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HomeMy WebLinkAbout2024-02-29; Maerkle Reservoir Solar Study Project Update (District 2); Gomez, PazTo the memb~rs of the: CITY COUNCIL Dat:3121~ CA / CC ✓ CM AC ~M (3)~ 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, lntergovernmental Affairs Director Via: Geoff Patnoe, Acting Executive Manager @. Re: Maerkle Reservoir Solar Study Project Update (District 2) Ccarlsbad Municipal Water District Memo ID# 2024018 This memorandum provides an update to a CMWD Board Memorandum dated April 29, 2021, Attachment A, on the Maerkle Reservoir Solar Study Project, Capital lmprovement Program (CIP) Project No. 4722 (Project). Background The Maerkle Reservoir site, located in the northeastern part of the city, was originally identified by staff as a potential site for constructing a solar photovoltaic (PV) energy-generating facility in 2009. The Project has long been envisioned to contribute to the use of renewable energy sources, promote energy sustainability and offset ongoing Carlsbad Municipal Water District (CMWD) energy costs. The city's Climate Action Plan acknowledges the Project's potential to achieve renewable energy production goals and the city's Five-Year Strategic Plan (2023-2027) identifies the CMWD Project as a priority. In fiscal year (FY) 2015-16, the Project was included in the CIP with a budget appropriation of $250,000 to conduct a feasibility 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 in the city's Five-Year Strategic Plan. Foliowing adoption of the Strategic Plan and the FY 2022-23 budget, staff 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 challenges surround the implementation 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 Sustainability Coalition and Clean Energy Alliance), to understand current best practices regarding a project of this type and Carlsbad Municipal Water District 5950 El Camino Real I Carlsbad, CA 92008 I 442-339-2722 t Board 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 similar municipal solar projects, power purehase agreement strategies and design-build construction proposals. Staff coordinated with lntergovernmental Affairs and General Counsel's offices, Community Services Branch Real Estate Division, and Finance and Community Development Departments. These interactions informed staff's understanding of possible concerns and facilitated collaboration on the Project. Hoch and staff memorialized these discussions and research in the attached memorandum and addendum (Attachment B). The general issues for consideration of the Project feasibility are summarized below. Financing, Development and Operating Models Ownership, development and operating models for the solar project will need to be evaluated du ring the feasibility phase to determine what is the most advantageous to the CMWD 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 CMWD contracting development, financing, construction and maintenance of a system via a power purehase agreement In each model, consideration and determination of the energy off-taker (e.g., Clean Energy Alliance, San Diego Gas & Electric, etc.) will be a critical decision. Land Use lssues 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 property's open space land use designation • Allowable District uses • Surplus Land Aet • Potential environmental impacts • Habitat Management Plan • Required California Environmental Quality Aet compliance Energy Production Staff have identified approximately 32 acres of usable space on the site, taking into account the access road and potential perimeter buffer zone. The energy produced at this scale would exceed the CMWD's energy needs but could be utilized by other commercial and industrial users with development of the proper contract agreements. Board Memo -Maerkle Reservoi r Solar Study Project Update (District 2) February 29, 2024 Page 3 Design 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 af Oceanside and Vista. The design and size selected will also impact the permitting and environmental review af the Project. Grid Connection Further, the scale and location af the infrastructure necessary to connect the solar facility to the existing energy grid still need to be studied and will be better understood du ring the feasibility study phase. Recommended Approach The technology for PV generation and storage systems continues to evolve rapid ly, and the viability af such a project and the benefits to the CMWD require further study by solar experts to evaluate feasibility, project development, implementation and asset management. lssuing a request for qualifications for this expertise and to obtain consistent services through all phases af the Project, including feasibility, project development, construction and operation af the system, is a comnion and recommended approach for delivery ofthis Project. Next Steps Staff have scheduled a presentation at the April 16, 2024, CMWD Board meeting to discuss the research findings and seek input from the CMWD Board regarding the process for determining project feasibility and evaluating the preferred development, ownership and operational models to be used in advancing the Project. These items are further outlined in the attached Hoch letter and addendum. Attachments: A. CMWD Board Memorandum dated April 29, 2021 B. Hoch letter and addendum dated February 21, 2024 cc: Scott Chadwick, Executive Manager Cindie McMahon, General Counsel Gary Barberio, Deputy City Manager, Community Services Laura Rocha, Deputy City Manager, Administrative Services Gina Herrera, Assistant General Counsel Zach Korach, Finance Director Jeff Murphy, Community Development Director James Wood, Environmental Sustainability Director Curtis Jackson, Real Estate Manager Eric Lardy, City Planner Board Memo -Maerkle Reservoir Solar Study Project Update (District 2) February 29, 2024 Page 4 Dave Padilla, District Engineer Shoshana Aguilar, Senior Management Analyst Eric Sanders, Utilities Manager Keri Martinez, Utilities Senior Engineer To the membe.rs of the: I OUNCIL Date CA ✓ CC ✓ CM_ ACM ✓ DCM {3) ./ CMWD Board Memorandum April 29, 2021 To: Carlsbad Municipal Wat Di trict Board of Directors From: Paz Gomez, Deputy City M ublic Works Vicki Quiram, General Ma aa:Qli~t-- Via: Scott Chadwick, Executi~ Ma e Re: Maerkle Reservoir Solar tudy oject Update (District 2) ATTACHMENT A Ccarlsbad Municipal Water District Memo ID #2021087 This memorandum provides an update to a previous Council Memorandum dated Feb. 18, 2021, (Attachment A) on the Maerkle Reservoir Solar Study Project, Capital lmprovement Program (CIP) Project No. 4722 (Project) and provides the Carlsbad Municipal Water District (CMWD) Board of Directors (Board) information on an unsolicited proposal on this Project. Background The Maerkle Reservoir complex, which is over 100 acres in size and located in the northeastern part of the city, is a potential site for constructing a solar photovoltaic 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 conduct a feasibility study. lf feasible, the Project could offset ongoing energy costs, contribute to the city's use of renewable energy sources and promote sustainability in keeping with the city's Climate Action Plan. Attachment A informed the City Council that staff plan ned to include the Project as part of the FY 2022-23 CIP Budget unless directed otherwise. Since then, CMWD staff have had discussions with Clean Energy Alliance (CEA) staff on the Project. Moving forward, CMWD will be leading the CIP Project effort instead of the city since the Project is on CMWD property. On April 13, 2021, the city received an unsolicited proposal from Dr. Phil Watts of Resource Renewable Energy, Ine., 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 Maerkle Reservoir (Attachment B). Discussion Staff planstorespond to Dr. Watts informing him that the city currently does not have funds in the FY 2020-21 CIP Budget for this Project. Additionally, Carlsbad Municipal Code {CMC) Section 3.28.060(A)(l) encourages the use of a request for proposals (RFP) process when soliciting professional services. Staff regards the exclusive negotiating agreement attached to his email as an offer to perform professional services on behalf of the city. Carlsbad Municipal Water District 5950 El Camino Real I Carlsbad, CA 92008 I 760-438-2722 t Board Memo -Maerkle Reservoir Solar Study Project Update (District 2) April 29, 2021 Page 2 lf funds are later allocated to study the feasibility of energy generation at the Maerkle Reservoir, CMWD staff will follow CMC section 3.28.0G0(A)(l) and solicit bids from proposers through a competitive solicitation process. Next Steps Staff will respond to Dr. Watts on his unsolicited proposal, Attachment B. CMWD staff will continue to discuss the feasibility of the Project with CEA staff and propose it for inclusion in the FY 2022-23 CIP Budget for t he CMWD Board's consideration and/or seek other funding opportunities. Attachments: A. Council Memorandum dated Feb. 18, 2021 B. Dr. Phil Watts' email of April 13, 2021 cc: Geoff Patnoe, Assistant Executive Manager Celia Brewer, General Counsel Gary Barberio, Deputy City Manager, Community Services Laura Rocha, Deputy City Manager, Administrative Services Robby Contreras, Assistant General Counsel Ryan Green, Finance Director Jason Haber, lntergovernmental Affairs Director Dave Padilla, District Engineer John Maashoff, Public Works Manager James Wood, Environmental Manager Curtis Jackson, Real Estate Manager Steve Stewart, Municipal Projects Manager To the rnemb ers of the: ~ITY COUNCIL Date :/.'~JÆ CA ~CC ~ CM __L_ ACM _iL DCM (3) :!._ A TTACHMENT A Feb. 18, 2021 To: ·From: Via: Re: Co uncil Memorandu m Honorable Mayor Hall and Mernbers of the City Council Paz Gomez, Deputy City Manager, Public Works Geoff Patnoe, Assistant City Manager @ Maerkle Reservoir Solar Study Project Update (District 2) {cityof Carlsbad Memo ID #2021043 This memorandum provides an update on the status of the Maerkle Reservoir Solar Study Project, Capital lrnprovement Program (CIP} Project No. 4722 (Project). Background Du ring the City Council Meeting on Feb. 11, 2021, a Council Mernber requested status of the Project and asked whether energy battery storage was•included in the scope of work. The Maerkle Reservoir complex, which is over 100 acres in size and located in the northeastern part_ of the city, is a potential site for constructing a solar photovoltaic energy genera.ting facility. In fiscal year (FY) 2015-16, the Project was included in the CIP with a budget appropriation of $250,000 to conduct a feasibility study. lf feasible, the Project could offset ongoing energy costs, contribute to the city's use of renewable energy sources and promote sustainability in keeping with the city's Climate Action Plan. • • In May 2019, during a presentation of the preliminary FY 2019-20 CIP Budget, staff provided City Council an update that the Project had not yet started due to lack af staff resources and prioritization. Approximately $830 of the $250,000 had been expended for an application with San Diego Gas & Electricto obtain energy data. No additional work has been cornpleted to date. As part of the FY 2020-21 CIP Budget development process presented to City Council in May 2020 and adopted in June 2020, capital projects were re-evaluated against anticipated revenue decreases as a result of the COVID-19 pandernic and other factors. Asa result, the rernaining budgeted Project funds of $249,170 were disencurnbered and reprograrnrned to be • included in the FY 2022-23 CIP Budget during the FY 2022-23 CIP Budget developrnent process. Discussion The Project' s scope of work is to prepare a study t o deterrnine the feasibility of constructing a solar photovoltaic energy generating facility at the Maerkle Reservoir cornplex, which is owned by the Carlsbad Municipal Water District. It does not include energy battery storage. Public Works Branch Fleet and Facilities Department 405 Oak Avenue I Carlsbad, CA 92008 I 760-434-2980 t Council Memo-Maerkle Reservoir Solar Study Project Update (District 2) Feb. 18, 2021 Page 2 Staff is in the process of developing the FY 2021-22 CIP Budget. Currently, it does not include the Project as ane of the proposed projects that will be presented to City Council as part of the preliminary budget in May 2021. Staff will inch..1de the P.roject in the FY 2022-23 CIP Budget and in the CIP Budget development process next year unless City Council directs otherwise. Next Steps Staff will include the Project as part of the FY 2022-23 CIP Budget unless City Council directs its inclusion in FY 2021-22. lf approved by City Council for inclusion in the FY 2021-22 CIP Budget, staff will prepare a scope of work fora consultant to conduct the feasibility study in FY 2021-22. cc: Scott Chadwick, City Manager Celia Brewer, City Attorney Laura Rocha, Deputy City Manager, Administrative Services Robby Contreras, Assistant City Attorney Ryan Green, Finance Director Vicki Quiram, Utilities Directo'r John Maashoff, Public Works Manager James Wood, Environmental Manager Dave Padilla, Engineering Manager Steven Stewart, Municipal Projects Manager I I ! i 1: I ·r t I ATTACHMENT B -----Original Message----- From: phil@resourcerenewables.com <phil@resourcerenewables.com> Sent: Tuesday, April 13, 2021 11:31 AM To: Matthew Hall <Matt.Hall@carlsbadca.gov>; Manager Internet Email <Manager@CarlsbadCA.gov>; CityClerk <Clerk@carlsbadca.gov>; Attorney <attorney@CarlsbadCA.gov> Cc: Council InternetEmail <CityCouncil@carJsbadca.gov>; Keith Blackburn <Keith.Blackburn@carlsbadca.gov>; Cori Schmnacher <Cori.Schumacher@carlsbadca.gov>; Priya Bhat-Patel <Priya.Bhat-Patel@carlsbadca.gov>; Teresa Acosta <Teresa.Acosta@carlsbadca.gov>; Jason Haber <J ason.Haber@carlsbadca.gov>; Dan King <dking@cosb.org> Subject: Another Look atMaerkle Reservoir Energy Project Dear Mayor Hall, After careful deliberation and months ofwork, we believe the proposed 25 MW solar power and 20 MW battery storage Maerkle Reservoir renewable energy project wo1th roughly $60MM and supplying up to 5% ofthe reg!onal electricity load deserves another look by the City ofCarlsbad. We have recently achieved a notable milestone: a new way forward for cities to install large renewable energy projects on city land. We seek your feedback regarding this new way forward. We accomplished this milestone by signing a no cost bilateral contract with another California city to develop 10 MW of solar power and 10 MW of battery storage on city land. Using that contract as a template, we have attached here a DRAFT no cost bilateral contract for ymt and yom· staffto review fora similar kind af renewable energy project at Maerlde Reservoir. Existing project RFPs typically assmne project specifics are both well-known and relatively fixed, criteria which do not fit most early stage euergy projects. Meanwhile, energy procurement by CCAS usually occurs for projects that have already been built. We are not aware of any other solution for cities and their CCAs to take charge of their lower price and high er resilience energy future, independent oflarge energy markets that favor utilities, experience losses, suffer cu1tailment,'and strut wild fires. Having lower energy prices than SDG&E is a given these days. We offer a solution that involves a public/private prutnership, Jocal energy savings (for both residents ru1d c01·porations ), localjobs, local investments, and a substantial lru1d lease payment to the City ofCarlsbad. This new way forwru·d is congenial to your staff. At no direct cost to the city, significant planning information and pricing transparency become available. Let's review same ofthedetails: • 1) Bilateral Coptracts Work. The reason why they work is because the contract gives the energy developer the exclusivity that is needed to study and design the energy project at 110 direct cost to the <;ity. . There are too many factors that can influence (or chru1ge or kill) the project for an RFP to make sense as a means to get such projects started. 2) Public/Private· Prutnership. The residents and corporations af Cru·lsbad would demand lower energy prices now ifthey knew what savings could be made available from city land alone. This is especially true af same energy intensive companies, and their trade representatives, who would seek and appreciate lower energy expenses ASAP. 3) Information Is Power. The bilate1•al contract foresees an exchange af energy project information that guru·ru1tees the city and its CCA technical sophistication, pricing transpru·ency, portfolio planning, RA rebates, oversight controls, and other benefits that usually res ide only within the ·!argest utilities --do what those saJ.lle utilities thought you would never be able to do and match their sophistication. 4) Highest and Best Use. The city Climate Action Plan andthe herutfelt climate priorities of Cru·Jsbad residents are met by a renewable energy project at Maerkle Reservoir. This is deservi.ng of special consideration, because the lang term view of a viable ru1d sustafoable plru1et is perhaps the single biggest driving force for all of hU111anity at this time. 5) City Reve1me. The total land lease amount received by thecity for an energy project dwaffs the sales value ofthe land to areal estate developer by 3X or more. Even with yearly property taxes, the renewable energy land lease is expected to beat any other possible revenue for the Maerkle Reservoir land. This is a finru1cial winningproposition. 6) RFQ Welcome. The bilateral contract is not about money; it is about time. The city and developers alike deserve the time we both need to carefully study, negotiate, and confirm our respective positions. lf an RFQ an land use suppo1ts such a process, then let that be the starting point. Public workshops would Iikely prove worthwhile as well. 7) No Transmission. Transmission lines in Californiaru·e overloaded due to large cities and hot weather. The power losses dw·ing transmission are huge and have been cleverly hidden by utilities. Curtailment clauses in energy contracts force CCAs to pay for w1delivered energy. The CCA then gets fleeced by exorbitant spot market prices. Deadly wild fires with devastating consequences are rrunpant. 8) Local Benefits. Witha local renewable energy projectat Maerkle Reservoir, what you see is what you get. There ru·e no hidden costs. There ru·e no priciug surprises. There are only low energy prices (for residents and corporations), RA rebates, local jobs, and a roughly $60MM investment within the City ofCarlsbad, plus the economic mnltiples. We seek )'.OW' feedback regarding this new way forward. Sincerely yours, Dr. Phil Watts Dr. Phil Watts CEO, Chair .Resource Cell: 562-607-2132 hrtps://urldefense.com/v3/ http://www.resourcerenewables.com :! !E 4xU6-vwMWK- O!6WCXrn8X4O93OYVIS6SmkX0cdd l mlw2.1-yi25PzAzPeeoL3Wg-RUe23vvi0cCMP2bl-lbws$ CAUTION: Do not open attachments ar click on links unless you recognize the sender and know the content is safe. EXCLUSIVE NEGOTIATING AGREEMENT TIDS EXCLUSIVE NEGOTIATING AGREEMENT ("ENA") is entered into as of 2021 ("Effective Date"), by and between the CITY OF CARLSBAD, a municipal corporation and charter city (the "City''), and RESOURCE RENEWABLE ENERGY, INC., a Delaware C corporation (the "Company"), on the terms and provisions set fo1th below. The City and Company ar.e sometimes refeITed to individually herein as a "Pa1iy" and, collectively, as the "Parties." RECITALS A. The Company is interested in investigating the possibility of constructing and operating a solar facility on certain undeveloped land owned by the City. To that end, the Company desires to establish a period during which (i) the City will negotiate exclusively with. the Company concerning development of such land, (ii) the Company will conduct the investigations and studies it believes are necessary, and (iii) the Company will prepare and submit to the City a development proposal fora solar facility on such land that shall include the solar facility's design, construction, commissioning, and fmancing . B. The City is interested in the possibility of the development of a solar facility on city- owned land that may provide power to Clean Energy Alliance ("CCA"). C. The City and Company accordingly desire to enter into exclusive negotiations regarding the terms of the various agreements needed for the Company to develop and operate the solar facility, such as a land lease with the City, power purehase agreement for power offtake by CCA, resource adequacy agreement for energy reserves with CCA, and other necessary agreements. NOW, THEREFORE in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and Company agree as follows: 1. Exclusive Negotiation. The City aiid Company agree fora period of one (1) year from the Effective Date (the ''Negotiation Period") to negotiate diligently and in good faith to agree on the terms and form of any and all agreements necessa1y for the Company to design, construct and operate a solar facility as fmther described in Section 3 of this ENA (the "Project") on approximately 56 acres of undeveloped City-owned land located at Maerkle Reservoir (Assessor's Parcel Number 169-5000- 500) (the "Site"), including, without limitation, the tenns and form ofthe foliowing agreements: (i) a land lease agreement pursuant to which the Company will lease the Site from the City; (ii) a power purehase agreement for power offtake by CCA; (iii) a resource adequacy agreement for energy reserves with CCA; and (iv) such other agreements that may be necessary for the design, construction and operation of the Project. During the Negotiation Period, including any extension thereof, the City agrees that it shall not negotiate with any other person or entity for the development of the Site and shall make commercially reasonable effo1ts to enter or help the Company enter into the site lease, power purehase and resource adequency agreement. 1 2. Option to Extend Negotiation Period. TI1e Company may extend the Negotiation Period once for one (1) additional year by giving written notice to the City at least sixty (60) days prior to the initial expiration of the Negotiation Period. 3. Proposed Project. The Project consists of one or more solar power and energy storage facilities, with a medium voltage interconnection to the distribution grid. The Project is expected to _be placed in a special purpose entity ("SPE"), and to have third party financing and ownership. Dependi.ng on the results ofvarious interconnection, distribution circuit, and load studies, the Project may nominally be of the following size, subject to change as necessary: Solar Power: 25 MW and Energy Storage: 20 MW 4. Required Actions. The Parties agree to take the following action during the Negotiation Period: (a) The Parties agree to exchange infonnation for the purpose of evaluating the Project. Subject to all legal and/or contractual limitations, the City shall make available data on electricity generation costs, settlement costs, overhead expenses, load profiles, and other related infonnation that enable energy arbitrage opportunities to be identified and the total cost of energy delivered to be calculated. The Company shall make available data on project perfonnance such as energy production, project cost, yearly revenue, yearly profits, cost of energy, internal rate of return, among other pro forma metrics that enable the highest· and best use of City-owned land to be demonst:rated and the economic viability of the Project to be guaranteed. (b) The Parties agree to diligently and in good faith negotiate the terms and form ofthe following agreements: (i) a land lease agreement pursuant to which the Company will lease the Site from the City; (ii) a power purehase agreement for power offtake by CCA; (iii) a resource adequacy agreement for energy reserves with CCA; and (iv) such other agreements that may be necessary for the design, construction and operation ofthe Project. Neither Party shall be obligated to execute any ofthe foregoing agreements. Any agreement(s) resulting from the negotiations hereunder shall become ef:fective only after and if such agreement has been considered and approved by City in the manner required by law. (c) The Company agrees to provide to the City comprehensive development plans for the Project. Such development plans must comply with all applicable laws, rules and regulations of City and all other government entities having jurisdiction. The Company further agrees to make oral progress repo1ts and written reports from time to time as requested by the City, advising the City on all matters and all studies being made with respect to the Project. The Company agrees to generally cooperate with the City and agrees to supply such other documents and information as may be reasonably requested in writing by the City. ( d) The Company shall submit to City satisfactory evidence of its ability to meet its responsibilities relative to financing (both construction and long-term) the lease of the Site and construction/operation of the Project. The Company shall make and maintain ful! disclosure to the City of its methods of financing to be used in the development of the Site and construction/operation of the Project. 2 ( e) The Company shall make full disclosure to the City of its principals, officers, major stockholders, major pa1tners,joint ventures, key managerial employees and other associates, and all other material infonnation concerning the Company and its associates. Any significant change in the principals, associates, paiiners, joint venturers, negotiators, development manager, consultants, professionals and directly involved managerial employees of the Company is subject to the approval of the City, such approval shall not be unreasonably withheld or delayed. 5. Fees, Costs & Expenses. The Company shall be solely responsible for all fees, costs and experises of investigating and studying the Site and designing, constructing and operating the Project. 6. City Approval of Subsequent Agreement(s). If negotiations culminate in one or more agreement that is/are mutually agreeable to the Patties, such agreement(s) shall not become effective until all state and local requirements for the lease of City-owned property have been camplied with and approved by the City Council and any other applicable legislative or administrative body required by law. The Parties agree and aclmowledge that, while this ENA provides that the Parties shall negotiate in good faith, this ENA does not obligate either the City or Company to enter into any agreement(s) or other instrument(s) for development of the Project, and approval of such agreement(s) or other instrument(s) for development of the Project shall require the approval of both Parties, with the City Council giving its approval, if at all, only after consideration at a regular meeting of the City Council and following all other proceedings required by law, including, without !imitation, compliance with the Califomia Enviromnental Quality Aet (Califomia Public Resources Code §§21000, et seq.). 7. Event ofDefault. The failure ofthe City or Company to reasonably and timely comply with its obligations under this ENA, if not due to circumstances beyond the reasonable control ofthe City or Company, as the case may be, shall be considered a default hereunder. Prior to exercising any remedies hereunder for the default of this ENA, the Patty asserting a default shall provide written notice to the other Party describing the alleged default, and such Party shall have thitty (30) days to cure such default. 8. Notices. All notices under this ENA shall be given in writing by personal delivery, or by ce1tified mail or registered United States Mail, return receipt requested, postage prepaid, or by facsimile and shall be deemed communicated when received if given by personal delivery or upon receipt or rejection if mailed as provided above or upon receipt by facsimile on a business day durit1g business hours in the location where received, and ifnotthen on the next business day, as the case may be. Mailed notices shall be addressed as set fotth below, but either party may change its address by givit1g written notice thereof to the other in accordance with the provisions of this section. City: Company: • City of Carlsbad Carlsbad City Hall 1200 Carlsbad Village Drive Carlsbad, California 92008 Attn.: --------- Dr. Philip Watts, CEO Resource Renewable Energy, Ine. 3 6216 E Pacific Coast Hwy #237 Long Beach, California 90803 9. Assignment. This ENA shall not be assigned by the Company, except to the SPE meant to hold the project assets, without prior written approval ofthe City, which the City may grant or refuse at its sole discretion. 10. Warranty of Authority. The signatories to this ENA represent and warrant that they have the authority to execute this ENA on behalf of the principles they purport to represent. 11. Broker's Fee. Each Party represents to the other Party that no broker has been engaged in connection with this transaction and no fee shall be paid in coru1ection herewith. 12. Attorneys' Fees. In any action between the paities to interpret, enforce, award, modify, rescind, or otherwise in connection with any of the tenns or provisions of this ENA, the prevailing pmty in the action shall be entitled, ·in addition to damages, injunctive relief, or any other • relief to which it might be entitled, to reasonable costs and expenses including, without linlitation, litigation costs, reasonable attorneys' fees and expert witness fees. 13. Applicable Law, Jurisdiction and Venue. This ENA has been executed and delivered in the State of California and the validity, interpretation, and enforcement of any of the clauses of this ENA shall be detennined and govemed by the 1aws of the State of California. Both Parties further agree that San Diego County, Califomia, shall be the venue for any action or proceeding that may be brought or mise out of, in connection with or by reason ofthis ENA. 14. Limitations of ENA. By its execution of this ENA, the City is not committing itself to or agreeing to unde1take: (a) disposition of land to the Company; or (b) any other acts or activities requiring the subsequent independent exercise of discretion by City. This ENA does not constitute a disposition of prope1ty or exercise of control over property by the City and does not require a public hearing. Execution ofthis ENA by the City is merely an agreementto enter into a period of exclusive and good faith negotiations according to t)le terms hereof, reserving final discretion m1d approval by , the City as to any subsequent agreement(s) and all proceedings and decisions in connection therewith. 15. Complete Agreement. This ENA reflects the complete and total understanding between the Parties hereto and all agreements or understandings between the Parties hereto are contained herein. Any changes, modifications, amendments or addenda to this ENA must be in writing and signed by all Parties to be effective. [Signatures begin on next page.] 4 above. IN WITNESS WHEREOF, the Parties have executed this ENA as ofthe date first set forth COMPANY: RESOURCE RENEW ABLE ENERGY, INC., a Delaware C corporation • By:--------------- Name: _______________ _ lts: _______________ _ CITY: CITY OF CARLSBAD, a California municipal corporation and charter city By:--------------- Name: _______________ _ Its: ________________ _ 5 February 21, 2024 Keri Martinez Carlsbad Municipal Water District Via Email: keri.martinez@carlsbadca.gov ATTACHM ENT B Hoch Consulting 804 Pier View Way, Suite 100 Oceanside, CA 92054 (tel .) 760-650-6613 cdale@hochconsulting.com www.hochconsulting.com Subject: Policy lssues Pertaining to Solar Photovoltaic (PV) and Battery Storage Project at Maerkle Reservoir Dear Ms. Martinez, Hoch Consulting (Hoch) was hired by the Carlsbad Municipal Water District (CMWD) to help identify policy issues for discussion and consideration by CMWD staff regarding a proposed solar photovoltaic (PV) and batt ery storage installation at the Maerkle Reservoir site. The Maerkle Reservoir and the surrounding property is owned by CMWD and is located on the eastern edge of the city near the barders of Vista and Oceanside (Figure 1). CMWD has identified approximately 32 acres for development of the proposed solar PV project. The proposed CMWD project is identified by City of Carlsbad's City Council as a priority project in the City's Strategic Plan in October 2022 and if implemented, provides an opportunity to cont ribute to the city's use of renewable energy sources and to offset ongoing operational energy needs and costs. Additionally, the city's Climate Action Plan includes measures to "Develop More Citywide Renewable Energy Projects," and it list s "a potential large PV system at the Maerkle Reservoir property" as one of the plan ned projects to meet this goal. This memo is intended to outline high-level policy issues pertaining to the development of the Maerkle Reservoir property for solar PV and battery storage, which requires input by CMWD Board of Directors. In addition, it may assist in generating discussion as well as providing direction for staff. Two policy issues discussed in this memo are the ownership models as well as what entity will purehase the power produced from the project . An addendum to this letter includes operational and administrative focus areas that have been considered by staff, which will need to be addressed du ring the feasibility analysis and preliminary project planning and design. While the PV and battery storage at the Maerkle site may be a good potential use, it may not be feasible if certain issues cannot be addressed including t he off-taker arrangement, described later in this memo. This evaluation does not include the technical feasibility of the project, which would need to be determined by the project proposers as part of a Request for Proposal process. This evaluation also does not include an analysis of California Energy Commission energy tariff. arPolicy Ad • ity of Carlsba;•/:.ecment MWD STATUTES, 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 as assessment of applicable State statutes, Codes, and authorities to outline any limiting factors associated with alternative land uses. One significant land constraint stems from the Surplus Land Aet (SLA), which would be triggered if there were plan ned uses of the land for purposes other than for the benefit of the utility, including selling the land north of the reservoir for housing or commercial development. Uses other than those that are categorized by law as "agency use", such as the envisioned solar and battery storage project, would require that CMWD offer the land for sale or lease to affordable home developers and certain other entities before selling or leasing the land to any other individual or entity. Further, an evaluation was conducted to determine compatibility with the City's planning documents and ordinances. Specifically, the zoning for the property encompasses General Plan and Zoning designations of Open Space (OS), category 2 as depicted in Figure 2. This designation imposes restrictions by disallowing common uses such as commercial or housing but does as an example, allow for recreational, farming, and pasture and other uses including wireless communications and structures which generate electricity by approval of a conditional use permit (CUP). An Early Assessment conducted by Carlsbad Planning staff confirmed that solar panels are permitted in the OS Zone with the approval of a CUP by the Planning Commission . Figure 2. Maerkle Reservoir Open Space Category Map ! 1 • Pres rv tion ol Naru I R sourc s 2 • Managed Produel.Ion of Resou.rces 3 -OutdoQr Reaeatlon (Programmed\Unprogrammed} 4 -Aeslhetic Culloral and Educotional Purposes Lagoons r•~----\ i_ __ j Cty Lim Is '\ I I I As a water district, CMWD has unique authority provided to it under California Water Code Section 71663.5, to establish a PV and battery storage project. The statute specifies that power generated by a district, such as CMWD, must be used for District purposes and surplus power can be sold to a public or private entity engaged in the distribution or sale of electricity, such as the Clean Energy Alliance (CEA) or SDG&E . Based on these preliminary factors, we are of the opinion that the most advantageous and optimal use of the Maerkle property is for a utility power and battery storage project, if feasible. Further analysis of submissions received under a Request for Proposal will yield additional information about its feasibility. lf implemented, this project has the potential to offset CMWD and potential ly, the city's electrical consumption with clean energy, assist in achieving the Climate Action Plan (CAP) goals of the city and CMWD, and provide a renewable energy source that can be acquired and made available to the Carlsbad community . through the CEA or SDG&E. POLICY ISSUE 1: OWNERSHIP MODEL Two different ownership models were evaluated. The first model consists of CMWD owning and operating all the solar panels and the battery storage (Ownership Option 1), while the second model envisions CMWD entering into a Power Purehase Agreement (PPA) with a third-party provider (Ownership Option 2). In Ownership Option 1, CMWD would have full responsibility for the project, including design, construction, permitting and · coordination with SDG&E to interconnect to the electrical grid. In addition, CMWD would need to hire additional staff with the expertise, skillsets, and proficiencies to operate and maintain the equipment, and would incur costs associated with administration, monitoring, periodic inspection, weed abatement, scheduled preventative maintenance, and corrective maintenance. The level of required maintenance could vary and would depend on the type of solar panel used, which CMWD would need to evaluate. Ownership Option 1 carries the risk of the system being down for longer periods of time if there is no expertise at CMWD to con duet repairs and troubleshoot problems. Furthermore, CMWD would need to generate initial capital, which would probably involve obtaining bands for financing. Under Ownership Option 2, CMWD executes a contract with a third-party provider to finance, construct, maintain, and operate the solar panels and battery storage facility. Under this type of power purchasing agreement (PPA), CMWD would maintain the ability to purehase the power produced for its own internal use or could work with a load serving agency (e.g. CEA or SDG&E), to sell the excess power allowing for it to be incorporated into their power portfolio. This option necessitates entering into a land lease agreement with the third-party provider and CMWD would assume no liability for operation, maintenance, troubleshooting, conducting repairs, weed abatement, inspection or 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 options, the power produced through the solar project could be used to offset CMWD and city power uses and depending on the size of the system, could allow for revenue generation to be fed back into the grid and purchased by an energy purehaser, like CEA or SDG&E. A PPA structure would allow CMWD to benefit from the energy savings that can be realized through a green energy project, without upfront capital costs. CMWD would also realize direct energy cost savings without the complexity of coordinating the financial and ownership issues associated with self-ownership. In a PPA, the t hird-party provider takes care of operation and maintenance of all infrastructure (e.g. solar panels, battery storage, site maintenance) and incorporates these costs into t he rates negotiated with CMWD. Contract t erms in 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 estimated capacity of the proposed solar project ranges from 3 to 5.5 megawatts based on rough industry rule of thumb for acreage development, which is expected to generate approximately 6.4 to 11.8 million kilowatt hours (kWh) annually. A review of CMWD's historical San Diego Gas & Electric invoices for operation of their various facilities, exhibited 1.8 million kWh used in FY 21/22 and 1.03 million kWh in FY . 22/23, which would create excess energy to be sold to CEA or SDG&E for purehase by community customers. A PPA allows CMWD to negotiate electrical rates over a longer term (20-30 years) with the potential benefit of rates being lower than that offered by CEA or SDG&E. In t his scenario, there is the added advantage of having predictable electrical costs for annua! budgeting. Costs borne by CMWD include t hose associated with evaluating land to determine open space requirements, developing a Request for Proposal (RFP), solar consultant fees as well as staff time. A PPA land lease could also include a fee or discounted rate for CMWD electrical use at CMWD facilities. The financial viability of the project and estimated capital cost, payback, and annua I savings (payback and annua I savings based on CEA or SDG&E payout options) would be included as part of the RFP review process. RECOMMENDATION It is recommended that the CMWD Board of Directors provide direction to staff to regarding pursuit of Ownership Option 2 in which staff develops a competitive RFP fora third-party provider to construct, operate, and maintain a solar phot ovoltaic (PV) and battery storage installation at the Maerkle Reservoir site. The proposals would also confirm the technical feasibility of the project and the interconnection into the electrical grid. Further, staff would also determine with certainty whether the city or any other public agency would be eligible to purehase power in excess of that needed by CMWD. Staff would return to the CMWD Board at a future date to approve a PPA and land lease agreement. POLICY ISSUE 2: CONTRACTING WITH AN ENERGY BUYER lf the CMWD Board proceeds with a PPA arrangement, they will need to specify what entity would be the off taker of the energy since CMWD 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 lower cost of energy could be negotiated with the solar developer if the developer is not required to look for an energy buyer. SDG&E provides t ransmission and continues to also provide some power procurement, with approximately 40% of its electricity being delivered from renewable sources. The CEA, of which Carlsbad is a member, operates a Community Choice Energy program to provide alternative energy within the communities' service area . The CEA has an objective to procure a power supply from a minimum of 50% renewable sources and can purehase power from a local government if it meets CEA's needs. The CEA has expressed interest in purchasing local solar PV energy from a project at Maerkle Reservoir and further, would like to be the off taker of any CMWD produced solar energy. RECOMMENDATION It is recommended that the CMWD Board of Directors provide direction to st aff with respect to entering competitive negotiations with CEA and with SDG&E for the purehase of power produced at the Maerkle reservo ir site, in excess of that used by CMWD. Should agreement be reached with CEA in lieu of SDG&E, staff could work with CEA to form a Joint Powers Agreement (JPA) and return for CMWD Board of Director's approval of the JPA prior to entering the PPA. CMWD and CEA would enter a PPA through bilateral negotiations. lf they do not enter a JPA; CEA would need to competitively bid on the project, like any other provider. CONCLUSION During our work to identify major policy issues for discussion and consideration, we did not identify any fatal flaws to advancing the project to an RFP. However, there are site specific and technical design issues that must be addressed to determine if the project is feasible. Some of these issues are discussed in the attached addendum and will be further addressed during a subsequent RFP process. lf you have any questions, please e-mail me at (cdale@hochconsulting.com). Sincerely, HOCH CONSULTING Cari Dale Director of Water Resources Addendum: Focus Areas Reviewed by Staff and/or for future Administrative Action Cc: Vicki Quiram, General Manager via email: Vicki.Quiram@carlsbadca.gov Addendum Hoch Consulting 804 Pier View Way, Suite 100 Oceanside, CA 92054 (tel.) 760-650-6613 cda le@hochconsulting.com www.hochconsulting.com This addendum provides details on various topics reviewed by Hoch and CMWD staff associated with the Solar Photovoltaic (PV) and Battery Storage Project at Maerkle Reservoir. lssues include those where future administrative action may be necessary such as permitting or compliance with environmental and other laws and regulations. This listing is not all-inclusive but identifies same of the major challenges to implementing the project. While a solar project at Maerkle is a good potential use, it may not be feasible if certain issues, including the SDGE connection infrastructure and the California Environmental Quality Aet (CEQA) process, (described further below) cannot be addressed. THE SURPLUS LAND ACT, ENVIRONMENTAL, AND ZON ING 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 space north of the reservoir. In addition to the existing operating CMWD facilities (reservoir, storge tank, hydrogenator, etc.), there is an existing cell tower and vacant dwelling structure located on the site (see Figure 1 in main memo). Maerkle Reservoir has also been known historically as the Squires Dam Facility. Surplus Lands Aet (SLA): CMWD's planned use of the Maerkle reservoir site fora solar and batte ry storage project, constitutes an "agency use" per the provisions of the California Surplus Lands Aet (SLA). Additional actions are necessary to comply 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 findings. Should CMWD lease the site to a third-party entity, they would own and operate the proposed solar facility to generate electricity (and potential revenue) to support CMWD water supply operations, with surplus energy sold, supporting the definition of agency use. The City Attorney's Office would need to draft a resolution and coordinate review with the California Department of Housing and Community Development. Habitat Management Plan (HMP), Zoning and the CEQA: CMWD and the City of Carlsbad have lang been stewards of environmental sustainability and protecting natura I habitats in and around Carlsbad is a high priority. The community vision prioritizes the protection and enhancement of open space and the natura! environment. The two visions -developing renewable energy sources and protecting open space -aften need to be reconciled, as renewable energy infrastructure will aften require land and may impact habitat. lf a PPA option is chosen, the developer would be responsible for performing the environmental review to comply with CEQA and meet standards to prevent negative impacts on wildlife and habitat. The area proposed for solar installation is in an "area subject to the [City's Habitat Management Plan (HMP)]," and located north of a Hardline Conservation Area (bordering Dawson Los Monos Canyon Reserve, as seen in Figure 1). The adjacency standards listed in the HMP address development sites that are adjacent to wildlife preserves, are intended to prevent negative effects on wildlife preserves, and must be addressed in the planning of any development/habitat interface. The adjacency standards include the foliowing categories: 1. Fire Management, 2. Erosion Control, 3. Landscaping Restrictions, 4. Fencing, 5. Signs and Lighting, and 6. Predator and Exotic Species Control. According to the 2009 Early Assessment for the proposed Solar project at Maerkle, the proposed project must be consistent with the HMP adjacency standards mentioned above. In addition, Open Space Category 2 requirements must be met, which includes the preparation of a Conditional Use Perm it (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 allowed use with approval of a CUP. The developer will need to submit a biological resource survey and a visual assessment with the submittal of a CUP application. Any habitat impacts must be addressed pursuant to the HMP through avoidance, minimization, and/or mitigation. Depending on the type and amount of vegetation affected, project related impacts may be eligible to utilize credits at the Lake Calavera Mitigation Parcel. The CUP process can also address issues related to habitat, noise, and aesthetics, which have potential significant impacts to the environment and would need to be addressed in any California Environmental Quality Aet (CEQA) analysis. Requiring an Environmental lmpact Report (EIR), rather than a Mitigated Negative Declaration (MND), would be the more conservative approach to assessing impacts on the environment associated with the project. The requirement to develop an EIR; prepare a CUP application and any additional planning work such as coordinating with CMWD staff on developing the CUP application; and attending the Planning Commission meeting to respond to CUP application questions, can be added to the Request for Proposal (RFP) as the responsibility for the third-party provider. Community outreach is also a component of the environmental review process. Coordination with neighboring cities of Vista and Oceanside is also required as site access du ring construction and maintenance may be an issue. The developer must evaluate the project's impact on the environment during planning, acquisition, development, and operation. Additionally, solar panels may have an adverse effect on scenic vistas, cause reflection issues, and contribute to increased traffic and noise. Environmental reviews, including community outreach, will take time and planning to complete before beginning the project and the project timeline will need to incorporate these lead times. To minimize potential aesthetic impacts of the project, landscaping is recommended between the residences and the solar panels. It is important that habitat management practices be implemented to mitigate harm. One way 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 public acceptance through educating and outreaching to t he public about the project; providing ways for the pubic to be involved in the project and offer input; and collaborating with community partners and trusted organizations to support the project. Additionally, Carlsbad could work with the surrounding communities of Vista and Oceanside to keep them informed of the project's progress. DESIGN AND CONSTRUCTION Solar panels would be designed and installed based on current best practices and available technology. The size of t he site is estimated to support an anticipated 3 to 5.5-megawatt solar project. The usable space at the Maerkle site is hilly and could increase from approximately 1.4 t o 1.8 million square feet with appropriate grading. Minor trenching may be required for supporting infrastructure and a smal I transformer building. Solar panel design height will need to be considered during design based on technology and maximizing energy generation, but also in consideration of t he surrounding community. Maint enance issues like security and ground maintenance will need to be incorporated during design . The site is currently maintained for weed abatement fire protection, which may provide some relief related to environmental requirements., As stated above, since the site is located adjacent to a conservation area, the HMP requires project to meet the standards including fire management; erosion control; landscaping restrictions; fencing, signs, and lighting; and predator and exotic species control. The responsibility to complete design and construct the Maerkle Solar PV and Battery 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 associated with infrastructure construction, permitting, and operation and maintenance shifts away from CMWD. Stormwater: The project would be required to meet stormwater mitigation requirements as well as the City of Carlsbad's Best Management Practice (BMP) requirements and to ensure t hat project reduces potential urban pollutant runoff. It is anticipated that the project will be defined as a "Priority Development Project (PDP) project," rat her than a "standard stormwater Best Management Practice (BMP)" as outlined in Carlsbad's BMP Design Manual, and the developer will have to prepare a Stormwater Quality Management Plan (SWQMP) and submit it for review and approval. Development and submittal of a SWQMP is likely to add more time and resources to the project . Specific design requirements would be included in the RFP. Land Encumbrances: The Maerkle property includes twelve encumbrances {easements) for road, sewer, water, gas, power and telephone lines and incidental purposes {Figure 1). An easement for road access on the south side of the open space and north of the CMWD dam is contained within the proposed project site and must be addressed {see the blue bubble line in Figure 2 below). The easement was granted in the early 1960's for access to the then proposed Ocean Hills Country Club . The Club was developed in 1982 and never used the access; they instead created an open space channel where the right-of-way would have entered. The existing easement, which will not be used in the foreseeable future, cannot be rescinded and must be resolved t hrough City real estate process. All other easements are not in conflict with the proposed project space. Figure 1. Maerkle Reservoir Easement Map 3 -, ,Tr07ll0..1$!1-12 fl.1.!!7AC 8fl u • 7 {' ' i~ t ('° ~ ~It ... o;> SQUIRES DAM FAClLITY LEGEND □ □ ■ Parcel 1 (Fee, Property In Question) Parcel 2 (Fee, Property in Question) Item No. 12 -Easement for public utllities, ingress and egress 04/16/1981, Instrument No. 81-116946, of Official Records Affects as described therein Item No. 13 -Easement for public utilities, ingress and egress 11/05/1981, Instrument No. 81·351125, of Official Records Affects as described therein Item No. 15 • Easement for public utilities, lngress and egress purposes 04/16/1991, Instrument No. 91·170296, ofOfficial Records Affects as described therein E~ s 1 1 ■ SI -..::::/ SHT3 WHITE 81RC~H DR~ : \ . ., .. ~ -:.•1 · .. ,,!-.~!-;;;._'!8.'·!'1,, •~.-~{1-t:ifø""' ;·5.,,,t, .. ·r~ ,. "' . ~\" .. ~ ~; \i \ \i \!1!.~ ~ .•:. ,. ~ ~ ;; . ,. ~ u Item No. 20 -Easement for public ulilities and road 12/30/1963, Instrument No. 230580, of Official Records Affects as described therein Item No. 24 -Easement for road and public utility 04/10/1972, Instrument No. 86672, of Official Records Affects as described thereln Item No. 25 • Easement for public utilities 03/14/1989, Instrument No. 89-128689, of Official Records Affects as described therein CLIMATE ACTION PLAN (CAP) Carlsbad's CAP outlines strategies and policies to reduce greenhouse gas (GHG) emissions. The city and CMWD have taken steps to surpass the CAP's 2020 target, which was to reduce GHGs four percent below 2012 levels. The city and CMWD are working toward the next target which is to reduce GHGs to 52% below 2012 levels. Measure M is a CAP measure to 11Develop More Citywide Renewable Energy Projects," and it lists 11a potential large PV system at the Maerkle Reservoir property" as ane of the planned projects to meet this goal. Implementation of this project would help advance GHG Reduction Measure M of the city's CAP by developing a CMWD renewable energy project that gene rates renewable energy for the city and CMWD consumption. By implementing the project, the city and CMWD will reduce their GHG emissions associated with offsetting the use of fossil fuel-derived energy. The CAP lists projects to meet CAP targets that cumulatively will meet the 5 percent reduction. The CAP directs the city and CMWD to con duet a feasibility study to evaluate citywide renewable energy projects and prioritize accordingly, and if construction of PV at the Maerkle Reservoir is infeasible, this reduction goal will not be met. The city has a goal of approximately 12,000 megawatt-hours per year through incorporation of PC systems on city buildings and parking lots, in addition to microturbine installations on city facilities. Based on historical usage, CMWD may offset approximately 1.03 mkWh -1.8 million kWh (858 -1,800 MW} annually with the implementation of a Maerkle Solar Battery Project. Procuring renewable energy provides greater electricity rate stability depending on established Power Purehase Agreements (PPAs) and GHG emissions reductions results in decreased costs. Measure M in the CAP states that, 11City costs are planning (including a feasibility study), constructing and maintaining the renewable facilities ... Benefits accrue from electricity savings to City through net energy metering." SAN DIEGO GAS AND ELECTRIC (SDG&E ) GRID CONNECTION The Clean Energy Alliance (CEA) is the City of Carlsbad's energy provider, but SDG&E delivers CEA's energy to Carlsbad. One issue related to developing a solar project at Maerkle reservoir is connecting the project to SDG&E's grid. The nearest infrastructure tie-in will need to be identified and connected. This obstacle may be difficult to overcome and may render the project infeasible depending on availability and cost to tie into SDG&E's grid.