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Agenda Bill 5APart2 10/05/2009
' ~ Y ~a - ~ J m ~ ~ _ _ ~ I ' -- ~~ ~o. ,. ~ _ .. e~~ 4'd'f 9'~~~$e°°p'4's..,..v,4 4,s''r'^` I ~~~fi`4'~'~`~'fi~~e e r'F-F'r"r f'a`R r4!-,.. ~, :it ~,. _ ~. 1. '~ .m i 4~ f ~ k'S ~E" t~ 1~ ~ ~ f 4~ 4~ f~~ S~ 4~ P i 4 P"e f5 L' ~~ ,~ , rl . TELLUS Prepared by Sam Pierce PE Principal, Tellus Applied .Sciences, Inc. Under the direction. of :the Climate Protection Campaign, ~~ ' Projected changes in global temperature: '` _ .. . , .ra a 185fi Y999end rD e6tlcn . altmatr . Tr; ?l 00 - - ~ i~_.,;-,i r~t~ , ,.-yn r F~. m,~~ ~, - , agrade ~ -lPCC ©stimate ,~~ , , n 1O° _. .. ,nqn ,~,~ - i T +~ ~ - ~. -~. ui- ' I - - - _~ a ~<<U_.~i.,v ,~~, ~.,o,~ ,r - it - 799!x. _ e.e. _ ~ , -~ .. r h^ .e ~ ~ ... 1859 1B~D 7890 1910 '1930 tBSD 1970 Y9B0 2010 203D 2050 2tJro ~~O isoo aooo 2yoo Ackno~vled~e~ents There were many individual. contributors to the success of this project. The City of Petaluma Staff provided the key information required to develop the measures in these Action Plans. The Public. Works Department directly supported the data collect effort.. The Petaluma Green Team, and Diane Ramirez in particular provided consistent support and clear .guidance throughout the project. The support of City Staff Senior Management. has ensured the active support of this project by the entire Petaluma team. Great appreciation is offered to Erika Walther of ABAG Energy Watch, and David Williard of Sustainergy Systems for their energy efficiency contributions carried forward in this work, and Ann Hancock, Executive Director of the Climate Protection Campaign whose inspiration is the driving force propelling this work forward. Finally, ultimate appreciation goes to the Petaluma City Council for their vision for a stronger, more secure future for otir community, expressed in many ways, including their support for this important work. Disclaimer: The Climate Protection Campaign and its subcontractors do not imply ariy guarantees. The information contained in this report is intended to support the City in its efforts to understand the greenhouse gas emissions trend and opportunities for City operations and employee commutes. All results are approximations using standard engineering methodologies, based on best available information and historical energy usage. 3®~ Definition of'Terms CEC (California Ener~;y Commission) The CEC is California's primary energy policy agency. They are responsible for forecasting future energy needs, promoting energy efficiency through appliance and building standards, and supporting renewable energy technologies. CNG (Compressed Natural Gas) Compressed Natural Gas is a substitute to gasoline, diesel, or propane fuel. It is made by compressed natural gas, mainly methane (CH4). CO2e (Equivalent Carbon Dioxide) Equivalent Carbon Dioxide is the concentration of carbon dioxide that would cause the same level of radiative forcing as a given type and concentration of greenhouse gas such as methane, perfluorocarbons, and nitrous oxide. GHG (Greenhouse Gas) Greenhouse gases are the gases in the atmosphere, which reduce the loss of heat into space and therefore increase global temperatures. Greenhouse gases include water vapour, carbon dioxide, methane, nitrous oxide, ozone, and chlorofluorocarbons. . ICLEI (International Council for Local Environmental Initiatives) ICLEI was formed in 1990 and is an international association of local governments and national and regional local government organizations that have made a commitment to sustainable development. IRR (Internal Rate of Return) Internal Rate of Return is a budgeting metric used to decide whether to make an investment or not. It is an indicator of=the efficiency of an investment. A larger ]RR is a stronger investment. kWh (kilowatt-hour) A kilowatt-hour is used to express amounts of energy delivered by electric utilities. One watt hour is the amount of energy expended by a one-watt load drawing power for one hour. Metric Ton A metric ton equals 2,205 lbs. A short ton equals. 2000 lbs. Net Capital Cost The net capital cost is the capital cost of a project minus incentives and rebates. NPV (Net Present Value) ~ ~~ Net present value is a standard method for the financial appraisal oflong-term projects. It measures the excess or shortfalls of cash flows, in present value terms, once financing charges are met. NPV indicated how much value an investment or project adds to the value of the business or firm. O&M (Operations and Maintenance) Operations and maintenance refers to the maintenance and fuel cost incurred by a unit of equipment. The O&M costs in this analysis are the additional operation costs associated with the efficiency measure. PV (Photovoltaic) Photovoltaic cells convert light energy into electricity. Also called solar power. RPC .(Renewable Portfolio Standard) Established in 2002 under Senate Bill 1078 and accelerated in 2006 under Senate. Bill 107, California's Renewables Portfolio Standard (RPS) is one of the most ambitious renewable energy standards in the country. The RPS program requires electric corporations to increase procurement from eligible renewable energy resources by at least l % of their retail sales annually, until they reach 20% by 2010. ~ California Public Utilities Commission, http://www.cpuc.ca.gov/PUC/energy/Renewables/ s Table of Contents 1.0 Executive Summary .......................................................................................................... 6 Background .............................................................................................................................. ... 7 Methodology ............................................................................................................................ ..: 9 Results .........................................................................................................................::.......... . 11 Summary .................................................................................................................................. .22 2.0 Introduction ..................................................................................................................... 23 3.0 Methodology ....................................................................................................................24 Context ..................................................................................................................................... . 24 Measure Identification ............................................................................................................. . 26 Measure Assumptions: General Variables ................................................................................ 26 Measure Specific Variables ...............................:..................................................................... . 28 Financial Analysis Results :....................................................................................................... 28 Community Benefit ................................................................................................................... 29 Measure Evaluation ................................................................................................................. . 30 California Low Carbon Fuel Standard ...................................................................................... 31 PG&E Power Content and City Future Action Assumptions ................................................... 31 Future Actions ........................................................................................................................... 32 4.0 Results .............................................................................................................................. 32 GHG Impacts and Plan Financial Results ................................................................................. 32 Action Plan Evaluations ........:.............................................::.................................................... 34 Energy Rate Escalation and Associated Budget Vulnerability ................................................. 35 Incremental Capital Cost of Efficiency Measures .................................................................... 39 Plan Details ...............................................................................................................................40 Action Plan Evaluations ........................................................................................................:... 50 5.0 Measure IDetails ............................................................................................................... 52 -~ Measure Selection ...:.........................................::.....................................................:................ 55 .1 Measures Results ...........................:......................................................................................... . 58 6.0 Summary and Conclusions ........................................................................................... 126 7.0 Appendices ......................................................................:.............................................. 127 . ~ 7,1 Basis for 2000 GHG Inventory ................................................................................:.. 128 7.2 General Inputs and Assumptions ............:................................................................... 130 7.3 Action Plan Evaluations .............................................................................................. 131 7.4 Kenilworth Swim Center Recommendations .............................................................. 135 7.5 Building and Swim Energy Efficiency Measures ....................................................... 136 7.6 ABAG Energy Watch Lighting Recommendations .................................................... 137 7.7 Petaluma Potable Water Pumping Data ...................................................................... 141 7.8 Transit Bus Replacement Costs .................................................................................. 142 7.9 Vehicle List with Measures ........................................................................................ 143 7.10 Solar Electric Production Assumptions ...................................................................... 150 7.1 1 Vehicle Fuel Cost Trends ............................................................................................ 151 - 3 °~t 7.l 2 Carbon Credits ............................................................................................................ 153 7.I3 Electric~Vehicles ...................................................:.:..:................................................157 7.14 Commute Programs :~ .................................................................................................. 161 7.15 Grease to Gas Augmentation of Digester Gas ............................................................ 166 List of Tables Table 1: Increases in Energy Consumption from 2000 to 2008 ........:........ Table 2: GHG Action Plan Financial Results ........:.................................... Table 3: Measures 1 - 25 ............................................................................. Table 4: Measures 26 - 50 ........................................................................... Table. 5: Measures 51 - 66 ..............:...............................................:............ Table 6: Measures 67 - 77 (Not quantified) ...........................:.................... Table 7: Increases in Energy Consumpt-ion from 2000 to .2008 ................. Table 8: General Inputs ............................................................................... Table 9: Action Plan Financial Results ....................................:....:......:...... Table 10: Evaluation Criteria Weighting .................................................... Table 11: Plan Evaluation Results ...........................................:...:.............. Table 12: Results by Measure (1-26) .......................................................... Table 13: Results by Measure (27-52) .....................................:.................. Table 14: Results by Measure (53 - 77) ..........................................:.......... Table 15: Measures 1 - 25 .......................................................................... Table 16: Measures'26 - 50 ......................................................................... Table 17: Measures 51 - 66 ........................................................................ Table 18: Measures 67 - 77 (Not quantified) ...................:......................... Table l 9: 2000 Greenhouse Gas Lnventory (Part 1) ...............:.................... Table 20: 2000 Greenhouse Gas Inventory (Part 2) .................:..:.............. Table 21: Evaluation Criteria Weighting .................................................... Table 22: Measure List and Evaluations A ................................................. Table 23: Measure List and Evaluations B ................................................. Table 24: Plan Evaluation Results .............................................................. Table 25: Vehicle List and Measures--Units 2 - 76 ......................~.............. Table 26: Vehicle List and Measures Units 77 - 201........: ......................... Table 27: Vehicle List and Measures Units 202 - 301 ................................ Table 28: Vehicle List and Measures Units 301 - 526 ................................ Table 29: Vehicle List and Measures Units 527 - 614 ................................ Table'30: Vehicle.List and Measures Units 6l5 - 990...., ........................... Table 31: Vehicle List and Measures Units 99l - A3 ................................ List of Figures .................................... 7 ............. ................. 12 .................................. 14 .................................. 15 .................................. 16 .................................. 16 .................................. 24 .................................. 27 .................................. 33 .................................. 50 .................................. 5 l .................................. 52 .................................. 53 .................................. 54 .................................. 55 .................................. 56 .................................. 57 .................................. 57 ................................ 128 ................................ 129 ................................ 131 ................................ 132 ................................ 133 ................................ 134 ................................ l 43 ................................ 144 ......................:......... 145 ................................ 146 ................................ 147 ...:...........:.........::..... 148. ................................ 149 Figure I ;City of Petaluma GHG Inventory as a Percentage of the 2000 Total ............................. 8 Figure 2: Energy Rate Escalation Scenarios ..............:.................................................................... 9 Figure 3: Annual Cost of Energy .................................................................................................. 13 Figure 4: City ofPetaluma GHG Inventory as a Percentage of the 2000 Total ........................... 23 Figure 5: Power Content Values for Converting kWh to lbs/CO2e ............................................. 31 Figure 6: Energy Rate Escalation Scenarios ................................................................................: 36 Figure 7: Annual Cost Trend of Vehicle Fuel Only ..................................................................... 37 Figure 8: Annual Cost of Energy .................................................................................................. 38 3°~ ~'itl- c.~',?et~alta~~tt~ C.;,~~~ent~c~t;~;e Gtt;1 n.~i:;sic}r~ i?.~.~tluctic?7i ,~~ctit7l~ 1f11~3~ 3 ~).3.C?$a 1®0 Ezecutwe~u maw Petaluma is a full service community in southern Sonoma County with a population of 54,660 in 2006. Formerly considered the "egg capitol of the world", the surrounding pastoral landscapes and the tranquil cityscape of Petaluma. have provided locations for numerous movie productions. In 1971 Petaluma gainlyd national attention. by enacting the "Petaluma Plan" to ensure orderly growth and to protect the city's character. The community has extended its tradition of stewardship by embracing the ICLEI program to reduce the greenhouse gas (GHG) emissions from-city controlled sources.Z The ICLEI program has five steps, referred to as "Milestones." Milestone 1, creating the GHG inventory, and Milestone 2, setting a reduction target have been completed. Milestone 3 requires the creation of a plan to meet this target. This report and associated analysis provides the information necessary for- addressing Milestone 2 and the roadmap to satisfy Milestone 3. This analysis provides five measure-specific plans to reduce emissions by more than 20%. Furthermore, the framework associated with this material will support the City in meeting the requirements of Milestone 4 (implementation) and Milestone 5 (monitoring and adjustment). The framework facilitates the integration of -new and revised. information, taking advantage of new opportunities and allowing adjustments to under performing initiatives. The analysis, :and resulting GHG emissions reduction plans, incorporates many opportunities in the various contributing. sectors (Building Efficiency, Fleet, Commute, Water/Sewer, Streetlights, and Photovoltaic Systems), as identified by the City Staff utilizing the best available information at the time of research. The results provide an emissions impact estimate for five plans with the corresponding financial analysis. The results for each .plan include the GHG emissions reduction. expressed in metric tons C02e (equivalent COZ emissions) 3 and as a percentage of the total City GHG emissions. These results are presented along with a number of other important metrics, including the Internal Rate of Return (IRR) and Net PresentValue (NPV) of each plan. These are critical in the financial evaluation of the "investment". Other. information includes the budget resources not sent to the utility company"'and the fuel companies, and the value of the resources'yredirected to local investments. Plan C, for example, results in over $]0 million in local investment over the 25 year life of the plan. The intent of this work is to allow the independent plans to be considered on their merits in numerous areas. This provides the capability to compare the comprehensive costs and benefits of competing paths, and thereby allow Policy Makers the ability to select the most appropriate path to reducing global warming pollution emissions in the City of Petaluma. Five Action Plans are presented resulting in reductions from 22% to over 38% below 2000 levels by 2015. Each plan has advantages and challenges, which are described in the following sections of this report. '` http://en.wikipedia.org/wiki/Petaluma, California 3 C02e: Equivalent CO, in ibs o~ tons. The additional greenhouse gases such as methane are converted into the equivalentamount of CO, for analysis and clearer presentation. ~::it~ f:yf`1'et~tlutit~ Ut~e.rthouse Gas L tttrssion .f?cduc:t'ic3i1 ,~4tioi~ 1?lztrt I().~.() ~ack~r®u>rflcl _ _- _ .. _ North Bay public jurisdictions (cities and counties) have adopted greenhouse. gas reduction . targets and .have committed to developing action plans to meet these targets. These initiatives coincide: with -= aggressive actions by the State to address climate change a The rule"s and - potential mandates from the State are under development. While. the -'_ specific requirements are not ,yet determined, it is clear that all sectors. including .local. governments will be encouraged or even required to join the effort to reduce greenhouse gas emissions. North Bay governments are already demonstrating leadership by embracing the ICLEI program, setting reduction targets and developing GHG emissions action plans. The first step, creating the .inventory of emissions produced by the internal operations has been completed for the City of Petaluma controlled equipment and operations. The total emissions for 2000 were roughly 5,400 metric tons of C02e. In addition to fihis baseline, there were numerous changes in GHG emissions identified from the utility billing since the baseline year of 2000. These are consolidated and modeled in the analysis as the "End Use" entries in the table below.5 These add another 640 tons to the reduction goal. This information was also used to generate the emissions trend associated with projected city growth from. 2009 to 2020. These projected additional GHG emissions are included in the calculations of each Plan. This adds. 106 tons per year which is dependant on the projected population increase each ,year within the City.b Increases in Energy Consumption from 2000'to 2008 End Use kWh Therms Fuel (gals) 2000-2008 Corporation~Yard 37,762 0 0 2000-2008 Muni.Pool 0 30;020 0 2000-2008'840 Hopper St Off 0 10,751 0 2000-2008 Lakeville Ag Pumps and Sm Pmps 0 126 0 2000=2008 Streetsignals -397,685 0 0 2000 to 2008 Fleet 0 0 41,990 2000-2008 Commute 0 0 10,266 Totals -359;923 40,897 52,256 C02e (metric tons) -80 229 ~ 491 Table 1: Increases in Energy Consumption from 2000 to 2008 a California's major initiatives for reducing climate change or greenhouse gas (GHG) emissions are outlined in the 2006 legislation Assembly Bill 32, 2005 Executive Order and a 2004 ARB regulation to reduce passenger car GHG emissions. These efforts,aim at reducing GHG emissions to 1990 levels by 2020 - a reduction of about 25 percent, and then an 80 percent reduction below .1990 levels by 2050. This initiative also includes the California Renewable Portfolio Standard for the production of electricity, and the California Low Carbon Fuel Standard under develbpment_ 'These End Uses represenr.100% of the energy increases for all accounts as identified in the PG&E billing data. They are labeled as'the accounts contributing most to the change andthe year associated'with the change. a Petaluma General Plan 2025 Air Quality -Greenhouse Gas Emissions Section Revised Draft Environmental lmpact,}2eport, Winzler and Kelly, November 2007. ~~:itv of Petalutt~~ Greer~.ftou~e <.ia~+ F~ttissic~n ~~ecltte?~~on /~~ tiott I~lat~~ 1~.>.(,~ The City of Petaluma emissions by sector are presented as a percentage of the total emissions in Figure 1 below. Baseline GHG Emissions by Sector Buildings 19% :~-~,_. ~~i Streetlights ~ " ~~ Fleet 26% Solid Waste Water Wastewater 0% 33% C~~~ 4 ~_ '~ ~~ fl --,~ V ~~~,' __ ~ f~... Co mmu t e 11% Figure 1: City of Petaluma GHG Inventory as a Percentage of the 2000 Total Many of the measures available to reduce GHG emissions also will reduce the City fuel, electricity and natural gas costs. These costs are a significant element of the municipal budget, and the. potential. cost volatility represents a threat beyond. the control of City Staff. Figure 2 below provides the trends for the annual energy costs based on four rate escalation scenarios. The 3.5% escalation rate reflects the currenttrend in utility energy cost. The "current" cost trend for fleet fuel is 7.8% per year based on the costs from 1987-2006. These values are used in the cash flow projections for each.. GHG reduction plan. The fuel,. electricity and natural gas related. measures eontairted in this analysis will reduce the vulnerability to rising energy costs. http:Utonto.eia.doe.~ov/dnav/pet-hist/mitt usA.huryn; See the appendices for the yearly published value. '~. 'r.ttct;.'.: ~~ s.~~~;i4=1i ~.; 'llhSS Re ~ n E:~IkI~ ~i .~ 1 ~. iii ~:'~,. ~t;!'. C.'tt~~ iii'1'ctaic~nt<t Gre~a.Eitou:~~ ~.ia~ ~Enl~sic+t~~i f~eduCtiCnt .~'Oction I'lax~t 1t~.~.Ot3 Energy Cost Escalation Scenarios Annual Ehergy Town annual energy cost with no future energy conservation actions Energy Escalation Cost Rate $10, 000, 000 , ' ~ $9,232,486 y $9,000,000. -~ lL - Z $8,000,000 - ~,_ I d I ,~ { li. $7,000,000 ' _ ; .. U $6,000,000 - - C $5,000,000 W j $4,000,000 Y -- C C Q $3,000,000 T, $2,000,000 $1, 000, 000 ~/ 12% $4, 768, 401 6.0% $3,990,025 3.5% ~u,~ $2,901,041 1.7% Figure:2:,Energy Rate Escalation Scenarios 1Vlethodolo The Petaluma GHG emissions inventory for 2000 was documented in 2003 and provides a reference for the baseline inventory developed for this analysis.8 The specific actions and events affecting this baseline from 2000 to 2008, either positive or negative,. are factored into the inventory and the resulting trend. The 2000 baseline details used in this analysis are available in ,the appendices. The options for future action by the City are comprised of measures applicable to building and equipment energy efficiency, fuel efficiency, •alternative fuel options, and distributed energy generation. These options have been identified and quantified within this analysis. They are evaluated and presented as individual projects (measures), and as groups of measures (plans). Each is assigned a. status (completed or future) and an implementation date to enable the calculation of cash flows over the life of the plans and the creation ofenergy cost trend graphs. The measures are grouped to create comprehensive GHG emissions reduction plans. Each of the .plans is analyzed to provide profiles enabling the evaluation of the plans individually and in comparison to the other plan. options. Measures of specific data such as capital cost, year of $ GHG Inventory Report Petaluma; Simon Wooley, September 2003. ..3iiiT_.~_ }~._,(t"t.'i.,.~? L ~slh~ ~1i4C~ 3~~ ~f i'„~i'- ,tl'~` il' t ~•..._. ., $0 , 00 O^ O`l' 00 Oa 00 Oro. O~ 00 00 ,~O ,~~. ~rL ~O ^tx ~y ,~~° ^1 ~O ,~0 r10 ~O r10 ry0 rt0 ry0 ~O rv0 rt0 ry0 rL0 ~O ry0 ~O rt0 r10 rv0 rL0 rt0 ry0 r10 rv0 t~`it~~ o1~Ptaltaaraa Grec,niic~~se Ciao 1.Eta.i~:sit~rt .[Ze~it~ctit~n lcticm 1'lt~ra 1Ca.~?.~a implementation, financing, energy and cost savings were processed to provide the following information for the five action plans: • Emissions reduction in tons C02e avoided as a percentage of baseline • C02e reduction by sector • Annual Cash Flow .including debt service, replacement cost and incremental O&M costs • Outstanding principal and debt service by year • Simple Payback (SPB) for each, plan • Internal Rate of Return, (IRR) .for each plan • Net Present Value (NPV) for each plan. • Avoided utility company payments (NPV over life of plan) • Avoided fuel purchases (NPV over life of plan) • Value invested locally in emission reduction projects A measure evaluation matrix was employed to quantify subjective considerations to allow their inclusion in the planning process. The evaluation scoring contributes to the understanding of the opportunities but is not intended to provide a final ranking of the measures. The decision to include measures in each plan is' dependent on its role in achieving the objective of that plan, and is therefore independent of any fixed criteria or ranking. The results of the evaluation are provided in the appendices. €~;itl~ ;.:if'1'€ ~~lunrt~ Eireet:~housc Cii~ l rni:;&ic~rt i?.tcl~~c:tic>n ,~ctrz~~i 1'lar~ l v.>.0~~ Results ~rowb~-~..b~. Five plans have been created for consideration by the City of ~- Petaluma. These plans consist of numerous measures to reduce GHG i;, emissions, reduce energy costs, address equipment issues, and reduce -I' ~- the uncertainty of the City's future annual energy costs.. Sumimary -: financial information is provided in Table 2 below. The results *~4<:...+<: ~~rr,~~=f~r<.' contained in. this table should be considered with the Action .Plan Evaluations provided in the Appendices to understand the relative strengths of each combination of measures populating the Action Plans. Detailed information for each measure is provided within the Measure Details section of this report. Plan Results and Comparison Tables Table 2 provides important- financial. information for each plan including the net annual cash flow. The "% Reduction" is the amount of CO2e reduced as a percentage of the total City emissions. Plan A provides a reduction of 23% below the year 2000 (baseline) emissions. Plan E provides a strategy to reduce the City's emissions to .38.% below 2000 emissions. These percentage reductions include the projected increased emissions from city growth from 2009 to 2020 based on emissions data from 2000 to 2006 and projected; population increases. The financial analysis is provided. with each plan. The critical metrics of Internal Rate of Return (IRR) and Net Present Value (NPV) provide important information to evaluate the worthiness of the investment from a cash flow perspective. It is important to note the large negative net cash flow in one of the later years of 'Plan A represents the replacement of the photovoltaic (PV) system inverters after 10 years.9 q The assumption is that the cost of inverters will increase at the generally assumed inflation rate of 3.5%. However likely advances in technology, and improved economies of scale for the industry suggest this is overly conservative. " ~'.lt~ Ct~`~~f't311lSllil.~tt't;E;71~1C9USf.' ~.I%l:~ ~ S3ltti~'slt}I"i ~Z~::=`;i'u3C:t'1<~II ~C't?C;II P~ti143 ~_~,J.(~~~ . GHG Action Plan Summary Anal sis Plan A Ptan B PIan;C Plan D Plan E Reduction below 2000 by 2015 23.2% 22.3% 22.3% 28.0% 38.7% SPB NA 5.3 0.3 1.2 6.3 IRR NA 49.8% 409.7% 108.2% 35.6% NPV ($17,587;409) $11,169,284 $12,748,340 $13,600,309 $12,007,322 Annual Cash Flow Plan A Plan B Plan C Plan D Plan E 2008 $0 $0 $0 $0 $0 2009 $0 ($20,;000) $0 $0 $0 2010 ($1,596,983). ($19,485) $61,620 ($58,672) $23,805 2011 ($1,613,670) ($32;.134) ($11,841) ($54,178) .($158,301) 2012 ($1,706;298) ($48;975) ($16,341) ($101.,033) ($186,522) 2013 ($1,671,733) ($98,506) $56,000 ($26,937) ($373,187) 2014 ($2,431,087) ($43,624) $75,264 ($4,643) ($301,478) 2015 ($3;800,666) $23,021 $315,061. $257,510 ($227,329) 2016 ($3,746,220) $299,023 $571,918 $539,177 $55,058 2017 ($3,720,043) $365,210 $662,738 $636,349 $215,357 2018 ($3,692,944) $799,010 $850,238 $989,940 $774,171 2019 ($3,929,337) $832,199 $883,643 $1,026,943 $967,207 2020 $851,666 $888,186 $949,769 $1,006,331 $1,027,979 2021 $88.1,735 .$,1,048,300 $1,056;544 $1,170,527 $1,193,047 2022 $912,864 $1,085,107 $1,093,586 $1,155,830 $1,179,254 2023 $363,923 $1,123,207 $1,131,926 $1,254,028 $1,278,394' ' 2024 ($1,346,214) .$1,162,644 $1,171,610 $1,297,986 $1,323,329 2025 $1,012,992 $1,203,464 $1,212,686 $1,343,485 $1,369,842 Table 2: GHG Action Plan Financial Results Carbon Offsets Carbon offsets are available as an alternative to specific reduction actions within the City facilities and equipment. The PG&E Climate Smart program launched is available, but has not been incorporated into these plans. This and numerous other programs are available offering a less cost intensive approach to GHG reduction than local project implementation. However, the offset typically must be renewed annually, doesn't offset energy use (and associated cost by the City), and doesn't reduce the future energy cost vulnerability (see Figure 3 below). More information .on carbon offsets is provided in the appendices, including a sample of programs available at the time of the research. ;.'!!'t1a1~' ~lt~;C'~,~lt'i:t ~~~EC1-~}3<i,t~ ~ ~~~ t ,ai! I ~.'(. _.~_1 ~fi=-. City- t1l~'etalutiia'C)~~eet~_liot~s~ ~ia~ I_ ~nr~~~c~n f~ecluction,~~tr~fioti 1?Ian 10.~.0~ Energy Rate Escalation and .Associated Budget Vulnerability There is considerable discussion. about the availability of fossil fuels in the near and middle term . future (5 to 20:years). The "Peak Oil" movement.. suggests that we are at or near the point where our increased global demand for oil cannot 6e supplied from new petroleum discoveries, while: production from.existing oil fields.is waning. Similar arguments are made for natural gas supply vs. demand. If demand outstrips supply, simple economics indicates that the cost to consumers will .escalate, ~rapidhy., until the global demand is~ .sufficiently dampened and realigns with available supply. The concern is significant enough to have prompted a US government sponsored study to determine.the :impacts of demand exceeding supply in the near future.t0 This issue has important implications for local North Bay jurisdictions. Forty percent of PG&E power is generated by natural gas't. A spike in the cost of this energy source will result in significant increases in the cost of electrical power, as well as increased volatility in the cost of natural gas used directly by the City. Energy efficiency projects and distributed generation energy systems can play a significant role in moderating this vulnerability. Figure 3 below provides potential impact of energy efficiency strategies on the associated vulnerability. For example, under the 3.5% utility cost escalation rate scenario, the City would reduce. its fleet fuel and utility ;payments by more than $lM per year in 2015 by implementing one of the emission reduction plans detailed below. 00 $5 000 Future Energy Cost Mitigation Annual Energy Cost ' Escal. Rate N.Gas and Elec.= 3.5 % Diesel and Gas =8% , , __ _ ~ r ~ ~ $4,112,005 NoAclion W $4,000,000 -- CO Z m 3 u" $3,000,000 - - . $2,913,041 Plan C , ~ - N N ~' ~ $2,810;172 Ran B o (..) ~ $2,616;326 Ran D ~, ., .- , $2,506,618 Ran E - $2,247,226 Ran A a~ $2,000,000 ~ - - -.~ W 1 Q $1„000,000 - , $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Figure 3: Annual Cosf of Energy 10 Hirsch, Robert. et al. (February 2005) "Peaking of world Oil Production: Impacts, Mitigation, & Risk Management." SAIC. " PG&E Power Content: Eligible Renewables: 15%, Coal: 2%, Large.Hydro: 16%, Natural Gas 47%, Nuclear. 20%, Other; 1 %, California Energy Commission; avww:energy.ca.~ov.'consumer, February 2009. s ~1 .z?:.1.° k'~~~'~l.t' ., i._,ft i` ~ ® ~~ 1. 6i3': tai:, tl:lt aitfif _,. .. ~~?[ C;it~, ~~f.~Petalu€il~t C~€=ctllt~l.t~;e ~~€s 1 ~~ti~s.ic~r R.e%i~€cticx"1 <1cfi~xy I-Yi€~r) l(~.5.0~) Action Plan'Details The measures used" in this analysis are provided :in the tables below. The first five columns indicate which measure is included in each Action. Plan. .More information on the measures is available in the Measure Details section. of the report. The material that follows' provides the- results for each Action Plan. It is important to note that some measures are mutually exclusive: Measures: 40 and 41, for example apply to the same set of equipment, the City fleet.. Measure 41 is more aggressive affecting more vehicles. Therefore a plan would select only one of these measures. Action Plan ..Measure - Measure Name Implementation Financed Numbor Date (yes/no) A B C D E ~ - n "n ~~- 1 K. Swim Center Solar Thermal~Repair MCAP 2010 es n n . (ExGusive to #2,7;8,9) y I 2 K.Swim Center Solar Thermal Expansion MCAP 2011 es ~ n - I (ExGusive to'#1,7,8,9) y n"-.- ~ r. I 3 K.Swim Center VFD MCAP (Exclusive tog) 2010 yes " ~ ~~i 4 K.Swim Center Pool Covers RepL. MCAP 2009 es "n ~~ ~ ~ (Exclusive to~9) y -' ~ 5~ K. Swim CntrOpt. Operation Pool Pumps and 2009 es n n i i ~ - Filtration EEM-1 (Exclusive to #6,9) y - ' ~ ~ ` 6 K. Swim Cnter Premium Efficiency Motors EEMQ 2009 es n ~~ n n . , (Exclusive to #6, 9) y ^n ~', ~ .n~ n ~ ~~ q K. Swim Cnter High Eff. Condensing Boilers EEM- 2012 yes 3 (Exclusive to #4and 8,9) ri. n n n n g K. Swim Cnter Supplimental Solar WV Heating 2009 yes EEM-4 (Exclusive to #1-,2,7,9) n n n n ~ g K. Swim Center Closure 50 % Days 2009 no . (exGusive to other K.Swim pool measures) m 10 Cavn. Cntr Opt. Operation Pool Pumps and 2009 yes - - Filtration EEM-5 11 Cavn. Cntr Premium Efficiency Pool Pump Motors 2010 es n __ EEM-6 (Matched to#10) y h n n n 12 Cavn. Cntr Supplimental Solar Wah Heatng 8011 yes EEM-7 n n n 13 Cavn. Cntr Install Cool Roof EEM-8 2011 yes " .14 City Hall, Com Cntr, Police DeptSBEA Lighting ~ 2006~~ ~. es y Measures n ~ 16 Police Facility Energy Management System MCAP 2010 yes n n r. ~I 16 Police Facility HVAC Upgrade to 16 SEER and - 2012 yes 80 % AFUE ABAGEW / HDR EEM=2 h~ n ~ ~ 17 Luchessi Cmty Cntr Replace Gas Pcks w/ High: Eff 2011 yes UnitsEEM-9 (Exclusive to #18) n ~ ~~ n 18 Luchessi Cmhty Cntr InstalfCool Roof EEM-10 2011 yes ~ (Exclusive to,#17) n 19 Animal Shelter Lighting Retrofit ABAG EW 2009 yes rr , ~~ 20 Corporation YardLighting Retrofit ABAG EW 2009 yes "n ~ - - I 21 Cavn. Cnh Lighting Retrofit ABAGEW 2009 yes , ~ Elwood Cntr Soup Kitchen Lighting ReVOfit ABAG n - I 22 EW 2009 es y n I ~ v 23 I Senior"Center Lighting Retrofit ABAGEW 2009 yes '.n ii '. 24 Airport Lighting Retrofit ABAG EW 2009 yes n _ 25 Vending Machine Controls ~ 2009 yes Table 3: Measures 1 -"25 `.'~~1''1;1'a: ~ t,`+~ .~'~3 53~~t-.dE=„ ~~~~' ~~-l'its~ ~,' ,. ~. ~~,~.,. t't.L C:it~ c~t:~1'etaiuiira Creerr~z>l.)e Cia4 ~-(n.i~sic7rr I~ec~r~etic~n ~~ctiorl 1'l~rr 1~.~.0~j Actlon Plan Measure ~ MeasureName Implementation Financed A B C p, ~ E. Number Date (yes/no) ~. , 26 Retrofit Frates Pumps (Zone 4) 2010 yes r. 27 ~ PetalumaAqueducl supplying2one 4 2012 yes i ~~ 28 SolarBeeT"'(unlessnewfacilityromovesneed) 2009 yes n v 29. Grease to Gas Meffiane:'Program 2011 yes ~ ~ ' 30 Streetlighling A: 50% Conversion HPS to LED (or equiv.) 2012 yes r n 31 Streetlighling B: 50 % Conversion HPS to LED (or equiv.) 2013 yes n'' - ~ - ~ ~ i.. - 32 Streetlighting C: Tum off 50% of Residential lighting (non intersection) 2010 no n ~. ;~ ~ ~... ~1. - gg Streetlighting D: Tum off 50% of Residential ~ lighting.(non intersection) 2012 no - m--~ i _ 34 Commuted 2010 no ' n` ;~ Y ~~ 35 Commute2 2011 no i _ 36 4 day work week (Commute) 2009 no 37 4 day work week (Building) 2009 no n ,' i 1 38 Bus FleetA 2014 yes n y- ~ ~ r 39 Bus Fleet B 2014 yes n ~n n 40 Fleet Replacement Strategy A (includes Nissan Elec) 2010 yes n ~ ~ 41 Fleet Replacement~.Strategy B (includes Nissan Elec) 2012 yes n n n ~ n 42 Nissan Electric Vehicles ~ _.. (Exclusive to other FIeeCMeasu~es) 2010 yes n -h n n n 43 Biodiese120% 2009 yes n ~ ~ n. n n n 44 Biodiese150% 2010 yes n ~ n n n n ~ -05 Biodiesel 99 % 2010 yes n ,n n n n 46 Biodiese120% linked'to FleetA ~ 2009 yes n n n n n 47 Biodiesel 20% linked to Fleet B 2009 yes 'n 'n n n 48 Biodiesel 50 % linked to FleetA ~ 2011 no 'n n n 49 Biodiesel 50% linked to Fleet 8 2010 no n. n n n n 50 Biodiesel-99,% linked toFleetA 2010 no Table 4: Measures 26 - 50 . ~I{~ I~. 1t_``~'',711'"; f .1 s1 tr~~.i` ~ ~?~.~ 1, ;!:.. Vii, ~ .. ~..~€~ .- ~i14. C::ity c~~ Pe[a~i~iui~t~;re~~t~)ise~ Ci~~s 1-;misic?t~ IZec~ucti~)~ ,~lctiot~ ~'Iar~ l f~~.~.~9 Action PWn Measure MeasureName Implementation Financed A B C D E Number Date (yes/no) 51 Biodiesel 99% linked to Fleet B 2010 no n ~ - - 52 Fleet Management Software Linked to Fleet ~ Replacement A 2010 .yes ~ ~ 53 Fleet Management Software Linked to Fleet Replacement B 2010 yes ~ ~ _ 54 PV 1.0 MWac (PPA) 2011 no _ 55 PV 2.0 MWac (PPA) 2013 no n ~ 56 PV 1.0 MWac (PPA) 2012 no ~~ ~ 57 PV .S MWac (PPA) 2012 no ii n n ~ ~ n '~~~ 58 PV .5 MWac 2013 yes -n n ~ -~ n ~~. 59 PV 1.0 MWac 2009 yes m n-: n n ~, 60 PV 2.0 MWac 2014 yes n ~ ~ ~ 61 Community Center 41 kWac PV MCAP 2010 yes ' Sn ~ ~ , 62 K.Swim Center 80 kWac PV System MCAP 2010 yes 'n - ~ 'q n ,. 63 City Hall PV System SOkWac 2012 yes n ;: r v. ; 64 Public Works PV System 25.3 kWac 2010 yes n ~ 65 Efficiency Coordinator (.SFTE) 2010 no n n ~- n,. - 66 EfficiencyCoordinator (:SFTE) 2012 no Table 5: Measures 51 - 66 Action Plan Measure Measure Name Implementation Financed Number . Oate (yes/no) A B C D E ri n n n n 67 Swim Center Pay-per-use Showers MCAP NA NA (not quantified) n n n n h 68 City Hall HVAC Upgrade MCAP NA NA - (not quantified) n n n n n 69 City Hall Council Chambers HVAC Upgrade MCAP NA NA (not quantified) n n n n n~ 70 Ciry Hall HVAC Upgrades West Wing Chiller, East NA NA Wing Packageunits MCAP (not Quantified) n h n~ n n 71 City HaILHVAC MotionNOccupahcy Sensors for NA NA Lighting MCAP (not Quantified) n n n n ri 72 City Hall Daylighting MCAP (not quantified) NA NA n n n n n 73 Community Center Energy Management System NA - NA ABAGEW/HDR (not quantified) n n n n n 74 Community Center lighting Design and Controls NA NA . MCAP (not quantified) n n ~ n n n 75 Cavanaugh Complex Variable Frequency Drives NA NA MCAP (not quantified) n n n n ri 76 Wastewater Treatment Plant. NA NA n n ' n n n 77 Reclaimed Water Initiatives NA NA Table 6: Measures 67 - 77 (Not quantified) / 'If ciil(,,, ~ 1't :'t:1 lr 3. .. It -.?#if it 3~~r~ i y"s~("~ f y`~(t~,. .. _ L.. ~.;iY~' c~~f~I'~:t~11u.t~ta CEt•e.Lz~.ltc~tltY C:ias { .11ii~+s{c?n .lec{aac:ti~>rt rl~tiotl l*l.trt 10.:~.Ot3 Plan A: 1,263 Tons CO2e Avoided 23.2°~° % Reduction Community .Benefit (over 25 year life of plan) Financial Metrics $$$ Avoided Utility Company Payments $8,213,356 .Jobs Created 1,094 $$$ Avoided. Fuel Purchases $11.1,593 IRR NA $$$ Invested Locally in GHG Projects $52,761,391 NPV ($17,587,409) Action Plan A: This plan has 10 specific actions and reduces the net GHG by 23% below 2000 levels. This plan relies primarily on the generation of electricity from photovoltaic systems. A total of 6.6 MWac of PV projects are included, roughly half utilize the power purchase agreement approach to financing. The PPA approach requires no capital or O&M expenditures. The fnancial metrics of this approach are very challenging where the NPV is negative $17M. The resulting annual cash flow is the net income to the City (energy cost savings minus project debt service, replacement costs and associated O&M). The negative. value in year 2024 is due to PV inverter replacement. The GHG Emissions graph below depicts the growth of emissions from 2000 to present and the reduction ,anticipated with this plan into the future. It includes the impact of the CA Renewable Portfolio Standard (RPS) and the CA Low Carbon Fuel Standard.12 These Standards are discussed in more detail on page 3l within the Methodology Section. Annual Net Cash Flow plan A 2008 $0 2009 $0 2010 ($1,596;983} 2011 (S1,613,670) 2012 (51,706,298} 2013 ($1,671,733} 2014 (52,431,087} 201:5 (53,800-;666} 2016 (53,74fi,220) .2017 (53.720,043} 2018 ($3,692.944) 2019 (53:929,337} 2020 $851,666 2021 $881,735 2022 $912,864 2023 $363,923 2024 t$1,346,214) 2025 $1,012,992 Emission Reductions Including Utility'Power Content Trend and Assumed FuttirE. ~' The reductions are obtained by reading the bottom curve on the graph. The Renewable Portfolio Standard (RPS) impacts are assumed to be 50% of the stated statewide targets. i~l 1'..,_ l~! .~~[:l'(ii,i, ~,.. t',(?,). `~? ~ .3 se~ ~i ~}~~.~~{i ~C~I~fa _. _ _iiL. City c~l~l?ctGtittnt~t C~rect~lrous~ bias 1=~tli~c~~t .[Z.i.iv,I.~ctiot} ~~ctit~r~ l'I~tt 10.~:E}~~ Plan B: 1,213 Tons CO2e Avoided 22.3°~° % Reduction Commuhity"Benefit (over 25 year life of plan) Financial Metrics ' $$$ Avoided Utility Company Payments $4,484,311 Jobs Created 341 $$$ Avoided Fuel Purchases $2,816,847 IRR 49.8% $$$ Invested Locally in GHG Projects $16,253;720 NPV $11,169,284 Action Plan B: The plan includes a combination of 28 new measures including 2 MWac of Photovoltaic systems producing over 2.4 million kWh per .year: This plan also includes a broad range of efficiency measures for the city buildings, fleet and wastewater system. The fleet measures are more aggressive including a range of gas hybrid, diesel hybrid and all electric vehicle replacements. The plan also includes reducing the Kenilworth pool schedule by 50%. All together, the measures in this plan allow the City to exceed the target of 20% GHG emissions reduction by 2015, yet realize an attractive internal rate of return of 51% and a net present value of the investment of over $11M. The resulting annual cash flow is the net income to the City (energy cost savings minus project debt service, replacement costs and associated O&M). The Emissions Trend below illustrates the progress toward the city's reduction goa1.13 GHG Emissions Trend: Measures and External Fadons eoo % aoo C -~~ E -zmo w O U -3200 -x000 oss 20% ^ Future Ac[io. ~% O CA low Carbon Fuel ~ Power Conte ~% t]Measu er TrenaSes 80% -100% Emission Reductions Including Utility Po~~~er Content Trend and Assumed Futnre Actions is The reductions are obtained by reading the bottom curve on the graph. The Renewable Portfolio Standard (RPS) impacts are assumed to be 50% of the stated statewide targets. ,lii? r.~ ~ is .~, 1;;17 f ~,. t1 ,;-t,. 3 -'~ ~ - ,. , Race Roo^ ~oR. Roos ry°oa aoo5 P~ ~°d pope 'P~y, rooo o~ ry°.~ F~ Rae ryo~ ^Fm ry~ M1p ry A 'L°,yo C:;ttv to#:~Pet~tle.tn~a (~;r:ec~itc~tt:~c ~'a~ I.ntissic~rt lZe~iu~;tiv,~ ~~.cti~~il l:'I~:rt GHG Emissions Trend: Measures andExtemal Factors ~ `~ - - ~ o~ _- - -i ^ Future Actions' v I ~% ^ cn row ~1 - _ Carbon Fuel ~ - ~ ©Power Canten[ ~ _ ~ .M~ ~~% ^Measures antl l PBan C: 1,21.0 Tons CO2e Avoided 22.3% % Reduction Community Benefit (over 25 year life of plan) Financial Metrics $$$`Avolded Utility Company $3;373,850 Jobs Created. 188 Payments $$$ Avoided Fuel Purchases $3,477,322 . IRR 409.7% $$$,Invested Locally In GHG $9,788,725 NPV $12,748,340 Pro ects Action Plan C: This plan includes 27 measures. In addition to similar measures of Plan B, Plan C replaces the fleet replacement strategy with a less aggressive strategy, and relies on a major grease to methane gas collection and. processing program .implemented elsewhere in California. Plan C exceeds the City target of 20% GHG emissions reduction by 2015 with very attractive financial metrics. The Internal Rate of Return is 190% and the Net Present Value exceeds $1.4 million over the term of the analysis (25 years). The annual net cash flow (energy cost savings minus project debt service, replacement costs and associated O&1V1) is negative for a number of years. However, the cash flow turns strongly positive in 2015. The Emissions Trend below .illustrates the progress toward the city's reduction goal.14 Annual Net Cash Flow plan C 2008 $0 2009 $0 2010 $61,620 2011 ($11,841) 2012 ($16,341) 2013 $56,000 2014 $75,264 2015 $315,061 2016 $571,918 2017 $662,738 20]8 $85,0,238 2019 $883,643 2020 $949,769 -2021 $1,056;544 2022 .$1;093,586 2023 $1,131,926 2024 $1,171,610 2025 $1;212,686 ~. ~ , ,N~ M1°o. Doti ry°o^~ 'Pa ,AoS ryo~ ry°o~ ryooe ryog, '4°0. P~ 't°~t ry,~. ~°e ry°~ E6 'L°~ 'E ry°e ~,~o Trends I~ ~~ i toox I Lmission.Reduc[ions including Utility Powcr Content Trend and Assumed Future Actions 14'The reductions are obtainedby reading the bottom curve on the graph. The Renewable Portfolio Standard (RPS) impacts are assumed to be.50% of.the stated statewide targets. ' ., ,. .. 'Et.~i.~ ~~,~ ~.:~~f~;;l i. r ~I,,:1 ~~ ~C.;ttt`; ~ .i~ti~... M.,~i1 _ li~ii~_ t C:it:v c~i'1'ctal€I,~~~i ~;rz:estt~t_Itlsc Ct<-a~ ft~1_itisic~rr L.ecltlc?vn i~~ti€art l'l~tn lO.w-.(){) Plan D: 1.,523 Tons C02 Avoided 28.0% % Reduction Community Benefit (over25' near life of plan) Financial Metrics. $$$ Avoided Utility Company $6,673,737 Jobs Created 207 Payments $$$ Avoided Fuel Purchases $3,374,173 IRR 108,2% $$$ Invested Locally In GHG $11,545,266 PIPV $13,600,309 Pro ects Action Plan D: The plan includes a combination of 35 measures including two residential streetlighting reduction measures: not included in previous plans. It includes a 1 MW Photovoltaic system as well as most of the energy efficiency measures that are available for each sector. An aggressive biodiesel fuel .measure for the. diesel powered vehicles is added to the aggressive fleet replacement program. All together, the measures in this plan allow the City to reduce emission by 28% GHG emissions below 2000 by 2015.. While the cash flow is negative in the early years, financial metrics of IRR and NPV are both attractive due to the positive cash flow after 2014. The resulting annual cash flow provided below is the net income to the City (energy cost savings .minus project debt service, replacement. costs :and associated O&M). The Emissions Trend below illustrates the progress toward the city's redaction goal.15 Annual Net Cash Flow plan D 2008 $0 2009 $0 2010 ($58,672) 2011 ($54,178) 2012 ($101,033) 2013 ($26,937) 2014 ($4,643) 2015. $257,510 2016 $539,177 2017 $636,349 2018 $989;940 2019.. $1,026,943 2020 $f,006,331 2021 $1,170,527 2022 $1,155;830 2023 $1,254,028 2024 $1,297,986 2025 $1,343,485 GHG Emissions Trend: Measures and External *~~ - I, , ,j '8'JO O' ,~ 0 E aaoo v 0 U 3ilp -- ~ ? ow ,. _-- _-__ ~ .N% ~~\ __- -- ~--_ - --- . - ,aow ~% - ;-cow .fi`P ti°° ~°°ti ry°°'~ P`P ry°~ R°`r° •F°^ M1°°° ry°°°' •A° P~ ry°~ P~ ~°" E° ry°`° ry°~ ry° ry°a ,~,~° CA Low Carbon Fuel Power Content Measures and mends Emission Reductions Including Utility Power Content Trend and Assumed Future Actions t' The reductions are obtained by reading the bottom curve on the graph. The Renewable Portfolio Standard (RPS) impacts are assumed to be 50% of the, stated statewide targets. .. I~l~..li _ ~'~. _t ,. { :~i3~ttt ,. '1d , ~ ®/.(] i ~ ~.3i. t 1tv ., ~~i. .`s i.,.i .`<. [rg~,`. t~'.ti~ c l~Petalur~r~~ C~rz:ert-lrr~use tints ~ rl7issictrt I~~.Li~lc:tic~r~ ,lctitst3 Pi<tr; 10.j.(J~~ Plan E: 2,1.01 Tons C02e Avoided 38.7% % Reduction Community Benefit (over 25 year life of plan) Financial Metrics $$$ Avoided Utility Company $4,858,555 Jobs Created 510 Payments $$$ Avoided Fuel Purchases $2,734,847 IRR 35.6°~ $$$ Invested Locally in GHG $25,071,010 NPV $12,007,322 Pro ects Action Plan E: This plan includes 40 new measures. In addition to most of the measures of Plan D, Plan E replaces the fleet fuel strategy with a more aggressive approach that specifies 99% biodiesel, and adds another 2 MWac PV system. This plan replaces the residential streetlighting measures with a conversion to 'LED streetlighting systems (or equivalent technology projected to be available by 2012). Plan E pushes the GHG emissions reduction beyond 38% by 2015, and maintains compelling financial metrics. The Internal Rate of Return is over 30% and the Net Present Value exceeds $11M. The annual net cash flow (energy cost savings minus project debt service, replacement costs and associated O&M) turns positive in 2016. The Emissions Trend below illustrates the progress toward the city's reduction goal.lb Annual Net Cash Flow plan E 2008 $0 2009 $0 2010 $23;805 • 201t ($158,301) 2012 ($186,522) 2013 ($373,167) 2014 ($301,478) 2015 ($227,329) 2016 $55,058 2017 $215,357 2016. $774,171 2019 $967,207 2020 $1.,027;979 2021 $1,193,047 2022 $1,179;254 .2023 $1,278;394 2024 $1,323,329 2025 $1,369;842 GHG Emissions Trend: Measures and External Factors eoo -- --- -- - ----- --------~ --- - - - - ~ -- ore o - - . ;~ - :. ~ ~~ - \ ' o ' . ,. ~ ~~ ~ p - % ^ FuNre Actions ~ -1600. o = '. . -F -. - ~ ~ - - - ~- ^CA LOw H - ~ _- ~ ~% Caft)On Fuel E zaoo ' ~ .. .. ©POwercontent w 4 ~ 4 , `~% p ~ ~ ~ ^hreasvre anal s U -~~ - - Trentls ~~ -,~ i.........__.___._~_. _....---_ __..._-_..._. _._.__. ___._._.---___.._..:..-.__ _ ._.........._. ___ i -more ,eo8 ,~° ~;~ ,to°~' ~o°' 'A°~' ,~o~ ,yo°1 ,~o~ ,~o°P '~°~ '~°, '°` ti°~ ti°e M1°y ti6 'L:~ M1°~ ti°9 '~~~~ E=mission Reductions Including Utility Power Content Trend and Asswned Future Actions 16 The reductions are obtained by reading the bottom curve on the graph. The Renewable Portfolio Standard (RPS) impacts are assumed to be 50% of the stated statewaide targets. ~~ t'<ti~ Irltti...,,'S. f rI~~p IL ~~ ~ ti _ e`` t,.i .., 3~. ~~. ~ ~: .. Cit}~ of Petaluma Greei~l7c~z~se Ciao 1-mission Reduction ~lctio~~ .flan lt).5.09 SlflffiIYI~I A greenhouse gas (GHG) emissions reduction of 20% by 2015 can be achieved by a~number of paths. documented in this report. Each path, or Action Plan, is comprised of up to 40 individuaY . measures. Each.'is evaluated for the fnancial costs and benefits they contribute to the overall. strategy.. The total "palette" of quantified opportunities includes. 65 new measures to reduce energy consumption. The analysis model .underpinning these results will be available for incorporating 'new information and technologies as they come available, as well as truing the analysis with monitored data. The comprehensive approach to addressing this goal allows the. City to meet a number of related goals, including improving the long term financial health of Petaluma, reducing the budget vulnerability to future energy cost escalation, addressing the existing maintenance demands of aging equipment,. and providing public demonstration of commitment and progress in the highly visible challenge of greenhouse gas emissions reduction. The information in this report allows the City to understand the challenges and opportunities available in reaching its goal. The evaluation matrix quantifies the many related issues not captured by the financial results or emissions reduction such as public visibility and the resolution of existing problems. The financial results provide information on the investment value of the various paths of action, along with the anticipated. °net cash flow over time. The ability to understand the complex context of greenhouse gas emissions reduction will allow policy makers to define expected outcomes and associated financial commitments to achieve those outcomes. This provides city staff the flexibility needed .to effectively implement the policy. The individual measures within each plan may be delayed, modified or replaced as appropriate while remaining faithful `to the policy directive. This flexibility will be essential given the dynamic nature of the regulatory environment and the rapidly evolving financial and technological opportunities in California. In summary, this analytical framework and report organizes the city's data and documentation relating to energy efficiency and greenhouse gas emissions reduction. It is applied to the city goal of a 20% reduction of emissions below 2000 levels, presenting five strategies to meet this . goal. The database and analytical framework supporting this work are available into the future as new information and opportunities (technical and financial) emerge for consideration. ~.. ~, [ ~~i- t~~ .j 4.~~.r ~1 ~[ i. 3 .:'t ~ o~ s ~. ~I i` .~~M~ `' .~.~i ft 1 `.. f:l~». Cite ofPeta.lui~la C;reer~lzouse G~~ T.rni~sic~r~ .[Z.eclu.ctio~~~ ,`lctiol~ Plan. ~ 1~J.~.0~ 2.0 Intr®duct~®n Public jurisdictions (cities and counties) have adopted global warming pollution reduction targets and have committed to developing action plans. These detailed plans are required to provide a roadmap to meet the goals and a framework to track and verify the progress toward- the goal over the life of the plan. This report provides these capabilities by using an analysis method developed for North'Bay cities and applied to 'the -City of Petaluma. This method incorporates all measures across the various sectors (Building Efficiency, Fleet, Commute, Water/Sewer, Streetlights, and Photovoltaic Systems), and provides an emissions impact estimate and a comprehensive financial analysis. Furthermore, this analysis allows independent plans to be analyzed, providing the capability to compare the costs and benefits of competing paths to global warming pollution emissions reduction. . The first step, creating the inventory of emissions produced by the .internal operations has been completed for all cities and the county. The total emissions for 2000-were roughly 5,400 tons of CO2e. Baseline GHG Emissions by Sector) Buildings Solid Waste yyater Wastewater 19°/u ~% ~ 33% \ ~ _ .~, _ ` ~~~r~"~~ ~~-~ Streetlights ~ ~'( 11% III ~ ~f J \__ ~ ~ ~ Y ~ `, '~ Commute 11% Flee[ 26% Figure 4: City of Petaluma GHG Inventory as a Percentage of the 2000 Total ~... ~I~„-;.~.. lyi Otis ~~w~lt ~.. .::t Ili :~?.I2 _aq '~ ~ ~'.l'•. ~._ ~ ""._ .... ~/ v k i. tc.:~41.. Cite of P=.~~~taltutla Cirt;ez~`~ou~;e C~a Ft2~~ssioz~ ~~ecluctit3n r~ctiotl 1'la~n Lt3.~:.09 300 1Vlethodol® Content The Petaluma GHG emissions inventory for 2000 has been. completed and provides a reference for the baseline inventory developed .for this analysis.~~ The specific actions and events affecting this baseline, either positive or negative, are factored into the inventory and the resulting trend.. The baseline inventory has been reconstructed from information made available by Staff at the initiation of this work. The total emissions for 2000 were roughly 5,400 tons of C02e. There were numerous changes in GHG emissions identified from the utility billing since the baseline year of 2000. These are consolidated and modeled. in the analysis as the ."End Use" entries in the table below.18 These add another 640 tons to the reduction goal. This information was also used to generate the emissions trend associated with city growth from .2009 to 2020. These projected additional GHG emissions are included' in the calculations of each Plan. This adds 106 tons per year which is dependant on the projected population increase each. year within the City.19 Increases 'in Energy Consumption from 2000 to 2008 End Use kWh Therms Fuel (gals) 2000-2008 Corporation'Yard 37,762 0 0 2000-2008 Muni Pool 0 30,020 0 2000-20Q8 840 Hopper St Off' 0 10,751 0 2000-2008.Lakeville Ag Pumps and Sm Pmps 0 126 0 2000-2008 Streetsignals -397,685 0 0 2000 to 2008 Fleet 0 0 41,990 20002008 Commute 0 0 10,266 Totals -359,923 40,897 52,256 CO2e (metric tons) -80 229 491 Table 7: Increases in Energy Consumption from 2000 to 2008 The options for future action by the City are comprised of measures applicable to building and equipment- energy efficiency, fuel, effciency, alternative fuel options, and distributed energy generation. These options have been identified and quantified within this analysis. They are evaluated and presented as individual projects (measures), -and as groups of measures. (plans). Each is assigned' a status (completed or future) and' an .implementation date to enable the calculation of cash flows over the life of the plans and the creation of energy cost trend graphs. The "palette" of measures includes emerging technologies which .are in the pilot project stage of ~' GHG Inveritory Report Petaluma, Simon Wooley, September 2003. ~$ These End Uses represerit 100% of the energy increases for all accounts as identified in the PG&E billing data. They are labeled as the accounts contributing most to the change and the year associated with the change. i9 Petaluma General Plan 2025 Air Quality -Greenhouse Gas Emissions Section Revised Draft Environmental Impact Report, Winzler and Kelly, NoJember2007. ~ili??zir." r'~,<~~E:'~1?U~i 4 :?;~zl ~ i~~ I ~!1'1•~ ~i!_:':~rl `~...:4sC1.4. .,`1f~. City- ol'I'etaetina Gr•t:err:hc}use Gay F....rriissic~n lZ`~l.u.cti<>rt ~~ctit~l~ Plan l().~.0~~ implementation. These are included on the assumption that they or an equivalent technology will be available by the year of implementation.20 The measures are grouped. to create comprehensive GHG emissions reduction plans. Each.. of the. plans is analyzed. to provide profiles enabling the evaluation of the plans individually and in comparison to the other plan options.. Measure specific data such as capital cost, year of implementation, financing, energy and cost savings were processed to provide the following information for five action plans: • Emissions reduction in tons CO2e avoided as a percentage of baseline • CO2e reduction by sector • Annual cash flow including debt service and incremental O&M costs • Outstanding principal and debt service by year • Simple Payback (SBP) for each plan • Internal Rate of Return (1RR) for each plan • Net Present Value (NPV) 'for each plan Avoided utility company payments (NPV over life of plan) ® Avoided fuel purchases (NPV over life of plan) • Value invested locally in emission reduction projects The details of each measure are provided, such as the vehicle and pump lists provided in the Measure Details section. The generally applied assumptions, such as the discount rate, interest rate, escalation rate for the cost of utility supplied power and fuel, and the CO2e conversion factors for energy and fuel have also been reviewed and approved by City Staff. The values are provided in Table 8. These general values can be overridden at the measure level if necessary. For example, the term of financing is set to 5 years as a default value. CEC loans are based on generating a net cash flow close to zero for the first year and a positive cash flow over the life of the loan with a maximum value of ] 0 times the annual cost savings. Where appropriate, the term. of the loan is adjusted at the measure level to meet this funding criterion. '`0 Example: A streetlighting measure is included:which relies on LED technology. There are several pilot projects underway that utilize this techriology. However, if this specific strategy does not perform as anticipated (light pattern uriiformity has been a concern), this analysis assumes another streetlighting energy savings strategy of similar costs and benefits will be available by the implementation date of 2012. ...~l4 i~°~.a i3.~1j., .3 :.', ~~'~ ly~ijli_. -t ~tl i._a. ~`<<.. ~. ;~1 <~_ l;'t'. CitE~ of I'etaltuna Creen.house~ C_ias I.n1is~~on R.ec~uctior~ Actio;~ Plan 1 ~J.>.09 1Vleas>I><re Identification The list of measures has been generated from document reviews, past experience of other jurisdictions, and a review of the Petaluma facilities completed by numerous energy professionals. All measures included in this analysis have been reviewed for inclusion by City Staff. The following sources contributed to the information in this report. • Draft Plan: City of Petaluma Building Energy Efficiency and Greenhouse Gas Emission Reduction, David Williard, Sustainergy Systems, ABAG Energy Watch, Climate Protection Campaign, November 2008. ® GHG Inventory Report Petaluma, Simon Wooley, September 2003. • .Petaluma General Plan 2025 Air Quality -Greenhouse Gas Emissions Section Revised Draft Environmental Impact Report, Winzler and Kelly, November 2007. • City of Petaluma Community Center and Police Facility HVAC Study, LGEP/Brown Vence and Associates, December 7, 2005. • Lighting Audit and Recommendations, Animal Shelter, Cavanaugh Center, Corporation Yard, Senior Center, Soup Kitchen, Association of Bay Area Governments Energy Watch, January 2008. • Proposal for Solar Electric Design and Build Services at Petaluma City Hall, SPG Solar, November 16, 2007. • Proposal for Solar Electric Design and Build Services at Petaluma Community Center, SPG Solar, October ;15, 2007. • Proposal for Design Build Services for a Solar Photovoltaic Power System for Regency Centers at the Petaluma Swim Center, SPG Solar, February 7, 2007. • 25.3 Kilowatt Photovoltaic System Proposal, SPG Solar, March 16, 2006. • PG&E :Billing Data • Supporting Data from the City of Petaluma Green Team 1Vleasure Assuffipti®ns: Gene>ral Variables This report.is based on a set of general inputs for-the financial analysis. Each measure utilizes these general inputs unless they are overridden at the' measure level. The general inputs are provided in Table 8 below with an expanded table provided in the appendices. The values used for each measure are provided in the Appendices. These inputs include the following: • Term of Analysis • Term of Finance • Discount Rate • Energy Inflation Rate ® Energy Cost • Interest Rate • Inflation Rate C'it~- ol't'etaluma C~ree~ih(x~se CiaS I'eni~~:ion IZedu.cti~n ,cti(?,? .I'laxt. IO.~.t)9 The conversions in the table below are based on the best available information. The values for natural gas, gasoline, and. diesel, fuel ..are consistent with the California Climate ..Action Registry values.21 The value for 100% ethanol is calculated using data from research published by Argonne Labs.22 The value used for C02/kWh is based on the PG&E fuel mix and is different than the value specif ed in the Registry23 and varies with years into the future according to the CPUC required Renewable Portfolio Standard. This analysis has modified the baseline results by using the current value to ensure an appropriate comparison. The costs and benefits assumed for each of the measures is based on the best available information available at the time of research. Some measures have a highly reliable set of costs and energy reduction estimates due to the maturity of the strategy. Lighting retrofits fall into this category. Other measures rely on more vague data, such as the availability of LED streetlighting and the associated costs. The dynamic context. for electric and hybrid vehicles is another example of firm ,possibilities with. unconfirmed costs-and benefits. The implementation dates of such opportunities are pushed out to 2010, 2012 or later to balance the uncertainty of the cost benefit data. The inclusion of these measures allows for a. more complete set of plans and provides the framework for adjustments as more refined information becomes available. The general assumptions and conversions. used in this analysis are provided in the table below. Metric Standard Revised Default Values Used Default Values Values. in Analysis n of Analysis (yrs) n of Financing (yrs) :oun[ Rate r Energy Cost Escalation Rate Gas Energy Cost Escalation Ra[e icle.Fuel Cost Inflation Rate rgy Cast ($/k W M1) rgy Cosl ($/Therm) rest Rate lion Rale 25 25 10 5 5 5.00% 5.00% 3.50% 3.50% 3.50% ~ 3.50% 7.80 % 7.80% $0.145 $0:145 $1.000 ~ 1.000 3.95% 3.95% 3.50% 3.50% Wh (Ibs.) berm (#/Therm) Gasoline (Ibs/gal) Diesel (Ibs/gal) sel (Ibs/gaQ tl (Ibs/gaQ Gasoline Diesel Biodiesel Ethanol (equivalent gallon) 1rm CNG Vehicles h Electric Vehicles ric Vehicle miles/kWh (subcompact) ric Vehicle miles kWh (full size) at (% 01.2000) ~r Purchase Agreement (PPA) Initial % ase over Utility kWh Energy Cost Escalation Rate 0.489 0.489 12.34 12.34 20 7 20.7 21'.0 21.0 0 5.242 5.242 12.23 12.23 $3.08 $3.08 $3.08 ~ $3.08 $3.38 $3.38 $4.OD $4.00 81.00 51.00 $0:145 $0.745 0.3 0.3 0.2 0.2 20.0% 20.0% 5.00% 5.00% 3.50% 3.50 Table 8: Geueral Inputs '`I California Climate Action Registry General Reporting Protocol, Version 3.0, April 2008. "Effects of Fuel Ethanol Use on Fuel-Cycle Energy and Greenhouse Gas Emissions; M. Wang, C. Saricks, and D. D. Santini; Argonne Labs; January 1999. '`3 PG&E Power Content: Eligible Renewables: 13%, Coal: 2%, Large Hydro: 17%, Natural Gas 44%, Nuclear: 23%; Other; I%, California Energy Commission, www.enerty:ca.oviconsunier, May 2007. { ~ ~',I~i ,~lr ?t: t.l zi ti ~_ iiSi}~f- I_I I7 ~~~ 3 4.'~+E ~ ~, €'I~1~- .. _.... ~ 1',~k. ~;:~i~~ s~~l:~~~etft~l~I12c~ ~Jt`ti;t;itil(;tt~t~ i~,_ x~'. .'',~It l~~.'~Ut'11 !1 .~, !;l 'ii4,!"1 ii3.~7.()~~ I`~Ie~sure S'~ecc `Variables The general inputs can be .adjusted for each individual measure as appropriate.. The other key individual inputs are Fisted below. The values for .each. measure are provided in the Appendices.. ® Category (Building, Fleet, .Commute, Distributed Generation,, Water/Sewer), • Status '(Completed, Pending, and. Future);. .Pending measures are defined as those , provided by City Staff with identified funding. Financing:. The cash flow is heavily dependent on, whether or not_ the measures are financed. This funding.decision is defined for each measure independently. • Project Implementation pate ® Net Capital Cost ® Incremental Capital Cost associated with the cost premium associated with the improved efficiency. For Example: a hybrid compact vehicle is assigned a cost premium of $4000 over an .equivalent: standard vehicle. ® Rebates and incentives • Annual O&M cost associated with the efficiency measure • Incremental Rep acement Cost ® Component Life • Time of Use factor (Photovoltaic systems) Financial ~afl~sis l~esu~ts The analysis provides the financial information required for investment decisions. This includes the following: • Net Cash Flow for each year of the plans ® Debt load for each.yearof eac15 plan • Simple Payback for each plan • Internal Rate of Return ® Net ]'resent Value • C02e reduction for each plan. ~ - Financial Definitionsza ~Siimple:'Pay Back (SPB): 'Simple pay back is determined.by dividing the capital,cost by the annual cost`sav;ngs for`°an investment. While not effective in determining the value of the investment in fcrms of return on investment, it does provide the. length of time before the initial investment is repaid. ` Given the var`iotzs implementation dates for actions analyzed in each plan, the SPB for the plans is calculated by summing the net cost.for each-measure regardless of implementation date and comparing this value to the sum of the positive cash flows in subsequent years. '4 http:/lwww.investopedia:comlterms', http://www:visitask.com y ~• C;~4.~ ~71:'l'ctalt~ia~<t t~~'i/~~~ho~~~c <;, l., , ts'it .`~ (' .z I'1~~i~ 1 ~.J..~,()~) Net Present Value~~(NP~; Net: Present Value. (NPV) is the difference between the present value of cash inflows .arid the present value of cash ottfllows. NPV is used 'in capital budgeting to analyze~the profitability of an investment or project. NPV analysis is sensitive to the reliability of'fitttire cash inflows thatan. investmett or project will yield: i~PV = ~ ~~ ° C'~, r,~ t { ~ Hlw r)i, Where t -the time of the cash flow n -the total time of the project r -the discount rate Ct -the net cash flow (the amount of cash) at time t. Co -the capital outlay at the beginning of the investment time (t = 0 ) Internal-.Rate of Return (IRR): The Internal Rate of Return.(IRR) is the discount rate that generates a zero net present value for a series of future cash. flows.. This essentially means that lRR is the rate of return that makes the sum of present value of future cash flows-and the final market value of a project (or an investment) equal its current market value. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, ,I:RR can be used to ,rank several prospective projects under consideration. Assuming all other factors are equal among the various projects, the project with the highest IRR wotrld probably be considered the best and undertaken first. The IRR is based on the total investment and energy cost savings over the life of the investment, independent of the financing strategy for the inves"tment.Zs ®)~Hlffi11I111~ ~~)11~~11~ The investments in the specific measures have positive: local consequences. The community benefits are.quantified and presented in xfie following otatcomes: l) $$$ Avoided Utili CompanYPa~ This is theNet Present Value (NPV) of all the avoided electricity and natural g"as payments over the 25 year period of the analysis. 2) ,$$$ Avoided Fuel_Payments The NPV of the avoided. gasoline and diesel fuel .payments over the 25 year life ofthe analysis. 3) $$$ Invested Locally in GHG Projects: This is the total capital cost of the measures specified:: for the, plan. Theis analysis. does not attempt to separate labor, material, . overhead or profit to more accurately identify. the percentage of these investments likely to remain local. The inherent overstatement of this restalf is balanced .to a ignificant degree by discounting the well-documented economic multiplier effect of local investment (no multiplier is used). Bio-diesel purchase is considered 100% local. In practice, this will depend on the supplier. Ethanol is not considered to be a local purchase. zs The IRR and NPV for the Plans are calculated .from the cash flows ofthe individual measures included in the respective plan, independent of the implemeritation_ date of each measure. This strategy results in a first year ".investment" required-for the IRR calculation and:a subsequent annual cash flow (the return on investment). t:it~- ~:~t l'~t<.~(~.~~~{~ ~;~'~:<;~~li{~~ise £ ' ~ ,. i,~n i~~:ci~~_~„ .. , _~: ;:l~larl 1()_,~.(.}c~ ~ , 4) -Jobs, Created:This is a simplified".calculation using the methodology def ned in the ~2~009 Federal'Stimulus Package application procedures. The fonritala is: $1.0 Million in Capital Expenditure = 17 jobs created This methodology does not incorporate timing of the. expenditure or duration. ~ee~3~)r~ ~VAlll}lailttl®Il The decision to include a measure in the action plan is based on ;a ...comprehensive appraisal of that measure and its impact on the overall cost/benefits of the Action Plan. To aid in the selection process, each measure has: been evaluated and cored for eight metrics listed below. While informative, the scoring of the measures is'. not, binding on the selection process. The results of the Measure Evaluation are presented in the Plan Results section. A summary of the individual measure scoring is in the appendices. 1) Cost: The measure is scored by the magnitude of the net capital cost, independent of other considerations. 2) Financial Metrics: The measure is scored by the internal rate of return (IRR) and Net Present Value (NPV). IRR and NPV are determined from. the investment required for the measure (Net Capital Cost), the annual cost savings and the resulting annual cash flow. 3) Resolution of Existing Problems: This metric evaluates how the. measure solves existing .problems, such as a failing -air conditioning system. The replacement of old mechanical units will save maintenance staff time and associated costs (maintenance savings are not calculated in the cash flows). 4) GHG Impact: The measure is scored on its impact on -the reduction of GNG emissions, relative to the other measures under consideration. 5) Public Visibility: Some measu"res-provide an additional. benefit by demonstrating to the general public the actions of ;the jurisdiction to :address global warming. Measures such as Photovoltaic systems are scored high for Public Visibility. 6) Employee Impact: The additional burden or inconvenience; imposed on City Staff is a consideration for any measure under consideration. This metric evaluates this impact. A photovoltaic system has no impact and receives a neutral.. score.. New fleet vehicles will require a change from "business as usual" and results. in a lower score.. The Commute measure .creates transportation options for the'City Staff,and receives a higher score.. 7) Community Impact: The additional benefit, burden or inconvenience. imposed- on fh~e' ,community is a consideration as well. This :metric evaluates this. impact. .The improvement of public fadilities, lighting .or HVAC for example, would result 'in a favorable score. The imposition of additional fees or hardship on the community would result in an unfavorable score. '8) Energy CostStabifization: Energy cost variability is a concern for al jurisdictions. The price ,volatility of natural ga's and the spike in cost for electricity in 2000-2001 give reason to address this vulnerability. This metric evaluates the impact by measure on the City's long term energy cost volatility. The highest value is assigned to energy efficiency measures..Energy saved by, efficiency has an effective cost of $0 into the future, as long. as the efficiency measure is in place. . ~~ . ~ , :, ~ ;,, .~:, 3~,0 ~~.~ :. ~. ~;',; +__~... ~ ,1 ~.~t':s,Cll~(_~t4';C' ~tt1ti l t2.44:_tC+~e [~.~ClttC:llt,ft ,~G1iIl1 ~"li~!1 lt).`•.$~~ Calif®rnia L®w Caro:®n, Fuel Standard In the. January 2007 State of the State; Governor Schwarzenegger asserted California's leadership in clean energy and environmental ;policy by establishing aLow-Carbon- Fuel Standard (LCFS) by Executive Qrder. This. first-in-the-world greenhouse gas (GHG) standard for transportation - fuels will spark research in,..alternatives to oil and reduce GHG emissions 26 The. target GHG reduction.is 10%: Thisanalysis assumes:this goal will-be met over a 12 year period. This-would reduce: the carbon .,density for gasoline from '20.968 lbs C02e/gallons to 18.871 lbs C02e/gallon with a similar reduction for Diesel: PGBaF dower Content and City Future t~ction Ass»l~>~n~tn®ns The sources of energy purchased by the utility determine. the. carbon density (lbs C02e per kWh) of the electricity produced by the' utility'and used by the City. This "Power Content" is identified by the utility and reported by the CPUC on an annual• basis. There is a requirement that the content rely on increasing percentages of renewable .resources. .The Renewable Portfolio Standard (RPS) req,tiires .electric corporations to increase procurement. from eligible renewable energy resources by at least 1% of their retail. sales annuafily, untitthey reach 20% by 2010.27 As the power content carbon density decreases the .emissions associated with electrical energy use decreases. Also as the carbon density decreases, the C02e reductions per kWh displaced by photovoltaic and energy efficiency measures also decreases. Therefore a kWh saved in 2009 will be more signif cant than a kWh saved.in ~20.15.~i~f the Power Content is more "green" in 20.15. This dynamic is factored into the analysis which is time dependent for both the implementation date of the meastare and the reporting date for•the reduction below 2000 levels. This relationship is represented by the "PGE mix" portion of the area graphs provided in the "C02e reduction 2000 - 2020" figures: for each. Action Plan. The values assumed for the PG&E Power Content. by year are provided in the table below. An adjustment of 50% is applied to the source. material to acknowledge the perceived "optimistic" nature of projected renewable content.28 26 California Energy Commission, http://www.ener~y.ca.eov/low- carbon fuel standard, March 2009 "California Public"Utilities Commission, http://www.cpuc.ca.gov/PUC/energy/Renewables/ '`x The inclusion of the PG&E fuel mix has a significant impact on the greenhouse gas emissions of the City in future years. The California Public Utilities Commission (CPUC) has required the fuel mix to be .increasingly renewable from 2008 forward.'The value for Ibs/k-Wh declines from 0:489 in 2008 to 0.356 in 2095 per calculations published by the, Climate Protection Campaign imthe Sonoma County Community Climate Action Plan issued in November 2008. y 6 d ~ ~s~i1<. 6 _.'~'+sii ~ ,z ~ ~s 4 ~. x - ~tl6t, ?: Figure 5: Power Content Values for Converting kWh to lbs/C02e (;i4 ;'itTl~~tA tiillcl 1,±'C.G:;.[l.tl{3i1~{. `s~i:~ 1-.4t1i5~.iCtz? 11ti:iiLtl:I:-.94} '`,. ,-()i1 ~'li'tl't 441.<_i,-fV';;} This analysis ,provides .specific information on the impacts of discreet actions to reduce greenhouse gas emissions from City controlled equipment and operations. The last of these measures is -implemented in 2014 for all plans. However, the trend of greenhouse gas emissions. is provided to the year 2020, including the annual increase in emissions associated with projected. city growth. To balance this structural increase from-2015 to 2020, and to acknowledge that the policy of action regarding greenhouse gasemissions will likely persist. at; the .pace established by actions from 2009 to 2015, a "Future Acfions" placeholder is included in the analysis and is represented in the "CO2e Reduction 2000 - 2020 (Net)" graph provided with each Action Plan. These are based on the level of reductions from 2009 to 2015 unique to each plan. These reflect a diminishing "rate of, return" on emissions reduction actions of 30% per year. There are no costs calculated for these future actions. They are not included in the financial metrics or cash flows for each plan. ~ They also do not contribute to the GHG reduction values or percentages reported with each plan. The emissions reporting date is 2015 which is prior to impact of the "future trends" element ofthe analysis. 4m0 l~esu~ts Five plans have been created for consideration by the City of :Petaluma. These plans consist of numerous measures to reduce GHG emissions, reduce energy costs, address equipment problems, and reduce the volatility of the City's annual energy costs. Summary information is provided below. The Action ,Plan Evaluation provided in the Appendices provides an analysis of the- relative strengths of each combination of measures. Similar information for each measure is also provided. GHG Y>~npacts and Plan Financial Results Table 9 below provides a comparison of each plan. The "% Reduction" is the amount of CO2e reduced as a percentage of the total City emissions.. Each plan meets the goal by a unique set of measures. .Plan E identifies the measures necessary to reduce the City's emissions by approximately 3'8% below year 2000 emissions by 2015. The financial .analysis is provided with each plan. The IRR and NPV results are based on the 25 year term of the analysis. ,,, .:~' ~ . ,.r~ii;1 E_~" ~ ~°3~ 1! , .~ .i~a r~~is.' _. idYi;. (;i?t' €71 '~.dy .,. °t.ri<;tit1~iC)1i4~ ~'t : r .a ';(~17° €4:tIC)1"l ,'~'.4'. ~c71 I(i..~`_'~ GHG Action Plan Summary Anal sis PIan.A Plan.. B Plan C Plan D Plan E .- Reduction below' 2000 by 201'5 23.2% 22.3°!° 22.3% 28.0% 387% SPB NA 5.3. 0:3 1.2 6:3 IRR NA 49.8% 409.7% 108:2% 35:6% . NPV ($17,587,409) $11.,169,284 $12,748,340 $1.3,600,309 $12,007,322 Annual Cash Flow Plan A Plan B Plan C Plan D Plan E 2008 $0 $0 $0 $0 $0 Zoos $o t$2o;o00) $o $o $o 2010 ($1;596;983) ($19,485) $61,620 ($58;672), $23,805 2011 ($1.,613,670) ($32,134) ($11;841) ($54,178) ($158;301) 2012 ($1,706,298) ,($48,975) ($16,341.) ($101,033) ($186,522) 2013 ($1,671,733). ($98,506) $56,,000 ($26,937) ($373,187) 2014 ($2,431,087) ($43,624) $75,264 ($4;643) ($301,478) 2015 ($3,800,666) $23,021 $315,061 $257,510 ($227;329) 2016 ($3,746,220) $299,023 $571;91'.8 $539,177 $55,058 2017 ($3,720,043) ~ $365,210 $662;738- $636,349 $215,357 2018 ($3,692,944) $799,010 $850;238 $989,940 $774,1.71 2019 ($3;929,337) $832,199 $883,643 $1,026,943 $967,207 2020 $851,666 $888,1.86 $949,769 $1,006,331 $1,027,979 2021 $881,735- $1_;048,300 $1,056,544 $1,170,527 .$1,193,047 2022 $912,864 $1;085,107 $1,093,586- $1,155,830 $1,179,254 2023 $363,923 $1,123,207 $1,.131,926 $1,254.,028 ~ $1;228,394 , 2024 ($1,346,214). $1,162,644 $1;171,610 $1,297,986 $1,323;329 2025' $1,012,992 $1,203,464 $1;212,686 $1,343,485 $1;369,842 Table 9: Action Plan Financial Results The fnancial analysis-is provided with each plan. The critical metrics of Internal Rate of Return (IRR), and Net Present-Value (NPV) provide important information to evaluate the worthiness of the investment from a Bash flow perspective. ]t is important to note the. large negative net cash flows for Plan A in 2024. These are incurred by substantial reinvestments in large photovoltaic (PV) systems (replacement of the associated inverters after 10 years). The assumption is that the cost of inverters will. increase at the generally assumed inflation rate of 3%. However, likely advances in. technology and improved economies of scale for the industry suggest this is overly conservati~.e. The other plans utilize power purchase agreements where the cost of the inverter replacement is included in the agreement. 3~3 ~~ „_ ~~-i~a' 3t~~~t.'~~~StI.EIItt ~,Sl''s=tii3_~lt~#.4tiL ~I'-; a_. ,~~t`.-.~LIC;~i€~Il .'~`54;t1131~ ~ I"c[e ~.t).w%.~~~~ Finally, the actual :net cash flow :is ,also, prodded for each plan in Table 9. An expanded cash flow table is provided with each plan .that breaks out the gross cash flow, annual debt service ,payment and; outstanding principal for-each year of the plan.. This presentation allows a clear . understanding of the impacts of a "financial decision" in 2009 over the life of the plan. Ac>~®n Pl~>1>~ Ev~lua>t~®ns The GHG Emission Reduction Action Plans involve more, than CO2e reduction and cash flow: There are critical ,concerns that should be factored into ..the decision. making. process. These include the financial .metrics of Internal Rate of Return (IRR) and Net Present Value (NPV) to evaluate the worthiness of the in_ vestment; the cost of implementing the measure, some measures come with a large price. tag which will challenge 1_iquidity; the degree to which the plan resolves existing problems, such.as old, high. maintenance air conditioning units; the visibility of the measures to the public, for example the photovoltaic systems are a physical example of actions taken the City and. communicate action .and, commitment. to the community. Other key considerations include the employee impacts: of new equipment or .procedures,. which may generate internal opposition; and the .impact on the variability of future energy costs and the associated budgetary vulnerability. Each measure and the plans as. a whole are evaluated by the following considerations: • Net Capital Cost • Financial Metrics (IRR and NPV) • Resolution of Existing Problems • GHG Impact • Public Visibility • Employee Impact ~ Community Impact • Energy Cost Stabilization The results of th'e evaluation are provided in the Appendices. The. individual scores for each category (cost, fnancial metrics, etc.) are aggregated to provide an overall score for that. measure. While the results. provide. .important information to be considered when selecting measures, the scores are advisory only. A relatively low score does not preclude a measure, nor~'~ should a, high score guarantee inclusion of the measure in the Action Plans. There wil[ always be additional considerations that are not reflected in the evaluation process. C.;ity cs~I'etz~l:~i~i4<~ C:t'cttttsc:.t,~. Csci; ~ i;;sc~t~ ~~.~:' ,~1~ ~ ~'sdt~~ (.():v~.'~% ~ner~ Rate Escalation and Associated u~i~et Ve>~lnerabili There.. is considerable discussion about the availability of fossil fuels'in the near and, middle term future (5 to 20 years). Thee "Peak 0i1" movement.suggests that we are at ornear the point where our increased global demand for oil cannot be supplied from new petroleum discoveries whl'e~ production from existing oiT fields is~waning. Similar arguments are made for natural gas supply vs. demand. If demand outstrips supply, .simple ;economics. indicate that the cost to consumers will escalate, rapidly;. until the global demand is sufficiently dampened and realigns with available supply. The concern is significant enough to have prompted a US government sponsored study to. determine the -impacts of demand exceeding supply in the near future 29 This issue has important implications for North Bay jurisdictions. Forty percent of PG&E power is generated by natural gas.30 A spike in the cost. of this energy source will result in significant increases in the cost of :electrical power, as well as increased volatility in the cost of natural gas and fleet fuel used' directly by the City. z9 Hirsch,, Robert. et al. (February 2005) "Peaking of World Oil Production; Impacts, Mitigation, & Risk Management-" SAIL. so PG&E:Power Content: Eligible Renewables: L5%, Coal: 2%, Large-Hydro: 16%, Natural Gas 47°/°, Nuclear: 20%, Other; 1 %, California Energy Commission, ~~-ww.energy.ca.eov/consumer,February 2009. (,`.Its.' C?~~~~ ~ A C~ . t ~t;° ~iSS' ~.4~1[ ,S`?{~>:i l~t',t~Lf~ llti "''Il 1~~~~ri ~Q.'.~„~'<~i All of the measures available to~reduce GHG emissions also will reduce the City energy costs.. These costs are a significant element of the municipal. budget, and the potential volatility .of their costs represents a threat beyond the control of City Staff. Eigtare 6 .below .provides the trends ,for the annual cost. of fleet fuel and utility supplied electricity and natural gas:.based on four rate: escalation scenarios. The bottom most trend line indicates the annual. cost of energy :from 2000 to 2020:if.the cost of energy increases at 1.7%:peryear.31 The other trend lines represent:.costs to. the city if the escalation rate is 3.5%; 6:0% and 12%. The measures contained iri this ;anal-ysis will reduce the vulnerability to energy price increases. These trend lines assume that the City takes rio further action to reduce or increase its reliance on fleet. fuel, and utility supplied electricity and natural gas. $10,000,000 ;-- _y $9, 000, 000 I W ~ $8,000,000 Z N li $7, 000, 000 ... N U $6, 000, 000 T r~ C $5,000,000 W j $4,000,000 C C Q $3, 000, 000 ' • ; $2, 000, 000 .~ $1;000,000 7 Annual Energy Energy Escalation Cost Rate J $9,232,486 12% ~J' „~ J $4, 768, 401 6.0% ~~J - $3,990,025 3.5% $2;901,041- 1.7% .. Figure b: Energy Rate Escalation Scenarios An annuaF increase of L.7% is considered very optimistic. This value was used in the Community Choice Aggregation analysis for Marin County in 2007. _.f ~-t:Sr _.., i 1 i.l"x `11yrfi ° 1('l~_`le. °`.i~tz`;1 t.`_ `S~' Energy C:os$ Escaiation~ Scenarios Town annual energy cost with no future energy conservation actions j. ~' $0 00 .0~. Off' O`3 Ob O5 OHO O'~, O~ O°j ,~O ,~'~. ^`L ~3 ^p ^'~ ^0 ^1 ,^0 ^O ~O ~O r10~. rL0 ~ ri0. ry0 rt0 ry0 ry0 ~O r10 . ~O rv0 ~O` ry0, ~O 'rt0. ,LO rt0 r10 ~~O ~ ~O t_,7~1~ ('_~ E';,`"L~nttllTil.~i. -~'` ii ~7c~`^ ~.?;,~..t,t€r, 2~{:L~ItL;~It3I'3.~;:~'t("sll.l~itill lil.::;.17~t The future cost,of vehicle fuel. (gasotine and diesel) is much. more volatile than the other energy .sources. The~cost of this resource has increased by 7.8%,3 year on average since 1987 (see the Appendices for further discussion on `the cost trends of vehicle fuel). If fuel increases continue at the 7.8%° rate the future cost will follow the 8% line in Figure 7 below. However,. if°;prces increase at twice the past rate (represented by the I'6% line) when the annual cost. of vehicle fuel will approach $2M by 2020: This trend is discussed in' greater detail in the appendices. Veh-isle duel Cost Escalation Scenarios Gasoline,and Diesel Annual Escalation Rates (Historical trend 8% since 1987) $3,000,000-,.-------' f_ $2, 500, 000 d 7 LL d ti $2, 000, 000 t d w O Y p $1,500,000 U io Y ~ $1,000,000 7 C ~ , Q ~ ,. { $500,000 "--` ~ ., ! ~ - , ~ ~ ,. - '4 .. ii _ ~ ~ ~ d _, _ ~ .. ~ : ..- ., ~O .~0 ~O ~O ~O ~O ~O ~O ~O ~O ~O ~O ~O ~O ~0.. ~O ~O ~O ~O ~O. ~O 20% d N R U 16% C m C d d 12°1o d 3 C C 8% Q N O 4% !_' C Figure '7: Annual Cost Treud of Vehicle Fuel Only D t.'t~.~' 41;t 1}~ [.~§,CA.iI't<~.~I:~~:.f~?~~lii,.i`t'ttiC. ~.I~:lti 1 l\~:_~ ~. Il~:~tltlt's S~i~z£L r t tJ.~:~v`~ Energy efficiency projects and distributed generation energy systems can play a significant role in moderating this. vulnerability. Figure 8 below provides potential impact. of energy efficiency strategies on the associated vulnerability. For example; under the 3.5% escalation rate scenario, the City is projected to reduce its fleet fuel and utility payments. by roughly $1-.S1V1 per year.in 2020 by implementing the efficiency measures in Action.Elan D': $5,000.,000 ~- _ ~, 'V f U N W $4,000;000 C9 Z a~ ~ $3,000,000 - 0 U m ~ $2,000,000 W m c C ~ $1;000,000 $0 -~=--- 2005 2006 Future Energy Cost Mitigation Annual EnergyGost Escal. Rate N.Gas and Bec.= 3.5°h Diesel and Gas = 8°h i ~} ~ $4:112.005 No Action J ,3 2007 2008 2009 2010 2011 2017 2013 2014 2015 $2,913,041 Ran C $2,810,172 Ran B $2,616,326 Ran D $2,506,618 Ran E $2,247,226 Ran A Figure 8: Annual Cosf of Energy The trend lines compare the outcomes for different approaches to energy savings with a 3..5% annual escalation of energy rates: ® No Action, $4,l 12,000 annual energy cost in 2020 (at a utility energy escalation rate of 3:5%) approximates the annual cost to the City if no actions are pursued to reduce energy consumption in the future. ® -Plan B: $2;,810,000 annual energy cost in .2020 at a utility energy escalation. rate of 3.5% based on the actions contained in Action Plan B. ® Plan E: $2;507,000 annual energy cost in 2020 using the same escalation rate as above if the more aggressive measures contained in Action Plan E are pursued. This is a reduction of $],500,000 in energy budgeting uncertainty between Plan E and the "No Action" scenario for the annual utility escalation rate of 3.5%. In summary; an aggressive energy strategy could significantly reduce the City's exposure to the rapidly escalating costs. The investments in energy efficiency and distributed generation will reduce the uncertainty in future energy cost supporting long term budget planning. ~~, , ~'." 3®3 ,'°.. - its'. l~it~' t:ti 1~;~~c'rlt7.ill~i ~s€t`t;Clli£}t's.c, ~iw, ..~ ~4' irttl 1~~zitl(;€€;a41 .~.~".:~)ii i'i24l1 1€1,:.'.ft~D Incre>1ffiental Ca~~t~l C®st ®f Eff c~encv Measures Many of the opportunities to reduce energy consumption, and thereby .reduce greenhouse gas emissions, involve the replacement of old; poorly :performing equipment. In many cases this equipment is at, the end of its useful life and is scheduled to be replaced- independently of this analysis. In these situations this analysis includes--only the incremental cost for exceeding the efficiency of a standard unit or :approach. There are 'two common examples where this issue comes .into play. The cost associated with replacing. the package IIVAC units is the additional cost incurred for purchasing SEEZZ 15 units over the purchase. of the standard :SEER 13 units. This incremental cost depends on the cooling capacity gfthe unit; but is in the range of 3-10% of the cost of the unit. "Cool Roof' reflective coatings add an incremental cost of roughly $1.5 per sgft to the overall reproofing project cost.. This incremental value is utilized in the analysis. The cost .assumed for the fleet replacement strategies are another example of the use of incremental capital cost. It should be noted that many of the energy efficiency packages identified in these plans can be financed using California Energy Commission. energy efficiency loans,. including the non- incremental costs. These loan packages are typically structured. to have a net zero cash flow (energy savings =loan payment). The replacement of air conditioning equipment that is beyond its useful life would be one application of this opportunity. r ~~ ~: , __ ;-, E ~ 3- <<~~ ~ ~ _