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HomeMy WebLinkAboutCOD-014-12 Clarington REPORT CORPORATE SERVICES T Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Date: June 25, 2012 Resolution#: - By-law#: Report#: COD-014-12 File#: Subject: EXPRESSION OF INTEREST EOI-2011-3, SOLAR VOLTAIC PANEL INSTALLATION — OPA MICROFIT PROGRAM RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report COD-014-12 be received for information. f S Submitted by: Reviewed by: lilz� (Marie Marano, H.B.Sc., ranklin Wu, C.M.O., 6 Chief Administrative Officer Director of Corporate Servipps Nancy T ylor,43.B.A., C.A., Director of Finance/Treasurer M M/J B/km CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T 905-623-3379 REPORT NO.: COD-014-12 PAGE 2 1. BACKGROUND 1.1 At their meeting held July 18, 2011 Council approved Report CAO-008-11 — Energy Management Committee — Solar Photovoltaic (PV) Program; copy appended as Attachment 1. 1.2 In summary, approval of the report authorized staff to proceed with the issuance of an Expression of Interest (EOI) to obtain additional information from the industry and to determine the interest of vendors for the potential installation of solar panel systems. 1.3 Following receipt of approval to proceed with an EOI staff undertook a further review of the Ontario Power Authority Feed in Tariff(FIT) program and concluded that, of the two options (FIT & MicroFIT programs), the MicroFIT program held the most interest given the size constraints associated with the Municipal Administrative Centre (MAC). 1.4 For clarification, a MicroFIT installation is one that produces not more than 10 kW whereas a FIT installation produces greater than 10 kW. Another determining factor was the feed-in tariff applied to MicroFIT installations vs. FIT installations. At the time this project started the maximum MicroFIT rate was $0.802/kWh whereas the FIT rate was $0.713/kWh (projects between 10kWh and 100 kWh). These rates have been revised following the recent review undertaken by the OPA. The revised tariff for the MicroFIT is now $0.549/kWh while the rate for a FIT installation was revised to $0.548/kWh, a reduction of 31.5% and 23.1% respectively. 1.5 Based on conversations with representatives from the Ontario Power Authority (OPA) it was recommended that the municipality make an application for a MicroFIT project in order to position ourselves for approval as applications take months to process. In the event there was no interest in pursuing a solar panel installation the application could be withdrawn. 1.6 At approximately the time the EOI was issued the OPA undertook a review of the FIT program which lasted several months. The outcome of that review has recently been published in a report dated March 19, 2012. 1.7 The report confirms the government's continuing support for the FIT program but does make changes to the FIT and MicroFIT tariff rates. 2. ANALYSIS 2.1 Late in the fall of 2011 the EOI was issued and publicly advertised on the Municipal website and the Ontario Public Buyer's Association website. REPORT NO.: COD-014-12 PAGE 3 2.2 During the period following publication a total of 42 firms downloaded documents. Subsequently a total of 19 submissions were received; however 3 were rejected for failing to meet criteria established for the EOI. 2.3 A total of 16 submissions were reviewed by the evaluation team consisting of representatives from the Operations, Community Services and Corporate Services Departments. Based on a uniform method of evaluation the number of submissions was narrowed to a total of 6 submissions of interest. A list of vendors short listed and submitting acceptable submissions is appended as Attachment#2, for information. 2.4 For the purpose of the Expression of Interest the Municipal Administrative Centre (MAC) was chosen as the site for consideration of a possible installation. It presents opportunities for installations on both the 3�d floor roof and penthouse and the 4t" floor roof and penthouse. The majority of the submissions chose the 4t" floor roof and penthouse as preferred location for their proposed installation. 2.5 Evaluation of the proposals submitted included a review of the following areas: • Estimated cost of installation; • System size, configuration and type of mounting (fixed versus ballasted); • Domestic content (to meet Provincial Standards); • Payback of investment; • Estimated net revenue after 20 years (term of the MicrOFIT program); • Maintenance requirements; • Warranties of various components; • Estimated life of the system • Value added services proposed by the vendors; • References; 2.6 The following is a summary of the findings: • Estimates ranged from the mid $50,000 range to the high $90,000 range for a 10 kW system. Although we specified MicroFIT installations we did receive information on FIT installations and these ranged in prices up to the mid $700,000 range. • The majority of proposals met the 10 kW requirements and proposed a ballasted installation as opposed to the fixed mounting. • All submissions met the 60% domestic content requirement • Payback varied between 5 to 10 years. However these figures were estimates only and not all submission were based on the same Tariff. The fact that the FIT program was under review moved some firms to estimate what the new rates might be and they based their calculations accordingly with a qualification that more accurate figures could be provided once the FIT tariff was established. REPORT NO.: COD-014-12 PAGE 4 • Net revenue after 20 years displayed a wide range largely because of the uncertainty of the tariff. However, depending on the system the net revenue for a twenty year period would range from the low $60,000 range to the mid $120,000 range. • Maintenance of the systems is minimal. The main concern is keeping the panels clean and clear of snow. Installers also offer maintenance programs at minimal cost per year to monitor the systems and conduct minor repairs. • Warranties of the components vary, however the key components of the system carry long term warranties and the panels usually have a guarantee that output of the panels will be at certain levels depending on age. For example after 25 years the panels should still be producing 80% of the rated output. • Expected life span of the system is 25 years • Value added services include maintenance programs and promotional programs to illustrate the steps that the municipality is taking to reduce consumption or produce power for the grid. • All firms submitting have installed multiple systems 2.7 In short, a 10 kW Solar Voltaic Panel installation at 40 Temperance Street would generate power to the grid for a period of 20 years and provide a payback of the investment long before the end of the 20 year term of the FIT program. At the end of 20 years and the FIT program the system would be adapted to feed power into the building thereby reducing operating cost for several more years. 2.8 With the recent release of the Two-Year Review Report the foregoing figures affected by the revision in the FIT will have to be recalculated using the new rate which, as noted above, has been reduced by 31.5%. Off-setting this reduction in potential revenue is the possibility that component and installation costs have become more competitive with the increased interest in solar generation. 2.9 Should a solar voltaic panel installation be considered for installation at the Municipal offices it is recommended that the roof replacement for the area proposed for the installation be undertaken. The current roof has deteriorated since installation and is experiencing leaks from time to time. According to the Capital Plan the roof is scheduled for replacement in 2015. It would not be prudent to install a panel system on a roof that is in need of frequent repairs and is scheduled for replacement within the next few years. To do so would necessitate partial disassembly of the panel system if repairs were needed and the removal and reinstallation of the entire panel system while the roof is being replaced. Assuming a 1 to 2 week period to dismantle the panel system, up to 2 weeks to repair the roof and 2 weeks to reinstall the panel system, the Municipality would lose up to 6 weeks of revenue plus incur extra cost for removal and reinstallation of the panel system. 2.10 Based on recent estimates, the cost of a roof replacement for the fourth floor library section would be in the area of $175,000. REPORT NO.: COD-014-12 PAGE 5 3. COMMENTS 3.1 The foregoing estimates, albeit based on the original FIT program, are an indication of the potential for a solar voltaic panel installation. With the recent changes in the FIT program the payback period will be extended and the revenue will be reduced. However, the amount of power that can be fed into the grid, the reduction in green house gases and the benefit to the municipality at the end of the 20 year term remain unchanged. 3.2 In order to update our information and the calculations for revenue and return on investment it will be necessary to have the vendors revisit their installation prices and recalculate the revenue stream and the payback based on the new MicroFIT program. Without a direction to pursue a solar panel installation for the MAC, staff are not in a position to pursue discussions with vendors with a view to firming up prices and selecting a preferred system. 3.3 As noted in section 3.3 of report CAO-008-11 the intention of the Expression of Interest was to generate adequate responses to assist the municipality in making a fully informed decision on the FIT program. The exercise was a success in that it provided the information required although complicated by the changes made to the FIT program. The exercise also identified a number of vendors that could be considered if an installation was feasible and proposed for the near future. 3.4 This report is provided for information. Should Council wish to pursue the possibility of installing solar panels on the MAC staff would require approval to proceed with the establishment of pricing and selection of a contractor. In addition, the financial aspect would require resolution and the source of funds established. The following are options for consideration: • Undertake the project in 2012 (not recommended due to lack of funding) • Include the roof replacement and solar installation in the 2013 budget discussions 3.5 Should Council wish to pursue a solar installation in 2012 given the amount of information collected to date and the short listing of interested vendors it is recommended that the requirements of the purchasing by-law be waived in order to pursue negotiations with the selected firms to establish the best package/price for a solar voltaic panel installation. A subsequent report with details of the project and a recommendation would be provided to Council prior to awarding any contract. If the 2013 Capital Budget Option is preferred it is recommended that a competitive process be undertaken as data collected in the recent EOI will be dated and the market will have changed. 3.6 For information, a number of municipalities such as Belleville, Markham, Vaughan, Ajax and several others have invested in the solar panel installations. REPORT NO.: COD-014-12 PAGE 6 3.7 The Green Energy Act, 2009 has identified as a guiding principle the use of renewable energy sources. Regulation 397/11 also requires public agencies to identify renewable energy generation projects, including the amount of energy generated on an annual basis, as part of the reporting requirements for their Energy Conservation and Demand Management Plans. 4. FINANCIAL 4.1 Should Council wish to pursue the installation of Solar Photo Voltaic System the following estimated funds will be required: Roof Replacement (includes consulting service): $175,000.00 Solar panel installation $ 90,000.00 (Subject to confirmation on completion of negotiations) Total Estimated Funds Required $265,000.00 4.2 To pursue the project in 2012 the funds would require direction of Council as funds are not included in any budget accounts. 4.3 Should Council elect to complete the project in 2013 the estimates would be provided as additional items in the 2013 Operations Capital Budget accounts. For clarification the roof replacement would be proposed as an additional item to the existing capital roof replacement program. 5. CONCURRENCE 5.1 This report has been reviewed by Fred Horvath, Director of Operations and George Acorn, Chair, Energy Management Committee, who concur with the comments herein. 6. CONCLUSION 6.1 The Expression of Interest has provided the information required to permit discussion of the details and the merit of considering a solar voltaic panel installation. 6.2 Although not as attractive from a revenue generating/return on investment perspective there is an opportunity to invest in the technology, derive a return on investment, contribute to the reduction of green house gases and provide for the maintenance of future energy costs once the 20 year program is completed. 6.3 To undertake this project should Council so direct, funding approval for the panel installation project as well the roof replacement would be required. REPORT NO.: COD-014-12 PAGE 7 6.4 The options are: do nothing; proceed with the project immediately which would require the provision of funding for the panel installation and the roof replacement ahead of schedule; or provide for the project in the 2013 Capital Budget. For information, the OPA will be undertaking a further review at the end 2013 which may result in a further change in the tariff rate. A project approval in the 2013 budget would leave sufficient time to award a contract and complete installation before the end of the year. CONFORMITY WITH STRATEGIC PLAN The recommendations contained in this report conform to the general intent of the following priorities of the Strategic Plan: Promoting economic development Maintaining financial stability Connecting Clarington X Promoting green initiatives X Investing in infrastructure X Showcasing our community Not in conformity with Strategic Plan Staff Contact: Jerry Barber, Manager of Purchasing Attachments: Attachment 1 - CAO-008-11 Attachment 2 - List of Proposed Firms Should Negotiations be considered List of interested parties to be advised of Council's decision: NONE Attachment 1 Leading the Way REPORT CHIEF ADMINISTRATIVE OFFICE Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Gate: Monday July 11,2011 Resolution#: d RAC 45PI-11 By-law#: NIA Report M CAO-008-11 t=ile#: ` Subject: ENERGY MANAGEMENT COMMITTEE—SOLAR PHOTOVOLTAIC (PV) PROGRAM RECOMMENDATIONS: It is respectfully recommended to the General Purpose and Administration Committee that Council approves the following: 1. THAT Report CAO-008-11 be received; 2. THAT the requirement for formal competitive bidding in accordance with By-law 2010- 112, Part 2 be waived for this initiative; and 3. THAT Staff, in conjunction with the Purchasing Division, be authorized to advertise for Expressions of Interest for the potential installation of solar panel systems on selected municipal buildings. Submitted by:(�f Franklin Wu Chief Administrative Officer CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET,BOWMANVJLLE,ONTARIO L1 C 3A6 T(905)623-3379 F(905)823-0720 REPORT NO,. CAO-008-1 I PAGE 2 1.0 BACKGROUND 1.1 Since the formation ol the EhergV Management Committee the mRm. bers ha%�e been keeping irtfoymed on various Of partic:j4r inleresil in tt-e iast 12 menwil-is has been the Onlat� Powe(Aijjwj(�f-,,Jys (ORA.)Foed-in-7a,r,iff(FITS Prorp-orn, 1.2 Ivn recent months 'Oft has foi6--vod many vmscficitied calls fro i trms providing information on the prograw, the roof mounb3d solar panel option and seeking interest from the municipalit�to proceed with arl applicabors for a prclecit. 'OPUk)1!S, fW building owners include the outright purotLase-of equipment, tile pure se:or eflulpri'lent orid lousing ;ooftops to the contras ors. To date staff have h ftrl in the infeernation gailhering oto, ;.vid have advised all firms shat if -are ic, proms' it will be 1hrc,4h a public procureir*n1l. ptocess 1,3 Tha mvnidpaRly owns a number of larger b-,"ziliings; l vinord', pot onlially be suillable rotallons for mid—sized roof moarded selar panels HAied on is feasible to mmsider, ooht-f pumol projects in the area of 10ok'SIV. 1.4 Al a recent Energy Marmigeme,,fil moutino a roprosontadi,, from 1he Renewable Energy Faca's1ation Ctftrieaf thP.(hilafle, folfilAry Q1 Enorgy a-T�d Hnff�Wnjduro prodded an avarview of the FIT Rrogram. The rapfewwali" e - , number of GTA monicipalitic.* have rac-cimd, approvals to proceed'wlh solar 0j proiects and many o1h . aye-in 91j1pos of 1he process. 2.0 PROGRAM 2.1 On Mafy 14, 2009 P*Grucin Energy and G Economy Ad vias pa_g&ed Into 1.94` The goals of Fnis legisfAlicri it making Ontario a renm-vable energV leader, encouraging invest me and pob and fov'oring a CUItUrs of conseriatica. In Octater &this carne year the OPA beg-an a�x*_Plirlg -applicator s under the FIT pror gram, REPORT NO,.,- Cap O-000-1 1 PAGE 3 22 The FIT PrDgram,"s developed to eneouraou the do-o-e-lop i-rent of smah',scale ren&oiabloenorgy p cols across the province, I'lle Fx<xgram it W-sud on the fienefallon,Winsmissi'on and disifibutionof energy into the pfovintems'orioqly supply wysleni. A r r ri r of energy sources are cmiered under thc-progfarn indiludingbiorrins, landfill nos, biagas, onshDre vorind. waber power and solar photavemaic. 21 Within [he FIT Program,b7are are three categnrie,,i I c c r i of -1 ,e, nergy nev re. it h, e P(qlnol,,siliall 1 OkW or below(MicrGFIT),mid-sized 1 UkA61-5DMVV� and large scale over SWIM, 24 Subject is all ireceasad.approvals Me QPA will eater iritc,a 10 yesir,contract for a fixed price for the electri6fy the larq0ent generales. Tive Fir is based Giq IkTe r—ype of en d' pr du and of sizo, of the proj=. In general the contrarV%afit sift clored to provide adequate guar PA1,00'revonucis to cover the capital ad, opefaling its aosociated writ h the pTojeLl as wetim pr(widing the building owner a reasonable retism an the initial inveslmBnt. Based on, informallon i3tatChm rowivud rijost installgians are expecled to re,zovor the capital ccatsvAthin the first term of the cri(ilrod 2.5 Based on a ror lop Ww panel project sized at 1 OMAI We contfati:pr'�Ce- is $0.7-13 per MI), %laff has advised the FIT program will qandergo a r"ew drum,rig 20,'1,1 with the pcxmbilily of aei�,Ijgud cunlracl pricing. 3,0 GOMMENT 5'.1 To da!'Je thea-hog b i n no detailed cl cusaion on the finafving of lhi!i progrorn. Subject to the f"-ponse,%11 on� the Expression of Ingest(E01) a de-lalled m- st ario, sis will be required if of is setwimendO to pro.t6w, "'with the program. 3.2 Prior 1)(Ock-riding v*h a mof mounted PV system a strijiltkiral rviequaG,t wAff&bu required oi),Ml k:144UHnos being m,-,sidemed and those costnwr be faolorox,'J irnlu 1hr.;, ' s Vinanriag caL culmlan , REPORT NO.: CAO,40811 PAGE 4 3.3 it is the nnientlon of thiS FOI to,ponorate a?dequab-p response from the e .; emnive,P�ne he v-i r4 , V c,ommuni.ty tha rev ill amisl 11-te munll-- lily Ic Tnako a fully inForTned decisicn, an t FIT progTa.'rn, 4.0 INPUT PROM OT"ER SOURCES 4.1 The Manage?-of Purchasing h [>---en-=(jsulW durirtg-,the prTeparabon, of this repc�,, and upon approval will coordirale the EKpr*,-,qslnrjo( k fur mst and any&ubsequant oogntiatbns. 42 Staff will eeo0.(jrj Ibe rotWis of the request fcr&e E01 A the fail,,& will t-o o(WhOrAl, C nrivmnelhef or nol,Ke munic-0a lily!should partiapa.le in the FN'S program. Attachment 2 Municipality of Clarington SHORT LISTED VENDORS EOI-2011-3 SOLAR VOLTAIC PANEL INSTALLATION BIDDER Sky Fire Energy Toronto Sunrise Solar Dynamic Solar Stouffville Solera Sustainable Energies Pickering TH Solar Wind Energy Ltd. Richmond Hill Blackstone Energy Solution Inc. Markham.