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9. Discussion on subscription to community solar Staff Report Date of Meeting: May 2, 2018 To: City Council From: Neil Soltis, Administrator Re: Solar subscription Background: The City has received information from US Solar regarding the opportunity to subscribe to the production from one of their community solar farms. The extent of the City’s subscription is determined by the City annual electrical usage. In terms of process the City would pay US Solar on a monthly basis based on the subscribed production amount. Xcel Energy would then provide the City with a credit in the amount of $0.01 / kWh over the amount paid to US Solar. The proposal that follows indicates a net revenue of $1,278 in year 1 of the subscription. While the cost savings are not significant, taking action to subscribe would support the City’s resolution to work at its own pace toward implementing any GreenStep best practices that will result in energy use reduction, economic savings, quality of life improvement, reduction in the City’s greenhouse gas footprint, and recognition by the League of Minnesota Cities as a Step Two GreenStep City If this is something that the Council feels would be worthwhile, we can request that US Solar provide a subscription agreement for consideration at the next City Council meeting. PR O PR I ET AR Y AN D C O NF I D ENT I AL B E YO N D T H E RO O F TO P S U N S C R I P T I O N SM P R O P O S A L : C I T Y O F S C A N D I A April 20, 2018 P a g e | 2 COVER LETTER April 20, 2018 Neil Soltis, City Administrator City of Scandia 14727 209th Street Scandia, Mn 55073 Dear Neil, Thank you for the opportunity to present this offsite solar and SunscriptionSM introduction to you and your team. We at United States Solar Corporation (“US Solar”) are thrilled to help the City of Scandia lock in the significant, long-term savings opportunity currently available under Minnesota’s Value of Solar community solar program. US Solar is a turnkey solar developer and owner/operator. We coordinate all project details – development, permits, finance, construction, management, insurance, maintenance, and monitoring. The enclosed proposal includes details about our company, our strategic alliance partners, and our Sunscription proposal. The US Solar team provides an unparalleled combination of broad experience and strong local roots. Our team has a proven track record of building and financing distributed solar projects. US Solar’s principals have developed and financed commercial solar projects and residential solar programs with a notional value of over $1 billion. We ensure that each one of our solar projects is built to the highest capital markets standards in order to maximize the savings available to our subscribers. Please contact us with any questions, comments, or points of clarification. We look forward to working with you. Sincerely, Reed Richerson - COO United States Solar Corporation 100 N 6th St., Suite 218C Minneapolis, MN 55403 W: (612) 260-2230 C: (916) 704.2720 E: reed.richerson@us-solar.com This letter is intended solely as a basis for providing indicative pricing and terms and for engaging in further dis cussion. It does not evidence any agreement to make an investment or any other binding commitment on the part of US Solar or any other party. Such investment or other binding commitment will arise only upon the execution of definitive, binding agreements. Any subscriber transaction would be contingent on prior credit review. US Solar requests that the recipient keep the terms of this letter confidential. P a g e | 3 SUNSCRIPTIO NSM SunscriptionSM [suhn-skrip-shuhn] noun 1. a contract with US Solar designed to provide you with significant, long term savings 2. an opportunity to enjoy solar benefits without the planning and logistical hassles of an onsite solar project 3. a way to exercise your new right to choose an alternative energy partner The Solar*Rewards Community program recently launched in Minnesota is the first scalable community solar program in the US and has immediately established the country’s smartest solar regime. Schools, towns, businesses, and nonprofits throughout the Xcel s ervice territory have embraced the opportunity to fix costs for the long term by “subscribing” to a solar garden and benefitting from cost efficiencies of scale, while also avoiding the siting, construction, and maintenance complexities of an onsite system. US Solar’s ability to connect subscribers with solar projects located offsite allows us to develop projects of the ideal scale at ideal sites, where we can optimize the orientation, spacing, and tilt of our solar modules to deliver the most solar energy at the lowest cost. Now, US Solar is offering the City of Scandia the opportunity to lock in savings for years to come with a Sunscription Agreement. HOW COMMUNITY SOLAR AND A SUNS CRIPTION WORK • US Solar builds a local Solar Garden at an ideal offsite location. • The Solar Garden produces energy that is delivered to Xcel. • Xcel continues to deliver Subscriber all electricity required onsite . • Xcel credits Subscriber’s bill for value of Solar Garden energy. P a g e | 4 EXISTING SUBSCRIBERS School districts, cities, universities, businesses, and even residents have signed up with US Solar. As a small team, we present a fair agreement to minimize back-and-forth in negotiating the terms. The following public entities have signed up with our program. School Districts • Becker Schools • Sartell-St. Stephen Schools • Robbinsdale Schools • Watertown-Mayer Public Schools • Hopkins Schools • Sibley East Schools • Orono Schools • Cannon Falls Area Schools Other • University of Minnesota • Met Council Transit • Met Council Enviro Cities • City of St. Cloud • City of Annandale • City of Rogers • City of Robbinsdale • City of Minneapolis • City of Silver Lake • City of Chanhassen • City of Plato • City of Shafer • City of Lexington • City of Spring Lake Park • City of Birchwood Village P a g e | 5 HOW DO YOU SAVE MONEY? We estimate the City of Scandia would gain a net value of $30,098 for no upfront cost. By contracting for a Sunscription with US Solar, you can expect to save every year as the Bill Credit rate that Xcel pays you will always remain $0.01 above your Sunscription rate with US Solar. Using numbers provided from your previous US Solar proposal under the ARR program, the table below shows the expected savings the City of Scandia will achieve based on a Sunscription sized to 127,771 kWh at a starting bill credit rate of $0.1033 for both General Service and Small General Service. With your Sunscription in place, Xcel will continue to deliver you all of your grid electricity, with no interruption of service. For an example of how a Bill Credit will appear on your utility bill, please see the following page. Your Sunscription with US Solar supports the development of near by Solar Gardens and secures your right to receive payments from Xcel for supporting local renewable energy. You can expect a Sunscription to save you money simply because the Bill Credit rate you receive from Xcel will always be higher than your Sunscription rate. The bill credit rate chart is listed below. Year 1 2 3 4 5 6-10 11-15 16-20 21-25 TOTAL 127,771 127,132 126,496 125,864 125,235 616,843 601,576 586,686 572,165 3,009,767 0.1033$ 0.1057$ 0.1081$ 0.1106$ 0.1132$ 0.1213$ 0.1360$ 0.1525$ 0.1711$ 0.1370$ (0.0933)$ (0.0957)$ (0.0981)$ (0.1006)$ (0.1032)$ (0.1113)$ (0.1260)$ (0.1425)$ (0.1611)$ (0.1270)$ Net Value ($/kWh)0.0100$ 0.0100$ 0.0100$ 0.0100$ 0.0100$ 0.0100$ 0.0100$ 0.0100$ 0.0100$ 0.0100$ 1,278$ 1,271$ 1,265$ 1,259$ 1,252$ 6,168$ 6,016$ 5,867$ 5,722$ 30,098$ US Solar Subscription Rate ($/kWh) Net Value ($) Subscribed Energy* (kWh) VOS Xcel Bill Credit ($/kWh) P a g e | 6 EXAMPLE OF AN XCEL BILL Xcel has provided Minnesota ratepayers with this example of a Bill Credit (note that it shows a hypothetical subscriber that is a gas and power customer with Xcel’s Public Service of Colorado subsidiary, not Northern States Power) P a g e | 7 INSIGHT INTO YOUR OF FSITE SOLAR GARDEN Offsite solar solutions save you the logistical issues of planning, constructing and maintaining a solar project on your property. However, we can provide you with the same ability to view and monitor the Solar Garden, as you would expect from an onsite system. US Solar is designing a customized platform for our Solar Garden subscribers, one of the first platforms designed specifically to monitor community solar projects. Our online portal will not only provide subscribers with performance information once systems are up and running, but it will also provide you with status reports regarding project development and construction. We can also provide you with a customized monitoring portals, allowing you to display information regarding the Solar Garden performance – energy and environmental – on video monitors or kiosks anywhere in the company. These customized portals can be tailored to inform and educate your executives, employees and customers about the performance and benefits of the Solar Gardens you are supporting. P a g e | 8 FREQUENTLY ASKED QUE STIONS •A: Subscribing requires no upfront payment whatsoever. Q: How much does it cost upfront? •A: Your Sunscription is fully transferrable. You can allocate subscription capacity to a new building of yours within Xcel Energy's service territory, or you can transfer it to another eligible Xcel Energy customer. Is my Sunscription transferrable? •A: Our Solar Gardens can produce energy in all seasons and all weather. Solar Garden output will vary from day-to-day and season-to-season, as does your electric usage. Your Solar Garden SunscriptionSM will be sized to account for this variability and designed to greatly reduce, or even eliminate, your utility bill over the course of each year. Q: What happens in the winter or when it’s rainy? •A: Solar Garden energy is delivered directly to Xcel’s grid, not your facility. Our Solar Gardens are simply one of the sources feeding the grid, and you will continue to receive 100% of your electricity from Xcel with no interruption of service. Q: Will my facility be connected to the Solar Garden? •A: Your historic, annual electricity usage determines the size of your Sunscription SM. This is another advantage –our Solar Garden subscribers receive solar benefits that are not limited by the size and/or quality of their roof. Q: How will my Solar Garden subscription be sized? •A: US Solar and its investor partners will receive the tax credit benefits for funding the capital costs of each Solar Garden, lowering the SunscriptionSM rates we are able to offer subscribers. Q: Are there tax benefits? •A: Once your assigned Solar Garden begins delivering energy to the grid, you receive bill credits from Xcel Energy and a bill from US Solar for the same amount of kWh. We will notify you as that date approaches and keep you updated along the way. Q: When do I start seeing bill credit benefits? P a g e | 9 US SOLAR: EXPERIENCE AND QUALIFICATIONS BROAD EXPERIENCE: THERE IS NO SUBSTITUTE US Solar is a turnkey solar developer and owner/operator. We seek to make solar energy accessible with simple, money-saving, long-term solutions that are as good for our partners as they are for the environment. US Solar’s management team brings a wealth of solar leadership and expertise from the commodities divisions of industry-leading firms such as Morgan Stanle y and Bear Stearns, as well as the project development teams of BayWa R.E. and REC Solar. Community solar development and finance requires a wide range of skills that few solar companies possess. US Solar is uniquely positioned with deep experience in all facets of this market segment. Additionally, US Solar draws on a unique set of strategic partnerships. US Solar’s platform is comprised of best-in-class providers within engineering, procurement, and construction; solar equipment manufacturing; energy management; legal services; development; and finance and investment. Project Development: The US Solar team has extensive experience in solar project development. This, along with support from our strategic alliance and partners, allows for the delivery of large -scale projects – on time and within budget. Community Solar: US Solar has broad experience in the siting, development, and subscription of community solar projects in Minnesota. Our principals have worked with Fortune 500 companies, municipalities, public and private schools, and utilities across the country. We have contracted with a number of large counties, towns, school districts, and corporations in Minnesota for Solar Garden subscriptions. Project Finance: Less experienced solar providers frequently underestimate the challenge of financing the construction and operation of a portfolio of solar projects. US Solar is currently developing and financing over $150 million of projects in Minnesota, and the US Solar principals have raised project capital for projects and programs with a notional value of over $1 billion. P a g e | 10 LEADERSHIP TEAM The US Solar team is truly one of the most experienced teams in Minnesota. Our successful experiences span across the utility-scale, commercial, and residential markets. At the intersection of successful experiences and deep alliance partner relationships, US Solar is uniquely positioned to provide the City of Scandia with the highest value. Furthermore, our Minneapolis office is comprised of professionals who were raised in Minnesota, understand the community, and have been involved in Minnesota community solar from the very beginning. Martin Mobley – CEO: Marty started US Solar after forming and leading the Solar Desk at Morgan Stanley Commodities, where he led the group into the US commercial market (~40MW from ~100 rooftop/ground mount/parking canopy projects), the US residential market (three separate US resid ential financing programs) and the Ontario market (~30MW in from 75+ rooftop projects). Prior to Morgan Stanley, Marty was an attorney at McDermott, Will & Emery in Washington, DC. Robert Oden – EVP: As EVP, Rob oversees corporate reporting and manages contract administration for US Solar's development assets and fleet of operational projects. Rob brings twenty years of experience in energy and climate markets. He started his career in a principal investment group at Bear Stearns in New York and Houston and was later in the New York Commercialization group at EcoSecurities, a leading originator and trader of emission reduction credits. Rob has an AB from Harvard College. Reed Richerson - COO: As COO of US Solar, Reed is responsible for the development, ori gination, and construction of all our projects along with the daily management of the business. Reed brings 10+ years of solar industry experience where he previously served as the VP of Sales and Business Development for BayWa r.e. and held various roles for REC Solar. Reed has a BS in Applied Economics from the University of Minnesota. Brian Lantz - SVP, Finance: Brian brings over 10 years of solar industry financing experience to US Solar. As the SVP of Finance, Brian is responsible for all aspects of capital raising and structuring activities. After beginning his career at a renewable energy consulting firm, he held various positions at SunEdison focusing on the distributed generation market segment where he closed debt and equity financing on over $750 million of solar projects. He was a member of the core team that successfully launched TerraForm Power's IPO and most recently served as the Director of Capital Markets and Structured Finance at TerraForm prior to joining US Solar. Brian holds a ME in Sustainable Energy Engineering from the University of Maryland, College Park, and a BS from James Madison University. P a g e | 11 NEXT STEPS While this proposal may seem too good to be true, there is a catch - subscription demand tremendously outweighs subscription capacity. We can provide a Sunscription Agreement to go over more specifics. Please contact us with any questions, comments, or feedback you may have in response to this proposal Thank you – we look forward to providing the City of Scandia with significant, long-term energy savings through a Sunscription. SIGN UP TODAY | US-SOLAR.COM You’re on your way to a brighter tomorrow !