Phase 3 Solar Feasibility Study Findings and Recommendations Dan Howell September 14, 2017

Anticipated Annual Production (kwh) Purchased Electricity (kwh) Background STRATEGIC PLAN 2016-2018 “Plan and cost-effectively implement local renewable energy projects with sufficient generation to meet the District’s entire net energy demands while minimizing the District’s carbon footprint” Generation Projects Installed MW’s Installed Anticipated Annual Production (kwh) Purchased Electricity (kwh) Phase 1 Solar 1 0.5 1.3 million - Phase 2 Solar 5 10.7 million Fuel Cell 2 1.5 11 million (*at 85% Rated Output) Total 8 7 23 million 100 million

Phase 3 Solar Feasibility Overview TerraVerde Renewable Partners Competitive selection via RFQ No. 2835 Board Approved Contract – August 17, 2016 Scope: NEM 2.0 opportunities RES–BCT evaluation Battery Storage alternative Economic analysis Develop findings and recommendations

Industry Changes NEM 1.0 vs. NEM 2.0 Changing Load Profile Removes Size Restrictions Reduced $ Credit – No Credit for Non-bypassable Charges Changing Load Profile

Industry Changes - Continued Peak Period Tariffs Current: 12 Noon – 6:00pm Proposed: 4:00pm-9:00pm Result Reduced Value of Solar Generation Grandfathering CPUC Approved 10 Years for Existing Installations Does not Apply to New “RES-BCT” Projects Includes Additional Solar for Expansion of Existing Systems and is Applicable from the Initial Date of PTO

NEM 2.0 Project Opportunities Expand Existing RWRF Solar Installations – 8.8 MW’s Large Electrical Loads – Direct Load Serving Available Acreage Cash Purchase – Estimated Cost/Savings MVRWRF PVRWRF SCRWRF SJRWRF Total Estimated Capital Cost $7,317,680 $11,098,960 $5,548,290 $4,480,500 $28.4 million 25 Years Net Savings $3,440,911 $3,259,571 $3,379,142 $2,633,819 $12.7 million Payback 19 Years 20 Years 17 Years 18 Years -

NEM 2.0 Project Opportunities - Continued Cash Purchase – Estimated Cost/Savings MVRWRF PVRWRF SCRWRF SJRWRF Total Estimated Capital Cost $7,317,680 $11,098,960 $5,548,290 $4,480,500 $28.4 million 25 Years Net Savings $3,440,911 $3,259,571 $3,379,142 $2,633,819 $12.7 million Payback 19 Years 20 Years 17 Years 18 Years - Power Purchase Agreement Estimate @ $.0725/kwh MVRWRF PVRWRF SCRWRF SJRWRF Total 25-Year Net Savings $4,567,390 $4,791,319 $4,336,172 $3,437,059 $17.1 million Positive Cash Flow 8 Years 10 Years 6 Years -

NEM 2.0 Project Opportunities - Continued Cash Purchases vs. PPA Why is a PPA more Favorable? CSI Incentive Program Eliminated 30% Investor Tax Credit to Financiers Economies of Solar Manufacturers and Providers also Providing PPA Contracts District Costs for Site Preparation and Development can be Included

RES-BCT Project Opportunity Large Number of Benefitting Accounts 2 Potential Host Locations Well 84/North Trumble Road SJVRWRF North (Recommended) 5 MW Installation PPA Only RES-BCT PPA Estimate - $.0725/kwh SJVRWRF North 25-Year Net Savings $8,061,595 Positive Cash Flow 16 Years

Battery Storage Opportunities Rapidly Developing Technology Benefits Accounts with Peak Time-of-Use Load Profiles Analyzed Over 200 Accounts 7 Potential Locations – Shared Savings Agreement Model Battery Storage Project Opportunities – Shared Savings Example 45/55 to 60/40 Share 4 Non-Solar Locations 3 Existing Solar Locations Total 10-Year Net Savings $708,918 $595,119 $1.3 million * Recommend Pursuing Separately as this Market Evolves

Summary of Project Opportunities Estimated PPA at $.07251/kwh MVRWRF PVRWRF SCRWRF SJVRWRF SJVRWRF (North) Totals 25-Year Net Savings $4,567,390 4,791,319 4,336,172 3,437,059 8,061,595 25,193,535 Positive Cash Flow 8 Years 10 Years 6 Years 16 Years - Site Preparation Costs $1,718,030 $3,210,560 $835,890 $662,743 $1,694,640 $8,121,863 System Size 2.23 MW 3.16 MW 1.87 MW 1.5 MW 5.52 MW 14.3 MW Tariff NEM 2.0 RES-BCT

Next Steps Test the Market via RFP Process Confirm/Validate Economics Approve and Authorize TerraVerde Contract - $169,211 Advance SCE Interconnect Application - $14,000 Concurrent Engineering Services Required Confirm/Validate Economics Evaluate Financing Strategies Establish Baseline Pricing Adjust Project Scope (as needed) Present Findings and Recommendations to the Board

Conclusion – Estimated Project Schedule

Recommendations Approve and authorize the following: Execution by the General Manager, or his designee, of the District’s standard form of contract with TerraVerde Renewable Partners for development of a Request for Proposals (RFP) advancing Phase 3 solar photovoltaic opportunities, in the amount of $169,211;   Administrative award and execution by the General Manager, or his designee, of the District’s standard form of necessary contracts and agreements for developing Phase 3 solar photovoltaic opportunities RFP; and Appropriation in the amount of $220,000 to fund project costs including TerraVerde Renewable Partners contract, Southern California Edison utility interconnection application fees, and District labor costs.

Contact Information Dan Howell Sr. Director of Administration (951) 928-3777 Ext. 6246 Email: howelld@emwd.org