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1 City of Middleton Solar Projects Proposal January 27, 2015 Don Peterson Madison Gas and Electric Company ---PAGE BREAK--- 2 Introduction / Agenda β’ Partnership to achieve more β’ Solar development β two different Middleton projects β Community Solar model β Partnership model β’ Financial options β’ Planning and decision making is iterative ---PAGE BREAK--- 3 Solar Partnership β’ MGE helps City acquire cost-effective solar power to help meet City sustainability goals. β’ City provides a site for MGEβs Community Solar project to serve MGE electric customers. ---PAGE BREAK--- 4 Community Solar Municipal Operations Center First project of the partnership ---PAGE BREAK--- 5 Community Solar Program β’ Participants cover the solar projectβs costs β’ Participants receive value for solar energy production β’ Structuring these charges and credits ---PAGE BREAK--- 6 Community Solar Programs β’ New approach for getting more solar on the grid β’ MGE/Middleton proposal β unique among 125 investor-owned utilities Courtesy of Solar Electric Power Association Solar carve out in RPS ---PAGE BREAK--- 7 Community Solar Design β’ Who might participate? β Siting limitations shading) β Canβt afford to own their own system β Renters β’ How will we design a successful program? β Focus groups β Surveys β Market research (SEPA, etc.) ---PAGE BREAK--- 8 Development Steps Order β’ Firm up project costs β’ Research using focus groups and surveys β’ Finalize financials and product offering β’ City of Middleton commitment β’ Submit proposal to PSCW β’ Public roll-out, open subscription period β’ Start construction (tax credit availability expires 12/31/16) ---PAGE BREAK--- 9 Partnership Model Middleton Police Station Second project of the partnership ---PAGE BREAK--- 10 Solar Partnership MGE Value-add Proposition to City To achieve this outcome for the City, MGE will: ο§ Monetize tax incentives ο§ Share scale benefits from Community Solar project ο§ Fund a majority of the capital costs of project ο§ Manage project construction ο§ Provide cost effective on-going O&M services ---PAGE BREAK--- 11 Police Station Array Layout 11 100 kW project ---PAGE BREAK--- 12 Partnership βFlipβ Model Illustration Ownership Structure ο$75K Solar Investment ο$154K Savings (net of investment) ο9.2% Internal Rate of Return ο$50K Net Present Value ο$225K Solar Investment ο$86K Savings (net of investment) ο$156K Tax Savings Realized ο3.0% Internal Rate of Return ο-$21K Net Present Value ---PAGE BREAK--- 13 βFlipβ Model + MOC Rent Illustration Ownership Structure ο$150K Solar Investment ο$63K Savings (net of investment) ο$168K MOC Rental Payments ο9.2% Internal Rate of Return ο$75K Net Present Value ο$150K Solar Investment ο$86K Savings (net of investment) ο$156K Tax Savings Realized ο7.0% Internal Rate of Return ο-$7.9K Net Present Value ---PAGE BREAK--- 14 Middleton Constructs Illustration Ownership Structure ο$350K Solar Investment ο-$95K Savings (net of investment) ο$0K MOC Rental Payments Internal Rate of Return ο-$144K Net Present Value ---PAGE BREAK--- 15 Middleton Solar Projects β’ One of the largest solar projects in Wisconsin β’ Largest community solar project in Wisconsin β’ Locally produced solar power offsets the grid mix β 800,000 kWh per year β enough to power 120 homes each year β’ Visible to the community β’ Progress toward Middleton sustainability goals β’ Offsets 760 tons of CO2 emissions per year ---PAGE BREAK--- 16 Middleton Solar Projects Clearly we can do more together than separately We ask that the Committee support continuing the discussion with City staff Thank you! ---PAGE BREAK--- 17 Appendix 17 ---PAGE BREAK--- 18 Ballasted Array Courtesy of H&H Solar ---PAGE BREAK--- 19 City of Middleton Annual PV-weighted Effective Rate $0.04975 $0.10462 $0.11533 $0.12281 36% 0% 10% 20% 30% 40% 50% $0.00000 $0.03000 $0.06000 $0.09000 $0.12000 $0.15000 Off-Peak Winter Peak Summer Peak Other Summer Peak (2 PM - 6 PM) $ / kWh Rate Categories % of Generation by Category 40% 15% 9% $0.088 / kWh % of Total Generation