BOARD MEETING DATE: September 7, 2007
AGENDA NO. 7

RECOMMENDED ACTION:

1.  Authorize the Chairman to execute contracts from the Rule 1309.1 Renewable Energy Program Fund to the following companies for residential projects (Attachments 1 and 3):

   1. ACS Construction for one project in the amount of $75,660.
   2. AMECO Solar for one project in the amount of $19,595
   3. Desert Power Inc. for two projects at various locations in the amount of $108,900.
   4. ElectriCare, Inc. for ten projects at various locations in the amount of $356,465.88.
   5. Enterprise Home Ownership Partners for nine projects at various locations in the amount of $995,957.44.
   6. GenSelf Corporation for three projects at various locations in the amount of $106,909.
   7. Heritage Solar, Inc. for one project in the amount of $9,936.00.
   8. JIL Enterprises for ten projects at various locations in the amount of $154,365.
   9. Mohr Power Solar, Inc. for one project in the amount of $29,978.32.
   10. PermaCity Solar for five projects at various locations in the amount of $170,751.
   11. SoCal Solar for one project in the amount of $15,000.
   12. Sol Source Energy for three projects at various locations in the amount of $67,908.96.
   13. Solar Electrical Systems for seven projects at various locations in the amount of $205,161.36
   14. Sol Or Corp. for four projects at various locations in the amount of $121,525.
   15. Sunbelt Solar Systems Inc. for eleven projects at various locations in the amount of $233,796.
        
2. Authorize Chairman to execute contracts from the Rule 1309.1 Renewable Energy Program Fund to the following companies for commercial projects (Attachment 2):
    
   1. AeroVironment, Inc. for two projects at various locations in the amount of $62,500.
   2. Chevron Energy Solutions Company for one project in the amount of $807,003.94.
   3. Mohr Power Solar, Inc. for one project in the amount of $346,752.
   4. PermaCity Solar for six projects at various locations in the amount of $1,043,102.
   5. Solar Engineering Industries, Inc. for two projects at various locations in the amount of $270,017.10.
   6. Solartech Power, Inc. for one project in the amount of $61,200.
       
3. Authorize the Chairman to execute contracts from the back-up list as set forth in Attachment 4 in case of any returned funds from the originally approved projects identified in Attachments 1 through 3.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In September 2006, Rule 1309.1 was amended with a new provision specifying the amount of mitigation fees required for electrical generating facilities to obtain credits from the Priority Reserve. As part of the adopting resolution, the Board directed staff to use one-third of the mitigation fees collected to promote the installation of renewable energy projects, including solar power, in communities where the new or modified power generation facilities will be located. On February 2, 2007, the Board approved the release of an RFP (RFP#2007-26) for renewable energy projects using one-third of Rule 1309.1 Priority Reserve Fund balance. The RFP was issued in an amount not to exceed $5,262,484 comprising of one-third of the mitigation fees from ten power plant projects. These funds will supplement the incentives, rebates and/or tax credits currently provided by other programs, such as the California Solar Initiative Program. The AQMD incentive would provide additional funds to cover up to the full cost of a solar photovoltaic system or 60% of the cost of other renewable energy projects located within a close proximity to one of the ten power plant projects.

Shortly after release of the RFP, AQMD staff held a Bidder’s conference on February 28, 2007 to clarify the minimum requirements in the RFP. This meeting was not mandatory, and more than 40 potential bidders, mostly state qualified solar contractors, were in attendance. The AQMD posted written responses to questions raised during the Bidder’s conference on the AQMD website to ensure all prospective bidders were provided the same information and clarifications. The AQMD also conducted community informational meetings in areas surrounding the power plants, including Burbank, Long Beach/Wilmington, and Romoland, to inform the local community of the AQMD funding opportunity.

Bid Evaluation

In response to the RFP, the AQMD received over 300 individual projects requesting over $26 million in funding. Of these funds, approximately $9 million was requested for residential projects and $17 million in commercial projects. Most of the projects involve solar photovoltaic (PV) systems. Other projects include solar thermal, wind power, and a digester gas project. The RFP specifies the minimum requirements for the projects, proposal evaluation criteria, and identifies three main funding priorities assigned to this program. Given the large number of projects received, the AQMD performed an initial ranking of the projects based on each project’s ability to meet the minimum requirements specified in the RFP, and the project’s location relative to the power plant. Projects located within a 5-mile radius of one of the power plants were placed on a short list, while the others were placed on a second list with lower priority. Projects within a 5-mile radius were then categorized into two groups: residential and commercial since the AQMD incentive amount is slightly lower for commercial projects. The residential definition used by AQMD for this program is the same definition used by the local utility to determine the type of electric rate.

As specified in the RFP, the first priority is to fund projects located as close as possible to one of the power plants. The second priority involves reserving at least 50% of the funds for residential projects, and the third priority is to reserve at least 50% of the funds for projects located in disproportionately impacted areas.

In the residential category, the AQMD received 160 projects that are located within a 5-mile radius requesting close to $5 million in funding. However, only 28 of these projects are located in a disproportionately impacted area. The total AQMD funds requested for these 28 residential projects is $1,542,605.20 (Attachment 1), which, by themselves do not meet the 50% funding requirement for disproportionately impacted areas. In order to meet this funding priority, the projects in the commercial category were then considered. Of the 31 commercial projects located within a 5-mile radius, only thirteen of these projects are located in disproportionately impacted areas (Attachment 2). These thirteen projects are requesting a total of $2,590,575.04 in AQMD funding.

Since all 13 of the commercial projects located in disproportionately impacted areas were found to meet the minimum technical criteria and are more cost effective compared to the residential projects at $6/watt, AQMD staff propose to fund all thirteen of the commercial projects located in disproportionately impacted areas, except the project submitted by Chevron Energy Solutions which will be funded up to only approximately 80% of the requested funds so that adequate funds can be made available to satisfy the 50% funding priority for residential projects.

With $1,129,303.76 in AQMD funds remaining, staff proposes to fund projects in the residential category in the order of closest distance to the power plant (Attachment 3). This would satisfy the priority for the residential category by allocating at least 50% of the funding to residential projects.

The proposed funding distribution for all projects is identified in Table 1.

Table 1 - Distribution of AQMD Funds for Renewable Energy Projects

In the event any of the awarded projects fall through, a back-up list of residential projects located within a 5-mile radius has been established. The back-up list of projects is included as Attachment 4. The projects identified on the back-up list meet the minimum technical criteria, however are not located in a disproportionately impacted area or were not the closest projects to a power plant to make the first cut. Projects on the back-up list would be considered for funding only if any of the recommended projects are not executed.

Proposal

With Board approval, AQMD staff would execute contracts with companies identified in Attachments 1 through 3 for renewable energy projects. Attachment 1 identifies the recommended awards to residential projects located within a 5-mile radius and in disproportionately impacted areas. All of these residential projects include solar PV systems, except for two projects that are for solar thermal water heating systems. Attachment 2 includes the commercial projects that are within 5-miles of a power plant and are located in disproportionately impacted areas. Of these 13 projects, only two projects do not involve solar PV systems. These two projects, submitted by AeroVironment, include wind power projects. Attachment 3 identifies the residential projects that are within 5-miles to a power plant and recommended for an award. The total amount of AQMD funds to be awarded for all renewable energy projects would not exceed $5,262,484.

Given the projects identified in Attachments 1 through 3, the AQMD would satisfy all funding priorities specified in the RFP.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids was published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun, and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

Additionally, potential bidders may have been notified utilizing AQMD’s own electronic listing of certified minority vendors. Notice of the RFP/RFQ have been mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations, the State of California Contracts Register website, and placed on the Internet at AQMD’s Web site http://www.aqmd.gov. Information is also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Benefits to the AQMD

The successful implementation of this program will result in the increased use of clean renewable energy. This program is expected to decrease the consumption of electricity generated from fossil-fuels, which will displace pollutant emissions, including PM10, CO and SOx. The program will also directly benefit the communities located in the vicinity of power plants by providing incentive funds for the use of clean renewable energy.

Resource Impacts

The total cost of the proposed program shall not exceed $5,262,484. Sufficient funds are available from the Rule 1309.1 Priority Reserve Fund.

Attachments (DOC 343kb)

1. Recommended Awards for Residential Projects Located Within 5-Miles and in Disproportionately Impacted Areas
2. Recommended Awards for Commercial Projects Located Within 5-Miles and in Disproportionately Impacted Areas
3. Recommended Awards for Residential Projects Located Within a 5-Mile Radius (In Order of Distance to Power Plant)
4. Back-Up List of Residential Projects Located Within a 5-Mile Radius (In Order of Distance to Power Plant)