HomeMy WebLinkAbout2024-09-19; Maerkle Reservoir Solar Project Update (District 2); Gomez, PazCMWD Board Memorandum
September 19, 2024
To: Yrlsbad Municipal Water District Boar o Directors
From: Paz Gomez, Deputy City Manager, Publ o
Amanda Flesse, General Manager
VJ&: Scott Chadwick, Executive Manager
Re: Maerkle Reservoir Solar Project Updat~ii4(1rict 2)
Ccarlsbad
Municjpal Water District
Memo ID# 2024070
This memorandum provides an update to a previous CMWO Board Memorandum dated
February 29, 2024 (Attachment A) and April 16, 2024, Staff Report (Attachment BJ on the
Maerkle Reservoir Solar Project, Capital Improvement Program (CIP) Project No. 4722 (Project}.
Background
The Carlsbad Municipal Water District's (CMWO) Maerkle Reservoir site Is identified as a location
for a potential solar energy generating and battery energy storage facility in CIP Project No. 4722.
This Project is envisioned to contribute to the use of renewable energy sources, promote energy
sustainability and offset the CMWD's, and potentially the city's, energy costs. The city's flve-Year
Strategic Plan Identifies this Project as a city priority.
To determine the Project's financial feasibility, define Its scope and fully evaluate potential
development and operational models, staff are seeking the services of a team of solar industry
experts to perform a phased scope of professional services, lndudlng subsequent project
management and assistance with procuring solar development services, if the Project Is deemed
feasible.
Ol$CUSS-lon
When staff presented an update to the CMWD Board in April, staff had planned to return to the
Board by the end of summer of 2024 with the Request for Qualifications (RFQ~ and/or Request
for Proposals (RFP), The process has taken a little longer than anticipated, and staff now plan to
return to the CMWD Board on October 29, 2024.
As the technology and regulatory landscape for solar power generation and storage systems
continues to rapidty evolve, the vlabllity of the Project and the benefits to the CMWD require
further analysis by solar industry experts. Even more comple.l< than technology and system
configuration, are the variety of development and operational models, as well as funding
mechanisms for these projects. Other issues regarding slte security and neoessary fire protection
for a battery storage facility, where a fire could have a large impact, are also being analyzed.
Carlsbad Municipal Water District
5950 El Com I no Reol I Co~sbod, CA 92008 I 442·339•2722 t
Board Memo -Mael'kle ReseNoir Solar Project Update (Oistl'lct 2)
September 19, 2024
Page 2
The Maerkle Reservoir site ls one of the CMWO's most essential facilities to ensure reliable water
supply, therefore this type of application must be carefully considered. Following the
presentation of results of CMWD's interdepartmental coordination and summary of Identified
site issues to the CMWO Board in April, staff have been wol'k.ing on development of an RFQ and
RF P from solar industry consult-ants.
After researching other utilities' procurement processes, staff are proposing a multi•phase
approach. Staff anticipate returning to the CMWO Soard on October 29, 2024, to request CMWO
Board input prior to issuing an RFQ for the complete feasibility analysis, preliminary project
scoping. and potential project management services during development. Staff expect the RFQ
process will assist in identifying the most qualified consultants with experience in similar solar
projects, ptior to requesting that firms prepare formal and comprehensive proposals and fees.
Staff will review Statements of Qualifications (SOQs) and identify a short list of qualified solar
consultants. Staff will then return to the CMWD Board with a request to authorite Issuance of a
formal RFP from these identified firms to provide details on their project approach and fees.
Next Steps
Staff provide the following timeline:
• October 29, 2024 -Provide Project update and request RFQ Input from the CMWO Board
• November S, 2024-IS$ue an RFQ for a solar industry consultant
• November 26, 2024 -Receive solar indust ry consultant SOQs
• December 2024 -Evaluate SOQs and prequalify firms to propose on the Solar Project
Feasibility and Project Management RFP
• January 7, 2025 -Request CMWD Board authorization to release an RFP to prequallfied
firms
• February/March 202S-Review proposals/fees and select the most qualified firm
• March/April 2025 -Request CMWD Board approval to award co,uract to the most
qualified firm
Attachments: A. CMWO Board Memorandum dated February 29, 2024
8. CMWD Staff Report dated April 16, 2024
cc: Geoff Patnoe, Assistant Executive Manager
Cindie McMahon, General Counsel
Gary Barberio, Deputy City Manager, Community Services
Laura Roe.ha, Deputy City Manager, Administrative Services
Gina Herrera, Assistant General Counsel
Jason Haber, Intergovernmental Affairs Director
Zach Korach, Finance Director
Board Memo-Maerkle Reservoir Solar Project Update (District 2)
September 19, 2024
Page 3
Jeff Murphy, Community Development Director
James Wood, Environmental Sustainability Director
Curtis Jackson, Real Estate Manager
Eric Lardy, City Planner
Dave Padilla, District Engineer
Eric Sanders, Utilities Manager
Ked Martinez, Utilities Senior Engineer
To the members of the:
OTYCOIJNO~
o,to~CA ✓cc ✓
CM~MLOCM (3)L"
February 29, 2024
CMWD Board Memorandum
To: Carlsbad Municipal Water District Board of Directors
From: Paz Gomez, Deputy City Manager, Public Works
Vicki Quiram, General Manager
Jason Haber, Intergovernmental Affairs Director
Via: Geoff Patnoe, Acting Executive Manager (}_
Re: Maerkle R0$0rvolr Solar Study Project Update (District 2)
A'ITACHMENT A
(carlsbad
Municipal Water District
Memo ID# 2024018
This memorandum provides an update to a CMWO Soard Memorandum dated April 29, 2021,
Attachment A, on the Maerkle Reservoir Solar Study Project, C-apltal Improvement Program (OP}
Project No. 4722 (Project).
Background
The Mae:rkle Reservofr site, located in the northeastem part of the city, was originally identified
by staff as a potential site for conrtructing a solar photovoltaic {PV) energy-generating facility in
2009. The Project has long been envisioned to contribute to the use of reneWilble energy
sources, promote energy sustainability and offset ongoing Carlsbad Municipal Water District
(CMWO) energy costs. The city's Climate Action Plan acknowledges the Project's potential to
achieve renewable energy product.ion goals and the city's Ave-Year Strategic Plan (2023-2027)
identifies the CMWO Project as a priority.
In fiscal year (FY} 2015,.16, the Project was Included In the CIP with a budget appropriation of
$2SO,OOO to conduct a feasiblllty .study. In FY 2021·22, as the landowner, the CMWD was tasked
with determining the feasibility of the Project. In October 2022, the Project was identified tn the
city's Five-Year Strategic Plan.
Following adoption of the Strategic Plan and the FY 2022-23 budget, sraff began working with a
consulting firm and various city departments to identify large-scale potential land use Issues and
other broad factors to consider in determining the feasibility of developing a solar energy
generation project at Maerkle Reservoir.
Discussion
Numerous cl,allenges surround tho lmplcinentaUon of a solar project at this .specific location. In
the investigation of Project feasibility, staff and Hoch Consulting (Hoch) met with stakeholders,
including project proponents and industry experts (e.g., Carlsbad Sustain'1bHity Coalition and
Clean Energy Alliance), to understand current best practices regarding a project of this type and
Carfsbad Munkipal Water District
S950 El Camino Real I Qirlsbad, CA 92008 I 442•339-2722 t
8oard Memo-Maerkle Reservoir Solar Study Project Update (District 2}
February 29, 2024
Page 2
scale and the various financing. development and operating models to be considered. In
addition, staff researched stmllar municipal solar projects, power purch~ agreement strategies
and design4 buUd construction proposals, Staff coordinated with Intergovernmental Affairs and
General Counsel's offices, Communlty Services Branch Real Estate Olvlslon1 and Finance and
Community Development Departments. These interactions informed staff's understanding of
possible concerns and facilitated collaborattOn on the Project. Hoch and staff memorialized thes.e
discussions and r~earch In the attached memorandum and addendum (Attachment B). The
general issues for consideration of the Project feasibility are summarfzed below.
flnanclo& Oeveloement and Oeeratins Mode's
OWne,shlp, development and operating models for the solar project will need to be evaluated
during the feasibility phase to determine what Is the most advant:ageous to the C.MWD and its
customers. Models to consider and evaluate Include:
• The CMWD owning and operating the solar energy generation/storage system
• The CMWD leasing the property to a solar development company for development and
operation of a system
• The CMWO contracting de-velopment, financing. construction and maintenance of a
system via a power purchase agreement
In each model, consideration and determination of the energy off-~ker {e.g., Clean Energy
Alliance, San Diego Gas & ElectJlc, etc.} wlll be a critiQI decision,
Lard Use !issues
Land Issues associated with the Project were also researched and discussed Including:
• Ultimate scope, scale and location of the proposed improvements
• Existing easements
• Consistency and permits required due to the ptopert'{s open space land use designation
• Allowable District uses
• Surplus land A.ct
• Pote,~tial environmental impac.ts
• Habitat Management Plan
• Required California Environmental Quality Act compliance
Energy Production
Staff have Identified approximately 32 acres of u~ble space on the site, taking into account the
access road and potential perimeter buffet zone. The energy produced at this scale would exceed
the CMWO's energy needs but could be utilized by other commerclal and Industrial users with
development of the proper contract agreements,
Board Memo -Maerlde Reservoir Solar Study Project Update (District 2}
Feb,u•ry 29, 2024
Page 3
Desisn Considerations
The existing topography will play a role in selecting design configurations either to minimize
grading or perform grading to maximize energy generation. Any design will need to consider
Infrastructure Impacts to the surrounding community and the neighboring cities of oceanside
and Vista. The design and sl:ze selected will also 1mpact the permitting and environmental review
of the Project.
Gtid Connection
Further, the scale and location of the infrastructure nece.ssary to connect the solar facility to the
existing energy grid still need to be studied and will be better understood during the feasibilrty
study phase.
Recommended Approach
The technology for PV generatJon and storage systems continues to evolve rapidly, and the
viability of such a project and the be.neflts to the CMWO require further study by solar experts to
evaluate feasibility, project development, implementation and asset management. Issuing a
request for qualifications for this expertise and to obtain consl$tant services through all phases of
the P-roject, including feasiblllty, project development, construction and operation of the SyStem,
ls a common and recommended approach for dellvery of this Project.
Next Steps
Staff have scheduled a presentation at the April 16, 2024, CMWO Board mee.ting to discuss the
research findings and seek Input from the CMWD Board re~rding the process fOr determining
project feasibifity and evaluating the preferred development, ownership and operational models
to be used In advancing the Project. These Items are furthetouUlned in the attached Hoch letter
and addendum.
Attachments: A. CMWO Board Memorandum dated April 2.9, 2021
8. Hoch letter and addendum dated February 21, 2024
cc: SCott Chadwick, Executive Manager
Cindie McMahon, Gener-al Counsel
Gary Barberio, Deputy City Manager, Community Services
Laura Rochel!, Deputy City Manager, Administrative Services
Gina Herrera, Assistant General Counsel
Zach Korach, Finance Director
Jeff Murphy, Community Development Director
James Wood, Environ mental Sustainability Director
Curtis Jack.son, Real Estate Manager
Eric Lardy, City Planner
Board Memo-MaerkJe Reservoir Solar Study Project Update (District 2)
February 29, 2024
Pag~4
Dave Padilla, District Engineer
Shos.hana Aguilar, Senior Management Analyst
Eric Sanders., Utilities Manager
Kerl Martinet, Utilities Senior Engineer
To the membe·rs of the:
UNOL
Date ✓ cc ✓
CM _ACM .L DCM (3)/
April 29, 2021
CMWD Board Memorandum
To: carlsbad Munjcipal Wa
From: Paz Gomez, Deputy City M e , ubnc Works
Vicki Quiram, General Ma a
Vla: Scott Chadw1ctc, Executl Ma,-11•'-~
Re: Maerkle Reservoir Solar tudy oject Update {District 2)
ATTACHMENT A
Cearlsbad
Municipal Water OistJlct
Memo 10 #2021087
Th1s memorandum provides a.n upd-atc to a pl'c~us Coundl Memorandum dated Feb, 18, 2021,
(Attachment A) on the Maerkle Reservoir Solar Study Project, Ca pita I Improvement Program (OP)
Project No. 4722 (Project) and provldesthe C.risbad Municipal Water District (CMWO) SC.rd of
Directors (Board) infonnation on an unsolktted proposal on this Project.
Bad<sround
The Maerkle Reservoir complex, whkti ls over 100 a-cres in size and located in the northeastern
part of the dty, Is a potentJal site for constructing a solar photovoltalc energy generating facility.
In fiscal year {FY) 2015·16, the Project was Included in the city's CIP with a budget appropriation
of $250,000 to oonduct a feasiblllty study. If feasible, the Project couk:I offset ongotng energy
costs, contribute to the city's use of renewable energy sources and promote sustainabUlty In
koeplng with the city's Climate Action Plan.
Attachment A lnformtd the City Council that staff planned to Include the Project as part of the
FY 2022-23 CIP Btldget unleS$ directed otherwise. Since then, CMWD staff h.ave hi!d dlscu:sslons
with Oaan Energy Altlance {CEA) staff on the Ptoject. Moving for'Ward, CMWD will be leading the,
CIP Project effort Instead of the c:lty since the Project ls on CMWO property.
On Aprtl 13, 2021., the city received an unsolicited propos.11 from Dr. Phil Watts of Resource
Renewable Energy, Inc., which proposed an exclusive negotiating agreement with the city to
develop a 25 MW solar power and 20 MW energy storage project on approximately 56 acres of
undeveloped land at the Maerfde Reservoir {Att~ment 8).
Dlscusslon
Staff plans to respond to Dr. Watts lnfo,ming him that the city currtntJy does not have funds ln
the FY 2020-21 CIP Budget for this Project. Additionally, C.rlsbad Munlclp•I Code (CMC) Section
3.28.060(A){1} encourages the use oh request for proposals {RFP) process when soliciting
professJonal services. Staff regards the exclusfve negotiating agreement attached to his emall as
an offer to perform professionaJ services on behalf of the city.
Clrlsbaid Municipal Water District
5950 El camino ... , I cartsbad, CA 9200s j 760-438-2722 t
Board Memo-Maerkle Reservo,Jr SOiar Study Project Update (District 2)
April 29, 2021
Page2
If funds are later allocated to study the feasibility of energy gene.ration at the MaerkJe Reservoir,
CMWD staff will follow CMC section 3.28.060{A){1) and so11dt bids from proposers through a
competitive sollcltatlon process.
Next Steps
Staff will respo,nd to Dr. Watts on his unsolicited proposal, Attachment 8. CMWO st off will
continue to dl.sc,us.s the feasibUity of the Projtd with CEA staff i,nd propose it for incl usion in the
FY 2022·23 OP Budget for the CMWD B~rd's consideration and/or seek other fundfng
opportunities.
Attachments: A. council Memorandum dated Feb. 18, 2021
B. Or. Phil Watts' email of April 13, 2021
cc: Geoff Patnoe, Assistant Executive Manager
Cella Brewer, General Counsel
Gary Barberio, Deputy City Manager, Commu·nity Services
Laura Rocha, Oeputy Qty M;mager, Administrative Services
Robby Contreras, Assistant General COu.nsel
Ryan Green, Finance Director
Jason Haber, Intergovernmental Affairs Director
Dave Padilla, District Engineer
John Maas:hoff, Public Works Manager
James Wood, EnvSronmental Manager
Curtis Jackson, Real Estate Manager
Steve Stewart Municipal Pro}ects Manager
Yo the mombouof me:
9T'(COUNQL
oare:(1P.8,. CA.L CC. !L..
CM .L. ACM ..>L DCM t3) L
Feb. 18, 2021
ATTACHMENT A
Council Memorandum
To: Honorable Ma\'Ot HaU and Mcmbus of the CltyCouncll
From1 Paz Gom~ Deputy Oty Manager, Publtc Works
Via: Geoff Patnoe, Assistant Oty Manaa,tt f;
Re< Ma<,riil• R....,.,i, SOl•r Study Project Updote (Olst~d 2)
Ccuyof
Grrlsbad
Memo ID #2021043
Thts memorandum provides an update on tho status: of the Maertde Reservoir Solar Study
Ptoiect, Caphal Improvement Program (CIP) Projeet No. 4722 (Project).
Background
Ou,fng the CltyCoundl Meeting on Feb.11, 2021, a council Member requested status of the
Project and asked whether energy battery stol'ilgo WM Included In the scope of work.
The Mtlerklc Reservotr c:omplex, which ts overlOO aaes in size and loeilted In the northecl$tem
part of the eltY, 1s a potential site fOf constructing a solar photo'w'Ottaic: eneray aenercitfng
fadlity, In #i$cal year (FY) 2015-16, the Project was included in the CIPwith a budaet
approprl11tion of $250,'000 to conduct a feasibility study. If fea.sib&o, the PtoJect couJd offset
ongoing energy costs, contribute to the dtys use of ttnewabl0 encray sources and promote
s~tatnability In keeping with the city's Olm ate Action Plan.
ln M;,v 2019, during a presentation of the prelimina,y FY 2019-20 CIP 8ud,gM, stiff provided
Oty Council an upd3te that the ProJect had not yet started due to lack of staff resources ind
prlol'ltltatfol'I, Approxlmutely $830 of the $250,000 had been expended fot an appflcatlon with
San D~go Gas & Electrk to obtain energy data. No additional work has been compfoted to date.
As part of the FY 2020•21 CIP Budget development process presented to Oty Couricil In
May 2020 and adopted In June 2020, t;i1plt3I projects were re-evaluated against anticipated
revenue deueases as a r1Kult of the COVI0-19 p.andemlc and other factors. As a result, the
remaining budgeted Project funds of $249,170were dlsencumbered and reprogrammed to be
tnduded In the FY 2022-23 CIP Budget during the FY 2022-23 ClP Budget development process,
Discussion
The Project's scope of work IS to prepate & study to determine the feasibility of constructing a
solar photovoltaic energy genemtlng facility at the Maerkle fteservolt complex, whlch IS owne-d
by the Car1sbad Munlcip.al Water Olstrtct. It does not tndude energy battery storage.
Public Works Branch
Fleet and Fadlkies Oepartme,nt
405 "0alc. Avenue I Catlsb:ld, CA 92008 I 760-434-2980 t
I
I
l
C:Ouncll Memo-M ... ,1de ~,wlr Solar Study Projeet Update (Olstllct 2)
Feb. 18, 2021
Page2
Staff Is In the process of devtloping the f.Y 2021·22 CIP Budget. Currently, It does not Include
the Project as one of the proPDSed projects that will be presented to Qty Council as part of the
preJlmtnary budget In May 2021. Staff will Include \hi! P.ro}ect In the FY 2022~23 OP 6udget and
tn the CIP Budget dewlopment process next year unless City Council directs otherwise.
Ne.tSteps
Staff wm lndude the Project as part of the FY 2022·23 CIP Budget unJess City Council directs Its
indu.slon lo fV 2021·22. If approved by City Council for lnduslon In the FY 2021·22 OP Budget,
staff \I.All prepare a scope of work for aconsult.anttoconduc.t the feaslblUty study In FY 2021·22.
cc: Scott.Chadwick, City Manager
tella e,aver, Oty Attorney
Laur& Rocha, Deputy City Manag~, Administrative Strvloes
Robby Contreras, Assistant City Attorney
Ryan Green, Finance Director
Vlcld Quiram, Utllhle$ Olrecto'r
John Maashoff, Publk Works Manager
Jame:s Wood, Environmental Manager
OaV(! Padllla, Engtneerlng Manager
Steven Stewairt, Munlclpal Projects Manager
ATTACHMENT B
-..Qrigiual Mcuace-••
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<Clnt@cll/l,Ndca~ Attomc.y~ey@Cflt,b;adCA.gov>
Cc.:Council lntcmCIC E!m.ail <C.)l)'CouDCJl@.arlSblldca.,ov>; Kdd18.tblft<X¢kb..8Jackt,u~~'f>:
Cori StMlfllltCbtr <Cori.Scfl~l,,adca,gov>; Priya Bh;at.htcl <Priyit.Dh .... P1i.ci,@c:wlsbad¢1.a,ov>;
Tctdl Aectta<l'~CO$ta@clll'lshodc1.go,p.; Jason Habcr<Juon.Ji1~badc:a.8,0Y>; 0.l<.lea
-1>.0<g>
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2S MW sol• powcr and 20 MW bM!kty ltOnJCMetddokt:servoir fflk'Wllbtc CflCtlY pt0Jcct worth roughly $60MM
imd sopplylna, op co S% ofilto~ cl"lrk:ilY toN cberY~ 111Qtlw:1o lootby !he CiayorCarlsbld.
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ekvctly h&dde:A by ~fli.tlct.
Qfflallfllitm claia~ in cnc:IJ,Y «mer.cu rotec CC.U io pi)' ror W'!Ot!Mftd CMtJY· The CCA tbea 1eu fleeced b)I
cxorbitana spot nwi:d prku;, Deadly wild h wlih devNIMi~ caucqlltnetS arc l'la'lpMIL
a) Looi. 8cn.tJm. W11h ■ locd rcMYnlbleellC'll:)' pn)j«lM
M.uldc R.t$ervoir, YIM ytn1 see is what )'00 ~ Tberc are no bJ66til _.._ TI1crc are no pricing Mllprisu. 1boro
,re Ol'lt)' low ctlCfSY piocs (lot mldcnu 11wl corpo,x!01N1). RA relMics, IGcal job&, -,id • ~ S60MM
in\'CaltllCIIC wNlffl Che Ci(}' of Carbkd, plu, the CCOQOmie rnlllUpks.
We sect )'.OUT (ecdbac,k rcprdln.a: tb.h n,:;w wo.y fonnrd,
Ot. Phll WtiU
Or. Phll Wlll.11
CEO, Chair ~touttc:
CelJ: S62-607-1131
hmn;llwJdcf1wevmnW Ql11rlbY.Yox o;.,,,m:s:mxn:at,l,¼111, :! IE i1UA::WOYK·
Ot6WCWX:f02JO)'YIS6Sm!:X9£4dlmh4klitltzNtmYWs·Rlklln·iOd)if1blihmS
CAtmON: Oo no1 open otuet11ncncs or dick ca !Jots uoleu yoa rccocnlzc die ffl'ldcr and bow cbe 0011~1 U safe..
EXCLUSIVE NEGOTIATING AGREEMl:NT
1BlS EXCLUSIVE NEGOTIATING AGREJ:MENT ('WA") ;, enterod ;nto as of
-----~ 2021 <.-Efrcc1ivo Dat~ by aOO berweco the C.ITY OP c.AR.LSBAD, a
municipal corporation and charier city (tbe '"City'), and RF.SOURc& RENEWABLE ENERGY,
INC., a Oclirwarc C COl'pOf&tion (the ''Company"). on the teems nod provisions set forth below. The
City lllld Company ar.o sometimes referred to iod(vidu.ally htrt.b1 as a "'Party'" and, colloc:tivdy, as the
.. Parties."
RECITALS
A. Tho Com~ny is interested i.n investigattng tho J)O$$ib!Jity of cooscructing aod opet1.ting
a solnr-f,e.ility on ctrlain undt\•elopcd land owned by tho City. To that end, lhe Company de$i.RIS to
estabU$h a period during whieb (i) the Ciry will negotiate exclusively with (bo Company conceming
dcvelopmcot of such lwwl, (ii) the C.Ompany will cooduct the im·cstignt.io,,s 11nd studies it believes arc
nec.essary, a11d (Iii) ll16 Company will prq,arc nnd Sllbln it to d>& City a developmcat proposnl for uolar
fueillty on web land that sh.all iuiclOOo t.ll'C $1QIIU' facility's design, ooostrucdoo. conunistionlBS, end
financing.
8. 1110 City ts intCfCStcd in tho possibiJity of the development oh solar facility on deya
ownod l:md that may provide power 10 Clean Energy AUinnco("CCA'')..
C. Tho City and Company eccordiualy desire 10 enttt into oxclusivo ne&04i:Ujons
regarding the tenns of lJi,c variollSagroct1,ea1S needed for the C-ompa.ny 10 dew lop and Ol)etllt& the solar
facility, sucb M a 1100 lease with the City, poww plll'ChAic oarecneot for power offiako by CCA,
l'CP()Urc:ie,adequaey agreement for cocrgy ~s wi1h CCA, and otber ocoessary agreeincccs.
NOW, THER.£FOR& in consideration of tho foregoing and for othct good and valuable
«>0s.idcmtioo, tbe receipt aOO sufficiency of whk:h o.ro htt-eby ecJmowledgod, the City and Company
agree as follows:
J. EY.duslve NeptiA6oo. 1'he City arid Company ape fora pcriodof one(t) year rro.:n
lhe Effeetiva])ate (tha "Negotiation Period>&) to lle&Qti3te diligently and in good faith to a,sree ou lbo
temu and form offtny and all a;arteinen1s necessary for tho Company to dtsigr), conscruct and operate
a solar fttciJhy as further described in Scccioo 3 of chis ENA (tli,a "'Project") on approximately S6 acm
of undeveloped Ci~wnod J1111d located at Mtertde Reservoir (Assessor's Parcel Number 169aSOOOa
SOO) (tho .. Site"). including, without lirnitalion, lbc terms aod tom, oftl\O following ag,tttnents: (i) a
land lease agreement p1.1rsuant to which tho Compnny will le.uo die Site from the City; (ii) a power
p11rehase ap1~t for power offiako by CCAi (iii) • resource adequacy ag,eemcut for e1,ergy rostrvts
widl CCA; and (w) such othClf agroemet'IIS d,111 may be necessary for tbo design. coos:troetioa and
operation of tbo Projoet, During tho Negotiation Period, tllciluding 11ny exltosion thereof. tho City
tgl"OICS tha1 ii shall oot negotiate with any 01.h.er pert00 or mtily for the development of the Site and
$hall make commercially reuooablc, offortt to entar or help tho Company enter 1:nto the sita le~
povo.u purdiase and resource sdeqt)(lncy agrcemcut.
l . Option to £dud Nqotiation Period. 11)C, Compa1l)' may extwd the Ncgocintioo
Period 0 1.ce for one (I) additiooal year by giv-ing wriuen noli06tO 1tie City at least sillty(60) dayt prior
to the inrti~l ~i"tion of Ibo Ncg01ia1fot) Period.
3. Proposed Projed. 11~ Project oonsi!rls of one or more solar power and energ_y
storage facilities. with a mtdiu1n voltago inlcrconnocticn to the dfatribudon grid, TI.e Project is
expected to ,b& pla.ced in a special purpo9e cotity (:'SP"E")1 aud to biwo third perty ftnaneing aod
owoer,bip. Oepcading on the resu.111 otvarious i11tcroonueedon. distribution circuit, aod load studies.
the Project may nomina.Lly t»of dic following size, subject to change as JICQC$$&J)':
Solar Power: 2S MW and Energy Stonge: 20 MW
4. Required Aetk>as. TI,e Parties agree co lake !lie-fo1Jowi11g adion during lhe
Negotiation Period:
(4) The Parties agree to exc:hAngc infonnat.ioo for the puri>OS6 of evaluating !ho
Project. Subj~ to all legal and/or (l()fltnletual lhnititioos, Ilic City shall ntako available data on
dcetricity geoeratioo «x>$tS, &t11tlemC111t OOSIS. owrbMd expenses, load profiles, 411d other rcl.a1ed
infomlarion that en•blo enetgy arbitrage opporttmjties to be identified 411d tho total cost of energy
delivued to be eak:ulattd. The Company shall mako avaibb1o data ()I\ proje,ct petformanoc such as
tnttgy productiai, Project eost, yearly rcvenu~ ~•ty J)l"Ofits, cost of energy, intemnJ ""' of rcCum,
among other pro fonnt metric, !hat enable 11,e higbcst • and best l.150 of Cil)'-Owned land to bo
demonMted and the ecooom ic viabiUty of the Project to bo gu.araot-eed,
(b) Tho Pa:rttti agrcc to diligently and in good fail.b iqotiiue tbe IM'nl and fom,
of die fol.lowlna agreements: (i) a land lease agre0tt101ll pursuaut co which tbc Compdny wil.l ka'SC the
Site from tM City; {ii) a power pun:haso agroet1Jet11 ror power offlakc by CCA; (iii) a rcsoul'W
adequacy agccmcul fot energy rcsef\'es with CCA; and (iv) soch other ag:rcemrentS tb11,t a1ay b&
noeessacy for tbc dosi&JI, ooostruction and operation of ti~ Projoct. Neith« Party ih,aJI be obligated to
execute anyoftbc foregoing n.gn:cmcnU, Any agrccment(s) mu I ting frorn tho negotiations hcrcundc:r
.s!iall become eftcecn<c only aft.er ttod if such agrce1nent llas been oonsidercd and opprovcd by City in
the mauoer required by bw.
(c) Tho Company agrees 10 provide to the City oomp.rcbcnsh-c devclopmcat plus
for the Project. Su¢h devel09f!.letit plans must tomply with all .applicablo Jews. n.1Jcs ai,d regulations
of City nnd all other government entities having jurisdiction. Tile Compe1iy further agrees to make
oral progress reports-and written reports rl'Om lime to time as requested by tlwCity, advising tho Cily
on all maltcrstnd tllSludics beilt,g madb with respect to the Project Tho Company ngreos to geiienlJy
~•to wilh tbe City and agrees to Stlpply sueb oeticr documel'IU and illformation as m.ay be
reasonably ttquested in writing by the City,
(d) The Company sba.lJ submit (o Cily sttisfatco1y ovidcu.oe ofits ability to meet
its tesponsibilities relative co Gn11noi:ng (bo1h c:01t$1rucfiQl1 and long•term) tbe lcasc of tbc Site and
construcdoal'opcnltion or1be Project The Company shall make and maintain fuJI di$closure to the
Ciry of its mcltiods of financing to be wed in lhe development of the Site and eoimructionfopcntion
of the Project
2
(~) The Compctny $hall make full discl0$UM co lbo City o.f its principals, officets,
m11jor stockimlders, majorpartncu,joint ven(uR:S, koyrnAR11gerial employees and other assooiates, and
all otJ>Ct" material intonnation co1~emin:g tho Corupany and m: associates. Any .si,gnificlltlt cbango in
the princip11Js. tSJOC1ato.,,. p:ittntts. joint vc,nturttS, negotiators. d~l\'elopment manager, oonsuhants,
pl'O(t$$"ionals and dircetly in\'ofved managerial employetS of tJi,e Company is subject to tho approwll
of tJ,o City, such appro\'al sbnll no( be uureuo1,ably withheld or delayed.
$. Fees, Costs & Exptnse.s. ibo Compeny stiall be solely rt;Spoosiblc for all foes. c.osts
and expenses of Ul\'cstigat.iug end studyi'ng tbe Sito and designing. coustruccing and operating t.bo
Project
6. City Approval or Sub~uent A&rffntt.■t(s). If negotiations cutmU,tte in one or
more agreement that Ware mutually agrocablc to the Parties, svob agrec:ment(s) sflall not become
cffoetivo u11tU all state aud local rc,quircmcnts for lbo leaso of City~oed propc,rty have bcc1) oomplicd
with a.nd llppt'O\'Cd by the City Cc>tmQil and any other applicable legislative or adminjslnllivc body
required by law. The hrties agree and 11(.lcnowlcdgc tlW. whUc th.is ENA provides that die Parties
shall oegotlate in good faith. ttiis BNA docs oot oblipio eitbei-tho City '1t COtUpany to enter into any
agreernerit(s) or ot.bcr irlstrumeol(s) fordevclop:neot ortl.e Project_ and approval of such ngreesno.111($)
or other instrumcnl(s) (or development of lhe Project shall require the approval ofbo01 Parties, with
lho City CouneiJ g:ivltlg its approval. if at alJ, oaly after coosidc:ralion a1 a replar meeting of tbe Ciry
Council a,)d following all other proceedings rcqub-ed by law, including, without limitation, eomplianoo
with t,h,c California Environmcu1al QuaUty Aet (California Public Resources Codo §§21000. ti nq.).
7. Event of Ddault. 'l1,e faitw-o of the City or Company to rcagonabJy and timely comply
with its obligations uodcr this ENA, if oot due to cif'C\lmffltlccs beyond tho reasooable ~trOI of tho
City or Compcn,y, a.s ll1e CIISt mo.y be, shalJ be considered a def au It hertu1'6et, Prior to exercising any
rell)Cdics hereunder for the default of this BNA, 1he Party as$erling a default shall provide wriltcn
notice. to !he otha Pariy describing 1110 oUogtd default. aod such Party shall have tbirfy (30) d&ys to
cure such dc(aulL
8. Notices. All no6cc:s uodcr 1his ENA shall ~ given in w,itiug by penonal dc:Jivcry, or
by cet1ificd mail or rO£iscered Unltcd Sr.atl!S M.ail, rel.um rcocipc t'Oqutsted, postage prepaid, or by,
facsimile aud WU be deemed communicated when rcc:eived if given by ptt$0Ml delivery or upon
re,ceipt or rejection if mailed as provided abovo 01' upon receipt by facsimile 011 a business day during
bwincss boon in lhc locafion whero teceived, and if not then on tbc 1~t businc:ssday. as 1ho ca,o may
be. Mailed notices sbllll bo addressed as set forth below, but either party may change ils address by
giving wriuen nocice thereof to the o(bcr in accordaneo with the provisiOfls of this section.
Corupony:
City of Carlsbad
Carlsbad City Hall
1200 C,rlsbad Village 0,ive
Carls.bad. CaJifomja 92008
Attn.: ______ _
Or. Philip Watts, COO
Rcsouroc Rcnawablo Energy, lne.
3
I
I
6216 6 Pi,eJfie Coast .Hwy #23 7
Loog Beach, Califom..ia 90803
!>. Aalg•ment. Thi$ ENA shall 1,ot be !U.Signtd by tile Company, exoq>t to the SPE
meant to hold lbe project assets, without prior written approval oft~ City. wh.ieh tho City may grtnt
or refuse at its sole diserctioo.
10. Warnnty or Authority. The sigBatorics to this ENA rcpre.scnt and warrnnt tl1at thoy
have the authority to ~ocuto this ENA on beha.lf' of lho principles lbcy putpOn to ret)ftseDt.
11. Broker'• F~ Each Party represents to tbe other Party that no broker bu been mgagcd
in connection with this transaclion and no fee shall be pnid in cowtedioo bcrcwilb.
J?. Attorneys' trees. In any action betwcca tbe parties to inlctprcl, altbl'tl(\ award,
modify, rescind, or otherwise in ooimoction with an)' of the terms Or provisions of this ENA, the
prtvo.ili11g party in tho 1elioo 1b11.ll bo cnlitled. 'i.n addition to damages, injunctive relief, or any other
re:Ucf to which it might be, entided, to rcasooabk costs and cxpc:nscs includi•l&, without limitation,
litigation oosu, reasooablcauomcys• recs and~ witness fees.
13, AppUcable Law. J•:rlsdlc.tion and Venne. Thki ENA bas boeo excwted and
delivettd in the State of Ca1if'omia and (be vaUdity, iatcrprdalion. and enforcement of any or tho
clauses of this 8NA s!iall be dctennincd And govemocl by the laws of the Sttue of Califomia. Both
Pardes further a£7t0 lli.at ~n Diogo County, California, shall be (be n.nuo for any action or)Jfocccdillg
lhat may be brought or arise out o~ in cooncction with or by reason of this-ENA,
1,. Llmltadou of ENA. By its n:ocutioo of this EN~ d.c City is not committing; itself
to or agreting to undertake: (a) disposition of land lo the Comp,11)'; Of (b) any ocher acts «-teti\l'itios
requiring tfie sub.sequent independent C\X.croise of di$Ct'Cfion by City. Th.it 6NA doos nor eonstiMe a
di.sposition c,f properfy or excrci$$ of 001)trol 0\/er property by the City aOO does not roqui,e a public
~attng. SXeeution of this ENA by the City is merely an agreement to enter into a period of cxclus-ive
aDd good faith negoti.ations ac:oordfog' to (be teru1s-hC'ft<lf, reserving final ditcretion and approver by .
the City as to any subsequent 11grce1neot(s) and all pt00todings aDd dccisiol~ in conncctiOO therewith.
J.S. Coruplde Agreement. This B'NA refleeis the compt.eco and toeal understanding
botwcco tho Parties hereto o.od all apmeocs °' undersWldi,l)gs be.tween 1bc Parties he.re4o arc
C011tal11td herei1i, Any changes. modifications, amendment,oraddcoda to this ENA mustbo io writing
and signed by all Parties to be ef'rccti\·c.
[Slgnoturu begin on next page.J
above.
IN WrrNISS WJUREOF, the Parties have executed tbb: ENA as of the dato finl Id f0t1h
COMPANY:
IU!SOURCE RENEWABLE ENERGY, INC.,
a ~laware C corporation
By:--------------
Name: ______________ _
lw. ______________ _
CITY:
CITY OP CARl.SBAD, a California municipal
cotp0ration and c.l!arter city
By:-------------
Namo: _____________ _
Its: ______________ _
s
February 21, 2024
Keri Martinez
Carlsbad Municipal Water District
Via Email: k.erl.martinez@carisbadca.gov
ATTACHMENT B
Hoch Consulting
804 Pier View Way, Suite 100
t// Oceanside, CA 920S4
', I (tel,) 760,650•6613
cdale@hochconsulting.com
www.hochcon.sultlng.com
Subject: Policy Issues Pertaining to Solar Photovoltaic (PV) and Battery Storage Project at
Maerkle Reservoir
Dear Ms.. Martinez.,
Hoth Consulting (Hoch) was hired by the car1sbad Municipal Water District (CMWO) to help
Identify pollcy issues for discusslon and consideration by CMWO staff regarding a proposed solar
photovoltaic (PV) and battery storage Installation at the Maerkle Reservoir site. The Maerkle
Reservoir and the surrounding property is owned by CMWO and is located on the eastern edgt
of the city near the borders of Vista and Oceanside (Figure 1).
CMWO has ldentlfled approxJmately 32 acres for development of the proposed solar PV project.
The proposed CMWD project ls Identified by City or Carlsbad's Oty Council as a ptiority project
in the City's Strategic Plan In October 2022 and if Implemented, provides an opportunity to
contribute to the city's use of renewable energy sources and to offset ongoing operational e-nergy
needs and costs. Addltlonally, the city's Climate Action Plan indudes measures to •Develop More
Citywide Renewable Energy Projects," and it lists •a pote.ntlal large PV system at the Maerkle
ResefVOir property" as one of the planned projects to meet this goal.
This memo Is Intended to outline high-level policy issues pertaining to the development of the
Maert.Je Reservoir property for solar PV and battery storage, which requires input by CMWD
Board or Directors. In addition, It may aMlst in geneniting discussion as well as providing direction
for staff. Two policy issues discussed In this memo are the ownet$hip models as well as what
entity will purcMse the power produced from the project. An addendum to this lettet Includes
operatlonal and administrative focus areas that have been considered by staff, which will need
to be addressed during the fea$ibility analysis and prellminary project pl-annlng and design. While
the PV and batte,v storage at the Macrtle site may be a good potential use, it may not be feasible
if cert-a in issuts cannot be addressed including the off-taker a,rangemont, described lat"er in this
memo. This evaluation does not Include the technical feaslbilltyofthe project, which would need
to be determined by the project proposers as part of a RN1uest for Proposal process. This
evaluatJon also does not indude an anatysis of California Energy Commission energy tariff.
flgwe 1. Moetklit ~ SM• Map _,.,..,....,_,,,,,
o, .. -,Qflll)
RgJJrt l . MONJtk hoposffl So.br ProJ«t Sir~ Mop
STATIJTES, CO.DES AND AUTHORITIES
As part of the initial project evaluation, Hoch and CMWD reviewed some of the potential best
uses of the land and conducted asass.es.sment of applicable State statutes, Codes, and author1tles
to outline any limiting factors a$50Ciated with altematlve land uses. One significant land
constraint stems from the Surplus land Act {SLA), whith would be triggered If there were planned
uses of the land for purposes other than for the benefit of the utmtv, lndudlng selllng the land
notth of the reservoir for hou$lng or commercial deveJopment. Uses other than those that are
categorized by law as ""agency use-¥, such as the envislontd solar and battery storage project,
would require that CMWO offer the land for $.ille or lea$e to affordable home developers and
certain other entities before selling or leas Ing the land to any other Individual or entity.
Further, an evaluation was conducted to determine compatibllity with the City's planning
documents and Ofdlnances. Speciflcalty, the zonin& for the prope.rty encompasses Genel'al Plan
and Zoning de.slgnations of Open Space (OS), c:au~gory 2 as depicted In Figure 2. Th1s designation
imposes r~strictlons by dlsallowlng common uses such as commercial or housing but does a.s a.n
e)Qlmple, allow for recreational, farming, and pasture and other uses Including wireless
communications and structu,es which generate elec.trlclty by approval of a conditional use
permit (CUP). A.n Ear1v Assessment conducted by carlsbad Planning staff confirmed that solar
panels are permitted In the OS Zone with the 4pproval of a CUP by the Planning Commisslon.
Figure 2. Moerkle Reservoir Open Space Category Mop
Optl'I Spa« CalogotlCIS!
1111 1 • Pte11orv._won ol Nawr•1 Re5,00,1ce5
2 • MM~O~d P, oouc;o-on of RMOu,c,c$
3 • Ov:dOOr RecteM!Ol'l {Pf09(anlll"!ed'..Unproi;p-ammtd> r 4 • M\thOllC Cult\lfQI ili:'ld Educ.ollonll,1 Puilpo$C'$
l"1)00M
,----. L ___ j c,iy Umii.s
A.$ a water district, CMWD has unique authority provided to it under califol'nia Water Code
Section 71663.S, to establlsh a fYV and battery storage project. The statute specifies that power
generated by a dist.net, such as CMWD, must be used for District purposes and surplus power can
be sold to a publlc or pri~te entity engaged in the d~stt1bution or sale of electricity, such as the
Clean Energy Alliance {CEA) orSDG&E. Based on these preliminary factors, we are of the oplnton
that the most advantageous and optimal use of the Maeftto property Is for a utllitv power and
battery storage projert, if feasible. Further analysis of submissions received under a Request for
Proposal will yield additional information about its feasibility, If Implemented, this project has
the potential to offset CMWD and potentially, the city's electrical consumption with dean energy,
assist In achieving the Climate Action Plan (CAP) goals of the city and CMWO, and provide a
renewable energy source that c.an be acquired and made available to the carlsbad oommunlty .
through the CEA or SOG&E.
POUCY ISSUE I: OWNERSHIP MODEL
Two different ownersh1p models were evaluated. The first mode.I consists of CMWO owning and
operating au the solar panels and the battery storage (Ownership Option 1), while the second
model envisions CMWO entertng Into a Power Purchase Agreement (PPA} with a thlrd•party
provider (Ownership Option 2). In Ownership Option 1, CMWD would have full responsibility for
the project, includlng design, construction, permjtting and coordination with SOG&E to
lntertonnect to the etectrlcat grid. In addition, CMWD would need to hire additional staff with
the expertise, skill~ts, and proficiencies to operate and maintain the equipment, and would
incur costs associated with administration, monitofing, periodic Inspection, weed abatement.
scheduled preve.nt-ative maintenance, and corrective maintenance. The lewl of required
matntenance could ~ryand would depend on the type of solar panel used, wtlich CMWO would
need to evaluate. Owne,shlp Option 1 carries the risk of the Sy$tem being down for longer
periods of time if there is no expertise at CMWO to conduct repairs and troubleshoot problems.
Furthermore, CMWD would need to generate lnltlal capital, which would probabJv involve
obtaining bonds for financing.
Under Ownership Option 2, CMWO exerutes a conuact with a thlrd•party provider to finance,
construct, maintain, and operate the solar panels and battery storage facility. Under this type of
power purchasing agreement (PPA), CMWO would maintain the abllJty to purcha.se the power
produced for its own Internal use or could work with a k>ad serving agencv (e.g. CEA or SOG&E),
to ~Uthe excess power allowing for it to be incorparated Into their power portfoUo. This option
necessitates entering Into a land lease agreement with the third-party provider and CMWO would
assume no llablUty for operation, maintenance, troubleshooUng, conducting repairs, weed
abatement inspection°' for financing costs. The third party-provider also bears the cost of the
equipment, construction, and permitting to interconnect with the power distribution system.
Under either ownership opUons, the power produced through the solar project could be used to
oHsct CMWO and city power uses and depending on the size of the system, could allow for
revenue generation to be fed back Into the grii:t and purchased by an energy purchaser, like CEA
o,soG&E.
A PPA strutture would allow CMWD to benefit from the energy savings that can be realized
through a green energy project. without upfront capital costs. CMWO would also realize direct
energy cost savings without the complexity of coordinating the flnandal and owneJShip Issues
associated with self-ownership. In a PPA, the third-party provider takes care of operatkln and
maintenance of all Infrastructure (e.g. so~r panels, battery storage, site maintenance) and
incorpora~s these costs Into the rates negotiated with CMWD.
Cont.rad terms fn a PPA model could contain provisions to ensure that CMWD would receive
renewable energy to offset its own power consumption; sell the excess; and to also retain
ownership of the Renewable Energy Certificates (RECs). The ~tfmated capacity of the proposed
solar pro}ect ranges from 3 to s.s megawatts based on rough industry ruk? of thumb for ac<eage
development, which ls expected to generate approximately 6.4 to 11.8 million kilowatt hour$
{kWh} annualty. A review of CMWO's historical San Diego Gas & Elearic invokes for operation
of their various facilities, exhibited 1.8 mlltlon kWh used in FY 21/22 and 1.03 million kWh in FY
22/23, which would c,eate excess energy to be sold to CEA o, SOG&E for purchase by commu11ity
customers.
A PPA allows CMWD to negotiate electrical rates over a longer term (20-30 year$} with the
potential benefit of rates being lower than that offeted by CEA or SDG&E. In thi$ scenario, there
Is the added advantage of having predictable electrical costs for annual budgeting. Costs bome
by CMWO Include those associated with evaluating land to determine open space requirements,
developing a Request for Proposal (RFP), solar consultant fees as ~II as staff time. A PPA land
lease could also include a fee o, discounted rate for CMWO electriecil use at CMWD facltities. The
financial viability of the project and estimated capital cost, payback, and annual savings (payback
and annual savings based on CtA or SDG&E payout options) would be included as part of the RFP
,eview process.
RECOMMENDATION
It Is reoommended that the CMWD Board of Oirecto,s provide direction to staff to regarding
pursuit of Ownership Option 2 In which staff develops a competitive RFP fora third-party provider
to oonswct, operate, and maintain a sola, photovoltaic {PV) and battery storage installation at
the Maerkle Reservoir site. The proposals would al$0 confirm the technical reasiblllty of the
project and the Interconnection into the electrical grid. Further, st8ff would al.so determine with
certainty whethe, lhe city or any other pubUc cigency would be eligible to purchase power In
excess of th.at needed by CMWO. Staff would return to the CMWO Board at a future date to
approve a PPA and land lease agreement.
POLICY ISSUE 2: CONTRACTING WITH AN ENERGY BUYER
If the CMWO Board proceeds with a PPA al'r'angement, they wlll need to specify what entity
would be the off taker of the energy siooe CMWO cannot sell the energy (either SDG&E or CEA}.
An advantage of specifying an off taker of any energy produced at the site may be that a lowe,
cost of en-ergv could be negotiated with the solar developer if the developer is not ,~ulted to
look for an energy buyer.
SOG&E provides transmission and continues to also provide some power prooorement, wtth
approxlmately 40% of Its electricity belns delivered from renewable sources. The CEA, of whkh
Carlsbad is a member, operates a Community Choice Ene,gy program to provide alternative
energyw1thln the communities' service area. The CEA has an objecti~ to procu,e a power supply
from a minimum of 50% renewable sources and can purchase power from a loc.il government if
It meets CEA's needs. The CEA has expressed interest in purchasing local solar PVenel'gV from a
project at Maerkle Resetv0ir and further, would like to be the off taker of any CMWO produced
solar ef'lergy.
RECOMMENDATION
It is recommended that the CMWD Board of Directors provide direction to staff with respect to
entering competitive negotlatk>ns with CEA and with SOG&E fort he purchase of power produced
at the Maerkle reservoir Site, in excess of that used by 0\11WO. Should agreement be reached
with CEA In lleti of SOG&E, staff could wortc with CEA to form a Joint Powers Agreement (JPA) and
return for CMWD Board of Dlrect:Ot's approYal of the JPA prior to entering the PPA. CMWO and
CEA would enter a PPA through bllateral negotiatk>ns.. If they do not enter a JPA, CEA would need
to competitively bid on the project, like anv other provide,.
CONCLUSION
Outing our wor1c. to Identify ma,jor polky issues for discussion and consideration, we did not
identify any fatal flaws to advanc.lng the project to an RFP. However, there are site specific and
technkal design issues that must be addressed to determine if the project is feasible, Some of
the$e issues are discussed in the attached addendum and will be further addressed during a
subsequent RFP process. tf you have any questions, please e-mail me at
{cdale@h9£hc;9n,sulting.com).
Sincerety,
HOCH CONSULTING
C.ri Dale
Director of Water Resources
Addendum: Focus Ate as ReYlewed by Sraff and/or for future Administrative Action
Cc: Vicki Quiram, General Manager via email: Vickl,Qulram@carlsbad@,&9V
1
I
Addendum
Hoch Consulting
804 Piervrew Way, Suite 100
Oceanside, CA 920S4
(tel.) 760-650-6613
cdale@hochconsu!ting.com
www.hoeh<:onsultlng.com
This addendum provides details on various topics rtvk!wed by Hoch and CMWO st-aff associated
with the Solar Photovoltalc(PV) and 8atte-ryStorage Project at Maerkle Reservoir. ls.sues include
those where future administrative action mav be necessary such as permitting or compliance
with environmental and other laws and regul.atlons. This listtng Is not all-Inclusive but identifies
some of t he major challenges to implementing the project. While a solar proj~ct at Maerktc is a
good Potential use, it may not be feasible if certain Issues, Including the SDGE connection
lnfrastn.ict\ire and the California Environmental Quality Act (CEQA) process, (described further
below) cannot be addressed.
THE SURPlUS LAND ACT, ENVIRONMENT Al, AND ZONING
Depending on the type of solar technology selected and site preparation (i.e. grading, fill, etc.),
the District-owned property has approximately 32 acres of usable spae-e north of the reservoir.
In addition to the existing operatln.g CMWO facilities (reservoir, storge tank, hydrogenator, etc.),
there is an existing cell tower and vacant dwe1Ung structure located on the site (see Ffgure 1 In
main memo). Maerkle Reservoir has also been known historically as the Squires Dam Facility.
Surplus Lond1Ad (SLAJ: CMWD's planned use of the Maerkle reservoir site for a solar and battery
storage project, constitutes an #agency use"' per the provisions of the California Surplus La.nds
Act (SlA}. Additional acUons are necessary to compty with the SLA; the CMWD Board would need
to approve a declaration that the land is "exempt surplus land" and support the declaration with
written findlngs. Should CMWO Jea.se the s:lte toa thtrd•party entity, they would own and operate
the proposed solar facility to generate electricity (and potential revenue) to support CMWO
water supply operations, wfth surplus energy sold, supporting the definition of agency use. The
City Attorney's Office would need to draft a ~solution and coordinate review with the canromla
Department ot Housing and Communtty Development.
Habitot Manog~nt Pion (HMP}, Zoning attd the aQA: CMWO and the Oty of Carlsbad have
long been stewards of environmental sustainability and protecting natural habitats In and around
Cu1sbad ls a high priority. The community vision prioritiies the protection and enhancement of
open spa(e and the natural environment. The two visions -developing reoewablt energy
sources and protec.tlng open space -often need to be reconciled, as renewable energy
Infrastructure will often require land and may Impact habitat.
If a PPA option is chosen, the developer would be responsible for performfng the environmental
review to comply with CEQA and meet standards to prevent negative impacts on Wildlife and
habitat.. The area proposed for solar lnstatlatlon Is In an '"area subject to the (City's Habitat
Management Plan (HMP)),"" and located north of a Hardline Conservation Area (borderins
Dawson Los Monos canyon Reserve, as seen In Figure 1). The adjacency standards listed in the
HMP ~dress development sites that are adjacent to wildlife pceserves, ate Intended to prevent
negative effects on wildUfe preserves, and must be addressed in the planning of any
development/habitat interface. TM adjacency standards lndude the followlng categories;
1. Fire Management,
2. Erosion Control,
3. landscaping Restrictions,
4. Ftncing,
5. Signs and Lighting, and
6. Predator and Exotk: Species Control.
Accotdlng to the 2009 Early Assessment for the propos,ed Solar project at Maer1de, the proposed
project must be consistent with the HMP adjacency standards mentioned above. In addition,
Open Space Category 2 requirements must be met, whith in(ludes the preparation of a
Conditional Use Permit (CUP). Planning staff have verified that solar energy projects are allowed
in Open Space category 2 areas as their purpose Is similar to previously identified energy
generation facilities {i.e. windmills), which are specifically named as an allowe-d use with approval
of a CUP. The developerwlll need to submit a biologic-al resovrce survey and a visual assessment
with the submittal of a CUP application. Al'ly habitat impacts must be addressed pursuant to the
HMP through avoidance, mlnlmlzat1on, and/ormitigatjon. Depending on the type and amount of
vesetation affected, project related impacts may be e.ligibie to utilize credits at the lake C..lavera
Mitigation Parcel. The CUP process can afso address Issues related to habitat, noise, and
aesthetk:s, whicti hi!ve potential significant Impacts to the environment and would need to be
addressed in any Cafifomta Environmental Q.vality Act (CEQA) analysis. Requiring an
Environmental Impact Repart (EIR), rather than a Mitigated Negative Oedaratlon (MNO), would
be the more conservative approach to as.sesslng Impacts on the environment associ.ated with the
project. The requirement to develop an EIR; prepare a CUP application and any additional
planning W(ltk such as coordinating with CMWO staff on developlng the CUP applk:ation; and
attending the Planning Commission meeting to respond to CUP application questions, can be
added to the Request for Proposal (R.FP} as the responsibility fOf the third-party provider.
Community outreach Is also a component of the envlronmental review process:. Coordination
with neighboring titles of Vista and Oceanside is also required as site access during construction
and maintenance may be an Issue. The developer must evaluate the project's impact on the
environment during planning, acquisition, development, and operation. AddltionaUy, solar
panels may have an advetSe effect on scenic vistas, cause reflection issues, and contribute to
lncreased traffic and noise. Environmental reviews, lndudlng communityoutreac", w111 take time
and planning to complete before beginning the project and the project timeline will need to
Incorporate these lead times.
To mlnimlie potential aesthetic impacts of the project, land.scaplng Is recommended between
the residences and the solar panels. It Is Important that habitat management practices be
implemented to mitigate harm. One wav to mitigate negative Impacts to wildlife is to create a
habitat area/open space adjacent to the facility or elsewhere in the city.
CMWD should gain publk acceptance through educating and outreaching to the pubUc about the
project; providing ways fOf the pubic to be involved In the projec,t and offer input; and
collaborating with communtty partners and trusted organizations to supi)ort the proJe<:t.
Addltlonally, Carlsbad could work with the surrounding communities of Vista and Oceanside to
keep them Informed of the project's progress.
DESIGN AND CONSTI<UCTIDN
Solar panels would be designed and fnstalled based on current best practices and available
ttthnology. The size of the site Is estimated to $Up port an anticipated 3 to s.s.megawatt solar
project. The usable space at the Maerkle site 1s hllly and could Increase from approxfmiltetv 1.4
to 1.8 million square feet with appropriate-grading. Minor trendiing may be tequire<I ror
supporting Infrastructure and a small transformer building. Solar pMel design height wm need to
be considered during design based on technology and maximizing energy generation, but also ln
consideration of the surrounding communltv. Maintenance Issues like security and ground
maintenance wm need to be Incorporated during design. The site is currently maintained for
weed abatement fire protection. whkh mav provide some rellef related to environmental
requirements., As stated above, sin~ the site lsloc:ated adjacent to a conservation area, the HMP
requires project to meet the standards including fire management; erosion control; landscaping:
restrictions; fencing, signs, and lfghtlng; .ind predator and exotic species control.
The responsibility to complete design and construct the Maerkle Solar JYV and eattety Storage
project would be incorporated into the RFP and completed by third-party entities. The advantage
of going with a third party Is that the risk a.ssodated with infrastructure construction, permitting,
and operation and maintenance shifts away from CMWD.
Stormwater. The project would be requited to meet stormwater mitigation requirements as welt
a.s the City of Carlsbad's Best Management Practice (BMP) requl,ements and to ensure that
project reduces potential urban pollutant n.moff. ft is anticipated that the project will be defined
as a ''Priority Development Project {PDP) projed," rather than a "standard stormwater Best
Management Ptactke (8MPr as outlined in carlsbad's BMP De.sign Manual, aind the developer
wrn have to prepare a Storrnwater Quality Management Plan (SWQMP) and submit it for revfew
and approval. Development and submittal of a SWQMP i.s likely to add more time and resources
to the project. Specific design requirements would be included In the RFP.
Land Encumbrances: The Maertte proptrty lndude.s twetve enwmbrances (easements} for road,
sewer, water, gas, power ;ind te:lephone lines and Incidental pul'poses (Figure 1}. An casement
for road access on the south side of the open space and north of the CMWO dam is contained
within the proposed project site and must be addressed (see the blue bubble One in Figure 2
below}. The easement was granted in the early 1960's for acce-ss to the then proposed Ocean
HIiis Country Oub. The Oub was developed in 1982 and never used the access; they Instead
created an open space channel where the r~t-of•way would have entered. The existing
easement, which will not be used In the foreseeable future, cannot be rescinded and must be
resolved through City real estate process. All other easement:$ are not in conflict with the
proposed pro}ett space.
Figure J, Moerkle Reservoir Easement Map
I
i
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SQUIRC~ rAC!UTY
•
LEGEND
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-.... Wl'#I.~
CLIMATE ACTION PIAN (CAP)
carlsbad's CAP outline.s strategJes and policies to reduce greenhouse gas {GHG) emissions. The
dty and CMWO have taken steps to surpass the CAP'S 2020 target, which was to reduce GHGs
four percent below 2012 fevels. The city and CMWO are wortctng toward the ne,ct target which is
to reduce GHGs to 52" below 2012 levels. Measu~ M is a CAP measure to "Develop More
Citywide Renewable Energy Proje-cts,,. and it nns <'l'a potential large JYV system at the Maet'kle
Reservoir property" as one of the planned projects to meet this goal. Implementation of this
proje<t wouJd help advance GHG Reduction Measure M of the city's CAP by developing a CMWO
renewable energy project that generates renewable energy for the city and CMWO consumption.
By Implementing the project, the city and CMWD will reduce thelrGHG emissions associated with
offsetting the use of fos,sil fueJ..derived energy,
The CAP lists projects to meet CAP targets that cumulatively wlll meet the s percent reduction.
The CAP directs the city and CMWD to conduct a feaslblllty study to evaluate citywide renewable
energy projects and ptioritize accordingly, and if construction of PV at the Maeitle: Reservoir is
lnfeaSilble, this reduction goal wlll not be met. The city has a goal of approximatety U,000
megawatt•hours per year thl'Ough Incorporation of PC systems on city bulldlng.s and parking lots,
ln addition to mkroturbine Installations on city facilities. Based on historical usage, CMWO may
offset approximately 1.03 mkWh -1.8 m!lllon kWh (85-8 • 1.800 MW) annually with the
lmplementat.ion of a Maerkle Solar Battery Project.
Procuring renewable energy provides greater efectr1c:Jty rate stability dependfng on established
Power Purchase Agteements (PPAs} and GHG emissions reductions reslllts in decreased costs.
Measure M in the CAP states that, "'City com are plannTng (including a feaslbllity study},
constructing and maintaining the renewable faclllUes ... Benefits accrue from eJ!(tridty savings to
City through net energv metering."'
SAN DIEGO GAS ANO ELECTRIC (SDG&E) GRID CONNECTION
The Oean Energy Alliance (CEA) is the Oty or tar1sbad's energy provider, but SOG&E delivers
CEA's energy to Carlsbad. One Issue .-elated to developlng a solat project at Maerkle reservoir Is
connecting the project to SDG&E's g:rtd. The nearest lnfrastrutture tle•ln wlll need to be rdentffled
and connected. This obstacle may be difficult to overcome and may render the project Infeasible
depending on availabillty and cost to Ue Into SOG&E's grid.
I
Meeting Date;
To:
From:
Staff Contact:
Subject:
Dls.trict:
April 16, 2024
Ptcsldcnt and Board Members
Stott Chadwick, Executive Manager
Vicki Quiram, General Manager
vickLquiram@carlslndca.gov, 442-339-2722
Jas,on Haber, Intergovernmental Affairs Director
jason.haber@carlsbadca.gov, 442-339-2958
Update on the Maerkfe Rcsetv0lr Solar Energy Study
2
Rec.ommended Action
ATTACHMENTS
CAReviewGH
Receive an update on the Maerkle Reservoir Solar Study Project and provide Input to staff on
next steps.
Ekecutlve Summary
The cartsbad Municipal Water Olstrict's Maerkle Reservoir site is identified as a potential site
for a solar photovoltalc energy-generating and storage facility In C'apltal Improvement Program
Project No. 4722. This project has lof'lg been envisioned to contribute to the use of renewable
energy sources, promote energy sustainability and offset the CMWO's and potentiaJty the city's
energy costs.
The city's Climate Action Plan acknowfedges the project's potential to achieve renewable
energy production goals, and the city's Five--Yeat Strategic Plan (2023-202?) Identifies this
project as a city priority.
CMWD staff have been working with a consulting flm, and various dty departments to conduct
the due diligence needed to determine the project's foaslbility and advance It to completion.
Staff are providing this report to update the CMWO Board on the results of this study and
request the board's Input on the project. Staff will return to the CMWO Soard at a future date
to ask the board to approve the release of a request for proposals and/or qualiflcatlons to hire
a consultant who would lead a phased solar energy generation and energy stomge project.
April 16, 2024 Item #15 Pag• lof6
Explanation & Analvsis
Opportunities and co_nstrpints
Staff and a consultant met with stakeholders,
Including project proponents and industry
experts -the C'.ar1sbad Sustainability Coalition
and the Clean Energy Alliance, or CEA-to
explore the various financing, development
and operating models to be considered. In
addition, staff researched similar solar
projects, power purchase agreement
strategies and design-build constrvction1
proposals.
In conducting this study, utilities staff and the \
city's Intergovernmental Affairs Director
coordinated with the CMWO's General
Counsel, the city's Community Servk:es
"'"'"' )
--
Branch and Its Real Estate Division, as well as the Finance, Community Development and
Planning departments. This collaboration revealed potential opportunities and constraints to be
addressed during the project feasibility, scoping and development phases. These Include:
• System finan,ing, development and operating models
• System sizing, including energy production and storage capacity
• Energy off•taket/load serving entity the electric service provider to partner with
• Site's land use constraints
• City and regional environmental considerattOns
• Site's design considerations
• Electrlcal grid Interconnection
Potential models
There are a variety of proJect development and operational models to consider in pursuing a
solar energy generation and storage project at Maerkle Reservoir. They indude, but are not
limited to:
• CMWO•owned and operated
• A power purchase agreement, or PPA
• A CMWD land lease
These models, the most commonly u$C<I, are described in greater detail below. The selection of
a model wm depend largety on what objectives CMWO has for the project and will require the
services of an expert consultant to assist staff in evaluating the options and determining what is
most advantageous to the CMWO, Its customers and the city.
CMWO-Owned and operated
Under this model, the CMWO, which owns the site, would provide the capital reqvired for
project developmC!nt. The CMWO would be responsible for project design, permitting.
J DeslJn,-buitd construction b a project delivery method th;1t combines the design ;1nd COO$-tn1ction of~ project
Into one contract.
April 16, 2024 Item #15 Page 2 of 6
construction and coordinating the grid interconnection with San Diego Gas & Electrlc (SOGE),
Addftional staff would be required to maintain this model, and there would be ongoing costs
associated with system administration, monitortng, inspection, praientlve maintenance and
repairs that would be Incurred over the life of the project.
Power purch~e agreement
With a power purc:hase agreement, the CMWD would lease the I.and to an outside developor
who would finance, construct, maintain and operate the solar energy generation and storage
system. The CMWO would negotiate to purdiase power produced by the system for its own
use, and any excess power could be served onto the electrical grid and sold to a load-serving
enlity (e.g., the CEA. SOGE or others) for resale to their ratepayers,
Under this scenario, the CMWO woukf not be required to provide any upfront capital and
would not assume any responsibility for ongoing maintenance and operation. The developer
would bear the full cost of buying and installing equipment, developing the site, obtaining
permits and making the interconnectfon to the electrical grid, The developer would also be
responsible for the Opef"atlon and maintenance of all project-retated infrastructure and would
recover these costs over the term of the agceement through negotiated electrkJty rates paid by
the CMWD and/or the sale of excess generation.
The contract terms in a power pucchase agreement model could cootaln provisions to ensure
that the CMWD would receive renewable energy to satisfy Its own power needs, generate
revenue by selling excess ge-neration, and retain ownership of the project's renewable energy
c:ertiftcates. These certificates are legal instruments used in renewable electrlclty mattcets to
account for and assign ownership of renewable electricity and its attributes. Each certificate
represents one megawatt hour of energy generated, and the owner of a renewable energy
certificate has ~elusive rights to make c.laims regarding the use of the renewable electricity
that generated the certificate. Renewable energy certificates can also be used to offset
emissions associated with non-renewable electricity use and can be sold for profit.
A power purchase agreement would allow the CMWO to negotiate electrical rates to be paid
over a 20· to 30~year term with the potential benefit of serving as a hedge against future
electricity price volatility. In thl.s scenario, having predictable electrical costs for annual
budgeting would be a benefit.
CMWD land lease
If the CMWO were to simply lease the land to a solar company for development and operation
of a solar project, the lease revenue would benefit customers through the CMWO reduced
rates. The project would still be subject to the city's land use planning restrictions and project
development requirements, and the CMWD's role and risk would be as the landowner.
(MWO's obligations
It's important to note that under all development and op<'ratlonal models, the CMWO would
bear the cost of evaluating the land to determine open space tequircments, dcvoloplng a
request for proposals/qualifications, solar consultant fees Md staff time. The financial vlablllty
of the project and estimated capital cost to the CMWD, payback and annual savings would be
determined as part of the request for proposals/qualifications review process. feasibility
assessment and later project phases.
April 16, 2024 Item #15 Pag• 3of 6
Energy Off-Taker/Load Servjng Entity
Regardless of which project development and operational model is selected, power produced
by the project could be used to offset the CMWO's power demands. Depending on the size of
the system, the project could also produce excess eSectricity to be served onto the grid for
purchase and resale by an electric load seMng entity such a.s the CEA or SDGE. generating new
revenue for the CMWO and beneflttlng Its customers with re<fured water rates.
The CMWO cannot legally sell the energy It produces to ratepayers, but it can sell to a qualified
load-serving entity such as the CEA or SOGE. Identifying a load•servlng entity to purchase excess
energy produced by the system would result in a lower negotiated cost of energy to the CMWO
because the project developer would not have to account for the uncertainty associated with
secudng an energy buyer.
The C~ the city's community choice energy provider. 2 and SOGE, the tnvestor-owned utility
that also provides power, ttansmlsslon and dlstrlbutio1t In the city, are two potential off-takers
for the project1s excess energy supply. However, there may be other lo.ad serving entJtles
Interested in adding the project's excess generation to their portfolios, so It may be In the
CMWO's interest to specify that any excess energy should be sold to the highest bidder.
Should the CMWO Soard dlrect staff to move fo<Ward with developing a re-quest for
proposals/qualifications, staff would engage both the CEA and SOGE in preliminary discussions
to determine whether they would be interested In se,ving as the project's energy off-taker, and
at what price.
Land use issues
Staff conducted preliminary research on the land use issues associated with the project and will
further analyze and provide updates on them, along with the nec.essarv findings, should the
project advance to the point of requiring CMWO 8oi!rd action in the future. These Issues
include, but are not limited to:
• How the state's Surptus-Land Act, which requires local public agencies to prioritize the
development of affordable housing on surplus land, might affect plans for the project
• The property's open space land use deslgnatlon
• Allowable land uses
• Existing ea.sements
• Potential environmental impacts
• Requirements of the city's Habitat Management Plan
• Callfomla Environmental Quality Act documentation and permitting
Proiecs $ite desi&o comide:@tiom
The tec,hnology for solar power generation and storage systems continues to evolve rapidly,
and the viability of the project and the benefits to the CMWO require further analysis by solar
Indus.try experts. Staff have 1dentlfled about 32 acres or usable space on the site, taking Into
) State law allows local govemments to form COO'lmunitv choice ene,gy pr01rams that offer an alte<nattve to
lnvestor•ownf!d utilitiH, su<h M SOGt, Under this modf!I, '°'"' a<W.:mrnents pVrd,~$$ and manase the-Ir
community'$ e:le<:tric power .supply, ind the existing u1ility continues to dbtribute the ent-rgy to customer$.
April 16, 2024 Item #15 Pase4 of6
account an exjsting site access road used by the CMWO to operate the Maerlde reservoir and
facilities, and a potential buffer ?one around the perimeter.
The hilly topography at the Maerkle Reservoir site will play a significant role in the project's
design and configuration, either to minimi:c:e the site grading requirements or to maximh:e the
site's potential for energy generation. The project's design will need to cons.ider the necessary
infrastructure Improvements and potential construction and the impatts on the surrounding
neighborhoods.
Ele,trical grid interconnection
SOGE owns and controls the energy transmission and distribution network infrastructure in
carlsbad. The Interconnection of a solar energy generation and storage project at the Maericle
Reservoir site to the SOGE power grid Is a critical design issue. The interconnection location will
be speclfit?d by SOGE. The scale, location and cost of Infrastructure necessary to connect the
project to the power grid mu.st be studied thoroughly du.ring the feasibility and preliminary
design phases.
Recommended approach
As outlined above, there are several Issues still to consider and evaluate In determining
whether and how to proceed with developing a solar ene.rgy generation and storage project at
the Maerkle Reservoir site. Additional information and analysis are needed to determine the
project's feasibility, define its scope and fulty evaluate potential development and operational
models. It is staff's opinion that completing this work requires the services of a team of industry
experts to partner with the city.
After receiving input from the CMWD ~rd at this meeting, staff proposes to return at a future
date to receive Board authoriiation to release a request for proposals/qualifications, in keeping
with carlsbad Municipal Code Section 3.28.060-Procurement of professional services and
services, to engage a qualified firm to perform a phased scope of professional services.
The phased work would include:
1. Preparation of a feasibility study and evaluation of potential project development and
operational models, Including a pro-forma analysis' and general evaluation of project
economics, the recommended ownership structure, generation and sizin.g calculation.s,
an estimate of system interconnection costs, the project schedule and other project
recommendations
2. Once it's determint?d that the project is feasible, advancing to a prellmlnary design and
scoping phase
3. Negotiating and executing the necessary development and site control agreements to
develop the project, including environmental review and permitting, final design and
contract document preparation, bid phase support services, construction manc1gement
and utility licensing and permitting
'A pro form.l an.alys(s h a set of as.wmptions and c;alwlations that predh;ts the! fillilnc:i.il rctv:rn of~ proposed
projec;t.
April 16, 2024 ltem#lS Pages of6
The request for ptoposals/qualifications and phasing process would be designed to include
specified opportuniti~ for both the CMWO and the cons.ultant or consult-ants to tcrmlnate
work on the project subjed to terms that will identify the compensation due fo, work
performed during each phase.
Fiscal Analysis
This is an informational presentation with no immediate direct fiscal impact. The cu"ent
available funding for the project is $228,587. Additional funding in the amount of $231,413, for
a total of $460,000, will be requested during the budget development process for fiscal year
202~2S as it may be needed for energy consulting services to assist with preparing the request
for proposafs/qualificatlons and evaluating of the proposals received as well as funding costs
that may be incurred during the project's feas.ibility assessment phase.
NextStees
Upon receiving the CMWO Board input and direc.tiol'), staff wm prepare a request for
proposals/qualific-ations for future CMWO Board review and approval. With the CMWO Board's
continued support for the project, staff will proceed with issuing a request for
proposals/qualiflcat!ons to engage an energy con.suiting firm to conduct a feasibility study for
the project, with an option to advance the professional setvlces into the project development
and scoping phase.
Staff will then retum to the CMWO Board with the findings of the study for further direction
befon? executing the necessary development and site control agreements to further deveJop
the project.
Environmental Evaluation
This action does not constitute a project within the meaning of the CEQA under Public
Resources Code Section 210656 in that It has no potential to cause either direct physic.al change
in the environment or reasonably foreseeable Indirect physical change in the environment. The
work to develop plans and present conceptual de-sign for consideration by the City Council does
not have a legally binding effect on future discretionary actions to approve the project. Public
Input received and technical information prepared will be used during the planning and
environmental evaluation pr0<ess.
Exhibits
None
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