HomeMy WebLinkAbout2024-04-16; Municipal Water District; ; Update on the Maerkle Reservoir Solar Energy StudyCA Review GH
Meeting Date: April 16, 2024
To: President and Board Members
From: Scott Chadwick, Executive Manager
Staff Contact: Vicki Quiram, General Manager
vicki.quiram@carlsbadca.gov, 442-339-2722
Jason Haber, Intergovernmental Affairs Director
jason.haber@carlsbadca.gov, 442-339-2958
Subject: Update on the Maerkle Reservoir Solar Energy Study
District: 2
Recommended Action
Receive an update on the Maerkle Reservoir Solar Study Project and provide input to staff on
next steps.
Executive Summary
The Carlsbad Municipal Water District’s Maerkle Reservoir site is identified as a potential site
for a solar photovoltaic energy-generating and storage facility in Capital Improvement Program
Project No. 4722. This project has long been 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 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 this
project as a city priority.
CMWD staff have been working with a consulting firm and various city departments to conduct
the due diligence needed to determine the project’s feasibility and advance it to completion.
Staff are providing this report to update the CMWD Board on the results of this study and
request the board’s input on the project. Staff will return to the CMWD Board at a future date
to ask the board to approve the release of a request for proposals and/or qualifications to hire
a consultant who would lead a phased solar energy generation and energy storage project.
April 16, 2024 Item #15 Page 1 of 6
MUNICIIPAL WATER D IISTRIC'f
Staff Report
Explanation & Analysis
Opportunities and constraints
Staff and a consultant met with stakeholders,
including project proponents and industry
experts – the Carlsbad 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 construction1
proposals.
In conducting this study, utilities staff and the
city’s Intergovernmental Affairs Director
coordinated with the CMWD’s General
Counsel, the city’s Community Services
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 financing, development and operating models
• System sizing, including energy production and storage capacity
• Energy off-taker/load serving entity the electric service provider to partner with
• Site’s land use constraints
• City and regional environmental considerations
• Site’s design considerations
• Electrical 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 include, but are not
limited to:
• CMWD-owned and operated
• A power purchase agreement, or PPA
• A CMWD land lease
These models, the most commonly used, are described in greater detail below. The selection of
a model will depend largely on what objectives CMWD 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 CMWD, its customers and the city.
CMWD-owned and operated
Under this model, the CMWD, which owns the site, would provide the capital required for
project development. The CMWD would be responsible for project design, permitting,
1 Design-build construction is a project delivery method that combines the design and construction of a project
into one contract.
April 16, 2024 Item #15 Page 2 of 6
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construction and coordinating the grid interconnection with San Diego Gas & Electric (SDGE).
Additional staff would be required to maintain this model, and there would be ongoing costs
associated with system administration, monitoring, inspection, preventive maintenance and
repairs that would be incurred over the life of the project.
Power purchase agreement
With a power purchase agreement, the CMWD would lease the land to an outside developer
who would finance, construct, maintain and operate the solar energy generation and storage
system. The CMWD would negotiate to purchase 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
entity (e.g., the CEA, SDGE or others) for resale to their ratepayers.
Under this scenario, the CMWD would 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 interconnection to the electrical grid. The developer would also be
responsible for the operation and maintenance of all project-related infrastructure and would
recover these costs over the term of the agreement through negotiated electricity rates paid by
the CMWD and/or the sale of excess generation.
The contract terms in a power purchase agreement model could contain provisions to ensure
that the CMWD would receive renewable energy to satisfy its own power needs, generate
revenue by selling excess generation, and retain ownership of the project’s renewable energy
certificates. These certificates are legal instruments used in renewable electricity markets 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 exclusive rights to make claims 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 CMWD 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 this scenario, having predictable electrical costs for annual
budgeting would be a benefit.
CMWD land lease
If the CMWD 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 CMWD 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.
CMWD’s obligations
It’s important to note that under all development and operational models, the CMWD would
bear the cost of evaluating the land to determine open space requirements, developing a
request for proposals/qualifications, solar consultant fees and staff time. The financial viability
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 Page 3 of 6
Energy Off-Taker/Load Serving Entity
Regardless of which project development and operational model is selected, power produced
by the project could be used to offset the CMWD’s power demands. Depending on the size of
the system, the project could also produce excess electricity to be served onto the grid for
purchase and resale by an electric load serving entity such as the CEA or SDGE, generating new
revenue for the CMWD and benefitting its customers with reduced water rates.
The CMWD cannot legally sell the energy it produces to ratepayers, but it can sell to a qualified
load-serving entity such as the CEA or SDGE. Identifying a load-serving entity to purchase excess
energy produced by the system would result in a lower negotiated cost of energy to the CMWD
because the project developer would not have to account for the uncertainty associated with
securing an energy buyer.
The CEA, the city’s community choice energy provider,2 and SDGE, the investor-owned utility
that also provides power, transmission and distribution in the city, are two potential off-takers
for the project’s excess energy supply. However, there may be other load serving entities
interested in adding the project’s excess generation to their portfolios, so it may be in the
CMWD’s interest to specify that any excess energy should be sold to the highest bidder.
Should the CMWD Board direct staff to move forward with developing a request for
proposals/qualifications, staff would engage both the CEA and SDGE in preliminary discussions
to determine whether they would be interested in serving 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 necessary findings, should the
project advance to the point of requiring CMWD Board action in the future. These issues
include, but are not limited to:
• How the state’s Surplus 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 designation
• Allowable land uses
• Existing easements
• Potential environmental impacts
• Requirements of the city’s Habitat Management Plan
• California Environmental Quality Act documentation and permitting
Project site design considerations
The technology for solar power generation and storage systems continues to evolve rapidly,
and the viability of the project and the benefits to the CMWD require further analysis by solar
industry experts. Staff have identified about 32 acres of usable space on the site, taking into
2 State law allows local governments to form community choice energy programs that offer an alternative to
investor-owned utilities, such as SDGE. Under this model, local governments purchase and manage their
community's electric power supply, and the existing utility continues to distribute the energy to customers.
April 16, 2024 Item #15 Page 4 of 6
account an existing site access road used by the CMWD to operate the Maerkle reservoir and
facilities, and a potential buffer zone 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 minimize the site grading requirements or to maximize the
site’s potential for energy generation. The project’s design will need to consider the necessary
infrastructure improvements and potential construction and the impacts on the surrounding
neighborhoods.
Electrical grid interconnection
SDGE owns and controls the energy transmission and distribution network infrastructure in
Carlsbad. The interconnection of a solar energy generation and storage project at the Maerkle
Reservoir site to the SDGE power grid is a critical design issue. The interconnection location will
be specified by SDGE. The scale, location and cost of infrastructure necessary to connect the
project to the power grid must be studied thoroughly during 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 energy 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 fully 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 Board at this meeting, staff proposes to return at a future
date to receive Board authorization 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 analysis3 and general evaluation of project
economics, the recommended ownership structure, generation and sizing calculations,
an estimate of system interconnection costs, the project schedule and other project
recommendations
2. Once it’s determined that the project is feasible, advancing to a preliminary 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 management
and utility licensing and permitting
3 A pro forma analysis is a set of assumptions and calculations that predicts the financial return of a proposed
project.
April 16, 2024 Item #15 Page 5 of 6
The request for proposals/qualifications and phasing process would be designed to include
specified opportunities for both the CMWD and the consultant or consultants to terminate
work on the project subject to terms that will identify the compensation due for work
performed during each phase.
Fiscal Analysis
This is an informational presentation with no immediate direct fiscal impact. The current
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
2024-25 as it may be needed for energy consulting services to assist with preparing the request
for proposals/qualifications and evaluating of the proposals received as well as funding costs
that may be incurred during the project’s feasibility assessment phase.
Next Steps
Upon receiving the CMWD Board input and direction, staff will prepare a request for
proposals/qualifications for future CMWD Board review and approval. With the CMWD Board's
continued support for the project, staff will proceed with issuing a request for
proposals/qualifications to engage an energy consulting firm to conduct a feasibility study for
the project, with an option to advance the professional services into the project development
and scoping phase.
Staff will then return to the CMWD Board with the findings of the study for further direction
before executing the necessary development and site control agreements to further develop
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 physical change
in the environment or reasonably foreseeable indirect physical change in the environment. The
work to develop plans and present conceptual design 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 process.
Exhibits
None
April 16, 2024 Item #15 Page 6 of 6
Tammy Cloud-McMinn
From:
Sent:
To:
Subject:
Item #15
-----Original Message-----
Council Internet Email
Monday, April 15, 2024 1 :52 PM
City Clerk
FW: Solar Farm project
From: spatrose@yahoo.com <spatrose@yahoo.com>
Sent: Monday, April 15, 2024 1:44 PM
To: Council Internet Email <council@carlsbadca.gov>
Subject: Solar Farm project
Hello!
All Receive -Age nda Item # 1..5
For the Information of the:
. J li:'( ~DUNCIL
Datetj//SjJ!f_ CA ~ CC ~
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I understand that the Carlsbad City Council and the water district will be discussing plans to set up a solar panel farm in
our backyard . This is news to me, and I am a resident of Ocean Hills. ALL THE RESIDENTS of Ocean Hills, Vista and
Carlsbad need to be kept informed of this project, every step of the way. We NEED to know the truth about the impact
that this project will have on our health and on our lives in general.
I look forward to hearing back from you as this project moves along. IF it moves along. 1ir
Sheila & Babu Patrose
{925) 915-1314.
Sent from my iPhone
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1
Tammy Cloud-McMinn
From:
Sent:
To:
Subject:
-----Original Message-----
Council Internet Email
Tuesday, April 16, 2024 8:56 AM
City Clerk
FW: Potential Solar Farm
From: Victoria Foster <victoriatfoster@yahoo.com>
Sent: Monday, April 15, 2024 8:16 PM
To: Council Internet Email <council@carlsbadca.gov>
Subject: Potential Solar Farm
Dear Carlsbad Council,
/
All Receive -Agenda Item # L5,
For the Information of the:
. PTY COUNCIL
Date~CA V---CC v
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I own a home on Dassia Way in Ocean Hills <;:ountry dub_ that looks directly at the farm that is being considered for a
solar farm. I would like to be informed of an; m~eting~ and developments related to this project?
Thank you,
Vickie Foster
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1
Tammy Cloud-McMinn
From:
Sent:
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Subject:
Attachments:
Dear Council,
Laurie Kemp <kemprlj@gmail.com >
Tuesday, April 16, 2024 10:10 AM
City Clerk; Council Internet Email
Item 15 on Tonight's Agenda
IMG_0187.png; I MG~0188.png
All Receive -Agenda Item # J.::5
For the Information of the:
. _s:Irr_ SOUNCIL
Oate'lf/&lii,1 CA V-CC ✓
CM V-ACM .....--ocM (3) L
Tonight you have before you an item to consider whether to authorize CMWD to go forward with a feasibility study for
a solar panel farm adjacent to the Maerkle Reservoir and several neighborhoods in the cities of Vista and
Oceanside. Staff estimates this will cost ratepayers $460,000. Although you will not be authorizing the
expenditure tonight there are some questions staff should be prepared to answer now.
The parcel is currently zoned as open space. As you know, Carlsbad has a permissive zoning code, which means that only
uses authorized by the code are allowed. Solar panel farms are not listed on the table found in CMC 21.33.020.
Under the general plan the property is designated as "Category 2: Open Space for Managed Production of Resources
(forestry; agriculture; aquaculture; water management; commercial fisheries; and major mineral resources)" will staff be
considering the production of power a resource such as agriculture, water management, fisheries, etc.?
If a Solar power farm is authorized on this open space area will they then be allowed in all open spaces?
If staff concludes the property must be rezoned to allow solar panels, how will the city make up for the loss of the 56
acres of open space. It appears to be counted in the total for open space in the general plan. See table 4-1.
These are basic questions that staff should be able to address before looking into the technical feasibility of the project.
The staff report identifies several stakeholders in the project but does not include the surrounding properties in the list.
You have been shown a graphic map of the area that does not show the density of the housing that will be affected by
this project.
I am attaching an overhead from google maps. The neighborhood to the left is the Ocean Hills retirement community in
Oceanside and the other sides are in Vista.
If staff were proposing to put a project of this size next to residences in Carlsbad would you be considering it? Although
not comparable in size, would it not be similar to dropping a solar farm in the recently purchased Aura Circle parcel?
So I ask that surrounding neighbors be considered stakeholders.
Lastly, the report mentions buffers. A quick scan of the internet, which may not be too accurate, shows a 1 km (1100
yards) buffer from residences. What is contemplated here?
Please be a good neighbor and proceed in due diligence on this project.
Ron & Laurie Kemp
1
CLEAN ENERGY ALLIANCE
April 15, 2024
City of Carlsbad Municipal Water District Board of Directors
City of Carlsbad City Council
1200 Carlsbad Village Drive
Carlsbad, CA 92008
SUBJECT : MAERKLE RESERVOIR SOLAR ENERGY STUDY
Honorable President/Mayor Blackburn and Board/Council Members:
As the load serving entity for both the City of Carlsbad (Carlsbad) and the Carlsbad
Municipal Water District (CMWD), Clean Energy Alliance (CEA) commends the CMWD
for considering a renewable energy facility at the Maerkle Reservoir site. The
opportunities for bringing locally generated renewable energy to the residents and
businesses of Carlsbad, in support of Carlsbad's Climate Action Plan (CAP), are few
and this decision is an important one for the CMWD and the Carlsbad City Council.
As one of CEA's founding members, Carlsbad created CEA to pursue one of Carlsbad's
top initiatives in achieving its CAP goals, also with a goal to achieve a minimum 2%
savings on generation costs. Since its launch, CEA has achieved those goals for
residents and businesses in Carlsbad.
CEA's Joint Powers Authority (JPA) Agreement, which Carlsbad led the effort to
develop, prioritizes the procurement of locally generated renewable energy for the
benefit of CEA's customers, including Carlsbad residents and businesses. CEA staff
has previously expressed to the CMWD staff working on this project that CEA is very
interested and willing to work with them to develop a project that is beneficial to
Carlsbad, CMWD, CEA and Carlsbad residents and businesses. CEA staff and its
technical consultants have the expertise to study and develop these types of
projects. The staff report indicates that $460,000 will be included in the FY 24/25
budget for energy consulting services to assist with preparing an RFP/RFQ and
evaluating responses, as well as additional costs that may be incurred during the
feasibility assessment phase. As an alternative to that approach, CEA proposes that
the CMWD Board/City Council direct its staff to work with CEA to develop a partnership
agreement to develop the site, which would avoid some, if not all, of that $460,000
projected cost.
We look forward to continuing to work with Carlsbad and CMWD on this very important
project.
Thank ~ e;;~v
Chief Executive Officer
5857 Owens Ave, 3rd Floor I Carlsbad, CA I 760-209-6177
TheCleanEnergy Alliance.org
Tammy Cloud-McMinn
From: Jason Haber
Sent:
To:
Cc:
Tuesday, April 16, 2024 12:17 PM
Tammy Cloud-McMinn; Sheila Cobian
Vicki Quiram
Subject: FW: Maerkle Reservoir Solar Study
Please see correspondence received below re: Item #15 on tonight's agenda.
Thank you,
Jason Haber
Intergovernmental Affairs Director
(Cityof
Catlsb.ad
442-339-2958 I Jason .Haber@carlsbadca.gov
www.carlsbadca.gov
Facebook I Twitter I You Tube I Flickr I Pinterest I Enews
From: Gregory Kusiak <Gregory_Kusiak@msn.com>
Sent: Tuesday, April 16, 2024 9:10 AM
To: Vicki Quiram <vicki.quiram@carlsbadca.gov>; Jason Haber <jason.haber@carlsbadca.gov>
Cc: gtodisco@keystonepacific.com
Subject: Maerkle Reservoir Solar Study
Vicki and Jason:
The Ocean Hills Country Club Homeowners Association owns the land in Oceanside which borders the
proposed solar project. Naturally, we are interested in any potential impacts of the proposed project on
our property and those private interests of our Members. The packet for today's City Council meeting
contains only a very small map locating the CMWD land in question. Are there any other maps or
diagrams indicating the proposed location of the installation itself on the CMWD property? If so, a PDF
or other image would be greatly appreciated; if not, please forward one when it becomes available.
Please consider us a concerned party and include us on any matters which would otherwise involve the
owners of adjacent properties in the City of Carlsbad. Likewise, those homeowners in Sea View in the
City of Vista are neighbors to the project and will be very interested.
Thank you.
Gregory M. Kusiak, MBA, President
Ocean Hills Country Club HOA
4819 Marathon Way
Oceanside, CA 92056-7406
818.424.0067
1
Ta mmy Cloud-McMinn
From:
Sent:
To:
Subject:
-----Original Message-----
Council Internet Email
Tuesday, April 16, 2024 1 :48 PM
City Clerk
FW: Solar farm
From: Sue <spe11er001@gmail.com>
Sent: Tuesday, April 16, 2024 1:38 PM
To: Council Internet Email <council@carlsbadca.gov>
Subject: Solar farm
All Receive • Agenda Item # /.:5
For the Information of t he:
_ S'TY.~9UNCIL
Date~~CC ~
CM V ACM ......-E>CM (3).::::::
We live on Dassia Way in Ocean Hills Country Club and need to be kept informed regarding this project. Please add our
email to any updates. We moved here for peace and solitude in our retirement years and feel we have the right to know
of anything that may affect our current way of life. Thank you.
Sue & Sal Pellerito
Speller001@gmail.com
Sent from my iPhone
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1
Maerkle Reservoir Solar
Jason Haber, Intergovernmental Affairs Director
Dave Padilla, District Engineer
Keri Martinez, Utilities Senior Engineer
April 16, 2024
Municipal Water District