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Home My WebLink About6.i. Approval of Amendments to Two Solar Subscriptions (SRC 040823 and 040824) EXECUTIVE SUMMARY City Council Regular Meeting: April 21, 2020 AGENDA ITEM: Approval of Amendments to Two Solar Subscriptions (SRC 040823 and 040824) AGENDA SECTION: Consent PREPARED BY: Anthony Nemcek, Planner AGENDA NO. 6.i. ATTACHMENTS: Proposed Subscription Amendments, Original Subscription Contracts APPROVED BY: LJM RECOMMENDED ACTION: Motion to approve the amendments to the subscriptions with Warsaw Solar, LLC. BACKGROUND In an effort to support solar energy production and reduce long-term energy costs, the City has entered into subscriptions with multiple solar gardens. The cost savings to the City are derived from the bill credits Xcel Energy pays the City, which amount to more than the cost of the subscriptions. The City entered into the most recent subscription contract at its meeting on April 2, 2019. That contract is with ReneSola, operating as Warsaw Solar LLC. The subscription agreement has the City paying a flat rate for energy produced by the solar garden. Savings are realized by Xcel Energy’s application of a bill credit to the City’s energy invoices. The value of that credit increases overtime, which is why the savings are higher further into the subscription term. As the garden is approaching its operational date, the solar developer wishes to amend the subscription agreement to reflect the most accurate information available. The original subscription agreement indicated that the City would subscribe to 39.71% of the garden’s capacity for each of the two subscription agreements. The proposed amendment changes that percentage to “up to 40%” of the capacity. It is a nominal increase in the size of the subscription, but will result in an additional savings for the City of approximately $125,000 over the 25-year term of the subscription due the fact that Xcel Energy’s 2020 bill credit rate is now available. This information has been incorporated into Exhibit D of the proposed amendment. RECOMMENDATION Staff recommends approval of the proposed amendments to the subscription agreements. AMENDMENT NUMBER 1 TO SUBSCRIPTION AGREEMENT (SRC 040823) This Amendment to Subscription Agreement (the “Amendment”) is entered into this ____ day of March, 2020, by and between Warsaw Solar, LLC, a Minnesota limited liability company (“Owner”) and the City of Rosemount, a political subdivision of the State of Minnesota (“Subscriber”). RECITALS 1. Owner and Subscriber are parties to a Subscription Agreement (SRC 040823) dated April 4, 2019, pursuant to which Subscriber acquires an allocation of capacity in a community solar garden owned and operated by Owner and related rights to Bill Credits associated with the Subscriber Energy associated with that capacity (“Subscription Agreement”). 2. Owner and Subscriber wish to amend the Subscription Agreement to properly reflect the Subscriber’s Allocated Percentage based on new information now that the solar garden is approaching its operational date. NOW, THEREFORE, in consideration of the above premises, and the mutual promises in the Subscription Agreement and this Amendment, Owner and Subscriber agree as follows. AGREEMENT 1. Definitions. Capitalized terms used in this Amendment shall have the meanings given to them in the Subscription Agreement unless otherwise expressly defined in this Amendment. 2. Amendment. Subscriber and Owner agree to amend the Subscription Agreement as follows: a. Section 1.1 is amended to delete and replace the following quoted section “…39.71% of the nameplate capacity of the Project or 556,080 watts (DC)…” with “…up to 40% of the nameplate capacity of the Project or 561,960 watts (DC)…” b. Exhibit C of the Subscription Agreement is deleted in its entirety and replaced with the new Exhibit C attached to this Amendment. b. Exhibit D of the Subscription Agreement is deleted in its entirety and replaced with the new Exhibit D attached to this Amendment. 3. Effective Date. The effective date of this Amendment shall be March ___, 2020. 4. Valid and Effective. Except as otherwise expressly amended by this Amendment, the Subscription Agreement remains in full force and effect. Subscriber and Owner each confirm that their respective representations and warranties in the Subscription Agreement are true and correct as of the date of this Amendment. 2 [Signature page on next page] 3 Northfield Solar LLC, a Minnesota limited liability company By:______________________________________ __________________ Its: Manager City of Rosemount, a political subdivision of the State of Minnesota By:_____________________________________ __________________ Its: 4 EXHIBIT C ESTIMATE OF ENERGY PRODUCTION Year Estimated CSG Production (kWh) 1 2,327,691 2 2,316,053 3 2,304,472 4 2,292,950 5 2,281,485 6 2,270,078 7 2,258,727 8 2,247,434 9 2,236,197 10 2,225,016 11 2,213,890 12 2,202,821 13 2,191,807 14 2,180,848 15 2,169,944 16 2,159,094 17 2,148,298 18 2,137,557 19 2,126,869 20 2,116,235 21 2,105,654 22 2,095,125 23 2,084,650 24 2,074,227 25 2,063,855 Total 54,830,976 Estimated Production was determined by using PVSYST software developed by the National Renewable Energy Laboratory using publicly available historical data for solar resource at the site of the Project, the manufacturer’s specifications for production capability of the solar modules, and reductions for estimated losses for Project usage and conversion, transmission and transformation of the electricity generated by the Project. 5 EXHIBIT D ESTIMATED SUBSCRIPTION BENEFITS Year Estimated CSG Production (kWh) Allocation (%) Estimated CSG Rate ($/kWh) Subscriber Rate ($/kWh) Cost/Benefit ($) 1 2,327,691 40% $0.12550 $0.1240 $466 2 2,316,053 40% $0.12876 $0.1240 $3,486 3 2,304,472 40% $0.13211 $0.1240 $6,555 4 2,292,950 40% $0.13555 $0.1240 $9,672 5 2,281,485 40% $0.13907 $0.1240 $12,840 6 2,270,078 40% $0.14269 $0.1240 $16,059 7 2,258,727 40% $0.14640 $0.1240 $19,331 8 2,247,434 40% $0.15020 $0.1240 $22,656 9 2,236,197 40% $0.15411 $0.1240 $26,036 10 2,225,016 40% $0.15811 $0.1240 $29,472 11 2,213,890 40% $0.16222 $0.1240 $32,965 12 2,202,821 40% $0.16644 $0.1240 $36,516 13 2,191,807 40% $0.17077 $0.1240 $40,128 14 2,180,848 40% $0.17521 $0.1240 $43,800 15 2,169,944 40% $0.17977 $0.1240 $47,535 16 2,159,094 40% $0.18444 $0.1240 $51,334 17 2,148,298 40% $0.18924 $0.1240 $55,198 18 2,137,557 40% $0.19416 $0.1240 $59,129 19 2,126,869 40% $0.19920 $0.1240 $63,128 20 2,116,235 40% $0.20438 $0.1240 $67,197 21 2,105,654 40% $0.20970 $0.1240 $71,337 22 2,095,125 40% $0.21515 $0.1240 $75,549 23 2,084,650 40% $0.22074 $0.1240 $79,836 24 2,074,227 40% $0.22648 $0.1240 $84,198 25 2,063,855 40% $0.23237 $0.1240 $88,639 The initial CSG Rate is Xcel’s proposed 2020 CSG Rate for General Service customers subscribing to community solar gardens larger than 250 kW in size and which elect to sell RECs to Xcel escalated at an assumed 2.6% for 2021. For subsequent years the CSG Rate has been escalated an assumed 2.6% per year; actual changes in the CSG Rate will be set by the MPUC and may be lower or higher. Costs and benefits shown equal the expected difference each year between the Subscription Rate and CSG Rate multiplied by the estimated annual Subscriber Energy. Energy Production is calculated using the method described in Exhibit C. AMENDMENT NUMBER 1 TO SUBSCRIPTION AGREEMENT (SRC 040824) This Amendment to Subscription Agreement (the “Amendment”) is entered into this ____ day of March, 2020, by and between Warsaw Solar, LLC, a Minnesota limited liability company (“Owner”) and the City of Rosemount, a political subdivision of the State of Minnesota (“Subscriber”). RECITALS 1. Owner and Subscriber are parties to a Subscription Agreement (SRC 040824) dated April 4, 2019, pursuant to which Subscriber acquires an allocation of capacity in a community solar garden owned and operated by Owner and related rights to Bill Credits associated with the Subscriber Energy associated with that capacity (“Subscription Agreement”). 2. Owner and Subscriber wish to amend the Subscription Agreement to properly reflect the Subscriber’s Allocated Percentage based on new information now that the solar garden is approaching its operational date. NOW, THEREFORE, in consideration of the above premises, and the mutual promises in the Subscription Agreement and this Amendment, Owner and Subscriber agree as follows. AGREEMENT 1. Definitions. Capitalized terms used in this Amendment shall have the meanings given to them in the Subscription Agreement unless otherwise expressly defined in this Amendment. 2. Amendment. Subscriber and Owner agree to amend the Subscription Agreement as follows: a. Section 1.1 is amended to delete and replace the following quoted section “…39.71% of the nameplate capacity of the Project or 556,080 watts (DC)…” with “…up to 40% of the nameplate capacity of the Project or 561,960 watts (DC)…” b. Exhibit C of the Subscription Agreement is deleted in its entirety and replaced with the new Exhibit C attached to this Amendment. b. Exhibit D of the Subscription Agreement is deleted in its entirety and replaced with the new Exhibit D attached to this Amendment. 3. Effective Date. The effective date of this Amendment shall be March ___, 2020. 4. Valid and Effective. Except as otherwise expressly amended by this Amendment, the Subscription Agreement remains in full force and effect. Subscriber and Owner each confirm that their respective representations and warranties in the Subscription Agreement are true and correct as of the date of this Amendment. 2 [Signature page on next page] 3 Northfield Solar LLC, a Minnesota limited liability company By:______________________________________ __________________ Its: Manager City of Rosemount, a political subdivision of the State of Minnesota By:_____________________________________ __________________ Its: 4 EXHIBIT C ESTIMATE OF ENERGY PRODUCTION Year Estimated CSG Production (kWh) 1 2,327,691 2 2,316,053 3 2,304,472 4 2,292,950 5 2,281,485 6 2,270,078 7 2,258,727 8 2,247,434 9 2,236,197 10 2,225,016 11 2,213,890 12 2,202,821 13 2,191,807 14 2,180,848 15 2,169,944 16 2,159,094 17 2,148,298 18 2,137,557 19 2,126,869 20 2,116,235 21 2,105,654 22 2,095,125 23 2,084,650 24 2,074,227 25 2,063,855 Total 54,830,976 Estimated Production was determined by using PVSYST software developed by the National Renewable Energy Laboratory using publicly available historical data for solar resource at the site of the Project, the manufacturer’s specifications for production capability of the solar modules, and reductions for estimated losses for Project usage and conversion, transmission and transformation of the electricity generated by the Project. 5 EXHIBIT D ESTIMATED SUBSCRIPTION BENEFITS Year Estimated CSG Production (kWh) Allocation (%) Estimated CSG Rate ($/kWh) Subscriber Rate ($/kWh) Cost/Benefit ($) 1 2,327,691 40% $0.12550 $0.1240 $466 2 2,316,053 40% $0.12876 $0.1240 $3,486 3 2,304,472 40% $0.13211 $0.1240 $6,555 4 2,292,950 40% $0.13555 $0.1240 $9,672 5 2,281,485 40% $0.13907 $0.1240 $12,840 6 2,270,078 40% $0.14269 $0.1240 $16,059 7 2,258,727 40% $0.14640 $0.1240 $19,331 8 2,247,434 40% $0.15020 $0.1240 $22,656 9 2,236,197 40% $0.15411 $0.1240 $26,036 10 2,225,016 40% $0.15811 $0.1240 $29,472 11 2,213,890 40% $0.16222 $0.1240 $32,965 12 2,202,821 40% $0.16644 $0.1240 $36,516 13 2,191,807 40% $0.17077 $0.1240 $40,128 14 2,180,848 40% $0.17521 $0.1240 $43,800 15 2,169,944 40% $0.17977 $0.1240 $47,535 16 2,159,094 40% $0.18444 $0.1240 $51,334 17 2,148,298 40% $0.18924 $0.1240 $55,198 18 2,137,557 40% $0.19416 $0.1240 $59,129 19 2,126,869 40% $0.19920 $0.1240 $63,128 20 2,116,235 40% $0.20438 $0.1240 $67,197 21 2,105,654 40% $0.20970 $0.1240 $71,337 22 2,095,125 40% $0.21515 $0.1240 $75,549 23 2,084,650 40% $0.22074 $0.1240 $79,836 24 2,074,227 40% $0.22648 $0.1240 $84,198 25 2,063,855 40% $0.23237 $0.1240 $88,639 The initial CSG Rate is Xcel’s proposed 2020 CSG Rate for General Service customers subscribing to community solar gardens larger than 250 kW in size and which elect to sell RECs to Xcel escalated at an assumed 2.6% for 2021. For subsequent years the CSG Rate has been escalated an assumed 2.6% per year; actual changes in the CSG Rate will be set by the MPUC and may be lower or higher. Costs and benefits shown equal the expected difference each year between the Subscription Rate and CSG Rate multiplied by the estimated annual Subscriber Energy. Energy Production is calculated using the method described in Exhibit C.