Ninth Avenue Terminal (NAT)

Solar Photovoltaic (PV) Feasibility StudyProduced By:

Sebastien LounisFlorent MartinEric A. Zielke

Submitted To:

Dr. Dan Kammen, UC BerkeleyRobert Broesler, Jr., Graduate Student InstructorJimmy Nelson, Graduate Student Instructor

Last Revision: February 23, 2009 Document prepared as part of the requirements of theUniversity of California Berkeley MSE/ER 226: Photovoltaic MaterialsDecember 11, 2008

Executive Summary

As public and political support for renewable energy grow, developers are looking for ways to “greentheir properties. An increasingly popular method for sustainable development is the use of roof-mounted solar photovoltaic (PV) power to generate electricity. This study evaluates the economicfeasibility of installing solar panels atop the proposed vintner’s hall at the Ninth Avenue Terminal(NAT), a warehouse located along the City of Oakland’s historic waterfront.A systematic method was used to determine our final recommendation. We began with a detailedreview of relevant background information including a load analysis and a review of existing incen-tives and potential future policy measures. The following incentives are available to NAT at thestate and local level: net metering provided by Pacific Gas & Electric (PG&E), the California SolarInitiative Performance Based Incentive and the California Feed-in-Tariff (FIT) of approximatelyUS

0.135/kWh. In addition, a 30% Federal Investment Tax Credit (ITC) is available to renewableenergy investors and Renewable Energy Credits (RECs) are available to producers and purchasersof renewable energy. We also considered the potential increase of the FIT to US

0.35/kWh andUS

0.60/kWh and the possibility that, as is already being done by Southern California Edision,PG&E will begin leasing warehouse roof space to install solar panels.Based on the assessment of incentives, a list of existing and future incentive alternatives was de-veloped. Several alternatives were excluded because of high cost and/or because they were beyondthe scale of NATs power generation potential. These initial exclusions left a total of six alternativesconsidered for this project; three existing and three future incentive alternatives. The existing in-centive alternatives were: (1) an electrical load-matching system ﬁnanced by a tax equity investor,(2) a net-producing system ﬁnanced by a tax equity investor with a FIT of US

0.135/kWh, and(3) a load-matching system ﬁnanced through a Power Purchase Agreement (PPA) with a SolarPower Provider. The future incentive alternatives were: (1) a net-producing system ﬁnanced bya tax equity investor with a FIT of US

0.35/kWh, (2) a net-producing system ﬁnanced by a taxequity investor with a FIT of US

0.60/kWh, and (3) a PG&E lease agreement. Setting aside thePPA and the PG&E lease agreement due to lack of available economic data, the remaining exist-ing and future alternatives were compared using the Delphi method to determine the best solutions.With input from the URS Corporation, NAT Partners and our group, the Delphi method deter-mined that a load-matching system financed by a tax equity investor is the best presently availablesolution for the use of solar energy at NAT. However, our economic analysis shows that in orderto achieve parity with the price of grid-purchased electricity over the lifetime of the system, a loanrate of 5 to 6% must be negotiated with the tax equity investor. Thus, depending on negotiatedrates, a PPA is also an attractive financing option that should be considered for a load-matchingsystem. In both cases, the remaining roof space is available in the likely case of a future PG&Elease agreement. Moreover, both options allow for flexibility in the event of a future increase inthe State of California’s FIT to approximately US

0.60/kWh, the winning and proﬁtable futureincentive alternative in our Delphi method. Multiple European countries already have FITs of similar magnitude and several state legislatures are currently discussing raising their FITs, thusUS

0.35/kWh to US

0.60/kWh are reasonable values used in this study.We recommend the installation of a 250 kW solar PV system to match the operating load of NAT’s future facilities. The feasibility of our recommendation under current solar energy policy

structures depends on the successful negotiation of favorable ﬁnancing rates through either a taxequity investor or a PPA. While also considering the relative value of the public relations creditgarnered by having solar panels installed at NAT, NAT Partners should pursue both ﬁnancingoptions using the Federal ITC, “green” publicity, and perhaps even RECs as negotiating tools.