Harnessing Los Angeles s 5,000 megawatt solar roof potential for sustainable economic growth

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1 Harnessing Los Angeles s 5,000 megawatt solar roof potential for sustainable economic growth UCLA Smart & Sustainable Cities Conference Mary Leslie, Los Angeles Business Council

2 California s Statewide Climate Action 2005: 2050 target for emissions Governor Schwarzenegger sets state goal to reduce GHG emissions to 80% below 1990 levels by 2050 (Executive Order S-3-05) 2006: California s Global Warming Solutions Act (AB 32) sets 2020 targets for emissions & renewable energy Established a goal to roll back emissions to 1990 levels by 2020 Launched California s landmark Cap and Trade program AB 32 Scoping Plan set forth strategies in a multi-sector approach Utilities mandated to generate 33% of their electricity from renewables 2015: State sets 2030 targets for emissions, renewables and energy efficiency Governor Brown and SB 350 (de Leon) set interim goals for 2030 that require utilities to generate 50% of electricity from renewable sources and double the energy efficiency of existing buildings by

3 3 Major market opportunities in LA, especially for solar energy Key statewide indicators In 2015, 3,266 MW of new solar capacity installed in CA (1 st in nation) with over $7.2 billion invested in these solar installations last year (SEIA, 2016) Next 10 reported that in 2014, California attracted half of the clean tech venture capital investment in the world ($5.7 billion) Key LA County indicators 19 GW of solar potential in Los Angeles County (UCLA Luskin Center for Innovation, 2011) LA County leads California creating 114,000 new jobs in clean tech in 2015 alone; 40,000 more than San Diego which came in second (Advanced Energy Economy, 2016) Rapid reductions in costs SEIA reports a 48% reduction in photovoltaic installation costs since 2010 Extension of 30% federal solar investment tax credit a key incentive VENTURA COUNTY « « « «27 «134 «2 10 ««« «60 10 Santa Monica Mountains City Boundary Freeways/Highways Solar Density Index Low Pacific Ocean Miles Rooftop Solar Potential of the City of Los Angeles High Map Preparation by Norman Wong - UCLA Luskin Center for Innovation « « « Angeles National Forest «42 « «2 Ports of Long Beach and Los Angeles 710 « ORANGE COUNTY 2011 UCLA LUSKIN CENTER for INNOVATION 07

4 Aliso Canyon heightens importance of resiliency Natural gas leak has depleted reserves at storage facility that supplies 17 power plants in LA Basin Up to 14 days of scheduled blackouts this summer Heightened need for resiliency Time to double down on investments in energy efficiency and renewables, and energy storage programs 4 Source: Alice Walton, Los Angeles Times, April 5, 2016

5 Los Angeles Local Solar Goals Mayor Eric Garcetti s Sustainable City plan Local Solar 2017: Install 400 MW rooftop solar with 200 MW more under construction 2025: Install 1,500 MW of local solar exceed 1,654 MW of energy storage capacity LADWP 2014 Integrated Resources Plan Staff Recommended Case 800 MW of local solar installed by 2023 Assumptions based on a 40% renewable portfolio standard for 2030 (state mandate since raised to 50%) Energy efficiency goal to deliver 15% of projected electricity needs by 2020 Heavy focus on electrification of transportation sector to decrease GHG emissions DWP plans 300 MW more of FiT by

6 Net Energy Metering in high demand Net Metering adopted in 2006 Approximately 22,000 solar systems installed in Los Angeles to date, over 168 MW LADWP s solar incentive program (SIP) has provided over $280 million in rebates for residential solar installations Online permitting and efficiency improvements have brought turn-around times for net metered solar interconnection under two weeks Last year, City of LA entered into agreement with the County to make Property Assessed Clean Energy (PACE) Financing available in LA, helping homeowners and businesses finance rooftop solar installations and other energy efficiency & water efficiency retrofits LADWP rate increases provide further incentive for homeowners to install solar Goal to install 280 MW of net energy metering by the end of 2016 (~42,800 solar systems) 6

7 LADWP s 150 MW Feed-in Tariff (FiT) Program Solar rooftop program that allows property owners to generate solar energy and sell it directly to the utility LADWP Board adopted pilot program in 2013 with two major components: 100 MW fixed-rate program for projects ranging from 30kW to 3 MW capacity 50 MW bundled FiT contracts awarded to two developer teams (SunEdison & Hecate Energy) as part of a utility-scale out-of-basin solar project. Innovative program that utilizes abundant urban rooftops to quickly generate electricity near where it is used and meet state renewable energy mandates, while spurring private investment and job growth within the city 7

8 LADWP has the lowest price FiT in the U.S. 8 Source: UCLA Luskin Center for Innovation

9 Public Benefits of 150 MW FiT Key Economic Benefits Create 4,500 local job years $562.5 million in direct private investment in Los Angeles Leverage $300 million in federal tax credits Key Environmental Benefits Generate over 300 million kilowatt hours of clean, local energy Power more than 34,000 typical LA homes 2.6 million metric tons of avoided CO2 Equivalent to removing half a million cars from Los Angeles roads 9 Source: UCLA Luskin Center for Innovation, LABC Local Solar Roundtable

10 LADWP 150 MW FiT Pilot is driving investment where it s needed most 40% of all installed or active capacity falls within solar equity hot spots, defined as zip codes in the: Bottom 1/3 of household income and Bottom 1/3 high school graduation rates Top 1/3 unemployment rates and/or Poorest air quality in the State (scoring in the top 10% in CA EPA s CalEnviroScreen) 10 Source: USC Program for Regional and Environmental Equity, Sharing Solar s Promise, 2013.

11 Key Benefits to Property Owners 10- to 20- year return on investment Increased property values Leverage 30 percent federal investment tax credit and accelerated depreciation Property owners may choose to own their solar system, lease their roof, or enter into joint ventures for other entities to receive tax benefits Solar contractor s warranty and maintenance contracts will cover most future roof maintenance FiT50 model now allows owners with large portfolios to bundle multiple buildings and land parcels into larger projects, attracting major institutional owners i.e. the Port of Los Angeles agreement to develop 10 MW of FiT LADWP plans 300 MW more FiT by 2023 and will re-offer MW of existing FiT megawatts with additional incentives this June 11

12 FiT Pays: Delivering Dividends for Business Owners Among some of the business benefits so far for companies that have completed FiT projects: A 1.2 MW project at CRAFTED, a handmade goods marketplace at the Port of Los Angeles, is expected to gross $5.6 million over 20 years. CRAFTED (the building owner) receives a percentage of an estimated $280,000 annual gross revenue, which it passes on to tis small business tenants. A combination of FiT and net metering offsets energy use at the headquarters of fashion retailer Forever 21 is providing 16 percent more return than predicted, and is expected to pay for itself in five years. A kw project on the family-owned Southern California Trophy Building in downtown Los Angeles, is expected to generate over $670,000 over 20 years. First rooftop solar project in Boyle Heights completed last July Largest rooftop FiT in the nation, 16.4 MW, announced on Westmont Drive in San Pedro 12

13 Forever 21 Headquarters 5.1 MW (Net Metering + FiT) currently the largest rooftop solar installation in LA Uses a racking system manufactured & invented in LA County Utilizes net metering to offset onsite energy costs and the FiT to sell the excess energy generated Project is expected to pay for itself in less than five years 13

14 Oxnard Plaza Apartments 84 kw system on the roof of an 80-unit apartment building in North Hollywood interconnected in June 2013 Total Project Cost: $250,000 First Year Revenue: $29,500 Expected Revenue from 20 year LADWP Contract: $561,000 Payback Period: 4 years (<1 year with federal investment tax Credit Life Expectancy of Project: years 14

15 Southern California Trophy Company kw system on the roof of a family owned commercial business interconnected in November 2013 Total Cost: $365,000 Payback Period: 6 years, 8 months Final Cost with Incentives: $126,000 Life Expectancy of Project: 30 Years First Year Revenue from 20-year LADWP Contract: $673,000 15

16 First Solar Roof in Boyle Heights In July 2015, the City of Los Angeles celebrated the first solar project completed in Boyle Heights, an East Los Angeles community identified by researchers as a solar equity hot spot The The 343 kw project was completed for building owner Levy Affiliates, one of a number of familyowned companies that manage large portfolios of commercial and multifamily buildings throughout Los Angeles 16

17 Westmont 16.4 MW - Largest solar roof complex in US The record-breaking, 16.4 MW rooftop project on a private warehouse complex along Westmont Drive at the Port of Los Angeles will create enough clean energy to power 5,000 homes The project will break ground this summer and is estimated to create 500 new prevailing-wage jobs in an underserved community 17

18 LABC s Vision: 1,500 MW of local solar by 2025 UCLA Luskin Center for Innovation estimates that meeting the LA Sustainable City plan goal of 1,500 MW of local solar by 2025 will provide: Nearly 39 million MWh of clean energy Enough to power over 335,000 LA homes annually Avoid over 26.4 million metric tons of CO2 Equivalent of removing over 5.6 million cars from the road Approx. 36,000 job years 18 Source: UCLA Luskin Center for Innovation. LABC Rooftop Solar Energy Roundtable, 2015.

19 19 But how do we get there

20 But how do we get there Integrating distributed generation with energy storage and smart systems that optimize building energy use will be key! Mind the Duck Curve! 20

21 Integrating DG with smart building energy solutions Some potential areas of opportunity: Adjusting Time of Delivery pricing to incentivize solar + energy storage Potential for electric vehicles to be used an energy storage resource Companies driving innovative solutions for building owners in Southern California Irvine Company / Advanced Microgrid Solutions partnership with Southern California Edison to optimize energy storage and building controls Solar-powered, energy efficient Smart Homes i.e. KB Homes & SunPower 21

22 One interesting new model Irvine Company partnership with Advanced Microgrid Solutions Installed large Tesla batteries with a smart system to charge batteries during nonpeak hours when electricity is cheap and use stored energy during peak daytime use when electricity is more costly. First phase of project will serve 24 office buildings to reduce the buildings peak demand by 25% Provides utility, Southern California Edison, with 10 MW of reserve capacity in event of a power failure Helps meet the utility s Local Capacity Requirements (LCR) to mitigate planned closures of San Onofre nuclear plant and water-cooled natural gas plants. 22 Source: Irvine Company; Advanced Microgrid Solutions

23 Thank you! 23 Photo: CRAFTED at the Port of Los Angeles