CITY OF NEW HAVEN JOHN DESTEFANO, JR.

MAYOR
CHIEF ADMINISTRATOR'S OFFICE ROBERT S MUTS CHIEF ADMINISTRATIVE OFFICER

CITY HALL 165 CHURCH ST. NEW HAVEN, CT 06510 (203) 946-7900 FAX (203) 946-7911

May 12, 2012 The Honorable Jorge Perez, President Board of Aldermen City of New Haven 165 Church Street New Haven, CT 06510 Re: Resolution of the Board of Aldermen Authorizing Solar Power Purchase Agreements for Selected Schools Dear President Perez: I am pleased to submit the above referenced resolution for your consideration and action. As part of the City’s commitment to reduce energy costs and improving energy efficiency, we have explored the possibility of placing solar arrays on City buildings in order to generate electricity at a lower rate than purchased from the grid. Under Public Act 11-80, the Connecticut General Assembly created a new funding mechanism for solar arrays known as the Zero Emissions Renewable Energy Certificate (ZREC) program. Under this program, an annual auction will be held for ZRECs (the “green” attributes of electricity from renewable energy systems) generated by renewable energy systems located in Connecticut. The proceeds of this auction will provide the winning renewable energy projects with a guaranteed supplemental stream of income for 15 years, paid by the local electricity distribution company. The most financially advantageous mechanism for the City to pursue solar power for its facilities is through power purchase agreements (PPAs). Under a PPA, a third party would own, install, and maintain a solar array located on a City facility while selling the energy produced to the City under a 15-year agreement. Third party ownership enables the project to take advantage of federal tax credits, which may be up to 33% of the project value. Also, the City avoids any further bonding for the required capital. Under the proposed power purchase agreements, the City would pay per kWh delivered, starting at $0.08 per kWh in Year 1. With a contractual escalation factor 2% per year, the cost in Year 15 would be $0.106 per kWh. For comparison, the average price for electricity for Board of

Education facilities in January 2012 was $0.123 per kWh. Even with the current low electricity prices, the power purchase agreement represents a 35% savings.

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Roof-top solar arrays are now designed to be compatible with existing roof warranties and have a minimal impact on the health of the roof system. All of the proposed arrays will be analyzed by a licensed structural engineer to ensure the integrity of all building systems. The ZREC auction submission deadline is June 12, 2012. However, submitting projects to the auction does not commit the City to executing any contracts or obligate the City in any way. The deadline for successful bidders to enter into an agreement is August 7, 2012, requiring a submission to the Board at this time in order to meet the deadline. The proposed resolution authorizes the City of New Haven Energy Committee to recommend specific projects under the parameters set forth in this action of the Board of Aldermen. The Energy Committee includes aldermanic representation and will be able to act quickly to ensure that the City can take advantage of the ZREC auction under the restrictive timeline created by the state. The resolution also authorizes the Mayor to enter into any ancillary agreements necessary for the technical execution of the solar array. Solar arrays are connected to the electric grid, and therefore require a standardized agreement with the local electric distribution company to interconnect. I urge your favorable action on the Resolution. Very truly yours,

Robert Smuts Chief Administrative Officer

RS/gz

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