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1 City of Middleton Solar Projects Proposal January 27, 2015 Don Peterson Madison Gas and Electric Company ---PAGE BREAK--- 2 Introduction / Agenda • Partnership to achieve more • Solar development – two different Middleton projects — Community Solar model — Partnership model • Financial options • Planning and decision making is iterative ---PAGE BREAK--- 3 Solar Partnership • MGE helps City acquire cost-effective solar power to help meet City sustainability goals. • City provides a site for MGE’s Community Solar project to serve MGE electric customers. ---PAGE BREAK--- 4 Community Solar Municipal Operations Center First project of the partnership ---PAGE BREAK--- 5 Community Solar Program • Participants cover the solar project’s costs • Participants receive value for solar energy production • Structuring these charges and credits ---PAGE BREAK--- 6 Community Solar Programs • New approach for getting more solar on the grid • MGE/Middleton proposal – unique among 125 investor-owned utilities Courtesy of Solar Electric Power Association Solar carve out in RPS ---PAGE BREAK--- 7 Community Solar Design • Who might participate? — Siting limitations shading) — Can’t afford to own their own system — Renters • How will we design a successful program? — Focus groups — Surveys — Market research (SEPA, etc.) ---PAGE BREAK--- 8 Development Steps Order • Firm up project costs • Research using focus groups and surveys • Finalize financials and product offering • City of Middleton commitment • Submit proposal to PSCW • Public roll-out, open subscription period • Start construction (tax credit availability expires 12/31/16) ---PAGE BREAK--- 9 Partnership Model Middleton Police Station Second project of the partnership ---PAGE BREAK--- 10 Solar Partnership MGE Value-add Proposition to City To achieve this outcome for the City, MGE will: Monetize tax incentives Share scale benefits from Community Solar project Fund a majority of the capital costs of project Manage project construction Provide cost effective on-going O&M services ---PAGE BREAK--- 11 Police Station Array Layout 11 100 kW project ---PAGE BREAK--- 12 Partnership ‘Flip’ Model Illustration Ownership Structure $75K Solar Investment $154K Savings (net of investment) 9.2% Internal Rate of Return $50K Net Present Value $225K Solar Investment $86K Savings (net of investment) $156K Tax Savings Realized 3.0% Internal Rate of Return -$21K Net Present Value ---PAGE BREAK--- 13 ‘Flip’ Model + MOC Rent Illustration Ownership Structure $150K Solar Investment $63K Savings (net of investment) $168K MOC Rental Payments 9.2% Internal Rate of Return $75K Net Present Value $150K Solar Investment $86K Savings (net of investment) $156K Tax Savings Realized 7.0% Internal Rate of Return -$7.9K Net Present Value ---PAGE BREAK--- 14 Middleton Constructs Illustration Ownership Structure $350K Solar Investment -$95K Savings (net of investment) $0K MOC Rental Payments Internal Rate of Return -$144K Net Present Value ---PAGE BREAK--- 15 Middleton Solar Projects • One of the largest solar projects in Wisconsin • Largest community solar project in Wisconsin • Locally produced solar power offsets the grid mix — 800,000 kWh per year — enough to power 120 homes each year • Visible to the community • Progress toward Middleton sustainability goals • Offsets 760 tons of CO2 emissions per year ---PAGE BREAK--- 16 Middleton Solar Projects Clearly we can do more together than separately We ask that the Committee support continuing the discussion with City staff Thank you! ---PAGE BREAK--- 17 Appendix 17 ---PAGE BREAK--- 18 Ballasted Array Courtesy of H&H Solar ---PAGE BREAK--- 19 City of Middleton Annual PV-weighted Effective Rate $0.04975 $0.10462 $0.11533 $0.12281 36% 0% 10% 20% 30% 40% 50% $0.00000 $0.03000 $0.06000 $0.09000 $0.12000 $0.15000 Off-Peak Winter Peak Summer Peak Other Summer Peak (2 PM - 6 PM) $ / kWh Rate Categories % of Generation by Category 40% 15% 9% $0.088 / kWh % of Total Generation