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HomeMy WebLinkAboutPalm Desert Strategic Solar PlanMEETING DATE C/ _ /V-07 CONTIiiUED TO 9 ` < 2- Q CITY OF PALM DESE To PAssED TO 2ND m em OFFICE OF ENERGY MANAG IT STAFF REPORT REQUEST: Adopt the Palm Desert Strategic Solar Plan with Phase One funding from Redevelopment funds, authorize staff to return to Council with a Management Contract, and authorize the City Manager to begin negotiations with outside agencies for additional funding for Phases Two and Three. SUBMITTED BY: Patrick Conlon, Director of Office of Energy Management DATE: September 13, 2007 CONTENTS: 1) Phase One Budget Breakdown 2) Palm Desert Strategic Solar Plan Recommendation: By Minute Motion: 1. Adopt the Palm Desert Strategic Solar Plan. 2. Authorize Staff to return to the Council with a Management Contract for Services and Activities, listed in the Strategic Solar Plan. 3. Authorize the appropriation of one million dollars from the Palm Desert Redevelopment Agency's unallocated Project Area No. 1, 2, 3 and 4 funds for Phase One funding subject to the following condition: the members of the Palm Desert Partnership supports the application for CPUC funds for photovoltaic incentives for future Phases Two and Three. 4. Authorize the City Manager to begin negotiations with outside agencies to secure additional funding for Phases Two and Three. Executive Summary: Currently, in the portfolio of energy efficiency programs for the City of Palm Desert there are no special provisions for businesses or homeowners who wish to install a photovoltaic solar system. The Palm Desert Strategic Solar Plan sets forth a strategy for starting a citywide solar program. Aggressive marketing, consultation services, and cash incentives are the heart of the Solar Plan. Cash -back incentives to businesses and homeowners amount to $1.50 per watt of solar installed, with a cap of $7,500 per business and $4,500 per home. These Palm Desert Solar Program September 13, 2007 Page 2 of 3 incentives will be retroactive for all PV solar systems installed after January 1, 2007. Due to our five-year energy goal, it is imperative to start this solar program sooner rather than later. To accomplish this, it is proposed that the City fund the first phase of this solar program. Once the program is started, and with the support of the Palm Desert Partnership, application will be made to the California Public Utilities Commission to fund Phases Two and Three from their Energy Efficiency Funds. Discussion: A strong, active program promoting photovoltaic solar will help ensure that the City of Palm Desert meets our five-year energy goals. The existing statewide incentives for installing solar are not enough; we need more. In 2006, the City asked our partner, Southern California Edison, to include an incentive for solar in the funding for the Palm Desert Partnership Program and we were refused. However, since then, with the California's newly adopted Energy Action Plan, which emphasizes the use of renewable energy sources such as solar, wind, and geothermal, along with the adoption of the new California Solar Initiatives (CSI), we think that we will have a better chance for success in requesting funding for Phases Two and Three of our Palm Desert Strategic Solar Plan. In early 2007 the Palm Desert Strategic Solar Plan was put on hold until legislative action was completed to clean up the "Time of Use" issue that was in Senate Bill 1. This Legislative cleanup was completed this past June. The Palm Desert Strategic Solar Plan focuses major efforts in three categories of activities: 1. Aggressive advertising and promotion. 2. Business and residential consultation services for community solar outreach. 3. For businesses and homeowners who follow through and install a photovoltaic solar system, a cash rebate at the amount of $1.50 per watt, for the first 5,000 watts on a business (maximum cap of $7,500) and for the first 3,000 watts on a home (maximum cap of $4,500). The business and residential rebates would be given only after final inspection approval by the Building Department. C \Documents and Settings\tstanley\Desktop \PD Strategic Solar Plan staff report 9-13-07 doc Palm Desert Solar Program September 13, 2007 Page 3 of 3 Funding and Staffing: It is proposed that to start Phase One of the Solar Program, the Palm Desert Redevelopment Agency provide the initial funding of one million dollars. This will allow the Solar Program to get started immediately and allow time for the City and its partners to make the necessary applications to negotiate funding from the available energy efficiency funds administered by the California Public Utilities Commission. It is anticipated that this process to secure additional funding could take up to a year to complete. How will the money be spent? Attachment One gives a detailed line item account on Phase One of this Program, which is summarized as: Incentives $675,000 (67.5%) Community Outreach $74,000 (7.4%) Implementation Service $225,000 (22.5%) Operations Costs $26,000 (2.6%) In lieu of adding additional full-time staff positions, it is the recommendation that the City contracts for services necessary to implement this Strategic Plan. If approved, Staff will return to Council with a contract for Council's consideration to cover these activities. Why should the Palm Desert Redevelopment Agency fund the first phase of this solar plan? The benefit of solar energy in Palm Desert is local and regional in scope. As a result of very high summer ambient temperatures, including a Summer Design Temperature of 112° F., average load demand and peak load demand of energy used in Palm Desert is an important factor concerning public safety and adverse economic impacts of power outages or power reductions (i.e., "brown -outs"). Utility company studies indicate that homes within the City of Palm Desert use on an average of 50% more energy and average summer peak load demands exceed 120% more energy than other similar utility customers located outside the desert climate zone. Reduction of total and peak energy use as a result of incremental energy conservation measures that this solar plan will achieve will have local and regional benefits in the cost-effective reduction of energy costs for the business and home owner, additional available system energy capacity, and a reduction in greenhouse gas emissions equivalent to the removal of over 10,000 cars from the road. We will be happy to answer questions. Submitted by: Patrick Conlon Director of Office of Energy Management Reviewed by: Carlos Orti%a City Manager C \Documents and Settmgs\Istanley\Desktop\PD Strategic Solar Plan staff report 9-13-07 doc Solar Saves - Phase One Budget A.Participant Incentives Number Amount Incentive Costs Percent of Budget Residentiallncentives 100 $4,500 $450,000 45.0% Business Incentives 50 $4,500 $225,000 22.5% Subtotal—Participant/ncentives $675,000 67.5% B.Community Outreach Materials and Events Radio Advertising Campaign $40,000 4.0% Special promotional mailings 12000 $1 $12,000 1.2% Printing and miscellaneous promo costs 10 $500 $5,000 0.5% Banners,posters,other collaterial materials 10 5500 $5,000 0.5% Solar Town Halls 4 $2,000 $8,000 0.8% Kick-Off Meetings Costs 1 $4,000 $4,000 0.4% Subtota/—Community Outreach $74,000 7.4% C.Implementation Services--Labor Subtotal Hours Subtotal Costs Percent of Budget PD SOLAR Design Services 238 $14,050 1.4% PD SOLAR Community Outreach 852 $43,200 4.3% PD SOLAR Recruiting 1135 $52,775 5.3% SOLAR Site Management Services 1200 $56,800 5.7% Facilitation and Management Services 748 $42,200 4.2% Overhead $15,677 1.6% Subtotallmp/ementation Services 4173 $224,702 22.5% D.Operations Costs Number Rate Totals °/a Total Remote telephone costs 4 $600 $2,400 0.2% Automobile travel 15000 SO $7,200 0.7% Solar service van cost 2500 $1 $2,500 Hotel rooms in the field 50 $150 $7,500 0.8% Testimorny,meetings SF/CPUC/CEC 5 $500 $2,500 0.3% Working meals 300 $18 $5,250 0.5% Subtotal OperaUons Costs $24,950 2.5% GRAND TOTAL 3998,652 99.9% The Palm Desert Strategic SOLAR Plan energy environment money Outline in Brief Executive Summary 1. Introduction 2. Setting Solar Goals 3. Exploring Options for City Leverage 4. Creating the Financial Offer: Lowering Participant Costs Select providers Special financing 5. Positioning through Local Marketing and Outreach 6. Providing Comprehensive Solar Assistance to the Business Community 7. Program Impacts and Benefits Economic Environmental 8. Budget and Management Structure 9. Timeline and Critical Path 10. Monitoring, Evaluation, and Documenting Results Report prepared by �,. EcoMotion -- The Power of fhe lncrement EcoMotion. 15375 Barranca Parkway F-104. Irvine, California 92618. (949) 450-7155 -- The Palm Desert SOLAR Strategic Plan -- 1 ��l'RN.�pR... what was �t���e grow�H.g up �w the desert be fore we had solar?�' A youngster in 2050 ponders the past just as we ponder life before computers and cell phones. Executive Summary The City of Palm Desert has an extraordinary opportunity to meld its energy, environmental, and climate convictions with its abundant sunshine. This plan calls to begin a movement to "solarize"the community, fulfilling the City's commitment to reducing its electricity—energy and peak capacity—by 30% in five years. With solar, Palm Desert will achieve 30:30 energy and capacity-saving goa/s while creating savings from conventional power generation worth $53 million. This Strategic SOLAR Plan presents the steps to create a solar movement in Palm Desert, a community leadership initiative that can ultimately result in 50— 100 MW of generation shifted from conventional sources, to clean and renewable, and energy savings that have the environmental equivalent of taking up to 10,000 cars off the road, permanently. • In 2008, Palm Desert SOLAR will take the equivalent of 146 cars off the road. • At the end of four years, so/ar in Palm Desert will take 1,461 cars off the road. • Ultimately, Palm Desert SOLAR could have the equivalent benefit of 10,000 cars. The City of Palm Desert is in the midst of a partnership with Southern California Edison and Southern California Gas, with the support of the California Public Utilities Commission, called the Palm Desert Demonstration Partnership Program. The City is optimistic that discussions about including solar incentives into these partnerships will bear fruit, but in the meantime, and because solar is so important to the City and its Council, the City intends to invest one million dollars for the first phase of this Program to launch a campaign and spur the solar movement described herein. • Homeowners will get up to $4,500 to become early adopters. • Businesses will get comprehensive technical support and up to $7,500. So just what will this look like? Home and business owners will hear about special City incentives—up to $4,500 for homes and $7,500 for businesses—that augment California Solar Initiative incentives, adding about 40%to the value of the consumer incentive, and shortening payback periods. Palm Desert SOLAR will walk prospects and participants through the program, taking the mystique and complexity out of solar. The solar program will be fully linked with Set to Save, providing a natural complement to the efficiency services offered. Select solar contractors will be deployed; preferential financing available, and consumers will be able to invest in the solar future thanks to the City's solar program. -- The Palm Desert SOLAR Strafegic Plan -- 2 The So/ar City of the California Desert. The recommended implementation scenario for Palm Desert SOLAR is about"putting the pedal to the metal" in Palm Desert to meet and then dramatically beat the Palm Desert Partnership Demonstration Program solar targets. This involves creating "The Solar City of the California Desert." Doing so involves creating a program, providing value-added services for City residents and businesses, exploring a number of financial incentives, staffing the program adequately, and launching a major marketing campaign for solar systems in Palm Desert. Features of the"High Amperage Solar Scenario" • Build a Critical Infrastructure o Create Palm Desert SOLAR implementation team and office o Competitive solicitation to establish Preferred Solar Financing Partners o Competitive solicitation to establish Preferred Solar Contractors • Additional Solar Incentives o Residential: $1.50/watt for the first 3 kW per home (up to$4,500) o Small Business: ■ Comprehensive technical assistance ■ $1.50/watt for the first 5 kW per business (up to$7,500) o Recommended interest buy-down approaches for solar loans • Community Services o Solar Town Halls, messaging campaigns o Rooftop assessments, shading analysis o Bill analysis and optimal system sizing services o PR and recognition of Solar Champions • Business Services o Comprehensive technical assistance o Rooftop assessments o Bill and financial analysis o Quality control o PR and recognition of Solar Champions • A Focus on Public Housing o Addressing the solar potential for 1,200 units o Maximize City-controlled solar opportunity o Separate funding mechanism • Golf Course and Resort Initiative o Special focus on single-axis tracking ground mount systems 0 2,000 solar-charged golf carts ■ Pre-sold to resorts ■ Bulk purchase ■ Potential economic development opportunity for local manufacture • Community Solar System o Highly visible demonstration(s) o Supported by foundations, local businesses, interested citizens o Ground or pole mounted, sun-tracking -- The Palm Desert SOLAR Strategic Plan-- 3 This plan lays out a strategy and then the tactical steps to spur at least 100 homes and SO businesses to participate in the City's solar movement in the first year, establishing a powerful base - including community awareness and the solar infrastructure - for the next levels of success in subsequent program years. -- The Palm Desert SOLAR Strategic Plan-- 4 Complete Outline Executive Summary The Opportunity 1. Introduction Palm Desert SOLAR Background Where the Sun Shines Palm Desert's Huge Solar Potential Residential, commercial, city and state owned The City's Commitment to the Environment The Estonia Protocol Achieving the 30:30 goals with solar Solar Barriers Lack of Awareness Misperceptions and Vestigial Solar Concerns Economics and the First-Cost Hurdle Complexity of Each Deal Purpose City Initiative to Overcome Barriers Combined Foundation and Market-Based Financing Full Leverage of the City's Position in the Equation A Roadmap with a Timeline for Palm Desert SOLAR 2. Setting Solar Goals Determine solar potential Types of Solar Electric: Photovoltaics Residential Commercial MUSH: Municipal, university, schools, and hospitals Solar Thermal: Hot water Residential Commercial MUSH: Municipal, university, schools, and hospitals Build Community Support // Process Establish an initial community outreach plan Identify key solar stakeholders in the city Convene stakeholder meetings and facilitate the process Hold "solar town hall" to present the solar opportunity Establish Advisory Board for policy guidance -- The Palm Desert SOLAR Strategic Plan-- 5 Link with Set to Save: City Solar Goals Identify metrics for success Participation Growth and transformation of local solar industry Fulfilling the goals of the Estonia Protocol by 2011 Further potentials and rooftop saturation levels 5% of eligible rooftops in 2010; 25% in 2020; 75% in 2030 3. Exploring Options for City Leverage Solar Demonstration Projects New City Hall SolarPort 60kW Falcon Crest, 83 SFH with 2kW each Opportunities at Desert Willow, the "bladder," etc. Solar Ordinance (link with efficiency ordinances) Municipal facilities Multifamily complexes: models and solar ready homes New construction, major remodels Policy Issues Support solar and efficiency legislation/regulation Work with Edison and The Gas Company on DG projects Explore municipal solar utility concept Launch City-catalyzed pilot program Planning and Permitting Develop clear architectural guidelines for solar systems Develop standard solar system specification sheets Train plan checkers and installation checkers for solar Support the plan checking and permitting process Solar Service Networks Establish "Preferred Solar Contractor Network" Establish "Preferred Solar Financing Network" Establish "Specialists" referral service Community Outreach City leaders' endorsement Ongoing community and installation evaluation Celebrate Community Energy and Solar Champions -- The Palm Desert SOLAR Strategic Plan-- 6 4. Creating the Financial Offer: Lowering Participant Costs Foundation Support The Palm Desert situation/opportunity Develop specific requests, address Berger Foundation Determine optimal use of potential funds Support specific customer segments Buy-down interest rates; secure loans Provide incentives for first 100 residential installations Meet with potential funding sources Market-Based Financial Mechanisms Inventory regional, state, and national financing resources Residential Commercial MUSH: Municipal, university, schools, and hospitals Create financial menu for solar participants Loans: Financing through local banks Assess preferred financial network RFP for special PD SOLAR financial products Leases: Power Purchase Agreements (PPAs) Explore viability of PPAs for market segments Develop local marketing materials that explain PPAs Create and Manage a Preferred Provider Network Customer selection within (or outside) Network Network to make solar systems more affordable Create a quality control function Web site management, blogs, customer referrals, scoring Options for City Financial Support Administrative costs Promotional costs Special participant incentives Cash Grants Interest Rate Buy-Downs "Credit Support Options" Guarantee loans Establish first loss reserve Linked deposits Institutional account deposits Revolving loan fund Institutional funding for $10 million debt aggregations Recommend straightforward approach to catalyze community action -- The Palm Desert SOLAR Strategic Plan-- '7 5. Positioning the Project: Community SOLAR Outreach Develop a community outreach plan Mayoral and City Leader endorsements Create special issue of the BrightSide on solar Prepare special Palm Desert SOLAR e-newsletter Web site, portal information Develop collateral materials for the Palm Desert SOLAR initiative Fact sheets Frequently asked questions Fact Sheets Solar Envelopes Solar Valuation Rules Tax Credits and Ramifications Identify and work with local reporters and media to promote program Develop collateral materials to market the menu of financial services Financing your solar system brochure Frequently asked questions Comparison of loans and leases Launch and feature Solar Champions program Major accounts are featured in many ways for solar leadership Press releases and photo shoots Council commendation BrightSide articles Plaque in City Hall lobby of Solar Champions 6. Providing Comprehensive Solar Assistance to the Business Community Develop business strategy for the business community Reaching small and medium-sized businesses Develop Top 25 strategy Site visits Outreach through Chamber of Commerce, other business associations Technical Assistance Solar consulting Solar site visits Economic analysis Investment criteria Referrals Project management Quality control and Continuous Feedback Develop case studies Create business solar champions -- The Palm Desert SOLAR Strategic Plan-- g 7. Program Impacts and Benefits Economic Participant perspective Regional perspective Environmental 8. Budget and Management Structure Budget to manage initiative Develop funding scenarios Initial need and City support Foundation support Commission-based support Management Structure Internal capabilities and resources The Role of Outsourcing Long-term perspective 9. Timeline and Critical Path Initiative timeline 2007 preparatory steps 2008 — 2001 implementation sequence Quarterly timeline with specific tasks, accountability 10. Monitoring, Evaluation, and Documenting Results Case studies of select solar installations Bill analysis and metered impact studies Web site to serve as a program "portal" and repository Press releases, conferences, photo shoots for notable installations Prepare articles for media (local and trade presses) Work with CSI and Southern California Edison to track savings -- The Palm Desert SOLAR Strategic Plan-- q 1 . Introduction Where the Sun Shines Without question, Palm Desert has huge solar potential. The desert is known for its unending sunshine, perfect for the harvest of solar power. Solar is a natural for Palm Desert, in fact, it's the City's "raison d'etre." Snow birds and others flock to the Coachella Valley to enjoy the winter warmth and sun. Given the City of Palm Desert's energy and environmental goals, solar fills out an aggressive energy strategy. This plan presents a"high amperage" solar strategy that will begin the transformation away from dependence on conventional power sources. It calls for a million dollars of funding for Phase One of the program to dramatically accelerate the uptake of rooftop solar electric systems to meet City, State, national, and even global goals for alternative, renewable power generation. Phase Two and Phase Three of the Program are proposed to be funded by as yet to be identified outside agencies. In 2006, the City embarked on a creative and aggressive energy management path, forming one of the State's most far-reaching energy efficiency partnerships with Southern California Edison and Southern California Gas. The goal of the Palm Desert Partnership Demonstration Program is a 30% reduction in peak electrical demand and in overall electricity use, citywide in five years. While the project is squarely on track, solar will assure that its energy and capacity goals are met. This strategic SOLAR plan presents a roadmap for the installation of photovoltaic systems throughout the community—on homes, businesses, schools, city facilities, parking lots, etc. -- and for the solar contribution to assure that the Partnership meet and potentially exceed its capacity and energy goals. When implemented, the plan will cut the City's carbon footprint and serve as a major hedge against future power price increases. Palm Desert SOLAR will assure that Palm Desert Demonstration Partnership achieves its 30:30 capacity-shaving and energy-saving goals. This plan lays out a roadmap for the complete exploration and promotion of solar energy systems in Palm Desert. Roof-mounted systems are presented for residential, commercial, resorts, as well as municipal, university, school, and hospital facilities (MUSH). City and Redevelopment Agency funds will be considered for community solar systems and solarizing public housing. A new means for getting solar without expenditures -- power purchase agreements -- will be explored for the City as well as for Desert Sands Unified School District and the College of the Desert that cannot take advantage of federal solar tax benefits. Ground-mount systems will be considered, linking with parking structure shading applications (so-called SolarPorts) and other unique ways to couple the solar production with other beneficial applications. -- The Palm Desert SOLAR Strategic Plan-- 10 Commitment to the Environment The City of Palm Desert has become a premier community in the Coachella Valley, with both a high quality of life as well as civic responsibility. The City continues to be led by a Council that has a record of taking leadership positions on critical issues. Palm Desert's leaders recognize the opportunity to take bold action to increase the uptake of solar and to accelerate the local solar market. Palm Desert's leaders recognize that it is imperative to take bold action and to demonstrate leadership regarding sustainable energy use, and specifically solar energy. The Estonia Protocol In 2005, the City of Palm Desert entered into the "Estonia Protocol" with Southern California Edison, Southern California Gas, the California Public Utilities Commission, and The Energy Coalition. The protocol outlined a process whereby the City of Palm Desert would work collaboratively with Edison and the Gas Company to cut electricity and natural gas usage by 30% citywide in five years. This includes all facilities, city- owned and privately owned. The protocol's "stretch goals" were later expanded to include a 30% peak demand reduction. In early 2006, the City prepared a scoping study. Just what steps would be required to cut usage across the board by 30%? How many homes are there, and how many of these would have to be retrofitted? How many square feet of resort property? A comprehensive analysis identified housing and building types, and the participation required to reach the goal, and the penetration of both efficiency and solar systems within homes required to accomplish the savings targets. By mid-2006 Southern California Edison prepared a far- reaching implementation plan for the City. It excluded solar because of Public Goods Charge funding restrictions. Ultimately Southern California Edison was approved for $14 million in special funding for the Palm Desert Partnership Demonstration Program in the fall of 2006. (Locally, this is being marketed by the City as the "Set to Save" campaign.) The Gas Company has also requested CPUC permission to provide an additional $3 million to the project, though it recalled its commitment to a 30% reduction given efficient applications of gas use already in place in Palm Desert. Its new initiatives will make current use even more efficient. Using Solar to Achieve 30:30 Program Targets In 2007 the Palm Desert Partnership Demonstration Program was funded by the California Public Utilities Commission. Thanks to Southern California Edison and the parties, its implementation plan was set, and after several coordinated marketing and outreach activities, program benefits began to flow. Consumers have recognized the value of the special incentives for high-SEER HVAC systems and variable speed pool pumps in particular. -- The Palm Desert SOLAR Strategic Plan-- 11 Despite the portfolio of special programs and services that Southern California Edison has developed and brought to Palm Desert—and that will serve a vital function in stimulating energy awareness in town -- the planned activity for the Palm Desert Partnership Demonstration Project cannot meet the 30% reduction goals without solar. "We can't meet the Estonia Protocol goal without solar." Thus solar is back on the table, and the City recognizes that it will have to carry the ball at least initially. If the special solar promotions, services, certifications, etc. that are required to stimulate the market can't be funded through public goods charges, what can the City do to promote solar? How can the City accelerate the natural uptake of solar systems to achieve its goals? The answers to these questions are the gist of this plan. The Strategic SOLAR Plan infuses solar energy into the PDPDP and the City's Set to Save marketing campaign. It is a roadmap for"solarizing" the City and demonstrating the City's commitment to the 30:30 goals and long-term energy, security, and climate protection. It begins with City funding to prime the pump with Phase One and deliver results immediately. Successive Phases may be funded by an innovative three-city pilot program discussed later, and through other sources and market-based approaches that can sustain activity. Fundamental Challenges to Consumer Uptake of Solar Systems There is no question that the public's awareness and interest in "greening" is at an all- time high. Interest in solar power is piqued. But the solar sales cycle—from consumer awareness to investment— is particularly challenging. For this reason, the City serves as an honest broker, helping its residents and businesses find the best solar solutions, and the best solar deals. Palm Desert SOLAR will likely not be the lowest cost deal, but it is intended to help the consumer get the very best lifecycle buy. Thanks to Palm Desert SOLAR homeowners and businesses will be walked through the rather complex solar process, assisted at every juncture. Success will be defined for Palm Desert SOLAR as the effective delivery of the appropriate blend of quality product, reliable service, maintenance, and price. There are many reasons why far less than one-tenth of a percent of California households have photovoltaic systems. A fundamental reason is that consumers have never before had to invest in utility infrastructure. Nor had they ever considered it. While consumers are used to buying cars and homes and sending their children to college, consumers have virtually no experience in investing and owning distributed means of power generation. ........................................................................� Solar investments have many benefits, but they take time to explain and understand. In addition to a lack of experience with solar energy, the general public is not particularly well versed in solar technologies. The public often confuses solar thermal —harvesting the heat of the sun to create hot water, as was done in the 1970s and 80s (unfortunately, with many roof leaks and irate customers) -- with photovoltaics that generate direct current electricity through the conversion of photons of light into electrons. Both -- The Palm Desert SOLAR Strategic Plan -- ]2 technologies are important to Palm Desert, though this plan focuses primarily on photovoltaics necessary to meet the 30% electricity and capacity reduction targets. The lack of awareness about solar presents Palm Desert with a major opportunity. The lack of awareness about current solar technologies and programs presents Palm Desert with a major opportunity: As a highly credible force in town, the City of Palm Desert will educate its citizens and business community about solar energy. The City will hold Solar Town Halls and other forms of community briefings on solar power, and how individuals and businesses can become engaged. The City will meet with every key account in town, promoting the City's commitment to solar. In many ways, the City will be taking solar"to the street,"by explaining the opportunities that solar affords, and the terms of the deals. The City will establish special solar financing, it will certify contractors, and provide a quality control function. Palm Desert SOLAR will give consumers confidence, and as a result, it will accelerate the market. Unlike solar installation companies with vested interests, the City will serve as the honest educator and broker. The City will not represent a product, and will stay at arm's length from the ultimate sales and relations between program participants and the solar contractors selected. While serving as a strong advocate of the multiple economic, energy security, environmental, and cost-saving benefits that solar provides, the City will "protect" its constituents from aggressive solar sales that threaten consumer uptake. ........................................................................, Purpose of this Strategic Plan The purpose of this Strategic SOLAR Plan is to develop a roadmap to implement solar energy in Palm Desert. What steps need to be taken to leverage the City's credibility and local contacts and communications and to make solar a common sight in the land where the sun shines? How much does the City have to invest to spur a solar movement that begins with meeting the 30% reduction goals? This plan lays out the steps to make solar a reality, to augment the energy efficiency measures of the Set to Save campaign, and to make Palm Desert a truly leading and exemplary city in regard to energy sustainability. -- The Palm Desert SOLAR Strategic Plan-- 13 ''i�d put`r.s� �oH.e� ow the suw aH,d so�ar e�rgr�,. what a source o f'power.� � hope we dow�t I?R✓e t0 WG�Gt GC�t.tG� OG� Rl�.Li�GOR� YG[1�1. D�Ct be fore we tackle that. � Thomas Edison, circa 1931 2. Setting Solar Goals There are a number of ways of capturing the sun in Palm Desert, ranging from passive collection, to active solar thermal systems, to photovoltaics. Solar thermal systems generally produce hot water that can be used for domestic hot water heating, and for special pre-heat applications for swimming pools, laundries, and sporting facilities. Photovoltaics, the generation of electricity from the sun, can be universally applied to offsetting conventional power generation. The Immediate Goal This plan primarily features goals for rooftop solar generation, using photovoltaic panels that convert sunlight directly into electricity. The immediate goal for Palm Desert SOLAR is to assure that the 30:30 goals are achieved in the four remaining years. (Two years have passed since the signature of the Estonia Protocol; program funding, however, has been in place for one year.) Edison estimates that solar will need to provide 2.8 MW of capacity in four years to round out the strategies to meet the 30% capacity-reduction goal. Consider the enormity of this capacity reduction for a moment: 2.8 MW = 700 household systems (average 4 kilowatts-- kW) OR = 140 small business systems (average 20 kW) OR = 1 MW resort system +450 household systems OR = 1 MW resort system + 2,400 kW big box store systems + 250 households And for perspective,this will bear a gross consumer cost of�14-28 miltion Palm Desert SOLAR proceeds with every intention of ineeting and beating the 2.8 MW goal in the next four years. But it will not happen with a passive position on solar power. Instead, this plan presents a strategy for the City of Palm Desert to launch a campaign that will reach the masses—homeowners and businesses - and that will stimulate solar action. Setting Longer-Term Goals After squarely addressing immediate goals, the community solar process will shift to setting longer-term community solar goals. This involves three fundamental steps: -- The Palm Desert SOLAR Strategic Plan-- 14 First, an examination of the solar potential. How much capacity can solar provide? How much electricity can be generated with photovoltaics? Is it sufficient to meet and/or beat the goals of the 30:30 program? What opportunities are there for solar thermal? What about rooftops? How much "rooftop real estate" is available? How can the public — including the resort community—get squarely on board and take pride in the solar movement? How many Solar Champions can the City anoint in the coming year? Three-Step Planning 1. Solar Potential a. Baseline use analysis b. Solar opportunities 2. Community Input 3. City Refines Strategic SOLAR Plan The second step involves a process of garnering community input. Who are the solar stakeholders in Palm Desert? Who might be enlisted to become Solar Champions? What advice can local solar experts bring to the table? How can the City align its efforts with natural market developments? What is the appropriate role of the City to accelerate and transform the solar market in Palm Desert without impeding free market behavior? Third, the potential study and community input is melded with the City's position. Ultimately the goals become codified in City planning documents. Baseline Analysis This section examines the total load for electricity and natural gas in Palm Desert, with an eye towards offsetting a portion of these loads with solar energy. The Palm Desert Building Stock The City of Palm Desert has a building stock that is largely sufficient for solar. There is relatively little shading and many commercial buildings—where the economics are most attractive for solar power generation—generally have flat rooftops ideal for solar generation. Palm Desert currently has some 8,000 business licenses; there are on the order of 4,000 active businesses in town. They are located on 466 commercial parcels, though many parcels have multiple businesses on site. Westfield Mall has 260 businesses on site. There are also 236 industrial parcels in the City records. ResoRs also have lots of open space, as well as strong demand for shaded parking. Thus "solar-ports," essentially carports topped with solar systems, are a natural fit for desert resorts. As for the City's 14,000 households, the rooftops are generally unshaded and gently pitched. Most homes are single story, easing the solar installation process. The panels plus their racking systems generally weigh about 3-4 pounds per square foot, an incidental amount for most roofs. By `'racking" panels about four inches above the roof surface, convection of air can occur under panels, providing a cooling benefit to the roof and home or business. -- The Palm Desert SOLAR Strategic Plan-- 15 In terms of electricity use, the two major power-consuming sectors in Palm Desert are residences and resorts. The following table provides a snapshot of the predominant housing types, with condos and apartments totaling 17,804 units outpacing single-family residences at 14,056. Multifamily units are generally more difficult for solar installations given State net metering rules. (The focus on 1984 relates to the year that double-pane windows were mandated in California.): Palm Desert Housing Stock Pre-1984 Single Family Homes 7,200 Post-1984 Single Family Homes 2,678 Larger-Sized Single Family Homes 765 Mobile Homes 3,393 Subtotal homes 14,056 Pre-1984 Condominiums 11,600 Post-1984 Condominiums 4,204 Multifamily Apartments 2,000 Subtotal Condos/Apartments 17,804 Total Housing Stock 31,860 City of Palm Desert Housing Authority The City of Palm Desert has a Housing Authority that was formed to preserve and improve the community's existing older neighborhoods and to provide decent, safe, and sanitary housing for families of very low, low, and moderate incomes. Palm Desert's Housing Authority has a track record of successfully getting Redevelopment Agency money (RDA) from Federal and state sources to build and sell, and refurbish and rent, housing in Palm Desert. Currently the Housing authority operates I S apartment facilities with nearly 1,200 units under its control. (These are in addition to the 2,000 multifamily units presented in the table above.) This provides another solar opportunity that will be explored and implemented separately from the Palm Desert SOLAR program. Baseline Energy Use in Palm Desert The City of Palm Desert—including all residences and businesses within the City limits — had an annual energy diet in 2004 and 2005 made up of about $90 million in electricity costs and about $30 million for natural gas, bringing the annual total utility bill to $120 million. (Increased consumption due to growth in Palm Desert, and increased power prices, have driven these costs up in 2006 and 2007.) • Etectricity (2005 data) 0 662 million kilowatt hours o Peak capacity: 67.5 megawatts o Electric revenues: $86 million -- The Palm Desert SOLAR Strategic Plan-- 16 • Natural gas(2004 data) 0 19.5 million therms o $27.3 million • Total electricity and gas costs: $111.3 million The businesses in Palm Desert are generally concentrated along the downtown core (El Paseo's high-end retail and restaurants) and Interstate 10 (commercial and light industrial). The City is also home to the College of the Desert, a California community college adjacent to the Civic Center complex. The City has been instrumental in developing the California State University campus in the northern sphere of the City. Electric Account Summary Number of Consumer T e Accounts %of total accounts Residential accounts 25,942 81.2% Smail commercial (GS1) 4,173 13.1% • Large commercial (GS2) 1,134 3.6% Streetlighting 302 0.9% Agriculture (TOU) 108 0.3% Other TOU 273 0.9% Totals 31,932 100.0% Electricity Use The summary tables below show that 662 million kilowatt-hours of electricity were used citywide in 2005 and that the City's consumer types had an aggregate peak demand of approximately 95 MW and a coincident peak demand of 67,539 kW. Of this use, the vast majority was provided to two Edison customer rate classes, "domestic" (residential) customers that used 42.5% of the total, and large commercial customers (resorts) that consumed 35.4% of the total. The remaining electricity use went to small businesses, for municipal water pumping, and to City accounts on time-of-use rate schedules. %of total kWh/ Consumer T e # Annual kWh kWh Account Residential accounts 25,942 280,293,402 42.3% 10,805 Small commercial (GS1) 4,173 55,562,440 8.4% 13,315 Large commercial (GS2) 1,134 234,487,484 35.4% 206,779 Streetlighting 302 3,343,945 0.5% 11,073 Agriculture (TOU) 108 31,730,208 4.8% 293,798 Other TOU 273 56,988,148 8.6% 208,748 Totals 31,932 662,405,627 100.0% 20,744 In terms of usage per account, Palm Desert's consumption for residences is nearly double the Southern California Edison system average. This can largely be attributed to air -- The Palm Desert SOLAR Strategic Plan-- ]� conditioning, speaking to the importance of retrofitting older air conditioners and tightening the building shell using windows and insulation, and also to pool pumping, the second greatest residential usage of electricity in Palm Desert homes with pools. These end-uses are being addressed by the Set to Save program. Efficiency steps are far more cost effective than supplying inefficient load with valuable photovoltaic systems. Palm Desert Electricity Demand Palm Desert had a measured peak capacity of 68 MW in 2005, while the actual value is much higher, likely double this level. Baseline data for residential and small commercial accounts is not available due to a lack of time of use rates and meters for these "mass market" accounts. Consumer T e # Peak kW %Total Residential accounts 25,942 Small commercial (GS1) 4,173 Large commercial (GS2) 1,134 49,057 72.6% Streetlighting 302 Agriculture (TOU) 108 8,822 13.1% Other TOU 273 9,660 14.3% Totals 31,932 67,539 100.0% Solar Thermal and Natural Gas Savings In 2004, Palm Desert used a total of 19.5 million therms of natural gas. Of this, 16.5 million therms were provided to the residential sector, representing 85% of Palm Desert's load. Two million therms were provided to 102 small commercial facilities; one million therms were provided to two large commercial facilities. At an average therm price of $1.40/therm, total gas costs in 2004 in Palm Desert were on the order of$27,300,000. Residential Gas Use: Fully 99% of new and existing residences have natural gas water heaters and almost all are storage type water heaters. While not the primary purpose of Palm Desert SOLAR, these will be examined for"solar assist" systems, a form of hybrid system that taps the free ener�y of the sun and then tops it off with gas-fired water heating when required. Commercial Equipment Gas Breakdown: In 2004, gas use in boilers for space heating accounted for 41.2% of commercial-sector gas use. Kitchen gas use—stoves and ovens— accounted for another 38.6%, with water heaters consuming 8.6%, space heaters 4.4%, air conditioning 3.4%, and other 4.3%making up the balance. Space and water heating will be of particular interest to Palm Desert SOLAR, especially in conjunction with photovoltaic systems. -- The Palm Desert SOLAR Strategic Plan -- 1 g Electricity and Natural Gas Use Projections Palm Desert is currently in a major and final new development push, expected to be completed in 2009. The"Northern Sphere" is being developed. According to the City's Planning Department in early 2006, the development would add 25% more residential units and 30% more commercial space to Palm Desert's overall footprint. Projected Five-Year Growth • Residential sector 25% • Non-Residential sector 30% The City's Planning Department projected that the City's 25,000 residences in 2005 would grow by about 25%to 32,000 residences. Commercial square footage will also grow dramatically -- by 30% -- as Palm Desert's prime location in the valley is revered with natural shopping locations along Interstate 10. Through a number of solar strategies— from solar model home requirements to "solar- ready" strategies (ordinances and incentives), and demonstrations of building integrated photovoltaic systems, the City has and can continue to promote solar to this development as the City expands as planned. Planning Scenarios There is enormous solar potential in Palm Desert. With a high number of average hours of daily insolation, as measured by the National Renewable Energy Laboratory, and considerable unobstructed rooftop as well as open space for ground-mount systems, the City has a major opportunity. One of the key planning challenges the City and its Office of Energy Management face is the uncertainty of the solar market. Prices have been volatile; there are new market entrants as well as consolidations. Rebates are dropping; tax credits are not permanent. Rate schedules complicate matters. Without question, the State's solar movement is suffering from fits and starts. Three solar planning scenarios are presented herein: A. The Laissez-Faire Scenario The first is a"laissez faire" scenario in which a city takes a hands-off approach and allows the solar market to act unencumbered. This is certainly not how Palm Desert has treated solar energy. Witness the brand new 60 kW solar carport addition at Civic Center. But if solar is cost effective—one can argue —why should the City have to expend resources to further promote it? If the California Solar Initiative is the most impressive solar incentive program in the country, why does a small city like Palm Desert need to take the matter of promoting solar into its own hands? Won't combined incentives, sophisticated financial instruments like operating leases and PPAs (discussed later) allow major accounts in Palm Desert get solar without any City intervention at all? -- The Palm Desert SOLAR Strategic Plan-- 19 These are good questions. And there are others: Will the City fulfill its 30:30 goals without intervention? Can any city accelerate the solar market and thus accelerate the benefits that accrue to the community from day one? There is, and will always be, a level of"natural uptake." The challenge now is to accelerate the solar market, to burst away from business as usual. Palm Desert SOLAR is about taking definitive action. Through the Office of Energy Management and other channels, the City continues to endorse and encourage solar without an explicit program or dedicated staff to drive it. This includes continued demonstrations, BrightSide coverage, maintaining lists of local solar contractors, and periodic lobbying in Sacramento and San Francisco. Fees have already been waived for solar permits and inspections. The HIP program (Housing Improvement Program) allows for energy efficiency and solar upgrades in eligible properties, as does the Building Fa�ade Improvement program for small businesses that can address different types of infrastructure improvements. Ordinances: One powerful tool promoting solar has been a progression of energy ordinances. The Palm Desert Energy Ordinance of 2006 requires that solar be presented as a customer option in new housing developments greater than five units. It also requires 2 kW AC solar systems on one model and allows solar to be used as a credit toward the energy budget of large homes. Future ordinances will ratchet up solar requirements. Through Palm Desert SOLAR the City of Palm Desert will draw competitively priced solar contractors to town. Prices will drop and capabilities will increase. The City will work with financiers to develop special financial products and services that make it easier for more people to go solar. The City will put its arms around the solar process for the benefit of the participant, the City, region, and indeed the world's ecosystems. B. Passive Promotion Solar Scenario(Current City Status) A second scenario is "passive promotion," and might be more accurately presented as Palm Desert's form of business as usual. Thanks to the work of the Office of Energy Management (and its leader working as an analyst and the City's Building Inspector), the City of Palm Desert has exhibited solar leadership with municipal facilities, and in promoting solar to interested residents and businesses. City Hall features solar-ports, and each of the 83 units at the new Falcon Crest housing development developed by the City's Housing Authority feature 2 kW solar systems. CSI Concerns: A valid concern of the Passive Promotion Scenario is that the California Solar Initiative is insufficient to support a major ramp up in solar activity. Many experts fear that the CSI incentives are falling far too fast—and certainly ahead of any price reductions in the market due to increased demand —and will greatly dampen investment in solar systems. There are warnings of another solar boom and bust, like the one that occurred in the solar thermal industry in the 1980s. The ten-year CSI program has already stepped through the first three of ten commercial sector tiers of the program's unique incentive structure in the first six months. As the CSI becomes less and less compelling, "business as usual" may not achieve the solar results anticipated by the State and presented in this strategic plan. -- The Palm Desert SOLAR Strategic Plan-- 20 The step-down of incentives calls for two actions: First, Palm Desert and other stakeholders must have a voice at the State level. The City must track the CSI and work with coalitions of cities with similar perspectives. Second, the City of Palm Desert can use the urgency of the declining incentives to market the value of"going solar now." Naturally, addressing the root cause—and keeping incentives sufficiently high—is of far greater priority among the two. The"High Amperage" Solar Scenario The third scenario —and the recommended scenario -- is about "putting the pedal to the metal" in Palm Desert to meet and then dramatically beat the PDPDP solar targets. This involves creating"The Solar City of the California Desert." Doing so involves creating a program, providing value-added services for City residents and businesses, exploring a number of financial incentives, staffing the program adequately, and launching a major marketing campaign for solar systems in Palm Desert. The High Amperage Solar Scenario provides a comprehensive service to move customers to make sound solar investments. Features of the High Amperage Solar Scenario • Build an Infrastructure o Create Palm Desert SOLAR implementation team and office o Competitive solicitation to establish Preferred Financial Providers o Competitive solicitation to establish Preferred Solar Providers • Additional Solar Incentives o Residential: $1.50/watt for the first 3 kW per home o Small Business: • Comprehensive technical support ■ $1.50/watt for the first 3 kW per business o Recommended interest buy-down approaches for solar loans • Community Services o Solar Town Halls, messaging campaigns o Rooftop assessments, shading analysis o Bill analysis and optimal system sizing services o PR and recognition of Solar Champions • Business Services o Comprehensive technical assistance o Rooftop assessments o Bili and financial analysis o Quality control o PR and recognition of Solar Champions • A Focus on Public Housing o Addressing the solar potentiai for 1,200 units o Maximize City-controlled solar opportunity o Separate funding mechanism -- The Palm Desert SOLAR Strategic Plan-- 21 • Golf Course and Resort Initiative o Special focus on single-axis tracking ground mount systems 0 2,000 solar-charged golf carts ■ Pre-sold to resorts • Bulk purchase ■ Potential economic development opportunity for local manufacture • Community Solar System o Highly visible demonstration(s) o Supported by foundations, local businesses, interested citizens o Ground or pole mounted, sun-tracking The Initial Goal of 2.8 MW by 2011 The initial goal will be to support the City's 30:30 goals and the projected savings from the Southern California Edison PDPDP Energy Action Plan. This plan presents a strategy to assure the goals are met by supplementing PDPDP with 2.8 MW of solar capacity. If this were done by homes alone, 700 homes would have 4 kW solar systems, an installation rate of 175 homes per year for four years. Naturally the installation of larger commercial systems will dramatically reduce this household participation requirement. "We need to have solar panels on every roof.� The sooner we start the better." The Solar City of the California Desert Vision The plan presented addresses the initial goal of using solar to fulfill the Palm Desert Demonstration Partnership's goals. Once the goal is met, Palm Desert and its solar stakeholders will be afforded the luxury of considering broader horizons, and taking a much larger perspective, perhaps an aerial perspective: What percentage of rooftops are eligible for solar collectors? Can the City set goals for this form of saturation? Imagine Palm Desert as viewed from space in years to come, a sea qf shimmering blue solar panels. Consider the following macro goals based on this perspective. 2010 5% of suitable rooftops 2020 25% of suitable rooftops 2030 75% of suitable rooftops Imagine the following s-t-r-e-t-c-h goals: That half the homes in Palm Desert—about 15,000 units—each install a conservatively small 2 kW solar system. That would provide 30 MW of capacity—largely peak coincident. This level of involvement by the residential sector alone would provide 1,000% of the gap in the 30% capacity reduction target. Now add public housing: There are 1,200 units under City control. These are among the "low hanging fruits" of Palm Desert SOLAR. While not every unit can carry solar, there is considerable potential for quick and decisive action in this housing type. Let's assume that on average there is one kilowatt per unit available. Let's also assume that the City can spur the development of a 500 kW Community Solar System. -- The Palm Desert SOLAR Sfrategic Plan-- 22 Imagine also that each golf course in Palm Desert installs a megawatt of capacity (about a $6 million investment). Currently, businesses with tax appetites are provided incentives for nearly 80% of total system costs. (This is accomplished through CSI incentives, Federal tax credits, and accelerated depreciation schedules.) That would result in another 34 MW of capacity while providing shaded parking, clubhouse and pumping electricity requirements, and potentially offsetting ratcheting demand charges during peak periods. Now let's add the commercial sector, putting panels on flat roofs, often using a non- intrusive/non-penetrating ballasted system in many cases. We'll assume that 200 facilities —commercial buildings from offices to warehouses—can each carry a 50 kW system, adding another 10 MW to the total solar potential. This plan calls for a special emphasis on helping small and medium-sized businesses make attractive solar investments. By helping businesses owners through the process, serving as the "honest broker" and providing objective information, Palm Desert SOLAR can also shoring up community development goals, in many cases linking with fa�ade improvements. The MUSH sector-- municipal, university, schools, and hospitals—provides another major opportunity. College of the DeseR could install 1 MW, rising to the Los Angeles Community College challenge of"a megawatt a campus." Each of four Desert Sands Unified School District campuses could be equipped with a 250 kW system while serving a critical educational function. The City itself—having just installed an additional 60 kW at City Hall —bringing the total "solarport" installations there to 90 kW -- can broaden its solar works, for instance by putting a solar skin over"the bladder" at Desert Willow. The City can also continue to "solarize" new and existing municipal buildings — from the roof of City Hall to fire stations, the Visitor's Center, etc. Let's assume that the City could add 2 MW of solar as a result of this Strategic SOLAR Plan. Palm Desert's Save With Solar Program Homes 30 MW Public Housing 1.2 MW Community Solar 0.5 MW Golf Courses 34 MW Commercial 10 MW MUSH College of the Desert 1 MW Desert Sands USD 1 MW City of Palm Desert 2 MW Total 79.7 MW Surprisingly, this far-reaching and highly aggressive solar vision is not altogether unrealistic, particularly given likely legislation that will strengthen climate protection requirements. Conventional power sources are expected to face greater and greater scrutiny, causing carbon-based fuel prices to increase and the race for alternatives to accelerate as well. Palm Desert will be well positioned, already meeting the challenge of transforming the conventional power system to one that acts locally and thinks globally. -- The Palm Desert SOLAR Strategic Plan-- 23 Through very aggressive solar penetration, Palm Desert could halve its use of conventional power, far exceeding the PDPDP program goals with solar alone. With today's economics for solar investments—including California Solar Initiative incentives, Federal tax credits, net metering, potential sale of Renewable Energy Credits - - solar makes dollars and sense. What is lagging is information and a catalyst. Homeowners are not clear about their opportunities; even for businesses with superior solar economics, solar is not a front burner issue... and it is rightly perceived as overly complex. Through Palm Desert SOLAR, the City has the opportunity to educate, motivate, and spur the solar market by helping interested home and business owners, demonstrating that solar is a reasonable investment, and highlighting community actions to beget more solar action. -- The Palm Desert SOLAR Strategic Plan-- 24 The Community Process To be effective, the Palm Desert Strategic SOLAR Plan needs the support of both City leaders and community stakeholders. The purpose of the community process is to tap the passion and expertise of interested parties, and to get community buy-in for the City's solar plan. After garnering City and Council support, the following community process is envisioned: 1. Identify key stakeholders a. City officials b. Community leaders c. Trade representatives d. Educators and opinion leaders 2. Convene stakeholders a. Refine vision b. Create goals c. Identify key barriers to address and overcome d. Establish Solar Champion recognition protocol for key accounts 3. Re-convene stakeholders for draft plan input 4. Establish permanent Palm Desert Solar Advisory Board Initial list of Stakeholders 1. Dick Kelley (Mayor) 2. Jim Ferguson (Council) 3. Cindy Finnerty (Council) 4. Carlos Ortega(City Manager) 5. Sheila Gilligan (Assistant City Manager) 6. Pat Conlon, Office of Energy Management Director 7. Benjamin Druyon, Office of Energy Management staff 8. Buford Crites, former Council member, opinion leader 9. Gordon Bloom, GenSelf(solar installation company) 10. Roy Heine, SunTrek (solar installation company) 11. Carlson Solar representative (solar installation company) 12. Southern California Edison representative 13. Southern California Gas representative 14. Chamber of Commerce representative 15. Other passionate residents, business owners 16. Facilitator: Ted Flanigan By the conclusion of the facilitated, community input process, the City will have established secondary solar goals and identified a number of inetrics for success. Just how aggressive does the City want to be in promoting solar? Are the initial goals in this plan appropriate to accelerate a local solar movement? Ultimately, what percentage of energy and peak capacity use will the City work to offset with solar? How will this mesh -- The Palm Desert SOLAR Strategic Plan-- 25 with other City policies and planned climate action goals? How many kilowatt-hours of solar contribution are required? How many therms of natural gas can be replaced with solar for water heating? -- The Palm Desert SOLAR Strategic Plan-- 2C 3. Exploring Options for City Leverage What can cities do to promote solar and meet defined goals? Most cities, of course, are not taking action on solar, leaving it to the free market spurred by California Solar Initiative incentives and Federal tax credits. There is justification for leaving solar to the market. After all, many question whether government institutions can actually cut red tape and spur innovation. In Palm Desert, however, the especially aggressive goals of the 30:30 program call for aggressive steps in the implementation of solar energy to reduce the City's ecological footprint (through electricity and gas savings) and to cut peak demand. The California Solar Initiative is currently administered by the State's investor-owned utilities. It is both the largest photovoltaic (PV) incentive program in America(a ten-year, $2.9 billion initiative), and one of the most sophisticated. (A smaller, solar thermal incentive program is now being developed to complement the PV program.) The goal of the California Solar Initiative is to transform the PV market in the State, building the number of contractors, reaping the benefits of a competitive market place, and making incentives less and less important. But some question whether the incentive payments drop off too fast and become too small. Can the CSI accomplish its goals? Some progressive cities in California—like San Francisco, Berkeley, Santa Monica, and Sebastopol -- are working to promote solar in innovative ways. They realize that their local connections and capabilities have value in accelerating the adoption of solar energy in their communities, and that they can help their residential and business constituents get on the "solar band wagon." There are at least nine ways that Palm Desert can leverage its position to advance the deployment of solar power. This plan explores each of them before presenting recommendations for Palm Desert. Before addressing the means for cities to accelerate the uptake of solar systems, let's turn to a logical question: Why can't the City of Palm Desert simply provide additional cash incentives for program participants? Isn't cash the only real issue at hand? Well, not really. This plan addresses a number of strategic means for the City to leverage its financial muscle for the benefit of the program. These will be discussed in the next section, "Lowering Participant Costs." As this plan suggests, there is a role for additional cash incentives, but there are many other critical roles that cities play that are equally important. There are a host of options for cities to promote and accelerate solar markets. Means for Cities to Accelerate the Solar Market 1. Municipal Solar Leadership 2. Creating a Local Solar Focus with Honest Advice 3. Local Marketing and Outreach 4. Establishing Special PD Solar Financial Services 5. Establishing a Preferred Contractor Network -- The Palm Desert SOLAR Strategic Plan-- 27 6. Links with City Government a. Easing the Permitting Processes b. Working with Design and Architectural Reviews c. Use of Geographic Information System d. Orthographic Rooftop Photos 7. MunicipalOrdinances 8. Formation of a Special Utility District or Venture 9. Solar Champions: Promotion of Successful Installations 1. Municipal Solar Leadership The City of Palm Desert has taken a lead role and is"walking the talk" with solar energy. Years ago and in a highly visible display, the 30 kW solar system was installed at Civic Center on shading carports. In May and June of this year(2007) a additional 60 kW solar system was installed at Civic Center. This most recent work was done by Carlson Solar— a local company that won the competitive solicitation issued by the City for the work. The new Falcon Crest housing complex features small PV systems for each of 83 units. Bulk Purchase Pro�: Some years ago, Palm Desert took a highly innovative and frankly bold step with solar energy. In an attempt to promote solar, the City bulk- purchased 200 Siemens photovoltaic panels. It then promoted a program whereby Palm Desert residents and businesses could get the equipment at the City's discounted cost. There was community interest and some uptake, but the innovative program sputtered for two reasons: First, local contractors were unhappy with the City. The prices the City offered were less than the contractors could get. Contractors usually make a significant portion of their profits by marking up equipment costs. With the City's bulk purchase, contractors could only bill for installation. Furthermore, the City was also unwilling to be liable for the life of the equipment. Since it purchased the panels, the City would have to transfer the warrantee, a complex process not easily resolved. Select City of Palm Desert Solar Systems 1. Bulk purchase program (200 panels) 2. Shade structures for parking with PVs(90 kW) 3. The Hanks PV/Ice Bear Demonstration site 4. Bus shelters with PV panels 5. Falcon Crest, 83 SFH units with 2 kW AC each And, there are many more opportunities for muni projects and leadership: 1. Desert Willow, Golf Cart Charging 2. Covering the big "bladder" 3. Housing Authority upgrades -- The Palm Desert SOLAR Strategic Plan-- 28 Climate Action: The Climate Action Registry, initially formed in California, and now expanded to 31 states, two Canadian provinces, and two Native American reservations, provides proactive means of tracking emissions, getting credit for steps taken and planned, and demonstrating City commitment to the business community. The U.S. Conference of Mayors has also drafted a Climate Protection Agreement that has been signed by 600 mayors in 50 states. This plan recommends that Palm Desert join the U.S. Council of Mayors and sign its climate mitigation resolution. 2. Creating a Local Focus with Honest Advice One of the most important, but perhaps undervalued, roles for cities in the "solar revolution" is to be the honest broker of advice for prospective participants. Given the complexity of solar installations—and consumers' general lack of familiarity with solar, a city can serve as an informed and fair advisor for interested residents and businesses. Here are some of the key solar system design parameters that make for complex consumer decisions, and thus the need for honest advice and guidance: • Type of system, PV or thermal (or both) o Building integrated o Fixed axis o Tracking systems • Size of system o Zero out the bill o Determine optimal investment level • System components o Panels o Inverters o Racking systems o Meters o Solar collectors • Orientation o Shading o Azimuth o Tilt • Performance degradation due to heat and dust • Roof and ground-mountin� o Condition of Roof o Tile, composition, flat o Surface conditions • System benefits, savings, environmental • Property value implications • Financing • Tax implications -- The Palm Desert SOLAR Strategic Plan-- 29 Bundlin� Efficiencv and Solar: Solar is best bundled with energy efficiency, pointing to a powerful way that the City of Palm Desert can help its constituents. While solar is highly visible, energy efficiency provides the most cost-effective way to reduce consumption. (The cheapest kilowatt-hour is the one you don't have to produce.) As such, and in combination with Southern California Edison and Gas Company PDPDP activities, the City can aggressively promote efficiency first, or in combination with solar systems. Through efficiency, solar system sizing can be minimized. One California city is requiring its preferred contractors (all of whom were primarily solar installation companies) to serve as prime contractors, delivering both solar and efficiency services as directed by the City program. 3. Local Marketing and Outreach One of the most valuable functions for a city in a solar initiative is local marketing and outreach. Cities generally have credibility. This is especially true in Palm Desert. Thus the key is to tap the City's credibility. By endorsing the solar concept—and later installations companies and financial providers -- program uptake can increase dramatically. The City has an established set of outreach mechanisms that are embellished in Section 5 on Community Outreach: • The monthly City publication—the BrightSide—is well read and available for solar messaging. • The City's web site can promote Palm Desert SOLAR • The City (or perhaps its mayor) can host a Solar Town Hall in the fall. • At Solar Town Halls and at Council meetings, the City can recognize existing "Solar Champions" • Cities can make a big deal of new installations, for instance staging ribbon- cuttings with the Mayor. • The City's clout with the press -- Desert Sun, Press Enterprise, etc. —can be used to garner maximum publicity for solar action. Beyond the outreach mechanisms presented above, the City has access to property records, building permit applications, and other assets that serve as facilitating capabilities. -- The Palm Desert SOLAR Strategic Plan-- 30 4. Creating a Preferred Provider Network One of the opportunities that Palm Desert has to accelerate the adoption of solar energy is to create a preferred network of contractors. This can be done through a RFP process and a competitive solicitation. Doing so can drive down prices while assuring quality. There are a number of benefits of establishing a preferred provider network: • To Drive Down Prices • To Provide Quality Control (product and installation) • To Require Preferential Terms o Highly responsive service when provided with a City lead o Fixed prices for"reasonable" installations o "Carrying" rebates so that customers pay net costs only o Combined efficiency and solar services o Maintenance requirements such as annual cleanings • To Provide Systematic Customer Feedback and Evaluation Let's look at each of these in some detail: 1. Price Reductions: Solar contractors are willing to discount their prices for City programs if they believe they will get significant volumes of sales. Price reductions can also be guaranteed for"hot" leads. Pre-qualified leads— specifically those that are past the "sticker shock" of solar prices—are worth about a 5%discount from contractors. Pre-qualified(and even measured) sites— may be worth an additional5% discount. Price Reduction Parameters i. Volume Sales ii. Pre-Qualified Leads iii. Pre-Qualified Sites 2. Quality Control: Creating a preferred provider network gives the City a means of assuring quality installations in Palm Desert. The City can specify the quality of the solar components—photovoltaic panels, inverters, racking equipment, etc. — as well as the quality of the installation. The latter can be accomplished by providing selection criteria scoring that rewards installation experience, including solar installation, electrical contracting and plumbing for solar thermal. Quality is maintained throughout the program by on-going evaluation requirements. 3. Preferential Terms: Establishing a preferred provider network gives the City the opportunity to stipulate a number of preferential terms for program participants. • Highly responsive service: The City of Palm Desert will sign a Memorandum of Understanding with each selected contractor that will stipulate the terms of continued involvement. The MOU will have a section on contractor guidelines, making clear the job site protocol, and potentially stipulating the speed of responsiveness—both for the -- The Palm Desert SOLAR Strategic Plan-- 31 contractor to respond to the City, and for the contractor to respond to the customer. o Fixed prices for"reasonable" installations: One option is to stipulate fixed prices for"reasonable" installations. This is attractive to many prospective participants leery of being "up-sold" system sizes and add-ons. While there will also be legitimate add-ons, the City can provide comfort to participants by fixing prices and by keeping an eye on upwardly creeping costs. o "Carryin�' rebates: While some contractors do this as a standard practice, other contractors require customers to shell out gross system costs and then recoup rebates from Southern California Edison. Cities can require that contractors carry the rebates, easing participants' first-cost hurdle and/or loan origination process. At the onset of an installation commitment, the contractor will make the customer"assign" the rebate to the contractor. Then the contractor handles all the rebate paperwork. (Rebates can take 4-6 weeks to process.) o Combined Services: Another option is to require the solar contractor to serve as the "prime contractor" on a job site. (This may require the preferred solar provider to have a general contractor's license). This allows for the City to recommend combined efficiency and solar services, using relatively low-cost efficiency to reduce the overall load, and then solar to address the balance of power requirements. Since customers often suffer from inertia, and prefer to write fewer checks (and to manage fewer contractors), the City can serve combined services to streamline the consumer process and maximize the value of energy management. o Maintenance Requirements: Cities can require select contractors to provide maintenance services beyond their norm. This could include annual system inspections and even annual (or bi-annual, or quarterly) cleanings. For larger installations, the City may require that the contractors monitor PV system production, potentially setting up alarms and notifying the City and the owner, if the system is operating in a sub-par capacity. 4. On�o�g Customer Feedback and Evaluation: One of the most effective ways to manage the contractor network is through continuous evaluation and sharing of results on the Palm Desert SOLAR web site. There, a blog can be maintained that provides customer referrals, comments, and scoring for installers. Feedback and Evaluation i. Web site blog ii. City hot line iii. Evaluation forms Additionally, customers are encouraged to call the City throughout the process with questions, comments, or concerns. Essentially, the City inserts itself into the -- The Palm Desert SOLAR Strategic Plan-- 32 solar process, helping when needed to overcome challenges and barriers. Contractors will also be required to provide each customer with an evaluation form with a self-addressed, and pre-stamped envelope that routes the completed form back to the City's solar office. 5. Establishing Special Program Financing The City can take on a number of functions to provide solar participants with "preferential" financing. This can range from educating citizens about funding sources already available, to soliciting special financial products and services. Identifv Local Financial Resources: The most basic local function is to identify local sources of financing (using CEC website and local banking contacts). Rabobank has already stepped forward to provide low-documentation financing with no points or fees for Set to Save efficiency upgrades. The City can work with the Chamber of Commerce to tap the local banking community. This might begin with an informational meeting— hosted by the Chamber—and then a more specific discussion with interested lenders. Identifv National Financial Resources: Similarly, the City can help make clear other State, regional, and national sources, for instance solar financing available through vendors and associations such as EGIA (the Electric and Gas Industries Association) and Safe BIDCO for small businesses. �ecial Palm Desert SOLAR Financing: A more sophisticated option—and the one recommended herein -- is for the City to release a Request for Proposals (RFP) for financial products and services. The purpose of the RFP is to query the financial market for special deals for Palm Desert SOLAR participants. This could include any of the following attributes, or a combination of them: • Easy sign-up • Low documentation loans • Unsecured loans • Financial products, PPAs and operating leases • Preferential interest rates, and terms 6. Easing the Permitting Process Cities can expedite solar installations, or hold them back. Arduous design and architectural reviews and proceedings, for instance, or building inspectors' lack of guidelines and familiarity, can dramatically slow a PV installation, tainting the reputation of the process along the way. Cities can help by: • Waiving permitting fees • Expediting solar permitting -- The Palm Desert SOLAR Strategic Plan-- 33 Palm Desert has already taken two clear steps to promote solar: First, it has waived permitting fees for solar installations. Second, the City has expedited solar permitting. Installation Guidelines for Solar: Another way cities can promote solar, or at least avoid costly time-related delays, is to prepare guidelines for solar installations. If followed, an individual, or installer has an easy time, assured of being approved. Similarly, guidelines provide plan checkers and inspectors with guidelines that ease installation approvals. • Establishing Solar Guidelines • Special Solar Training for Building Inspectors Buildin�pector Training: Training building inspectors is another option. Regional trainings, funded by the California Energy Commission, are offered throughout California. Informative six-hour sessions can get both building inspectors and preferred solar contractors on the same page, easing the process and thus accelerating the adoption of solar systems in Palm Desert. 7. Municipal Ordinances Cities have the exclusive opportunity of passing municipal ordinances, for instance requiring all new subdivisions to offer"solar ready" units, and ultimately solar systems. Palm Desert crafted a series of sequential efficiency ordinances for the 30:30 program, phasing in increasingly tight requirements to exceed California Title 24 New Construction building codes. The City now has the opportunity to prepare a similar phased-in set of ordinances to promote solar energy. (Solar upon resale or remodel are options to consider.) The ordinances, of course, may be more effectively introduced and approved by Council as part of broader green building ordinances. Given the City's interest in green building that encompasses energy, water, materials, use, etc. -- and LEED standards in particular— any solar requirements levied by the City may be incorporated into the broader ordinance(s). 8. Formation of a Special Utility District or Venture What will be the best way to spur a City-wide solar initiative? Can this be done by the City's Office of Energy Management, or might it be better to develop a joint powers authority, or even a municipal utility district or municipal solar utility? Some cities, Berkeley in particular, are considering establishing a special assessment district. During the planning process, and throughout the five-year initiative presented herein, the City will explore its options and determine the best organizational structure to promote widespread adoption of solar in Palm Desert. While there are quite sophisticated means of creating a special utility district or structure, at this time it is anticipated that the City of Palm Desert itself will catalyze solar in town for five years, potentially then supporting solar with a more limited role thereafter. -- The Palm Desert SOLAR Strategic Plan-- 34 9. Solar Champions: Promotion of Successful Installations Given the City's success with outreach, there is no question that successful installations need to be recognized and championed. "Solar Champions�' —those members of the community that step forward and go solar, can be recognized by the City in ways that no other private company or utility can. Commendation at City Council (complete with a scroll and resolution), being part of a special plaque at City Hall, and all manner of PR will be highly valuable to garner greater and greater participation and community support. The City will generate case studies of Solar Champions—with detailed system fact sheets —for each installation, building a bank of proof of solar system performance in Palm Desert. This will be used to reach out to the broader community. The case studies will also cover unique financing arrangements—such as power purchase arrangements, and loans—so that Palm Desert consumers will fully understand their solar options and investment opportunities. -- The Palm Desert SOLAR Strategic Plan-- 35 "c,o soCaY awa'�ou'CC �e �'o�w� �our poc�zet�oo� awd n�otl�e� n�atu�-e a fa�or" 4. Creating the Financial Offer: Lowering Participant Costs Introduction The cost of solar systems can be overwhelming for many consumers. In fact, beyond the absolute dollars is a basic and understandable lack of familiarity with solar system costs, and solar investments. Consumers are used to paying monthly utility bills; these are anticipated expenses. Consumers are used to buying stocks, and CDs, and putting money in IRAs and even savings accounts. But spending $10,000, $20,000, $30,000 and up for a solar investment—about the cost of a new car -- is certainly something new. The costs of independently owned solar systems—what utilities call "distributed generation" -- could be considered a mountain of costs. How can the City of Palm Desert help? How can the City chip away at the costs to make them more palatable? What kinds of product and vendor discounts can be realized? Can local financing—potentially secured or discounted —be provided for program participants? Can the City augment state incentives and Federal tax credits to spur program participation? First off, the City can help to clarify the existing incentives for going solar. Home and business owners can take advantage of net metering laws that allow for selling back power to the utility on par with its purchase price, cash incentives from the California Solar Initiative, Federal tax credits, and accelerated depreciation for businesses. These mechanisms, however, have not spurred a solar movement in California, or in Palm Desert. This plan calls for additional support to accelerate the market. Current Solar Support Mechanisms: • Net metering to offset power bills • Cash incentives through the CSI • Federal tax credits • Accelerated depreciation for businesses The California Solar Initiative: The California Solar Initiative is the biggest in the country, with some $2.9 billion on the table over the next ten years. Currently the CSI provides $2.50/watt for residential installations, $0.34/kWh for each of five years for the measured output of large commercial installations. Each of these incentive levels was higher, and each of these incentive levels will drop over time. The theory behind this is that the market will be "transformed," more market activity will increase competition and drive down prices, making State of California incentives less important. -- The Palm Desert SOLAR Strategic Plan-- 36 Federal Tax Credits: In addition to State incentives, Californians are eligible for tax credits. Residential consumers are entitled to a tax credit of 30% of system costs up to $2,000. Commercial property owners are entitled to a tax credit of 30% of system costs without a cap. Thus, generally, homeowners can defray about half the costs; businesses can currently defray about two-thirds of system costs. (Naturally there are exceptions and tax code issues such as the Alternative Minimum Tax that program participants will be alerted to discuss with their accountants and tax attorneys.) A bill currently in U.S. Congress would triple the tax credit and remove the cap on residential installation incentives. But the current financing mechanisms for solar are falling short. Net metering laws are limiting solar system sizes. Many solar experts in California fear that the incentives are dropping too fast, and that the market has not yet been prepared for lower incentives. They are hopeful for Federal tax code revisions that will "sweeten the pot," but they (and the City) cannot rely on them. So how can a City help reduce solar costs and make investments in solar energy viable? The City will explore a number of options for doing so. Let's start with the concept of tapping foundation support. Foundation Support It may be hard to imagine foundations lining up to support affluent Palm Desert residents' pursuits with solar energy. Foundations, in general, are serving a public purpose, a mission that would not otherwise be accomplished by "the market." And while foundations may not want to support well-to-do individuals or profitable businesses, they may well be interested in different angles: • Working in a targeted geographical area • Developing new financial models ■ Securing loans ■ Revolving funds ■ Residential Power Purchase Agreements • Supporting fixed-income seniors • Providing guarantees for solar loans • Documenting Palm Desert SOLAR for other communities' benefit • Buying and retiring carbon rights and credits • Supporting solar as part of a community's exemplary efficiency program The Berger Foundation: The Berger Foundation is located in the Coachella Valley and has been highly supportive of a range of projects in the Valley, most recently supporting the new California State University campus in Palm Desert and the Eisenhower Medical Center. Given unique channels with the Berger Foundation, Palm Desert SOLAR will develop a concept and approach the Foundation. Based on the experience with Berger, the City will consider whether or not to address additional foundations. -- The Palm Desert SOLAR Strategic Plan-- 37 Market-Based Financial Mechanisms The Inventory of Solar Financin� Sources: An initial step in the pursuit of preferential financing will be to prepare an inventory of regional, state, and national financing resources. This is complicated somewhat by specific lending priorities-residential, commercial, and MUSH-sector(municipal, university, schools, and hospitals). There are about a dozen basic forms of financing available for solar and efficiency in California. Information Sheets on Residential and Business Financin�: The inventory will then be crafted into information sheets for homeowners and business owners so that they can make market-based decisions. Many prospective solar owners are likely not familiar with vendor financing. Just as you can finance a car at a car dealership, vendor financing is being offered for Sharp, SunPower and other PV modules. Request for Proposals: A sophisticated step will involve issuing a Request for Proposals for special Palm Desert SOLAR financial products and services. Through such a process, the City will be looking for preferential rates and/or terms, as well as privately labeled (or co-branded) opportunities, all intended to further accelerate solar uptake within the City limits. The RFP will also seek services and products in the event of City support. What terms can financiers offer if the City utilizes "linked deposits" or loan guarantees, or first loss reserves? While the City will not commit to offering financial support, potential lenders will be asked to present their best offerings without and with City support. Power Purchase A�reements: One of major trends in the solar world is the use of Power Purchase Agreements (PPAs). This financial model shifts the investment from the ultimate consumer-owner of the "host site"-to major financial institutions such as Goldman Sachs, firms with"unending tax appetites." PPAs -and their providers (major companies like PowerLight and SunEdison) -are in the game, "gobbling up" CSI incentive reservations and significantly shaping the industry. To date, most PPAs are for major customers, be they municipalities, schools, universities, and major big box chains. SunEdison-which gets it capital from Goldman Sachs-has a contract for every Whole Foods store in America. The benefits for providers of PPAs are marked: Their customers need not appropriate money and they are provided with guarantees for electricity price discounts over long terms (up to 20 years). Ownership of Renewable Energy Credits can be negotiated. Potential Host Sites for PPAs in Palm Desert College of the Desert WestField Mall Desert Sands Unified School District Resorts and Golf Courses Big box stores— Lowe's, Wal-Mart, Home Depot, etc. The benefit of PPAs for consumers is that it completely obviates the first-cost hurdle of investments in solar power. Instead, a consumer provides a host site-and roof-and signs a contract to buy the system output for x years (typically six years), and then to either buy-out the system or continue to purchase its output. Most solar PPA contracts -- The Palm Desert SOLAR Strategic Plan-- 38 give the consumer immediate bill reduction, and then are pegged below conventional power prices as they escalate. Opportunities for City Financial Leverage/Support • Cash Grants • Interest Rate Buy-Downs • "Credit Support Options" o Guarantee loans o Establish first loss reserve o Linked deposits • Institution account deposits • Revolving loan fund • Institutional funding for$10 million debt aggregations There are a number of ways that the City of Palm Desert could directly financially support Palm Desert SOLAR: Cash Grants One option to kick-start Palm Desert Solar is to offer special incentives for the first program participants. And nothing quite works like money! Cash grants could be distributed for the first 100 or 500 or 1,000 homes and/or businesses that go solar. The $4,500 spiff from the City for participating homeowners will be highly marketable. Businesses may raise their eyebrows as $7,500 cash incentives are publicized in the community. This plan recommends providing every resident and business that elects to go solar with a cash grant of$1.50/watt, augmenting the State's current $2.50/watt incentive. The grant will be capped at 3 kW for homes and 5 kW for the City's 4,000 GS1-rate businesses, making the City's maximum exposure $4,500 per participating home and $7,500 per participating small business. For particularly hard-to-reach market segments—seniors on fixed incomes, schools, non- profits (community centers, etc.) -- private foundations approached by Palm Desert SOLAR may be enticed to make the pot even sweeter, potentially matching the City contribution, and thus increasing the current CSI incentive of$2.50/watt to $4.50/AC watt (and up for non-profits). In this scenario, a program participant would get incentives from four sources: The California Solar Initiative, Federal tax credits, the City of Palm Desert, and foundation support. -- The Palm Desert SOLAR Strategic Plan -- 39 Interest Buy-Downs Interest buy-downs are much like paying additional points when you refinance your home. By paying points, the loan's interest rate is lower for its entire term. Palm Desert will work with program participants to make sure that they take advantage of interest buy-downs to the greatest degree possible. Note that paying 3% of system cost—about $1,000 for an average Palm Desert system -- can buy down interest rates by 1.5%, saving a consumer about $10,000—20,000 over the tenure of the loan. Most importantly, from a participant perspective, monthly payments are less. Credit Support Options There are a number of ways that the City can support the credit of a"solar deal," be it a lease or a loan. Guarantees: By guaranteeing solar loans, lenders are at ease with the risk. The City of Palm Desert would essentially be a co-signatory of the loan, and responsible for its full value. Partial guarantees may be structured if lenders are willing to accept risk, generally at a higher interest rate. Loss Reserves: City can be responsible for loan payments in default. By establishing a loss reserve fund, lenders will be able to lend to prospective participants with lower credit scores that represent greater liabilities. In the event of a default, a loss reserve would cover monthly payments for the orphaned system until it can be unbolted from the roof and deployed in another location. This is recommended herein as a relatively low-cost, and fundamentally low-exposure mechanism. Linked Deposits: Many cities have cash savings invested in local banks. If these banks are willing to be lenders for Palm Desert SOLAR, potential loan defaults can be covered by tapping the interest payments of savings accounts. This linked deposit scheme gives banks plenty of assurance, and a new business opportunity. Additional Financial Options: • City can establish a low or no-interest revolving loan fund • City can seek institutional funding for $10 million debt aggregations -- The Palm Desert SOLAR Strategic Plan -- 40 ''saviv�,g the pCav�et, ov�solars�ste`cc at a t�r�ce. � 5. Positioning the Project: Community SOLAR Outreach The City of Palm Desert has a strong record of community outreach. Well-written publications coupled with effective communications of all kinds have resulted in strong capabilities to get the word out about whatever initiative is of interest and importance to City Council. The City is credible, and in this case the City will use its credibility to promote a sustainable energy future through solar power. Being fully endorsed by City Council, and supported by the Office of Energy Management, Palm Desert SOLAR will be able to take full advantage of the City's strong communications engine. Step 1: Analyze the existing environment • Palm Desert today Existing solar --In addition to the solar potential as identified earlier, what are the existing trends in solar uptake in Palm Desert? What segment of the City seems most interested? What barriers to solar can be identified that are peculiar to Palm Desert? Political situation—What is on the horizon at the State level given the current administration's leadership on global warming solutions? What is happening regarding State-provided rebates? What about Federal tax credits? Social indicators—How has Palm Desert reacted to climate change? The green living movement? • Analysis of Existing Solar Uptake Which solar contractors/installers are already most active in Palm Desert? What other installers have their eye on this lucrative market and will be ready to jump into action when they see the City's efforts? How can additional providers be lured to Palm Desert? What about developers in the City that DON'T support solar? Involving and incorporating each of these will be important to keeping the program on track. Step 2: Development of the Solar Outreach Plan Based on the analysis as described above, the "marketing plan" for Palm Desert SOLAR need not be extensive, but it does need to include pertinent features: -- The Palm Desert SOLAR Strategic Plan-- 41 • Identify and characterize target audiences within the City Much work has already gone into this important step. Still, promoting solar to residents is different than promoting it to businesses or to educational institutions or to a resort or to potential installers or to potential financiers. Each audience has its own needs with regards to timing, facts, preferred communications media and style, degree of desired customer service, etc. At the same time, Palm Desert SOLAR will identify other audiences that need to be included, including press contacts, utility representatives, political officials, etc. • Prioritize audiences • Develop appropriate "products" -- or one basic "product" -- to serve the most important audiences. In this case, the "product" offered will likely be a combination of the following: o The"Solar Advisory Service" o Referrals to installers and/or financiers o The financial incentive (provided by the City) o Quality Control o Community Recognition as "Solar Champions" Step 3. Develop messaging for products and for the campaign for each target audience One challenge will be to identify ways the program can be supported by joint marketing with other players—manufacturers and installers of solar equipment, financial institutions, etc. —and to develop appropriate joint messaging. Step 4. Develop schedule and budget for roll-out of campaign Palm Desert already has a busy calendar of events that the PD SOLAR campaign can piggy-back on, such as the Golf Cart parade, different tournaments, etc. In addition, Palm Desert SOLAR can sponsor its own special events such as presentations in conjunction with conferences or educational programs, Solar Town Halls, contests, neighborhood competitions. Good planning will allow these special events to take place efficiently and cost-effectively. Step 5. Design marketing materials for use in outreach campaigns, based on messaging, schedule and budget o Program brochure o Special issue of the BrightSide o Palm Desert SOLAR website or portal o Palm Desert SOLAR e-newsletter o Presentation materials (slide shows, videos, etc.) o Other printed collateral (fact sheets on solar technology, financing options, FAQ, diagrams, etc.) -- The Palm Desert SOLAR Strategic Plan-- 42 o Media kits o Banners, signage, displays for booths o Other: prizes, stickers, other recognition devices Step 6. Launch the project with much fanfarel Palm Desert SOLAR will take liberal advantage of City leaders and personalities to promote its activities. As partners are brought aboard—installers, financiers—they too will be incorporated into the communications mix, for instance serving as guest experts at meetings. Throughout, solar owners —existing or new—will become program Champions, sharing their stories via newsletters, interviews, etc. Step 7. Track progress Since all solar installations will go through the City's permitting department, Palm Desert SOLAR will easily track actual capacity as it is installed. In addition, Palm Desert SOLAR will track participation at events and efficiency actions taken through sign-ups, printed or e-mail evaluation forms and/or evaluation forms on-line. Regular"progress reports" will be a part of the program. Step 8. Public Relations campaign to promote the City nationally Much of what is planned for Palm Desert SOLAR will be of great interest to the entire nation. A separate marketing component will be a plan to spread the word to increase Palm Desert's standing among other city governments, large national businesses and even the visiting public. As the program unfolds, a public relations campaign can be built on City-wide progress, measured energy savings and case histories of individual installations. -- The Palm Desert SOLAR Strategic Plan -- 43 6. Comprehensive Solar Assistance for the Business Community One of the most important aspects of Palm Desert SOLAR is reaching out to the business community, from small businesses to major resorts, and helping them reap the benefits of solar power. Given their highly attractive solar economics, this will be a major programmatic push and one that will support the local business economy. As peak power prices increase, and retailers are bound to maintaining comfort and lighting services during peak periods, solar systems make that much more sense, offsetting the highest cost power prices. First off, Palm Desert SOLAR will develop allegiances — for instance with the Chamber of Commerce—to reach out to businesses with the Palm Desert solar message. For businesses that just don't know what their opportunities are, The Top 25 Palm Desert SOLAR will work with business associations and Southern California Edison to identify the 25 largest power consumers in Palm Desert. A dossier will be created for each of these in preparation for approaching each of them regarding photovoltaics. Who know's who? What member of the City government—mayor, councilmembers, city manager—will be best received by the prospect? What messages will be most attractive for the client? Which financial mechanisms—PPAs, operating leases, purchases—are most beneficial for the business? Small and Medium-Sized Businesses For small and medium-sized businesses, Palm Desert SOLAR will reach out in broader ways, but with specific messaging about the solar opportunity they have (notably Federal tax credits and accelerated depreciation schedules). One option the City has is to link Palm Desert SOLAR with the Fa�ade Improvement Program. This, and other strategies, will be explored in the program's first quarters. Palm Desert SOLAR's services will help businesses throughout the entire solar sales and implementation cycle: Technical Assistance Solar consulting Solar site visits Economic analysis Investment criteria Referrals Project management Quality control and Continuous Feedback Develop case studies Create business solar champions -- The Palm Desert SOLAR Strategic Plan-- 44 7. Program Impacts and Benefits There are a host of benefits that Palm Desert SOLAR will accrue to participants, the City, the region, serving utilities, the State of California, and arguably the nation and planet. These are economic as well as environmental. Let's begin with the big picture and a summary table of the program impacts presented in this plan: Palm Desert SOLAR Savings Summary Program Percent Solar Annual Annual Equivalent Year of Goal System kWh Avoided Cars Off Capacity Generated / Pounds CO2 The Road kW Avoided * ** 2008 10% 280 562,100 730,730 146 2009 20% 560 1,124,200 1,461,460 292 2010 30% 840 1,686,300 2,192,190 438 2011 40% 1,120 2,248,400 2,922,920 585 Total 100% 2,800 5,621,000 7,307,300 1,461 'Assumes 1.3 pounds of CO2 per kilowatt-hour generated from conventional sources `*Assumes annual CO2 emissions of 5,000 ounds er car As the table shows, there are capacity impacts (kW), generation impacts, and environmental benefits expressed as avoided CO2 and equivalent number of cars taken off the road. The economic impacts of going solar are profound. Assuming conservative 25-year solar system lives, and a 7% utility rate escalation rate over the same period, the plan presented will create a direct economic benefit of avoided conventional power purchases of more than $53 million by the year 2035. Palm Desert SOLAR will provide community savings of $53 million over the 25-year solar system life. The environmental impacts are equally profound: Fulfilling the 30:30 energy and capacity savings targets with solar—providing a 2.8 MW contribution—will result in 7.3 million pounds of CO2 annually, or 182.5 million pounds over a 25-year life. Put in terms of equivalent cars taken off the road—and specifically avoided emissions—Palm Desert SOLAR will be the equivalent of taking 1,461 cars off the road for 25 years. -- The Palm Desert SOLAR Strategic Plan-- 45 8. Budget and Management Structure There are a number of ways that a community such as Palm Desert can fund a solar initiative. Palm Desert began by considering foundation support, but while worthy of exploration, it's clear that the City cannot rely solely on foundation funding for this project. The City has explored Federal and state grants and programs, but none are available to launch the kind of initiative presented in this plan. Thus this plan calls for start-up funding of one million dollars of City support for the first phase of Palm Desert SOLAR. Since signing the Estonia Protocol that established the 30% reduction goals, two years have passed. In calendar years, one is down, with four to go. To achieve the PDPDP goals, Palm Desert SOLAR has to be put on a fast track. This strategic plan recommends bold and aggressive action for solar in Palm Desert, funded—at least initially—with seed money from the Palm Desert Redevelopment Agency. City leaders have stated that we need to "strike while the iron is hot." Along with the commitment to timeliness, Palm Desert SOLAR has to be adequately funded to be taken seriously. This plan calls for a million dollars, with nearly 70% of the total going directly to cash grants for participants and critical credit support to allow nearly every home and business owner to go solar. Phase One Budget Requirements The project's first phase budget requirements presented in summary form below, and in greater detail in Attachment A, reflect the primary categories of a no-nonsense approach. The City will leverage its existing outreach capabilities. It will hire a contractor to work with the Office of Energy Management to implement the program, doing the daily activities required to spur a movement and hundreds of installations. Much of this work will be "in the field," or more accurately, on the rooftops of Palm Desert. Primary Budget Categories Amount Percent Participant incentives Residential $450,000 45% Business $225,000 22.5% Community Outreach $74,000 7.5% Implementation Services $224,702 22.5% O�erations Costs $25,950 2.5% Total $1,000,000 100% Participant Incentives: The bulk of the funds requested to carry out this plan—by several factors -- will be for direct participant incentives. In the first program year, 67.5% of the total budget will be paid in direct participant incentives. Fully 45% of the total amount —or$450,000—is proposed for additional incentives for residential installations. Another$225,000 will be available to provide incentives for the first businesses that step forward to participate in Palm Desert SOLAR. (Large businesses and MUSH-sector properties will value public recognition—as Solar Champions—far more than what in perspective would be a trivial incentive on the first 5 kW.) Funds are -- The Palm Desert SOLAR Strategic Plan-- 46 available for at least 100 homes and 50 businesses. These participation levels line up with the goals presented in the timeline in the next section. Incentive Notes: • The incentive levels are highly attractive, and will certainly spur demand. The program will be run on a first-come, first-serve basis, as funding is available. It is envisioned that Phase One will span over multiple years. • The City will pay the incentives in a timely manner, after final inspection, notably before or at the time that the customer is required to pay his or her solar system installer. • Payments will be retroactive to January 1, 2007 to accommodate the approximately 20 system owners who called the City to see if they should wait for anticipated incentives. Implementation Services: A scope of implementation services is presented below. The budget for this category is intended to provide base compensation for the contractor who may ultimately be paid through combined base and performance-based mechanisms, from base pay to sales commissions, to implementation services based on percentages of grants won, and basis points for successfully financed systems. Subsequent Funding Scenarios Phase One for Palm Desert SOLAR is projected to result in savings of 10% of the four- year program goal, or 280 kW of capacity. The first phase program cost is a million dollars. In the future and for subsequent program phases, there are a number of scenarios that might provide financial support for Palm Desert SOLAR. • A budding partnership of"innovator cities" (Palm Desert, Irvine, and Santa Monica) may serve to showcase a utility-funded and integrated efficiency/solar combination approach. While hopeful, Palm Desert is so committed to solar, and it is so dedicated to incorporating solar into the Palm Desert Partnership Demonstration Project, that it seeks to initially invest its own resources in the program. If special program funding becomes available from the State, the funding source can shift from the RDA to State resources without disrupting the program's progress and structure. • Assessment districts may be an appealing mechanism worthy of exploration, collecting funds from the public for public improvements using revolving mechanisms. • Another policy option is to test the applicability of Redevelopment Agency funds for public purposes including solar systems on households in town. • Further, the City can explore legislation that would allow Community Development Block Grants to be used for community projects to curb greenhouse gases. -- The Palm Desert SOLAR Strategic Plan-- 47 • Palm Desert SOLAR will explore the opportunity to aggregate and sell Renewable Energy Credits, another means—used successfully in New Jersey and other areas—of sharing solar costs and effectively reducing consumer investment requirements. But in the meantime, the clock is ticking and the City is ready to take action. Management Structure The City of Palm Desert established the Office of Energy Management(OEM) in early 2007 to serve as the focal point for energy efficiency and renewable energy activities. Today the OEM is squarely driving the Set to Save program, coordinating local resources and "taking it to the streets" vis-a-vis household assessments. While it is to be commended for its solar works with municipal facilities, and can be credited for its role with"passive promotion" of community solar,the current staff level is not capable of taking on a project of the magnitude of Palm Desert SOLAR. T'his plan calls for contracting for the bulk of the work required—the 4,181 hours of tasks projected in Phase One -- to make Palm Desert SOLAR an exemplary reality. The outsourced management of Palm Desert SOLAR is divided into five areas: • Pro�ram Desi�n: The program begins with refining the design, gathering some additional information, convening key stakeholders to garner input and buy-in, and finalizing strategies, tactics, and plans. • Communitv Outreach: The second aspect involves community outreach, primarily in-person outreach to home and business owners, helping them through the process one step at a time. The contractor will work closely with the City's Community Relations group to provide appropriate solar content to the BrightSide, and other outreach communications. Palm Desert SOLAR will have a booth at community events, farmer's markets, etc. • Palm Desert SOLAR Recruitment: The third area is recruiting participants. This involves telling the story again and again, as well as climbing upon rooftop after rooftop to assess its solar potential. A key program focus will be on recruiting Palm Desert's top 25 commercial accounts, and then helping them through the step-by-step process. • Solar Site Mana e� ment: Fourth encompasses site management services, and making sure that installs meet or exceed the participant's expectations. • Project Facilitation: Finally, the process of launching a solar campaign in Palm Desert will require diligent facilitation and management. While not particularly glamorous, the contractor will necessarily take the time to bring people, companies, departments, together. -- The Palm Desert SOLAR Strategic Plan-- 48 Palm Desert Solar Implementation Services Category Principal Team Hours Design 108 238 Community Outreach 208 852 Solar Recruitment 133 1,135 Solar Site Management 72 1,200 Facilitation / Management 268 708 Total 789 4,181 This plan calls for approximately four thousand hours of contracted labor working in close collaboration with the Office of Energy Management and the PDPDP program, to launch, promote, recruit, and successfully manage the program -- about two full-time equivalents. Naturally a contractor would provide these hours based on a strategic split of varying and precisely applied skills sets including design, communications, marketing, operations, and facilitation. -- The Palm Desert SOLAR Strategic Plan-- 49 9. Timeline and Critical Path This section assumes that to succeed in meeting the PDPDP program goals—and to reach beyond to a robust solar platform worthy of the "SOLAR 5AVES" moniker-- the "high amperage" solar scenario needs to be carried out. The Palm Desert Partnership Demonstration Project runs from 2006-2011. Palm Desert SOLAR will initially be aligned with PDPDP, seeking to fulfill the solar energy and capacity targets presented in the PD Energy Action Plan. To meet the goal of 2.8 MW of peak capacity by 2011, the City will need to act in an orchestrated fashion for the next four years. Attachment A presents the projected annual savings summary in detail. Preliminary Four-Year Program Time Line (2008 — 2011) 2007 Preparatory Steps • Prepare strategic plan as living document • Identify and seek external funding • Convene Palm Desert stakeholders • Determine program design o Management structure o Operating budget • Secure City Council support • Develop Palm Desert SOLAR web site 2008 Milestones • Financing: Develop preferred financial partner network o Develop community fund mechanism to sustain operations, secure financing • Contractors: Develop preferred contractor network with preferential pricing • Prepare outreach materials/strategies according to plan • Launch program publicly with significant fanfare • Prepare SOLAR presentation and deliver to 24 audiences in Palm Desert • Have a PD SOLAR presence at every Citylcommunity event, fair, etc. • Achieve small but demonstrable results for program escalation 0 10% of target ■ 280 kW =70, 3kW residential systems +7, 10 kW business systems 2009 Milestones • Dramatic escalation • Work to bring down participant prices based on proven volumes o Work with financiers o Work with contractors and their product distributors • Shift community outreach campaign to encourage others to join the movement! • Document results in line with PDPDP • Achieve doubling of annual results 0 20% of target(560 kW= approximately 400 households) -- The Palm Desert SOLAR Strategic Plan-- 50 2010 Milestones • Re-issue RFP for preferred contractors pricing • Another doubling of annual results 0 40% of target(1,120 kW= approximately 800 households) 2011 Milestones • Reissue RFP for preferred contractor pricing . Accomplish PDPDP target results 0 30°l0 of target(840 kW= approximately 600 households) • Fully document program for replication While not a technically astute means of ineasuring required levels of participation, the timeline uses a simple household proxy to count and gauge progress. In total, to achieve the 2.8 MW reduction—and assuming a conservatively low average of 2 AC kW per home -- there would need to be 1,400 homes participating over the four-year period. Naturally many homes will have larger systems — if we assume 4 kW the number of homes is slashed to 700. There will, of course, be commercial and MUSH sector projects, many of which will be very large scale. As such, the likely number of homes will be in the 500—800 to achieve the target. This is out of a single family housing stock of approximately 9,000. Solar can also be put on multifamily complexes and in ground-mount applications. -- The Palm Desert SOLAR Strategic Plan-- 51 10. Monitoring, Evaluation, and Documenting Results Prepare case studies of select solar installations The City will document select solar installations to promote more of the same. A simple format will provide sufficient—but not overwhelming—information for home and business owners while recognizing the Solar Champions that made these projects real. Conduct bill analysis and metered impact studies Closely related, the City will conduct bill analyses to track before and after solar system savings. In addition to kilowatt-hour generation, the City will examine rate structure impacts... all in an attempt to provide other home and business owners with the best possible advice based on actual installations in town. Use web site to serve as repository of case studies The Palm Desert SOLAR web site will be used as a repository for solar information and case studies. Interested home and business owners will be able to click on similar properties to get a better feel for the process and economics. The case studies will be prepared using a standard format for ease in comparison. Press conferences and photo shoots for notable installations One of the City's great opportunities is to tout notable installations. Ribbon-cuttings, for instance, can involve the Mayor and other top City officials such as Council Members, the City Managers Office, and Department heads. Local TV and press officials will be invited to these events, begetting more program interest and participation. Local cable TV can be used as a powerful conduit for case study and programmatic information. Articles for the media The City of Palm Desert will strategically prepare articles for the media, and to have its officials present the program to other cities. In advance of presentations, the City will make sure to have outreach materials ready so that the City can be highly responsive, and so that staff time is minimized in the process. Certainly the public relations value of the "solarization" of Palm Desert can be capitalized upon by the City's visitors and convention bureaus. Tracking SOLAR results with the PDPDP Throughout the process, Palm Desert SOLAR will work closely with the Palm Desert Partnership Demonstration Project to document savings, and to measure results. Through quantitative analysis and strategically infusing the solar message and results within the community, solar initiatives will become a solar movement. Ultimately, this movement will become a model, and Palm Desert will be recognized not only in Southern California, but throughout California, and across the United States. With the political will to do so, Palm Desert will indeed become THE SOLAR CITY OF THE CALIFORNIA DESERT. -- The Palm Desert SOLAR Strategic Plan-- 52