AGENDA TITLE:
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Adopt a Resolution Authorizing City Manager to Execute Third Phase Agreement with Northern California Power Agency for Renewable Power Purchase Agreement with Grace Orchard Energy Center, LLC (EU)
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MEETING DATE:
July 17, 2024
PREPARED BY:
Jiayo Chiang, Electric Utility Resources Analyst
recommendation
RECOMMENDED ACTION:
Adopt a resolution authorizing the City Manager to execute a Third Phase Agreement with the Northern California Power Agency (“NCPA”) for the Renewable Power Purchase Agreement with Grace Orchard Energy, LLC (“Grace”).
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BACKGROUND INFORMATION:
California Renewables Portfolio Standard (“RPS”) requirements necessitate 60 percent of the City’s retail energy sales be supplied by renewable energy by 2030 and every year thereafter.
Lodi Electric Utility’s (“LEU”) existing generation resources at NCPA, in addition to more recently acquired power contract resources including the Astoria 2 Solar Project (2016), South Feather Water and Power Agency Hydroelectric Project (2021), Antelope 1B Solar Project (2022), and Geysers Geothermal Project (2023), will enable LEU to meet current RPS requirements through at least 2025. While Lodi continues to work with NCPA on the identification of and due diligence associated with additional power resources to meet 2030 RPS requirements, LEU has just recently completed efforts on the proposed project described herein.
Selection of this project was a result of a competitive solicitation conducted by NCPA on behalf of members in 2020 and subsequently amended in 2022 to identify and select cost-effective resources to support member RPS obligations.
Located in Riverside County, California, Grace will sell renewable energy produced from a 50 MW solar facility. Through negotiations with NCPA on behalf of Lodi and other members, Grace has agreed to sell and deliver the renewable energy and green attributes to NCPA for the benefit of its members. Negotiations on the terms and conditions associated with the Renewable Power Purchase Agreement (“Agreement”) with Grace are now complete. As a result of such effort, NCPA, in coordination with the project participants noted below, has negotiated an Agreement with Grace for renewable energy products.
The preliminary share of facility output for each of the NCPA participant members is provided below. On the effective date of the Third Phase Agreement, Santa Clara (the initial participant) will hold the full project participation percentage; however, Lodi will exercise its right to accept a transfer of the portion identified below thereby becoming a project participant.
Participant Percentage MW
Biggs 0.8% 0.4
Gridley 2.0% 1.0
Healdsburg 5.2% 2.6
Lodi 30.0% 15.0
Lompoc 10.0% 5.0
Port of Oakland 16.0% 8.0
Plumas-Sierra 2.0% 1.0
Santa Clara 18.0% 9.0
Shasta 10.0% 5.0
Ukiah 6.0% 3.0
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Total 100.0% 50.0
Under the terms of the Agreement, NCPA will purchase, on behalf of the participants noted above, the electrical energy output, renewable energy credits, and all other environmental attributes associated with the solar generating facility from Grace. Delivery under the terms of the Agreement is scheduled to start December 1, 2027 for a contract term of 20 years. Grace, under the Agreement, is guaranteed to qualify as Portfolio Content Category 1 under RPS guidelines. Lodi’s contracted share of 15 MW will provide solar energy to meet approximately 10 percent of Lodi’s annual retail load.
The contract price is fixed for the 20-year life of the contract and has been disclosed in a confidential meeting of the City’s Risk Oversight Committee. Due to sensitivities associated with similar contract negotiations, Grace has requested that the contract price remain confidential and is therefore not included as part of this staff report and has been redacted from the corresponding agreements included with this agenda item.
During each calendar year, the amount paid for energy will be based on actual energy delivered. Lodi will not have an ownership interest in the solar generating facility and will not incur any capital expenditures. The total annual cost of energy, capacity, and renewable credits is estimated at approximately $1.8 million per year.
Pursuant to the NCPA project development process, as described in the NCPA Amended and Restated Facilities Agreement, in order for NCPA to move forward on behalf of participating members, a Third Phase Agreement is needed to enable NCPA to enter into the Agreement with Grace on behalf of the participants.
On May 30, 2024, the Risk Oversight Committee received a report on the Grace Solar Project and recommended approval of the Third Phase Agreement with NCPA.
STRATEGIC VISION:
5D. Infrastructure: Ensure capacity for future growth.
FISCAL IMPACT:
Actual costs associated with this project will be based on energy delivered. This Agreement provides a long-term fixed contract that will help reduce future market energy purchases and thereby reduce LEU’s exposure to potential market volatility and risk.
FUNDING AVAILABLE:
Costs associated with this project will be funded by Greenhouse Gas Fund Revenue (Fund 508) and/or Electric Utility Operating Funds (Fund 500) and will be appropriated as part of the annual budget process for power supply costs.
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Jeff Berkheimer
Electric Utility Director
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Scott R. Carney
City Manager