BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Authorize the Chief Executive Officer to Negotiate and Execute a Rate Agreement with the Power and Water Resources Pooling Authority for Development of the Almaden Campus Solar Carport 2 Project, at a Not-to-Exceed Rate of $203 Per Megawatt-Hour with 2% Annual Rate Escalation (San Jose, District 4).
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RECOMMENDATION: Recommendation
Authorize the Chief Executive Officer to execute a Rate Agreement with the Power and Water Resources Pooling Authority for the development of the Almaden Campus Solar Carport 2 Project at a not-to-exceed rate of $203 per megawatt-hour in year one (1), with 2% annual rate escalation.
Body
SUMMARY:
Santa Clara Valley Water District (Valley Water) recognizes the benefits of developing solar projects to help diversify Valley Water’s energy portfolio and improve power resiliency. Onsite solar development is part of a broader strategy to enhance power resiliency and may be supplemented in the future with battery storage systems as battery technologies become more cost effective. In addition, solar projects constructed at Valley Water facilities will reduce or avoid utility transmission and distribution (T&D) charges and can directly offset electricity purchased from the utility grid at those facilities.
In January 2025, Valley Water released a Request for Proposals (RFP) through its joint powers authority (JPA), the Power and Water Resources Pooling Authority (PWRPA), to solicit proposals for the Almaden Campus Solar Carport 2 Project (Project). The project would install additional solar carport systems in the parking lots at the Almaden Campus.
Three solar developers responded to the RFP and White Pines Renewables (Solar Developer) was selected as the highest ranked proposer. The proposed project includes the installation of two (2) new solar carport structures in the parking lot north of the Headquarters Building and two (2) additional solar carport structures in the Water Quality Lab parking lot. The new solar carports would generate a combined 500 kilowatts (KWac) of power and are expected to produce approximately 1,043 megawatt-hours (MWh) of electricity annually. This production is estimated to offset approximately 24 percent of the electricity currently purchased from the utility grid for Almaden Campus.
The project is proposed as a power purchase agreement (PPA), under which the Solar Developer would finance the upfront costs to design, construct, operate, and maintain the system for the 20-year term of the agreement. Valley Water will pay only for the renewable energy generated by the system through a Rate Agreement with PWRPA. If authorized by the Board, the not-to-exceed rate under the Rate Agreement for distributed generation (onsite) solar will be $203 per MWh in Year one (1) of production, with an annual escalation of two percent (2%) over the 20-year PPA term.
The annual escalation rate for utility T&D charges has been highly variable over the last decade. Because the energy generated will be consumed onsite at the Almaden Campus, the Project will partially offset the demand-based Wholesale Distribution Tariff charges for site, which are projected to increase at an annual rate of 4.5%, and will not be subject to utility Transmission Access Charges, which are projected to increase at an annual rate of 7.6%.
The solar installation is designed for a 30-year lifecycle. The Project’s financial model includes buyout costs associated with the transfer of system ownership at the end of the 20-year PPA term, as well as operation and maintenance costs for the 10-year period following the system buyout. The carport structures are expected to exceed the 30-year lifecycle of the solar components. The remaining value of the carport structures was not included in the financial model, however may also offset the costs of a future solar project depending on future energy and utility market conditions.
Staff is requesting Board authorization for the Chief Executive Officer to negotiate and execute the Rate Agreement with the Solar Developer for the Almaden Campus Solar Carport 2 Project. This authorization will allow Valley Water to continue diversifying its energy portfolio and advance its goal of improving on-site power resiliency at its facilities. If authorized, staff will also proceed with negotiating a site license agreement with the Solar Developer, enabling construction to begin as early as Fall 2026.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with the recommended action for the Almaden Campus Carport 2 Project. The recommended action is unlikely to or will not result in disproportionate impacts on any specific community(ies) relative to the general population.
FINANCIAL IMPACT:
Staff estimate a $4.87M expenditure associated with the Project compared to a $6.31M expenditure for the equivalent electricity purchased through PWRPA’s existing energy portfolio over the 30-year duration of the Project. This represents an overall savings of $1.44M over the Project lifecycle.
Adequate funding for the Project power purchase payments is currently budgeted in the Building and Grounds Project, Project No. 60101002, which is included in the FY 2025-26 Adopted Budget. The power purchase payments will continue to be funded through the Building and Grounds Project budget over the term of the agreement. The Building and Grounds Project is funded by the General Fund (Fund 11).
CEQA:
This project is statutorily exempt from CEQA review pursuant to Pub. Res. Code Section 21080.35 which covers the installation of solar energy systems installed on the roof of an existing building or at the existing of a parking lot.
ATTACHMENTS:
Attachment 1: PowerPoint
UNCLASSIFIED MANAGER: Manager
Sam Bogale, 408-630-3505