar provider retains ownership of the hardware and is responsible for its maintenance.  Financier may be the solar provider or a separate entity.  Federal PPAs sometimes called “Energy Services Agreements”  Third Party can take advantage of tax incentives that Federal Agencies cannot  PPAs are becoming the standard for large (>250kW) solar installations

7. Solar Leases Solar leases are contracts between building owners, third-party financiers, and installers of solar technologies.  Agencies receive all solar power produced by the units  Agencies pay a lease payment for solar technologies installed on agency property by a third party solar provider  Financier retains ownership of the hardware  Third Party can take advantage of tax incentives that Federal Agencies cannot  Agency or installer is responsible for solar unit maintenance –If you have your own maintenance staff, it may be more cost effective to maintain the unit yourself  Operating Lease, not Capital Lease, therefore does not require Capital Appropriations  Leases are becoming the standard for medium sized (<250kW) solar installations

8. PPAs vs Leases PPA  Power purchased by the agency at a pre-determined rate for the life of the agreement  On site power meter to determine monthly charges  More complicated initial structuring of the deal Lease  All power generated by the panel received by the agency in return for a fixed monthly lease payment  Power supply measured based on a regular maintenance cycle  Simplified initial structuring of the deal

9. PPAs with public entities California State Univ. Chico Installation Type: Roof Mounted System Size: 346 kW Installation Date: June 2006 Chuckawalla Valley State Prison Installation Type: Ground mounted installation Size: 1 MW Installation Date: June 2006 Installation Type: Roof and Ground mounted installations Size: will offset 20% of electricity use Contract awarded: Jan. 2007 Installation Type: Tracking ground mounted installations Size: 15 MW Installation Date: began construction Apr. 2007

10. PPAs with private entities Installation Type: Multiple roof and ground mounted installations Size: Over 1.1 MW Installation Date: June 2006 Installation Type: Multiple roof mount systems at multiple facilities Size: 50 kW - 245 kW Installation Date: Ongoing since 2004 Whole Foods, Inc. Staples, Inc.

11. PPAs with private entities, cont.

12. Otay Mesa Border Inspection Station GSA facility in San Diego, CA  Third party leases the roof space and installs a 500-kW photovoltaic system  $7/W installed cost before state and Federal rebate Size of proposed system500 kW InsolationVery good Total system cost for 3 rd party pre- rebate $3.5M Loan period30 years Solar cost10 c/kWh Displaced energy cost14 c/kWh Energy savings4 c/kWh Federal facilities like the Inspection Station above are currently hamstrung by a 10-year limit on utility service contracts. An extended loan period is needed to make this scenario financially attractive. Potential Installation 1

13. Forrestal Building GSA facility in Washington, DC  Third party leases the roof space and installs a 500-kW photovoltaic system  $7/W installed cost before state and Federal rebate Size of proposed system500 kW InsolationFair Total system cost for 3 rd party pre- rebate $3.5M Loan period30 years Solar cost15 c/kWh Displaced energy cost10 c/kWh Energy premium5 c/kWh Federal facilities like the Forrestal Building above are currently hamstrung by a 10-year limit on utility service contracts. An extended loan period is needed to make this scenario close to being financially attractive. Potential Installation 2

14. Aggregated Scenario GSA enters into a PPA with a solar provider that covers both the Otay Mesa Border Inspection Station and the Forrestal Building. The solar provider is responsible for installing 500kW of solar PV on each property, for a total of 1,000 kW (or 1 MW). As in a typical PPA, the provider owns and maintains the solar equipment, while GSA agrees to pay a set rate for solar for a set period. Important Assumptions/Caveats DOE has not yet analyzed GSA’s portfolio of building stock to determine the appropriate priority of solar installations or aggregation combinations that result in low or no-cost solar alternatives. Otay Mesa and Forrestal are just examples. Assumes that a 30-year financing mechanism is available to GSA. FacilitySolar Premium/SavingsAnnual Energy GeneratedAnnual Premium/Savings Otay Mesa4 c/kWh savings0.85 GWh$34,000 savings Forrestal Building5 c/kWh premium0.85 GWh$42,000 premium Total1c/kWh / 2 facilities = 0.5 c/kWh premium 1.7 GWh$8,000 premium

15. Final Thoughts  Solar projects are the ideal way to do new renewable generation on site  Solar is getting less expensive every day  Third party financing like PPAs and Solar Leases will make widespread solar implementation possible for federal agencies  Pay attention to legislation coming out this summer and the near future

16. Thank you Questions?