Palo Alto enters 25-year solar energy contract

Nov. 15, 2012, 12:51 a.m.

Palo Alto’s Utilities Advisory Commission and Finance Committee announced their unanimous approval of a 25-year contract with Brannon Solar LLC on Nov. 5. This is the city’s first solar energy contract, and the company will provide up to 52,000-megawatt-hours, 5% of the city’s electricity needs, per year for no more than $91 million for the duration of the contract.

“Solar prices were about two times as much a couple years ago but there has been an overall downward trend in California,” said James Cook, chair of the Palo Alto Utilities Advisory Commission. “This contract could be the first of more solar projects for Palo Alto energy sources.”

The company’s Power Purchase Agreement (PPA) was approved at the city council meeting as part of the city’s Renewable Portfolio Standard goal of getting at least 33 percent of Palo Alto’s energy from renewable sources by 2015. Cook estimates that approximately 20 percent of the Palo Alto’s energy came from renewable sources prior to this contract. The remainder of the energy is “brown,” he said, or non-renewable.

Since 2004, Palo Alto has signed 10 contracts for renewable energy, including wind, landfill gas and geothermal projects based in northern and central California.

“Palo Alto is moving to a carbon-free energy growth plan, which would be completely carbon neutral [by 2015],” Palo Alto Vice Mayor Greg Scharff said.

The efforts to provide 33 percent of Palo Alto’s energy from renewable sources by 2015 are part of a larger effort to make Palo Alto a greener city.

“We’re in the process of another RFP [Request for Proposals] for renewable energy contracts,” Cook said. “We also have ongoing energy efficiency projects, so we don’t need as much energy in the first place.”

In the fall of 2011, Palo Alto issued a request for PPA. Scharff explained that price and the availability of resources are major considerations when examining PPAs.

“Geothermal, for instance, provides power all the time,” Scharff said. “Wind power provides power when the wind blows. Solar provides when the sun shines. You take that into account, but you also try to go with the lowest cost.”

Brannon Solar’s agreement was deemed the best overall, in addition to offering the lowest price of $77 per megawatt-hour. The original price was $72 per megawatt hour, but after the U.S. Department of Commerce’s decision to impose tariffs on Chinese solar cells, Brannon Solar said the original price would be impossible. Negotiations with the City led to the final rate of $77.

“We were very, very excited to get the renewable energy for a very reasonable rate, much more reasonable than what we had projected,” Finance Committee member Nancy Shepherd said.

Shepherd also explained that these contracts are investments because the city not only receives revenue and energy from companies like Brannon Solar, but it also provides the companies capital to build the renewable technology.

“We have to invest as the fields go into place,” Shepherd said. “As the Utilities Commission makes these relationships, these companies…would rather work with the city of Palo Alto than places like [Pacific Gas and Electric]. They offer it to us because they know that we build up a reserve in order to go in and make these types of investments to secure our renewable energy supply, to maintain our portfolio.”

The contract allows the city to opt for a five-year extension, to be determined at the end of the contract’s 24th year.

The Brannon Solar project that will provide Palo Alto’s energy is based in Fresno County. In addition to building facilities in Palo Alto, Brannon Solar’s parent company, Trina Solar, is building a total of four other solar projects in Fresno County and Sacramento County.

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