TO: MAYOR AND CITY COUNCIL MEMBERS, CITY OF CHINO
FROM: WARREN MORELION, AICP, DIRECTOR OF DEVELOPMENT SERVICES
SUBJECT
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Solar Power Purchase Agreement with SitelLogIQ, Ontario, CA.
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RECOMMENDATION
recommendation
Approve a Power Purchase Agreement (PPA) with SiteLogIQ, Ontario, CA, that 1) provides for SiteLogIQ to construct, operate and maintain solar photovoltaic (PV) carports on the City property at 5450 Guardian Way (Chino Police Department); 2) obligates SiteLogIQ to sell and the City of Chino to purchase energy produced by the project at a fixed rate of $0.171/kWh; and 3) authorize the City Manager to execute all necessary documents on behalf of the City.
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FISCAL IMPACT
Cost Savings: It is anticipated that the City will begin purchasing power from SiteLogIQ in FY 2025-26 and that this project will result in cost savings of approximately $4.4 million over the 25-year contract term. This estimate assumes public utility rates will increase at 5% per annum over the 25-year contract term. If utility rates increase at a 6% annual rate, the cost savings will total approximately $5.9 million over the 25-year contract term.
Initial Cost: There is no up-front cost to the City for the construction, maintenance and operation of the Solar Photovoltaic Carports. These costs will be borne by SiteLogIQ and recovered through the per kilowatt-hour rate the City will pay to SiteLogIQ for electricity generated by the project. If unforeseen circumstances arise that lead to additional construction expenses, the rate that the City will pay SiteLogIQ to purchase electricity will automatically increase by $0.0003 per kWh for every $10,000 in additional expenses. As an example, if the project were to incur $100,000 in additional expenses, the City’s cost for electricity purchased under the PPA would increase from $0.171 per kWh to $0.174 per kWh, which in turn would reduce the 25-year savings available to the City by $105,485.
Insurance: Under the PPA, the City is required to maintain insurance in an amount not less than the replacement value of the Improvements (i.e., the Solar Photovoltaic Carports).
Performance Guarantee: The PPA establishes a minimum guaranteed annual output for the Solar Photovoltaic Carport system and provides that the City be reimbursed for 100% of lost savings should the system’s output fall below the guaranteed output.
Early termination fee: If the City opts to terminate the PPA prior to the end of the contract term, the following early termination fees would apply:
Maintenance of premises: The City shall be responsible for maintaining the premises on which the solar carports are constructed, while SiteLogIQ shall be responsible for the maintenance of the solar carports.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above furthers the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Financial Stability
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BACKGROUND
A Power Purchase Agreement (PPA) is an arrangement in which a development partner installs, owns, and operates an energy system on a customer’s property at no upfront cost to the customer, and the customer in turn purchases the system’s electric output for a predetermined term at set rates. This allows the customer to receive stable and low-cost electricity with no upfront costs, and the partner to access tax credits and receive income from the sale of electricity.
In 2018, the City of Chino awarded a contract to EcoMotion to assess the potential for cost savings through solar power generation at City facilities. EcoMotion completed the assessment and found that the market rates for electricity generated by solar power and purchased under a Power Purchase Agreement (PPA) would not result in cost savings to the City.
In 2022, EcoMotion was tasked with re-evaluating market conditions for solar power PPAs and determined that the City could realize significant savings through the development of solar carports at the Chino Police Department property. Subsequently, staff published a Request for Proposal (RFP) for qualified firms to submit a proposal to provide Solar Photovoltaic (PV) Carports at the Chino Police Department. Four proposals were received and evaluated, and the City entered into a PPA with PCS Energy.
Following the award of contract, PCS prepared, submitted and received approval of its interconnection application from Southern California Edison (SCE) and in doing so, locked in SCE’s NEM 2.0 rate plan, which governs the rates paid by utilities for energy exported to the SCE power grid. Following the approval of its interconnection application, PCS transitioned to the development phase of the project and was unable to secure the financing needed to move forward with construction. PCS notified staff that they would be unable to complete the project and committed to transfer the NEM 2.0 approval to a new City partner to allow the project to move forward.
In October 2024, the City published an updated RFP on Planet Bids. Eight proposals were received, and each proposal was evaluated and scored based upon the criteria outlined in the RFP (qualifications, past performance, responsiveness, cost, and timeline). Staff ranked the proposals from the responding firms in the following order:
1. SiteLogIQ
2. Motive Energy Storage Systems, Inc.
3. Luminace
4. Renewable Energy Partners, Inc.
5. GreenQuest Energy Development LLC
6. Staten Solar Corporation
7. Endelos Construction
8. Option One Corporation
The top two firms (SiteLogIQ and Motive Energy Storage Systems, Inc.) were invited to participate in finalist interviews, after which SiteLogIQ was deemed to be the most responsive and responsible firm.
ISSUES/ANALYSIS
Under the proposed Power Purchase Agreement (PPA), SiteLogIQ will develop, operate and maintain solar carports at the Chino Police Department and sell power generated by the solar carports to the City at a fixed rate of $0.171/kWh for 25 years. Table 1 shows the estimated savings the City will realize under the PPA, which total $4,386,628 over the 25-year contract term.
Table 1: Estimated Annual Energy Cost Savings
1 Calculation based upon NEM 2.0 rates and 5% annual SCE rate increases
It is important to note that the above estimate is contingent upon this project being completed and interconnected with SCE’s grid no later than April 14, 2026. Should that deadline not be met, the rate at which the City will be compensated for the excess energy generated by the solar carports and exported to the utility grid will fall to the lower rates available under the current NEM 3.0 rate plan. Under this scenario, the City’s estimated savings over the 25-year contract term will total $2,738,834, a reduction of $1,647,794.
At the end of the contract term, the City will have the right but not the obligation to purchase the solar carports at fair market value, or it can require SiteLogIQ to remove the carports and return the site to its original condition at no cost to the City.
The City Attorney’s office has reviewed and approved the Power Purchase Agreement, and it is staff's recommendation that the City Council award and authorize a Power Purchase Agreement with SiteLogIQ for the development, operation and maintenance of Solar Photovoltaic (PV) carports at the Chino Police Department.
Attachment: Solar Panel Design Concept
Agreement