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8.A. - Page 3 <br /> entity (in this case, CEI Solar One, LLC.) designs, installs, and maintains the solar <br /> arrays on public agency facilities. The public agency enters into a long-term contract to <br /> purchase 100% of the electricity generated by the solar installation. Although a direct <br /> purchase financed at favorable terms might provide greater savings on energy costs <br /> than a PPA in the first five years, those additional savings would likely be partially or <br /> fully offset in later years by the cost of replacing critical components and, ultimately, the <br /> cost of disposing of the system. With this consideration and the uncertainties involved <br /> with obtaining sufficiently favorable financing terms, staff chose to move forward with a <br /> PPA approach rather than financing and construction of City-owned solar facilities. <br /> Site and Installation <br /> CEI Solar One, LLC. (a wholly owned subsidiary of Cupertino Electric, Inc.) will install <br /> rooftop PV on the Red Morton Community Center building and carport structures <br /> supporting solar panels on the existing parking lot at Red Morton Community Center. <br /> Schedule 4 of the Power Purchase Agreement shows approximate layouts of the arrays <br /> at the site. <br /> PPA Terms <br /> Length of Agreement: The PPA has a 20-year term with a provision for one five-year <br /> renewal. <br /> Purchase Option: The City can exercise an option to buy the system for fair market <br /> value (as determined by a mutually-agreed-upon appraiser) after the sixth (6th), tenth <br /> (10th), or fifteenth (15th) anniversary of the Actual Commercial Operation Date of the <br /> Facility, or ninety (90) days prior to the end of Initial Term or Renewal Term, if applicable. <br /> Production Guarantee: CEI Solar One, LLC. is required to deliver at least 90% of the <br /> expected annual power output from the system; failure to do so would result in cash <br /> payments by CEI Solar One, LLC. to the City to offset the City's costs in replacing the <br /> lost power. This provision provides additional incentive to CEI Solar One, LLC. to <br /> maintain the systems in good working order. <br /> Removal Fund: CEI Solar One, LLC. is required to fund a Removal Fund reserve on an <br /> annual basis. The Removal Fund will be held in escrow and could be used by the City to <br /> remove the panels and carport structures if CEI Solar One, LLC. were to go bankrupt <br /> and the City wanted the structures removed. <br /> Project Management Funding: CEI Solar One, LLC. is required to provide 3.5% of their <br /> cost to construct the solar arrays to the City after execution of the PPA to be used to <br /> fund City staff time for project management. <br /> Maintenance: CEI Solar One, LLC. is responsible for all maintenance related to the <br /> systems, including any necessary replacement of inverters. <br /> Pricing: The PPA Price ($/kWh) is $0.155/kWh, with a 2.5% annual escalator. <br /> According to Alameda County's analysis, the RREP bids are on average between 17% <br />