Xcel Energy RDF Proposal

Transcription

1 Xcel Energy RDF Proposal Region Five Development Commission 200 First Street NE, Suite 2 Staples, Minnesota April 1, 2013 Page 1 of 41

2 RDF Grant Application: Region Five Development Commission A. TABLE OF CONTENTS Table of Contents I. Scope of Work Grant Application Form... 3 Executive Summary... 7 Project Goals... 8 Project Objectives... 9 Performance Measurements...11 Protections for Xcel Ratepayers...12 Project Schedule...13 II. Technical Aspects Project Description...14 Detailed Project Overview...18 Project Development Details...24 Electrical Generation...28 Project Team...29 Final Project Reporting...31 III. Project Benefits Economic...32 Environmental...35 Xcel Energy Ratepayers...36 Other Benefits social, educational...37 IV. Use of Project Funds Project Budget (Appendix B)...38 Project Cost Narrative...39 Energy Pricing Narrative...40 Page 2 of 41

3 Applicant Information Grant Application Form Xcel Energy Renewable Development Fund Energy Production Project Name and Title of Applicant: Region Five Development Commission Mailing Address: 200 First Street NE, Suite 2 Staples, Minnesota Nature of Business: Local Unit of Government-Economic Development Agency Contact Person: Cheryal Lee Hills Phone: chills@regionfive.org FAX: Project Information Project Title: Regional Schools Solar PV Demonstration Project Locations: Leech Lake Tribal College, 6945 NW Little Wolf Rd., Cass Lake, MN Royalton High School, 120 S. Hawthorne Rd., Royalton, MN Brainerd High School, 702 S. 5 th Street, Brainerd, MN Forestview Middle School, Knollwood Dr., Baxter, MN Pequot Lakes Schools, 6537 Cty Rd 11, Pequot Lakes, MN Pine River-Backus High School, 401 Murray Ave., Pine River, MN Pine River-Backus Elementary, 401 Murray Ave., Pine River, MN Pine River-Backus Commons, 401 Murray Ave., Pine River, MN Technology Type Biomass Hydro X Solar PV Solar Thermal/Electric Wind Funding Request and Project Cost Total RDF Funding Requested: $1,993,659. Other Funding: $3,870,955. Total Project Cost: $5,864,614. RDF Funds requested by year: 1 st Year: $1,794,293 2 nd Year: $199,366 3 rd Year: $0 4 th Year: $0 5 th Year: $0 Project Capacity Page 3 of 41

4 New Project Nameplate Capacity (kw or MW): 1,493 kilowatts Refurbishment Existing Capacity (kw or MW): NA Incremental Capacity: NA Projected Project Duration Construction Start Date: April 1, 2014 Commissioning Date: January 31, 2015 Energy Production Estimated amount of AC energy (kwh or MWh) to be produced annually for each year of operation for up to a 15-year power purchase contract length. Total Energy (kwh) ,359, ,352, ,344, ,337, ,330, ,323, ,316, ,309, ,303, ,296, ,289, ,282, ,275, ,268, ,261,905 Please estimate the amount of energy in kwh that will be produced in each month of a typical year. The sum of the monthly estimates should total the annual estimates above. Jan 141,545 Feb 162,776 Mar 217,035 Apr 235,908 May 268,935 June 254,780 Page 4 of 41

5 Jul 254,780 Aug 242,985 Sep 205,240 Oct 169,853 Nov 110,877 Dec 94,363 Please estimate the percent of energy that will be produced on-peak and off-peak in a typical year. The on-peak period is defined as those hours between 9:00 a.m. and 9:00 p.m., Monday through Friday, except the following holidays: New Year s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. When a designated holiday falls on a Saturday, the preceding Friday will be designated a holiday. When a designated holiday falls on a Sunday, the following Monday will be designated a holiday. Off- Peak is defined as all other hours. Energy Pricing Narrative Percent (%) Generated On-Peak: 69.3% Percent (%) Generated Off-Peak: 30.7% Energy produced by these systems will be consumed on-site at the eight school sites. An estimated offset to the customer s bill is based on 90 percent of an initial rate of 9.0 cents per kilowatt-hour fixed for the first five years and inflated at 2.5 percent per year. Energy Pricing Annual price schedule ($/kwh or $/MWh in 2013 dollars) for each year of operation for up to a 15-year period $.081/kWh 2015 $ $ $ $ $ $ $ $ $ $ $ $ $ $.115 Page 5 of 41

6 Please indicate the percent of total energy produced that you plan to sell to Xcel Energy, and the percent you plan to consume on-site: Estimated % total energy to be sold to Xcel Energy: 0% Estimated % total energy to be consumed on-site: 100% Emission Rates If the proposed project produces any of the following emissions, please provide emission rates in pounds per kwh at full load. PM-10 NA NOx NA CO NA CO2 NA Pb (lead) NA Business Type Number of Employees: 8 Year Established: 1973 How Long Under Current Ownership: continuous from inception Legal Form or Ownership (check one) Sole Proprietorship General Partnership Subchapter S Corp Limited Partnership Corporation X Other (specify) 501 C3 Page 4 of 5 Project Team Cheryl Lee Hills R5DC Executive Director 7 Name Title Years with Company Jason Edens RREAL Managing Director 4 Name Title Years with Company Jesse Royer RREAL Solar Development Manager 2 Name Title Years with Company Nikki Larson R5DC Finance Director 5 Name Title Years with Company Page 6 of 41

7 Standard Grant Contract Terms and Exceptions I am authorized to act on behalf of the applicant in this matter and I have received, reviewed and do hereby accept the Standard Terms and Conditions of the Grant Contract included as Appendix C of the Xcel Energy Renewable Development Fund RFP except as shown on the Contract Modification Form enclosed herewith. R5DC Executive Director March 29, 2013 Signature of Authorized Representative Date I hereby authorize Xcel Energy to make any inquiries and obtain any financial information necessary to evaluate my organization s capability to implement the proposed project. I also authorize Xcel Energy to make any necessary inquiries to verify the information I have presented. I also release all necessary information to Xcel Energy. March 29, 2013 Signature of Authorized Representative Date I hereby certify that I have read and understand the terms and conditions contained in the Xcel Energy RFP and that the information contained in this proposal is true, correct and complete to the best of my knowledge. March 29, 2013 Signature of Authorized Representative Cheryal Lee Hills Typed Name Date R5DC Executive Director Title C. STATEMENT OF WORK Executive Summary Technology. Region Five Development Commission (R5DC) is seeking an RDF grant to install tenksolar photovoltaic systems on the roofs of eight public school buildings across the fivecounty area of Central Minnesota served by R5DC. This proposal s eight projects total 1,493 kilowatts of nameplate tenksolar RAIS Wave equipment on buildings in four public school districts and at Leech Lake Community College on the Leech Lake Reservation. A demonstration of energy storage will be done at two of the school sites. Page 7 of 41

8 Goals and Approach. This project will be a model in Minnesota for how to cost-effectively manage multiple projects among several school districts and multiple jurisdictions. Region Five is served by a variety of utilities including Xcel Energy and Minnesota Power, as well as several municipal utilities and electric utility cooperatives. R5DC s well-established capacity for management of planning and development projects with diverse partners will allow it to develop a significant amount of solar energy capacity in the region at a cost that will be lower than if these solar projects were to proceed on an individual basis. The result will be greater leverage of RDF funds and an increased understanding of how to reduce the overall development costs for solar energy. This project will rely heavily on local expertise and capacity for the development of these solar energy systems in order to create new jobs and strengthen an emerging cluster of solar energy related businesses in Region Five. The solar projects will be the first major step toward a regional economic development goal to expand renewable energy capacity in the area and it is likely to be the catalyst for other energy-related economic development initiatives in the region including other renewable energy projects and the expansion of local job training programs for jobs in the solar energy industry. Costs and Schedule. The total installed cost for the tenksolar equipment is $3.62 per watt. In addition, eight Silent Power storage units, each with a capacity of 9.2 kilowatts, will be installed at a cost of $21,983 each. The budget includes $134,370 for project management of the eight solar energy installations, as well as the reporting and financial management required for the RDF grant. Total cost for the project is $5,404,660. Based on the current schedule for the award of RDF funds, final design, engineering and procurement will be completed by March 2014 with construction beginning in April. Completion of all projects is expected by October 2014 with commissioning by year-end. Unique Features. R5DC and its school district partners are uniquely positioned to costeffectively implement a large and highly visible solar energy project that will benefit Minnesota schools and broadly educate the public about the benefits of solar energy and Minnesota s potential for using advanced solar energy technology. The project will be designed, installed and financed exclusively with resources from Minnesota-based companies and organizations, advancing regional goals but also contributing to statewide efforts to promote and expand the renewable energy business sector in the state. RDF Amount Requested. RDF funding of $1,945,678 is being requested, which represents 36 percent of the total project cost. RDF funds will be requested as a lump sum payment upon completion of construction of all systems, but prior to final commissioning. The budget includes $59,720 in contributions from local utilities for installation of the Silent Power energy storage units. 2. Project Goals: Alignment with RDF Mission The primary goal for this project is to design, install and commission for interconnection 1,493 kilowatts of nameplate tenksolar equipment on eight school building sites over a 15-month timeline within the timeline and budget established for the projects. Increase market penetration of renewable energy at reasonable costs. RDF funds are being requested for 36 percent of project which will be a cost-effective demonstration of the latest Page 8 of 41

9 generation of tenksolar equipment and the Silent Power energy storage units. It will also be some of the largest solar energy projects at K-12 school sites in the state. The total project costs are reasonable for solar energy development in Minnesota and will demonstrate important applications of Minnesota-based solar energy technologies that will help to bring these technologies to the market at commercial scale. Promote expansion of renewable energy projects and companies in Minnesota. All of the solar modules, energy storage units and most of the related equipment in Region Five s proposal will be manufactured in Minnesota. In addition, RREAL, the project developer, is based in Region Five at Pine River. R5DC itself will gain valuable experience as a solar energy developer that will allow it to pursue other solar energy projects in the future. Stimulate research and development into renewable energy technologies. The solar projects in this proposal will serve as a demonstration of a unique development model by coordinating eight projects among multiple school districts. It will demonstrate performance characteristics for latest generation of tenksolar equipment and field test Silent Power units as a demand management strategy for the unique time-of-day and seasonal demand curves in school buildings. Develop near-commercial and demonstration scale renewable energy projects. These projects will serve as important models for other K-12 schools in Minnesota that may be interested in developing their solar energy resources. It will reinforce the market presence of tenksolar and Silent Power in Minnesota and increase the capacity of RREAL as a solar energy developer. 3. Project Objectives Specific products and deliverables. As the grant applicant and project manager, R5DC will be responsible for grant products, deliverables and benchmarks during the grant period. R5DC s experience with similar state and federal grants will allow it to integrate its past work on metrics and measurement into its management of RDF-funded activities. As one of its core principles, R5DC is committed to collection and analysis of effective data and indicators on all projects and economic development initiatives in ways that will allow it to measure its performance in meeting the goals of this RDF grant project. The goals and objectives of this project are to: Demonstrate a cost-effective model for increasing market penetration of solar energy projects among multiple jurisdictions by coordinating development through a regional agency with development expertise; Maximize regional economic development benefits, including new job creation and business expansion, from a $5,404,660 investment in solar energy capacity; Create long-term financial benefits for partner school districts and the region from more than 50,000 megawatt-hours of electrical power generated over 25 years; Use the regional solar energy initiative as a catalyst to identify additional resources to expand local job training programs in solar energy careers; Strengthen and recruit new and existing solar energy businesses and related businesses such as solar thermal and energy storage the region; Page 9 of 41

10 Promote Minnesota-based solar technology companies and strengthen Minnesota-based businesses that design, finance, construct and operate solar energy systems; Broadly educate the public in Region Five about solar energy and the under-utilized potential for solar energy in Minnesota; and Reinforce R5DC s role as a leader in promoting regional strategies for sustainability and renewable energy in Minnesota. PRODUCT: Design and construct all solar energy systems within the project budget and timeline. METRICS: 1.) Internal weekly project team meeting minutes; 2.) Monthly reporting during grant period; 3.) Internal financial tracking of sources and uses of funds; 4.) Final project report. TIMEFRAME: 15 months from beginning of grant period. PRODUCT: Demonstrate a cost-effective delivery model for regional coordination of multiple solar energy projects among multiple jurisdictions. METRICS: 1.) Ongoing capture of lessons learned in project team meetings and monthly grant reporting; 2.) Outside analysis and informal audit of project costs as a component of final project report; 3.) Development of a strategy for dissemination of lessons learned to other regional economic development agencies. TIMEFRAME: During the grant period and for a period of six months thereafter. PRODUCT: Maximize regional economic development benefits from the investment in solar energy. METRICS: 1.) Monthly tracking of labor hours, wage rates and procurement and professional services contracts during the grant period; 2.) One-on-one survey of economic impact with all major contractors and vendors for final project report. TIMEFRAME: During the grant period and for a period of six months thereafter. PRODUCT: Generate long-term financial benefits to area schools and the region. METRICS: 1.) Long-term ownership agreements with schools and revenue sharing from solar power production; 2.) Annual comparative study of costs of solar production and electric rates for 15 years; 3.) Analysis with utilities of impact on demand charges at solar sites generally and specifically at sites with energy storage. TIMEFRAME: For a five-year period after completion of all solar installations. PRODUCT: Expand regional job training in solar energy. METRICS: 1.) Plan for expanding the scope of regional training in solar energy; 2.) identification of funding sources and partnerships for expanded training; 3.) Funds raised for expansion of training programs; 4.) Marketing plan and targets for students entering training programs, achieving certification, and levels of solar-related job placement. TIMEFRAME: 12-month period following completion of grant-funded activities. PRODUCT: Strengthen regional and Minnesota-based solar energy businesses. METRICS: 1.) Track employment and annual revenues of current solar businesses; 2.) Evaluate RDF-leveraged investment as a percentage of total solar energy business activity; 3.) Track new solar-related business development in the region. TIMEFRAME: During the grant period and for a period of five years after completion of grant activities. PRODUCT: Increase public awareness of solar energy. METRICS: 1.) Integration of solar energy initiatives with R5DC website and tracking of site visits; 2.) Track number of public meetings, presentations and estimated attendance; 3.) Collection of written materials and news Page 10 of 41

11 media articles about the solar initiative. TIMEFRAME: During the grant period and for a period of one year after completion of grant activities. PRODUCT: Further establish R5DC leadership on renewable energy. METRICS: 1.) Evaluation as part of Sustainable Communities and Resilient Region plan updates; 2.) Participation in statewide efforts to build renewable energy business cluster; 3.) Ability to identify other resources for solar energy development and solar project financing beyond the grant period. TIMEFRAME: During the grant period and for a period of one year after completion of the grant activities. 4. Performance Measurements Minutes of weekly project team meetings. Minutes will be assigned as an R5DC staff responsibility and posted to the R5DC website. METRIC: Record of completion of all solar projects on time and within the budget. Monthly reporting during grant period. Monthly grant progress reports will be assigned to a contracted grant manager and posted to the R5DC website. METRIC: Record of completion of all solar projects on time and within the budget. Monthly tracking of labor hours, wage rates, procurement and professional services contract. Quarterly reporting on economic impacts will be assigned as an R5DC staff responsibility and posted to the R5DC website. METRICS: FTE-equivalent job creation directly leveraged by solar projects for businesses located in Region Five and in Minnesota; business revenues leveraged by solar projects for businesses in Region Five and in Minnesota. Quarterly financial reports. Financial reports will be assigned as an R5DC staff responsibility subject to review and supervision by the RDF project manager. METRIC: Completion of all solar projects within the project budget. Audit of project costs. An informal audit and financial review of project costs will be conducted after completion of the project with assistance from independent, outside experts. Results will be posted to the R5DC website. METRIC: Lower installed costs per kilowatt of nameplate solar energy capacity compared with an identified benchmark. Commissioning of systems. Final commissioning report on all solar project will be managed by the design-build contractor and submitted for approval to the Project Manager. METRIC: Operational capacity for all energy systems by April Final Project Report. A final project report will be prepared by R5DC within 60 days of project completion and posted to the R5DC website. METRIC: Completion of the final report within 60 days of project completion. In addition to the required elements for the final report, it will include: Lessons learned from the project and dissemination plan for lessons learned; Strategies for ongoing development of renewable energy in Region Five as part of larger statewide efforts to promote renewable energy; Summary of all meetings and presentations regarding the project; records of all print and electronic news media reports regarding the project. Page 11 of 41

12 A one-on-one survey of all major contractors and vendors on the project regarding project management and lessons learned. The final project report will also include analysis and recommendations on the following deliverables associated with this grant project: Electric Rate Analysis. Within one year of project completion, R5DC will convene a joint working group of area utilities and facility managers to evaluate the effects of the solar energy projects on time-of-day electric use and rates. The focus will include an analysis of the impacts on demand charges at all sites, but particularly at the sites that deployed utility-activated energy storage systems. METRIC: Quantifiable impact on demand charges at sites with or without energy storage. Regional Training Strategy. Within one year of project completion, R5DC will convene a joint working group of higher education institutions in Region Five and other workforce development partners. The focus of the group will be to develop a strategy to enhance workforce development programs and resources that are focused on renewable energy businesses. METRIC: Regional strategy among multiple stakeholders and funding targets for ongoing workforce development in renewable energy fields. Regional Renewable Energy Strategy. As part of its ongoing Resilient Region and Sustainable Communities project, R5DC will develop strategies to promote and expand the number of renewable energy businesses located in Region Five, and develop financing strategies for ongoing development of renewable energy projects in the region. METRICS: Businesses retained; new businesses relocating to Region Five; level of solar energy development within the region. 5. Protections for Xcel Ratepayers. Region Five is proposing to submit its request for payment of RDF funds as a lump sum at the end of project construction. This assures that the project will be completed before there is any expenditure of RDF funds. Region Five is a well-established economic development agency and has been planning an RDF grant for six months and has assembled an experienced development team for its proposed RDF projects. This increases the assurances that this project will be done on time, within the project schedule and meet all project deliverables. As a result of regional planning and a consensus strategy to pursue development of renewable energy projects, R5DC convened a series of informational meetings with school districts and utility representatives in the summer of Four school districts and the Leech Lake Reservation signed Letters of Intent for development of solar energy projects and R5DC identified the RDF grant program as a potential source of funding. At the request of R5DC, an initial feasibility assessment of suitable roofs for solar energy was done by Rural Renewable Energy Alliance (RREAL) in September The feasibility study included site visits, an analysis of energy bills, and consultations with school district officials. Six elementary schools in the region were eliminated from consideration due to small roof areas and lower electrical usage. Also in September, R5DC assembled a team that began gathering information for an RDF grant application and began seeking contingent financial commitments Page 12 of 41

13 for construction financing and equity and debt financing of a major regional solar energy initiative. 6. Project Schedule R5DC is proposing to complete its design, construction and commissioning of the eight solar energy projects within the region over a 15-month period. Based on an estimated January 2014 start to the project, the following major tasks, milestones and deliverables form the basis of that development schedule: December 2013 January 2014 Finalize grant agreement for RDF funds. DELIVERABLE: Signed grant agreement. Enter into individual development agreements with the four school districts and Leech Lake. DELIVERABLE: Signed agreements with all school districts and Leech Lake. Enter into Design-Build Contractor Agreement. DELIVERABLE: Signed agreement with selected general contractor. February 2014 March 2014 Secure final financing commitments. DELIVERABLE: Signed agreement committing all necessary project financing Complete final structural analysis and engineering on all eight solar energy systems. DELIVERABLE: Completed engineering and design report. Initiate procurement of equipment from tenksolar and balance of system materials. DELIVERABLE: Signed purchase orders for all solar equipment. April 2014 Secure all necessary building permits for the eight systems. DELIVERABLE: All necessary permits in-hand. Finalize construction schedule for all eight projects. DELIVERABLE: Approved construction schedule. July 2014 November 2014 Initiate procurement of Silent Power energy storage systems. DELIVERABLE: Signed purchase order for energy storage units Complete construction and interconnection of all solar systems. DELIVERABLE: Contractor statement of substantial completion. Complete construction of energy storage systems. DELIVERABLE: Contractor statement of system completion. Page 13 of 41

14 November 2014 Submit payment request for RDF funding. DELIVERABLE: Submission of payment request and all necessary supporting documentation. February 2015 March 2015 Complete system commissioning and on-site utility inspections. DELIVERABLE: Commissioning statement from all utilities. Project close-out and draft of final project report. DELIVERABLE: Completion of approved final report II. TECHNICAL ASPECTS A. PROJECT DESCRIPTION Technical Issues: Facility Configuration and Production Capacity. The eight solar energy projects, totaling 1,494 kilowatts, will be allocated among the sites as follows: Location Nameplate Panels Output Pequot Lakes High School 269.1kw 1,495 panels 428,931kwh Pine River-Backus High School ,063 Pine River-Backus Elementary ,021 Pine River-Backus Commons ,984 Forestview Middle-Brainerd , ,567 Brainerd High School , ,952 Royalton High School , ,693 Leech Lake Tribal College ,866 TOTALS: 1, ,276 2,359,077 Page 14 of 41

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17 In addition, four Silent Power OnDemand Energy Applicance standard base units will be installed at Brainerd High School, and another four units at Forestview Middle School. The Silent Power units will be upgraded to 9.2 kilowatt inverters, with a 60 AMP Solar MPPT charge controller and configuration of all electronics, breakers and other electrical and mechanical items to be compatible with tenksolar panels. All solar energy sites will include standard Solar Log monitoring systems. The output estimate, based on system nameplate capacity, is for the first full year of production and is assumed to degrade at a rate of 0.4 percent per year. Layouts showing the configuration of the system at each school site are attached to his application. Operational Characteristics. Region Five is proposing to use newly manufactured fifth generation Titan solar modules that will be released by tenksolar in April 2014 and are rated at 410 and 440 watts. The redundant cell architecture used in the RAIS modules enable the efficient construction of larger modules with corresponding reduced labor hours for installation. These products when combined with the reflective gain from the reflective panel manufactured by 3M Company make the tenk models some of the most powerful production modules offered in the industry. Standard Solar Long monitoring systems will be included at each school site. Demonstration of the Silent Power OnDemand Energy Appliance storage system will be incorporated at two school sites. Operation and Maintenance of the systems during the period of the capital lease will be the responsibility of the limited liability corporation that is set up for this project. It is likely that this O & M work will be contracted to a third party, and R5DC will seek an experienced contractor for that purpose from businesses located in Region Five. Page 17 of 41

18 B. DETAILED PROJECT OVERVIEW Major Equipment Technology. tenksolar has been selling its new generation of solar technology for the past five years. At the core of this technology is the proprietary RAIS-WAVE module architecture (Redundant Array of Integrating Solar), where cells in each module are interconnected in a mesh rather than series. When combined with a unique digital control algorithm and embedded low-voltage redundant electronics that were also developed by tenk, the module virtually eliminates serial constraints present in other conventional solar modules. To extend redundancy from the modules to the grid, and take full advantage of the proprietary control methods, a simplified conversion process is used to create grid-quality alternating current (AC). A proprietary stepped-pulse transformer (SPT) technology uses a simplified set of automotive-grade, low-voltage electronics to step-pulse the energy into a solid-state transformer. Unlike conventional inverters, no active electronics are exposed to grid-level voltages, improving up-time performance and reducing operating and maintenance costs. The technology also uses fully embedded, anti-islanding controls that have been third-party validated and certified in most international solar markets. Because of the controls residing in the electronics, tenk is able to interconnect the SPTs in parallel, allowing the AC conversion process to operate redundantly. If one fails, the energy that would normally be lost flows to another SPT. At times of low solar radiation, a reduced number of SPT s still operate to improve overall system efficiency. As a result, each tenk solar installation delivers full, 480-volt AC grid-quality power directly from the array. Within the array, the maximum voltage is 57 volts DC in comparison to conventional arrays at volts, and each module has full, built-in ground-fault and arc-fault protection. The modules are intelligent, and can sense an active connection. In case of a fire, de-activating the system from the grid anywhere on the AC side causes the modules to stop internally, avoiding safety issues for firefighters and first-responders. These same safety and embedded assembly features also greatly simplify the installation process. The RAIS-WAVE module control technology and stepped-pulse transformer technology are ideal configurations for integrating energy storage directly into the system without requiring additional electronics or infrastructure. The modules deliver a controlled voltage to the storage and SPTs in parallel, and the SPTs operate bi-directionally. That means energy can be exported to the grid, as well as imported for recharging the storage system in the absence of sunlight. Due to the system s phasing control, this system can also be used to actively balance phases. Beyond the improvements in reliability from eliminating all of the single points of failure and the high-voltage active electrical components in conventional solar arrays, tenksolar panels take advantage of cell independence within the module to add illumination from static reflection. A proprietary spectroscopic reflector-based racking system developed by tenk and 3M gathers additional light from the unused gaps in typical solar arrays to greatly increase the energy delivered by the system. This results in a much higher level of energy density for the system as a whole. The solar industry contends that higher cost and lower efficiency are often the result of lowvoltage systems. However with its systems design and integration, tenk is able to manufacture and sell its product at competitive pricing versus other low-cost vendors in the industry. The non- Page 18 of 41

19 reflected efficiency of a tenk system is at or above conventional systems when just environmental losses in the system are considered. When including the energy gain from reflection, the efficiency of a tenk system is percent higher than a conventional system, an outcome that has been extensively validated against other commercially deployed systems in comparisons with operating tenk systems. The RAIS-WAVE modules are certified by third-party agencies to all of the applicable standards, including UL1703 and UL1741, and the stepped-pulse transformers are also certified to UL1741 and other standards. Cost or Market Barriers. For the latest generation of tenksolar solar equipment, the advanced performance projected for the 410- and 440-volt Titan solar modules and its integrated solar equipment package has not been extensively tested in the field at larger scale. Verification of data from the field will be useful in establishing the cost-effectiveness and market positioning of this advanced solar technology. Although total project costs for the solar energy portion of these eight school projects will be at or below typical costs for projects in Minnesota, at $3.62/watt of nameplate capacity, costs are still about percent above the level that will be competitive with other sources of generation. So while the cost-per-watt of these systems compares favorably with the installed costs for other solar technologies and earlier projects using tenksolar technology in Minnesota, further efficiencies in the delivered cost of the systems needs to be achieved. The pricing of the tenk package is competitive with equipment costs on other projects around the country, particularly when cost-effectiveness is measured in terms of kilowatt-hours that accounts for the greater power output from tenk systems and when costs are calculated as lifecycle costs of the electrical power generated over 15 years or more. Some of this cost differential may be due to relatively less experience on the part of local development and installer teams in Minnesota, particularly for large-scale solar projects. Reductions in solar equipment costs need to be matched by savings in other development costs that go into the total project cost of a solar energy project: direct labor for assembly, electrical inter-connection, balance-of-system materials and labor, miscellaneous expenses for permits, equipment rental, freight, structural analysis, etc., as well as costs for project management of system design, installation and commissioning. These RDF projects will measure and track some of the strategies for the efficient construction of solar energy systems at larger scale and will model an innovative delivery mechanism across multiple projects that can achieve greater cost efficiencies. Region Five has extensive experience with project management and a commitment to metrics and data collection that will be applied in this case to understanding the detailed cost elements that go into the total project cost of a solar project. As noted in the deliverables, a specific product of this project will be a detailed analysis of development project costs. This analysis and recommendations for further efficiencies will be included in the final report on solar energy development projects at this scale using this type of development approach. This project also includes demonstrations of the Silent Power energy storage systems at two school sites in Brainerd and Baxter. Many school sites have unique weekday demand curves with electrical use peaks from about 10 a.m. to 1 p.m. as food preparation, service and clean-up activities use many electrical appliances that are otherwise not in use. At the same time, school Page 19 of 41

20 buildings are often used much less during summer months when most utilities experience their greatest seasonal demand for electrical power. The installation of large-scale solar energy systems on school buildings, combined with demonstrations of energy storage at two sites, will be specifically evaluated for its ability to reduce relatively high demand charges that are typical of the monthly electric bills for school buildings---even during non-summer months. Brainerd Public Utilities, the utility serving Brainerd High School, has agreed to consider a financial contribution for the installation of energy storage and also participate in the design and evaluation of the impact of the solar panels and energy storage on demand curves in school buildings. Integrating the latest generation of tenksolar panels with the Silent Power energy storage systems, however, will not be without its technical challenges. These issues include the higher costs for inverters when using Silent Power energy storage and other potential energy losses from the integration of the two systems. The conversion of energy from DC to AC at the array, then from AC to DC for battery storage, and finally back to AC for interconnection to the grid has system losses at each stage. The distance from output at the solar array to the storage system can also result in significant and highly variable costs to implement energy storage. Silent Power, which is itself headquartered in Baxter, is committed to being on-site for the installations of its systems and working side-by-side with tenksolar and the installation team to identify and address these technical barriers. Resolving some of the technical issues in integrating tenksolar equipment with Silent Power energy storage will significantly advance Silent Power s entry into the broader market for energy storage. 3. Current Level of Commercial Use Operational experience to-date. tenksolar solar equipment has been marketed and sold for five years in domestic and international markets. The tenksolar equipment package is primarily manufactured at its facility in Bloomington, Minnesota and previous generations of its equipment have been installed at numerous sites. In Minnesota specifically, tenksolar equipment has been used in about 140 projects, totaling 2.2 megawatts with projects in progress raising that aggregate total to 4.0 megawatts by the end of The fifth generation of tenksolar equipment, the larger Titan panels rated at 410- and 440-watt capacities, has just been released and has not been in broad commercial use. However, tests of the panels were conducted at the National Renewable Energy Lab (NREL) in Golden, Colorado and at a Duke Energy test facility outside of Charlotte, North Carolina. Those tests included direct comparisons of output with other solar technologies and an analysis of panels placed offazimuth to shift output to peak periods. Overall, output in these tests was higher for tenksolar equipment compared to conventional systems, and 21 percent higher in an offazimuth positioning of tenksolar modules that were able to produce 60 percent of their DC power rating at 6 p.m. Technical aspects not commercially proven. The tenksolar equipment package is primarily manufactured at its facility in Bloomington, Minnesota and previous generations of its equipment have been installed at numerous sites. The newer form of 410-watt panels, the latest generation of tenk equipment, needs to test cost-effectiveness and functionality at a commercial scale on a number of key points: Page 20 of 41

21 Best-in-class density of energy production of 190 kilowatt-hours or more of annual production on average for each square meter of panel area, sustained over at least a threeyear period of time. This target output was tested for a small array at the National Renewable Energy Laboratory (NREL) in Colorado in 2012 but has not yet been established at larger scale and in Minnesota conditions. Using the latest feature of distributed storage within the arrays, successfully limit the change rate of output from grid-activated PV panels to no more than 4 percent of nameplate capacity within ten second intervals and 8 percent of output within one-minute intervals over the course of an entire year. This active buffering principal was tested on a small array but has also not been tested at larger scale. Fire and electrical safety compliance with the NEC standard without bolt-on switches and while connected to existing electrical sub-panels within a large commercialinstitutional building. NEC requires all wiring within the array to drop to no more than 80 volts within 10 seconds of system disconnection from the grid. Covering early-morning and late-day peaks by adding some amount of energy storage to the system, without adding significantly greater costs associated with robust energy storage technologies. The RAIS-WAVE system can include energy storage of varying amounts without extra components with its bi-directional stepped-pulse transformer topology. Evidence of technical performance and reliability. In 2012, a tenksolar RAIS-WAVE photovoltaic system was installed as south and southwest facing test arrays in Charlotte, NC. The System Advisory Model (SAM) based on the TRNSYS5 computational engine from the University of Wisconsin-Madison was used to predict energy performance. Energy shifts were also observed and the model was used to illustrate the effectiveness of integrating the proprietary energy storage device directly into the array. Energy Production Modeling. The RAIS-WAVE system of an integrated module, reflection, and unique electrical topology is generally placed in an orientation consistent with conventional solar arrays. In northern climates, the system uses a 45-degree tilt. A spectroscopically selective reflector is placed opposite each of the interior PV modules facing north, at a 32-degree tilt. Spectrally filtered light that would normally fall in the gaps between the rows is used to boost total illumination on the module surface. Due to the unique properties of the cell s electrical topology, highly non-uniform illumination from a static reflective surface is acceptable to the module. SAM was used as the basic modeling system with a reference system operating at NREL and a TMY weather file for Charlotte to validate the SAM modeling for a system facing directly south. To account for reflected illumination, the altitude-by-azimuth table of SAM was modified to account for the direct beam effects of the reflectors and shifted to align to the array. Measurement System. Two 9.72 kilowatt tenksolar RAIS-WAVE systems were installed at a Duke Energy facility near Charlotte, NC in May As noted, each module within the system operates independently and self-records power-on hours (POH), accumulated energy and other information. One array was installed directly south facing and one array was installed facing 70- degrees southwest to optimize time-of-day energy production. In this analysis, only the reflected rows were considered and modules on the south side of each array, without reflectors, were not included in the analysis. South-Facing Results. AC output for the south facing array was measured on July 29 and December 1, 2012, and normalized to the rated peak DC output of the system. The data was Page 21 of 41

22 compared with modeled SAM results for a representative day, both for the RAIS-WAVE array and a conventional system with a 10-degree module tilt. There was general agreement in the shape of the July output curves of the two systems, with a small offset that was likely due to weather differences versus actual conditions. However, due to the inability to add reflected illumination, losses due to temperature, alignment losses and DC-to-AC losses, there was significantly lower production for the conventional system. The December data also showed good agreement in shape and magnitude between the systems but lower production overall for conventional panels. Southwest-Facing Array Results. Data on the same days, using the same weather file and reference days, was measured for the southwest-facing array and compared with the predicted SAM output. There was a unique shape and character to the two curves, and close agreement in both the shape and magnitude on the days. Included for reference was a conventional 10-degree tilt system both facing south and at 250 degrees, where the low tilt modeled a limited effect from rotating the system. A higher tilt conventional system could be considered but the physical space required to optimize for late-day sun angles would be much greater. Data for the RAIS and conventional systems found reductions in total energy produced through the day for systems turned significantly away from south. At 6:00 pm in Charlotte on July 29, both the south-facing RAIS-WAVE array and the conventional systems were delivering AC power at 25 percent of the DC rated power. The southwest-facing conventional system improved the 6:00 pm AC performance to 32 percent of the DC rated power. In contrast, the southwest-facing RAIS-WAVE system was delivering AC power at nearly 60 percent of its DC rated power. Module-to-Module Performance. Because of its unique module architecture, RAIS-WAVE performance and variations within the array could be tracked over the period of time of the study (June 7 to November 30, 2012) for power-on hours, energy production and other salient variables. Data was read directly from the system using a proprietary digital power-line communication feature or the binary digital information feed from the proprietary LED device on the front of each module. The POH was 2,022 hours for the south-facing array and 2,004 hours for the southwest-facing array due to a slightly later start for these modules. The south facing modules produced 850 hours of energy versus 700 hours for the southwest facing array, a reduction of 21.4 percent in total energy produced. It was also possible to assess the variation of energy production performance of each module during operation. The south-facing array had a 2.1 percent standard deviation over the mean, including all factors such as the variance of each module as produced, variations in illumination on the module surface (both direct and reflected for interior and exterior modules), thermal operating differences, etc. For the southwest facing array, the predicted AC energy was within 3 percent of the measured energy over this time period. The predicted DC energy is within 3 percent of actual DC energy as well, both measured at the DC-to-AC conversion point and also measured as an accumulation of all modules. Contribution to Market Readiness. Developing several large-scale solar energy installations at multiple school sites will contribute to market data that will increase the market readiness of the next generation of tenksolar equipment. Region Five and RREAL will work closely as a development team with tenksolar to design and implement solar energy projects and develop appropriate performance metrics that are most likely to advance the market readiness of the tenksolar technology. Page 22 of 41

23 As a demonstration of energy storage, eight Silent Power OnDemand energy appliances will be installed under field-test conditions in the immediate area of the Silent Power headquarters. The goal is to significantly advance this company s ability to identify its priority markets, refine its technology offerings, and broaden its appeal in the market for energy storage systems. Eight large-scale solar energy installations, and Region Five s unique proposal for a master developer coordination role across eight projects and five local jurisdictions, will be subject to a robust analysis of total project costs. The result will be much greater understanding of where greater efficiencies can be found in the development of solar energy in Minnesota. As an industry and as individual companies involved in the solar energy business, there is a goal to reduce the total costs for installation of large solar energy systems by an additional percent per watt, below a target price for in stallations of $3 per watt. At that level, solar energy will be cost-competitive with other sources of power generation in many circumstances and in multiple applications of the technology. Page 23 of 41

24 Location. C. Project Development Details Ownership, Third-Party Agreements. All of the solar projects will be owned by the school districts but will be subject to longterm capital leases with a project-specific limited liability corporation that is controlled by Region Five and its tax equity partner. This structure will facilitate the ability of the projects to access substantial federal tax incentives for solar energy--- federal support that would otherwise not be available to public school districts as non-taxpaying entities. This ownership structure will allow Region Five to maximize its leverage of RDF grant funds with $2,627,746 in federal tax benefits that represents 48.6 percent of total funding for the project. After the minimum five-year holding period required by the Internal Revenue Service for renewable energy assets subject to the Investment Tax Credit for solar energy, each school district will have an option to buy-out the solar energy system capital leases at the fair market value and thereafter operate the solar energy systems on their rooftops with no further lease payments. This fair market value sale, which is required by IRS rules, will be based on the net present value of the energy system s projected energy production over the next five years. At this point, the systems will continue to generate electrical power for the school districts for at least another 20 years, generating about $3 million in economic benefits to the school districts over the lifecycle of solar system performance in the form of reduced electrical costs. Page 24 of 41

25 During at least the first five years of energy system operation, the project specific LLC as leaseholder will be responsible for all operation and maintenance of the solar equipment. The LLC will also be required to guarantee the energy performance of the systems as a design-build contractor under the state s energy savings guarantee contracting rules It is likely that O & M functions will be conducted by a third party under contract to Region Five and its LLC. In the event school districts elect to exercise their option to buy-out the systems, a school district may continue the third party contracting of operation and maintenance or take on this responsibility with its own facilities staff, who will be trained in how to conduct all routine maintenance and inspection work. Site Control. The public school districts and Leech Lake Tribe have site control and own all of the facilities and the rooftops that have been identified for this project. Letters of Intent entered into between all of these jurisdictions and R5DC have been included as addenda and evidence the willingness of these project partners to use their roof areas for installation of the solar energy systems. Licensing and Permitting. The only permits that will be required for these roof-mounted systems are building and electrical permits which will be secured from each local jurisdiction in which the school building is located. Although most of the local jurisdictions have not adopted solar-specific provisions in their building code, all solar system layouts include at least a 10-foot setback from the roof parapet. RREAL will be responsible for making application and securing all of the necessary building permits, which has been included as a benchmark activity on the project schedule. Resource Assessment. The first-year annual production for these solar energy systems was calculated on a site-specific basis by RREAL using the National Renewable Energy Laboratory s (NREL) System Advisory Model (SAM) performance tool. This tool allows for consideration of the reflectance factor that is an integral element of the tenksolar equipment package. The following table includes the site-specific estimates for each system. A breakdown of this production by month for each site is included as an attachment to this application. Location Nameplate Panels Output Pequot Lakes High School 269.1kw 1,495 panels 428,931kwh Pine River-Backus High School ,063 Pine River-Backus Elementary ,021 Pine River-Backus Commons ,984 Forestview Middle-Brainerd , ,567 Brainerd High School , ,952 Royalton High School , ,693 Leech Lake Tribal College ,866 TOTALS 1, ,276 2,359,077 To substantiate the use of the SAM performance tool, a reference tenksolar RAIS-WAVE ground-mount array consisting of watt modules was installed by the staff at NREL s Golden, CO test facility in March, The arrays consisted of five front row modules at a 45- degree tilt not receiving reflected illumination, and five rear modules also at a 45-degree tilt which were receiving reflected illumination from spectroscopic reflectors oriented at 32 degrees from horizontal and facing north. The system s DC and AC production was measured using an independent data collection system recording at one minute intervals, concurrent with electrical Page 25 of 41

26 currents and temperatures of select modules. Various irradiance measurements including ground horizontal irradiance (GHI), plane of array POA), ambient temperatures and wind measurements were also made. The reference conventional flat plate array for comparison purposes was a pole-mounted, 40- degree tilt system consisting of 6, 210-watt conventional modules operating with a string inverter. The system DC and AC production of the conventional array was also measured over the same time period, and included the POA irradiance. Energy production in kwh was normalized to 1800-watt DC nameplate capacity from the tenksolar array for selected dates in the period from March to June, 2012, and calculated as the total system AC production of all 10 tenk modules, including panels with and without reflectance. This was compared to the AC energy production from the conventional system in kwh normalized to the nameplate rating of 1260-watt DC over the same time period. Due to the level of integration into the module, the DC to AC loss in the RAIS-WAVE array was from: DC wiring loss of less than one percent, inverter efficiency rating of 96 percent, and any AC wiring loss. There were no other module related losses, matching losses, within-module losses, nameplate, diode or interconnection losses, etc. Non-uniform soiling losses were also greatly minimized due to the cell interconnection architecture. This resulted in a very high DCto-AC efficiency of over 96 percent, compared to the more typical value of percent for the conventional array. Because the RAIS-WAVE ground mount system was a small array and each module operates independently, individual modules were also instrumented and measured for power in order to validate the power under each condition within the array, including five non-reflected front row modules, and three reflected modules in the back row which received reflected light through the entire day. Due to sharing of reflection between modules before and after solar noon, there were also two reflected modules on the outer edges that received only a portion of reflected light through the day. In a typical 100 kw configuration, there would be minimal front and row edge modules in comparison to interior reflected rows, so reflected row production from the study would be most typical. On this basis, the NREL found that the equivalent hours of energy production of this configuration of tenk panels was hours of AC energy, or 27.2% more than the hours produced by the conventional pole mounted array over this time period. On March 30, the reflected modules produced AC energy equal to 108 percent of nameplate compared to the conventional system producing 87 percent of nameplate, or a gain of 24 percent. On May 4, the reflection gain was higher due to the higher sun angle, and an ambient temperature that day that was similar to March 30. Again the reflected modules produced 110 percent of nameplate compared to the conventional array production of 83 percent of nameplate, or a gain of 32 percent. On June 9, the ambient temperature was higher, and the AC energy produced by the reflected modules dropped to 100 percent of nameplate, compared to 79 percent of conventional nameplate, or a gain of 27 percent. Finally, the performance ratio based on the POA irradiance values on each module configuration was calculated, using the DC rated nameplate values to compute the module efficiency for each type. The performance ratio for the conventional array was 77 percent, typical of a conventional high profile pole mounted array with superior cooling properties. For the RAIS-WAVE front modules without reflectance the performance ratio was 82 percent due to the improved electrical Page 26 of 41

27 topology alone, since no reflected light was cast onto the front modules. For the reflected modules that would make up the bulk of a tenk system, the performance ratio was 105 percent, a 36 percent improvement over the conventional array. tenksolar believes the NREL study validates the SAM system for assessing the projected output of the tenksolar energy system. Over time, a degradation factor of 0.4 percent annually would be applied to energy production from each of the arrays. Although this is somewhat less than industry averages for degradation in production, it is greater than the degradation factor in the field for installed tenksolar systems and reflects the high quality of materials in the manufacture of tenksolar panels. Financing Plan. R5DC has identified multiple financing partners for these projects that will invited to submit proposals for providing the tax equity financing based on the Federal Investment Tax Credit (FITC) and depreciation schedule for solar energy equipment. The selected tax equity partner will be required to provide this financing tied to the FITC upfront at the beginning of the project and other construction financing that will allow R5DC to receive its RDF grant as a lump sum at the end of project construction. Debt financing of about 14 percent of total project cost will be repaid by the cash value of equipment depreciation over five years and revenues from the generation of electrical power from the solar panels. The school districts will retain ownership of all solar energy assets during this time and enter into an operating agreement for the systems with the limited liability corporation and retain the full value of the systems power production. A detailed budget for the project has been included as Appendix B. The following summarizes the sources of funding for the $5,404,660 in Total Project Costs: FITC tax equity $1,666,188. RDF grant 1,945,678. Depreciation cash 1,006,348. Other utility contributions 59,720. Debt financing 771,516. TOTAL: $5,404,660. The detailed project budget in Appendix B also includes information on project expenses, with a budget summary provided below. tenksolar equipment $2,254,430. Silent Power equipment 149,300. Balance of system materials 477,760. Monitoring equipment 44,790. Direct labor 522,550. Electrical subcontract 522,550. Finance/legal expense 522,550. Grant/project administration (R5DC) 134,370. Miscellaneous (permits, freight, etc.) 253,810. Developer margin/contingency 522,550. TOTAL: $5,404,660. Page 27 of 41

28 RDF funds requested represent about 81 percent of the costs for procurement of the tenksolar and Silent Power equipment package without any other development costs. That speaks to the high degree of leverage and the appropriateness of the use of RDF funds in this project. Matching amounts include $2,627,746 in federal tax credits and incentives and $771,516 in other financing, matching amounts which together are 62.9 percent of the project total. An additional 59,720 will be contributed by participating utilities in the area tied to the installation of the Silent Power energy storage units at strategic locations. As noted, interim financing during construction will be provided by the selected financial partner in the project that will also provide the tax equity and debt financing. An operating proforma for all of the projects in aggregate has been provided as an attachment. There are no travel expenses included in the project budget. D. Electrical Generation The RREAL feasibility study estimated the annual production and percentage of total energy demand that will be supplied by the solar energy system at each site. Current average annual energy consumption was based on an analysis of two to four years of actual monthly energy bills from each site. Also included is the solar fraction for the months of June, July and August, typically a higher demand period for utilities, but a time when school buildings are used less and have lower levels of energy demand. Location Ave. Consumption Solar Prod Solar % Summer% Pequot Lakes School 1,025,800kwh 428,931.5kwh 41.81% 64.47% Pine River-Backus High 472, , Pine River-Backus Elem 509, , Pine River-Backus Comm 310, , Forestview-Brainerd 2,051, , Brainerd High 2,336, , Royalton Schools 661, , Leech Lake Tribal 261,020 82, The following table shows the aggregate amount of estimated solar energy production for the first 15 years. Production by month has been summarized in the Grant Application but is also provided for each site, based on the SAM performance tool, as an attachment. The only limitations on production will occur in the event of an interruption for roof repairs and replacement projects. Year 1 2,359,077kwh Year 2 2,349,641 Year 3 2,340,242 Year 4 2,330,881 Year 5 2,321,558 Year 6 2,312,271 Year 7 2,303,022 Year 8 2,293,810 Year 9 2,284,645 Year 10 2,275,496 Year 11 2,266,394 Page 28 of 41

29 Year 12 2,257,329 Year 13 2,248,300 Year 14 2,239,306 Year 15 2,230,349 Power generation from 3-7 PM in July. Without any additional energy storage or off-azimuth positioning of the solar panels, the anticipated kilowatt capacity of the tenksolar systems will be 100 percent at 3 p.m. and 60 percent at 7 p.m. in July for an average of 75 percent of the DCrated nameplate capacity. Peak production: 1,634,840 kilowatt-hours (69.3%) Off-Peak production: kilowatt-hours (30.7%) E. Project Team Project Manager. Cheryal Lee Hills, Executive Director of Region Five Economic Development Commission, will serve as overall Project Manager. An additional staff member, with experience in renewable energy development, is likely to be hired as an assistant to the Project Manager. Technical Staff. Jason Edens and Jesse Royer, director and solar technician at the Rural Renewable Energy Alliance (RREAL), will serve as technical staff advisers for the project. Mark Eilers, tenksolar, will also serve in a technical and financial support position for the project. Administrative Staff. Nikki Larson, Finance Director for Region Five, will serve as the principal administrative staffperson. Sub-contracts. Region Five expects to enter into a design-build General Contractor agreement with RREAL for a turn-key construction project on all eight projects. R5DC also anticipates contracting with an experienced grant manager to assist it in the preparation of monthly progress reports and the final report on the RDF as well as the collection and analysis of data on project metrics. Roles, Capabilities and Renewable Energy Experience. In August 2012, R5DC completed an eight-month planning process for a resilient region that was funded by the U.S. Department of Transportation, Environmental Protection Agency and Department of Housing and Urban Development. This plan for a more resilient region included energy and renewable energy as one of 11 key focus areas. An energy working group subsequently made recommendations to work with existing companies in the region to develop promising new technologies in energy production and to capitalize on other resources and technological advances in smart grid and renewable energy technologies. Action items from the working group to advance these practical renewable energy technologies that have a reasonable return on investment included building local renewable energy infrastructure and working with utilities and others to provide general education on renewable energy. Page 29 of 41

30 Key Personnel and Subcontractors. (Include any other RREAL staff and your likely electrical contractor). Organizational Description. Region Five Development Commission (R5DC) will serve as the identified project manager for the RDF grant project and will be the general manager of all development-related, technical, administrative and construction activities needed to successfully complete the project. R5DC was created by the Minnesota Legislature and local units of government in Region Five in 1973 as a qualifying entity under the federal Regional Development Act of The total population of the five counties that make up Region Five is 163,000, most living in rural areas or small towns with fewer than 500 residents. All five of the counties currently meet the federal definition for being economically distressed Region Five s vision is to enhance the vitality and quality of life in Crow Wing, Cass, Morrison, Todd and Wadena counties in Central Minnesota with community, economic and transportation programs that strengthen the regional economy. Its resources and program activities include small business loans, technical assistance, training and referral services for businesses and individuals. Its departments include Community and Economic Development, Transportation, Community Development, Energy, and Grant/Loan/Contract Administration of special projects. R5DC also provices project and technical assistance to local units of government and nonprofits in its area. It has well-established relationships with key state and federal agencies and has obtained and administered other major competitive grants for projects at the local level. It is governed by a Board of Commissioners comprised of 21 elected officials from townships, cities, counties, school boards and special interest groups such as Camp Ripley, Tribal Councils, and the local workforce investment board. R5DC is recognized in Minnesota and across the nation as a leader in integrating community and economic development with principles of sustainability. Region Five is the recipient of various federal, state and local grants. Annually Region Five administers a Federal EDA planning grant and contracts with the Minnesota Department of Transportation for regional planning assistance. Partial list of grants awarded FY212 FY2013 Federal: EDA $60, (annually) EDA $150, USDA/RCDI $210, HUD/DOT/EPA $ USDA/Micro $400, State: MnDOT $50, (annually) Local: NWAF $75, BUSH $115, Blandin $95, Initiative Foun. $50, (est.) Otto Bremer $22, MN Power $10, Page 30 of 41

31 Region Five is currently engaged in numerous contracts with other organizations, foundations and companies with a current annual budget of $1.3 million. Region Five Development Commission has been classified by five federal agencies as a high performing grantee based on execution of grant deliverables and reporting expectations. F. Final Project Reporting Project intent and project findings. R5DC will be responsible for the Final Project Report as well as the primary deliverable of this grant, which is to cost-effectively develop eight solar energy projects at multiple school building sites across its region. Project findings will be recorded as part of monthly grant progress reports and through other affirmative measures and included in the final project report. R5DC has extensive experience with the management of large, multi-stakeholder planning and development projects. It has built substantial in-house skills for project reporting and analysis and is committed to public transparency in the projects it undertakes on behalf of the residents of its region. To assist with this process, R5DC is likely to contract with an experience grant manager and specialist in renewable energy development. In addition, R5DC will call upon its established energy working group, an extensive network of business and research contacts, and its strong relationships with federal, state and local officials for periodic review and analysis of project findings. In particular, R5DC will ask an independent advisory group to analyze development costs for these projects and make recommendations on how project development can become more efficient for schools and other local units of government in Minnesota. Benefits to the public and private sector. Benefits to the private sector tend to also translate into benefits to the public sector in an area such as Region Five that has unemployment and household poverty rates well above statewide averages. R5DC is well aware of this dynamic relationship between public and private sector actors and almost all of its projects involve partnerships between these groups. Overall, R5DC sees significant opportunities for improving the economic vitality of its region from a focused effort and public-private partnership that builds up local and statewide renewable energy businesses and expands the regional market for development of renewable energy. Lessons learned. Project reporting for this RDF project will focus on lessons learned about the key issues and questions that have been identified in this grant, such as: 1. Can multiple school districts, acting through an established regional development agency, cost-effectively develop solar projects at a cost that is less than if these school districts sought to development solar energy on their own? 31

32 2. What specific development costs for solar energy projects can be done more efficiently, reducing labor and/or material costs, to make solar energy more costcompetitive with other sources of energy generation? 3. To what extent do the labor skills, resources and technical expertise exist in a rural region of the state for the development of solar energy at a large scale across multiple sites? 4. Will the widespread development of nearly 1.5 megawatts of solar PV in a fivecounty area act as a catalyst for further job creation, business growth and project development in renewable energy? The project reporting that Region Five is committed to will not only identify lessons learned about these questions, it will also recommend changes in development methods and policies that will be of value to other communities in Minnesota. Summary of benefits: Economic. Final reporting will focus on the benefits of reducing the installed costs of solar energy, maximizing federal tax incentives, and quantifying the benefits of the solar energy project to the regional and state economy. Summary of benefits: Environmental. The final project report will focus on reductions in greenhouse gas emissions and other environmental impacts from replacing fossil-based energy generation with non-carbon based energy such as solar. Summary of benefits: Ratepayers. The final report will focus on how to reduce costs to meet the demand for more renewable energy, increased knowledge about demand management, and generate positive publicity with ratepayers, local officials and legislators. Acknowledgement of RDF Contribution. Acknowledgement of the RDF grant from Xcel ratepayers in Minnesota and Wisconsin will be included in all presentations, printed and electronic communications about the project. Signage acknowledging the contribution will be posted at all eight project sites. III. PROJECT BENEFITS A. Economic benefits Job creation. The contract with RREAL for installation of the solar energy systems will require an estimated 9,054 labor hours over a 12-month period beginning in April 2014, or the equivalent of 4.7 fulltime staff positions during that period. That most likely means that RREAL will hire several new employees and permanently expand its capacity for solar energy installations. The total dollar value of the contract for RREAL as the design-build firm, including balance of system costs and miscellaneous items, but exclusive of major system equipment procurement, will be an nearly $2.3 million. This will be a large economic investment in this growing solar energy company based in Region Five and will create good-paying jobs in a relatively low-income part of the state. 32

33 In addition, the procurement of 8,276 solar panels and related equipment from tenksolar and procurement of eight Silent Power energy storage units represents a total dollar value of more than $2.4 million and will certainly strengthen manufacturing employment at the tenksolar facility in Bloomington and the Silent Power manufacturing site in Baxter. To the maximum extent possible, R5DC and RREAL will also procure the budgeted $477,760 in balance of system materials from local vendors in the area. Administration of the grant project by R5DC is expected to require 1.25 of an FTE with responsibilities spread across several positions within the organization and those labor hours will be for the entire 15-month period of the grant. Taxes. Solar energy equipment enjoys preferential tax treatment in Minnesota so there will be no sales tax revenues from the procurement of equipment for these systems. Likewise, the projects sites are all non-taxed public school or tribal government sites that do not pay property taxes there will be no addition to market value and higher property tax payments as a result of these systems. There will be a small amount of fee revenue for local governments that issue electrical and building permits for the projects. The most significant impact on taxes will be from about $3 million in net revenues that will be generated by the solar projects over 20 years, revenue that will supplement state and local tax revenues that flow to these public school systems. State tax revenues will result from an increase in the number of good-paying jobs in renewable energy fields and the growth of new and existing renewable energy businesses. Overall, RDF funds for this project will leverage more than $5.4 million in economic activity, almost all of it directly benefiting Minnesota residents and businesses. The 2007 report of the Governor s Green Jobs Task Force found renewable energy dollars are multiplied more than five times in local economies, which would be a total economic impact of $27 million, almost all of it in Minnesota. Other benefits. Solar energy systems are particularly well-suited to meeting peak energy periods for schools, which typically occur during mid-day. In addition, the analysis of school building electric bills that was done as part of the feasibility study for this project shows that the solar energy installations will provide a larger percentage of on-site energy demand during summer months than other months of the year. These unique load factors, combined with the ability of solar energy to provide its maximum power during the same time period, could reduce or even eliminate demand charges that utilities have otherwise been forced to charge for demand during peak periods. This will have a significant long-term benefit for the schools on all of their electric bills and will be a model for managing the unique load factors for other schools across the state. As a potential benefit for all of the state s ratepayers, Region Five has proposed a master developer strategy that it believes will deliver high-quality, completed projects for participating school districts at a cost-per-watt of nameplate solar capacity that is below what would be possible if each school district pursued development of a solar energy 33

34 project on its own. A single coordinated process of technology selection, engineering and design, and one overall general contractor on all of the projects is likely to remove some duplication of effort as well as achieve certain economies of scale across all of the projects. It may also be possible to bargain for volume discounts with vendors, both on solar equipment and balance of system materials, because of the large aggregated volume of activity among all eight of the projects. To maximize the potential this strategy has to reduce costs for other similar projects in the future and in other regions, Region Five is committed to asking independent outside experts to help it informally audit project costs and determine whether, in fact, cost savings were realized by this strategy. These findings and conclusions will be shared with other school districts, regional economic development agencies and other stakeholders in the state. Cost-effectiveness. Solar energy is approaching parity in cost with other forms of power generation, particularly compared to new, large-scale fossil fuel generation facilities. Cost parity narrows further when some accounting is made for the environmental effects of alternative forms of energy, such as costs associated with greenhouse gas emissions, and the benefits of distributed generation. Solar energy is most competitive when its value is accounted for as carbon-free power delivered to the point of use with no direct impact on transmission and distribution systems. When solar energy can be closely aligned with demand, as it is proposed to be with these school building projects, it offers the most attractive application. In some cases, cost effectiveness should also include the ability of solar to supply targeted energy at peaks of demand and in locations where it can defer or even eliminate capital costs for upgrades to local distribution systems. Market size. The potential size of the solar energy market in Central Minnesota is difficult to estimate. However, it is likely that the high visibility of these solar projects will increase public interest in solar energy and lead to more installation of systems on other public and privately owned buildings. Minnesota utilities sell about 68 million megawatt-hours of electricity each year. If just two percent of that total was to come from solar energy, it would represent an installed capacity of more than 800 megawatts. By working with a range of utilities, including municipals and cooperatives, the project may also prompt those organizations to increase their incentive programs for solar energy. Strengthening the financial position of local businesses such as RREAL and Silent Power will allow them to take advantage of expanded markets within the region and statewide for solar electric systems, energy storage and solar thermal products. Benefits to ratepayers. Minnesota energy consumers are demanding more renewable energy, including solar energy. All utilities in Minnesota need to be responsive to this consumer demand, while working with the solar energy industry to deliver solar energy in the state at the lowest possible cost. This project represents a model for achieving 34

35 some of that project efficiency with its unique development model and its commitment to audit and analyze detailed project costs during and after project completion. By engaging in a sustained program of solar energy development in Minnesota over the next three years, ratepayers will benefit from maximizing the substantial federal tax incentives for renewable energy, including solar, that expire at the end of These federal dollars represent an unlimited source of project financing for solar energy projects, and can bring federal dollars into Minnesota for renewable energy investment that would otherwise go to the benefit of ratepayers in other states. Accelerated development of renewables in Minnesota also anticipates changes in federal energy and climate policy that may put conventional energy sources at a disadvantage in the near future. These potential changes in federal energy goals could result in sharp increases in utility rates for those ratepayers who are most reliant on non-renewable energy sources. Increasing the share of energy that comes from renewables in Minnesota will mitigate these potential cost increases. This project and others will add to the understanding of how solar energy can be of greatest value to Minnesota s overall energy infrastructure, including how it can assist in managing demand, reducing peak usage and deferring capital costs for grid upgrades. Finally, keeping more of the state s current $20 billion expenditures for energy in local economies, rather than exporting that capital to buy energy from other states and Canada, will have longterm benefits for local economies and increase the state s economic vitality. Stronger local economies, increased global competitiveness, business and job growth are all part of a general economic climate that will benefit the state s utilities and their ratepayers. B. Environmental Benefits Emissions. There are no direct emissions from the production of solar electrical power using photovoltaics. Instead, the proposed solar project will offset 1,975,519 tons of carbon dioxide based on a comparable energy mix that includes 75 percent coalgenerated power. That is the equivalent to the amount of carbon dioxide from: Combustion of 7,225,521 gallons of gasoline 361,276,061 miles driven by a vehicle with average fuel efficiency Absorption by 12,722 acres of forest In addition, the strong focus of this proposal on local equipment and material purchases will reduce the carbon footprint of these materials, which would otherwise include a significant amount of embodied energy from long-distance transportation. 35

36 C. Benefits to Xcel Ratepayers By leveraging federal tax incentives and contributions from local utilities tied to energy storage, this project is very cost-effective and offers a high degree of leverage for RDF funds. The total installed cost for the solar energy projects in this proposal, including the limited energy storage demonstrations, is $3.62 per watt of nameplate capacity, which is comparatively low based on recent experience in Minnesota. Demonstrating how to lower the delivered cost for installing solar energy in Minnesota will have a direct benefit for Xcel ratepayers who will continue to be asked to support the development of solar energy in Minnesota. This project has been specifically designed to evaluate the ability of solar, and in some cases energy storage, to manage peak loads at school facilities. This knowledge will be transferable to other school facilities in Minnesota, a large portion of which are in the Xcel service territory. Models for how to better manage the unique energy loads at schools will have a direct benefit to Xcel ratepayers to the extent that it reduces demand for high-cost peak power supplies. As noted earlier, developing all of these projects under the experienced project management structure of R5DC is likely to be more cost-effective than if these projects had proceeded on an individual basis. For example, the large scale of the combined projects will allow for lower unit pricing of materials, including the solar energy equipment package from tenksolar, storage units from Silent Power, and balance-ofsystem materials. There will also be some elimination of duplication of effort by working with one team of contractors on all of the projects. Xcel ratepayers will benefit from projects that demonstrate lower-cost implementation of solar energy systems by acting under joint and cooperative development agreements. Through this project, Xcel Energy and its ratepayers will receive very positive visibility in a region of the state where it has less of a market presence. This positive exposure will include business and residential ratepayers from other utilities, school and other local officials, legislators and other elected officials that represent the region. It will include benefits for several thousand school children in these schools, who will be part of the next generation of business and community leaders. This will be helpful to Xcel in advancing its policy agenda at the State Capitol and elsewhere now and in the future. Xcel s reputation as a leader in renewable energy generally, and in this case for solar energy, will encourage other utilities to develop more robust programs to support solar energy. Increasing public demand will compel other utilities to share the costs of developing Minnesota s solar energy resources at a level that matches the effort from Xcel and its ratepayers. 36

37 D. Other Social and Educational Benefits The location of these projects at K-12 school sites and at the Leech Lake College will create opportunities for solar energy to become a real and tangible part of science, math and technology curricula in these schools. One of the project goals is to work with higher education institutions and other workforce development agencies in Region Five to develop strategies for training in well-paying jobs tied to the needs of renewable energy businesses. Lessons learned from these projects will be useful in defining and seeking funding for those programs. As a well-established and respected community institution that covers all five counties in the region, R5DC is in the best position to educate the public about the benefits of solar energy. It already plans to work with new and existing businesses that grow as a result of this and future investments in solar energy. R5DC s commitment to education, public transparency and economic planning in the region will bring it into contact with many of the region s residents and key opinion leaders over the course of this RDF project. 37

38 IV. A. USE OF PROJECT FUNDS Appendix B 38