Previously, I have focused on how renewable energy implementation’s function is to provide a relatively cheap solution that reduces greenhouse gas emissions. Moreover, San Francisco’s 2017 Resilient Solar and Storage Roadmap (the report provided by Professor Thomas in the above comment) emphasized economically productive cities need safe infrastructure in place. It was interesting to see the report highlighted renewable energy’s primary function as increasing resiliency in safety of important buildings vulnerable to natural disaster. The city targeted resourcing shelters and critical emergency management facilities in its plan as it addressed the spaces’ need for reliable power in those chaotic situations. That being said, the focus of this report is on battery storage, as it has not only proven to be a cost-effective tool in terms of supporting the environment, rather it can simply provide back-up for longer streaks of time. However, surprisingly, although the city, county and Storage for Resilience Project evaluated 1,263 potential congregation and shelter sites across the city, only 67 of them were identified as shelter sites with power requirements and opportunities to develop resilient infrastructure through solar and storage. It is a result of the thorough criteria (outlined in the report) which the project managers used to determine the smartest sites to install at. Although the writers mentioned the entire report is a model for other cities looking to enhance safety using battery technology, the section about site selection is particularly a model for others. Specifically, it highlighted the process of deciding whether a building should be part of a micro-grid or have its own stand alone system.
It was also interesting the report emphasized solar and its storage system requires less maintenance compared to diesel generators. Generators require monthly tests under load, regular inspection, regular cleaning, and replacement of filters, oil, and coolant. In contrast, solar arrays should be washed once or twice per year depending on dust exposure, and batteries require monthly visual inspection to confirm that they are free from damage or corrosion. Other required voltage and current inspections are performed automatically in normal operation and require no added maintenance.
In the project finance section, the report mentioned typical financing methods of bonds and taxes may require voter approval, creating a lengthier process for deploying resilient infrastructure. It is important to consider that source of delay when determining which avenues to target in order to timely fund a project. The report outlined reasons why storage financing is complicated including:
Returns are determined by electricity rates, which vary by facility and energy provider, and have uncertainty in future escalation. Typically rates are set for at most three years in the future with no guarantee of stability beyond the end of the current rate case.
San Francisco has multiple options for incentivizing solar and storage due to its position as a customer of the San Francisco Public Utilities Commission (SFPUC). Furthermore, should the city choose to partner with a private entity, additional funding mechanisms would be available (e.g., feed-in tariff, net metering, income tax refund).
Energy storage financing options are still developing as the California Energy Commission, California Public Utilities Commission (CPUC), and utilities (e.g., SFPUC, Pacific Gas and Electric [PG&E]) identify the best mechanisms for storage interactions on the retail and wholesale markets.
Several options for design, construction, ownership, and maintenance of solar and storage systems are used in the marketplace currently.
As a result of this variability in financing options, the optimal financing choice for San Francisco depends on whether a single building is being evaluated or a portfolio of buildings is being considered. For single buildings, addition of solar and storage can likely be accomplished through direct procurement by the city department through capital planning or at the time of building renovation. If capital is unavailable, a power purchase agreement with a third-party provider could provide a zero-capital approach to installing solar and storage.
I was intrigued the groups determined a public-private partnership was decided on to be the most viable pathway for financing the endeavor. The city would seek a private-sector partner to share the financing and risk of the project in all phases, relying on the private-sector partner to provide most of the initial capital in exchange for allowing the partner to operate the installation for a set number of years as a means to recover the initial capital expense. At the end of the operation period, the private partner hands the asset over to the city. I was also surprised the project only saved the city and county 6% over the course of 20 years. Nonetheless, building resilient infrastructure using renewable energy mechanisms is still financially logical considering, according to the U.S. Department of Energy, between 2003 and 2012, 679 widespread power outages occurred due to severe weather which annually costed the American economy between 18 and 33 billion dollars. Specifically, the Bay Area faces danger from fires and a projected 1 meter rise in sea level and a deep concern of flooding due to storm surges, as well as the constant threat of earthquakes.