Solar Financing Solutions for The City of Napa Gopal Shanker December 12, 2008

Outline of Presentation Global Energy Issues and Implications The City of Napa's Energy Situation The City of Napa's Energy Solution Next Steps

Global Energy Issues AB 32 Kyoto Protocol Carbon Tax/Trading Demand Supply Climate Change BRIC Nations Peak Oil Peak Natural Gas Petropolitics “Foreign Oil” Black / Brown outs Security Smog Monoculture Soil Depletion Fertilizer Runoff Health Effects Asthma Cancer Agricultural / Ecological Consequences On its own, each issue increases the costs of fossil fuels or of using fossil fuels

Who we are determines what we focus on Demand Supply Climate Change Security “Old Environmentalist” Health Effects “Medical Professional” Agricultural / Ecological Consequences “Patriot” “New Environmentalist” “Businessman” “Oil-man”

Solutions for these Energy Issues Nuclear, Renewable Energy, “Clean” Coal… Demand Supply Climate Change Energy from all sources, wars… All renewable energy, coal… Security All renewable energy except large scale hydro… Health Effects Energy from all sources, wars… All renewable energy except biomass… Agricultural / Ecological Consequences

These Issues are Converging! Demand Supply Climate Change Security Health Effects Agricultural / Ecological Consequences Only renewable energy fits in the intersection of these circles We can no longer develop/afford solutions that solve one problem but exacerbate others

As the convergence accelerates Demand Supply Climate Change Security Health Effects Agricultural / Ecological Consequences The problems merge into a single issue ENERGY TRANSITION Renewable energy replaces fossil fuels

We have made energy transitions before Whale blubber  kerosene Kerosene  electricity Warships: wind  wood  coal  oil Electricity from coal  electricity from natural gas And now…fossil fuels to alternatives

Why not make the transition now? Our biases prevent us from recognizing this as a problem of energy transition Until we eliminate these biases, we will engage in ineffectual arguments and develop ineffective solutions –Is Climate Change anthropogenic or not? –Food or fuel? –Drill, baby, drill!

Implications The transition is not just for a dedicated few, but for all If we don’t make the transition, we will be at serious local and global, economic, environmental, and social risk We need to accelerate the transition, because the convergence is accelerating

We are on the right track in Napa County but need to accelerate Goal: Energy Independence by 2012 Napa Valley wineries have adopted solar (PV) at an extraordinary rate They have done so because the COMBINATION of federal, state, and utility incentives made solar affordable Non-tax paying entities can also benefit from these incentives now

Client’s Perspective on Solar High Risk / High Return Low Risk / Low Return Can use tax credits and/or depreciation Cannot use tax credits and/or depreciation Cannot use tax credits and/or depreciation Until now, the PPA was the only viable solar financing option for non-tax paying clients. But it provides little more than a hedge against inflation, because the benefits of going solar have to be shared with the PPA provider.

Recent developments benefiting local governments and schools 30% Investment Tax Credit for solar photovoltaics has been extended for 8 years California AB 2466 –Local governments and schools can receive a bill credit (based on the TOU electricity generation component only) for electricity produced off-site National Development Council has pioneered, using The Gasser Foundation as a pilot, a solar financing solution for non-tax paying entities

Outline of Presentation Global Energy Issues and Implications The City of Napa's Energy Situation The City of Napa's Energy Solution Next Steps

Electricity Benchmark for The City of Napa Annual Usage (kWh): 2,645,926 Annual Bill: $393,958 Average Rate (per kWh): $0.15

Electricity Projections Period Cost of Electricity Last 12 Months (~) $393,958 In 25 th year $1,595,110 Over 25 years $21,614,313 Assumptions 6% annual escalation rate

Annual Energy Bill

Cumulative Energy Bill

Outline of Presentation Global Energy Issues and Implications The City of Napa's Energy Situation The City of Napa's Energy Solution Next Steps

PV System Metrics

NDC Proposals

Cumulative Energy Bill

Cumulative Energy Bill (NDC 22 cents/kWh)

Cumulative Energy Savings (NDC 22 cents/kWh)

Cumulative Energy Savings (NDC 15 cents/kWh)

Cumulative Energy Savings (Both NDC Proposals)

National Development Council Proposal

Outline of Presentation Global Energy Issues and Implications The City of Napa's Energy Situation The City of Napa's Energy Solution Next Steps

Sign Letter of Intent with NDC / Récolte to develop turnkey solar installation and financing solutions File solar rebate applications (Récolte) Study sites/bills to determine whether on-site or off-site generation makes more sense –Compensation at full retail versus TOU generation Get pre-qualified for financing

California Solar Initiative Trigger Tracker (