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CITY COUNCIL WORK SESSION
December 09, 2014
4:00 PM, City Council Chambers
MEETING AGENDA
I. Renewable Energy Options Discussion
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MEMORANDUM
TO: Mayor and City Council
FROM: William Dolan, Renewable Energy Manager
THRU: David Hornbacher, Director of Utilities and Environmental Initiatives
DATE OF MEMO: December 5 th , 2014
DATE OF MEETING: December 9 th , 2014
RE: Renewable Energy Progress Update Work Session
PREVIOUS COUNCIL ACTION: In January of 2013, Council gave staff direction to begin
researching additional renewable energy options. Subsequently, the City contracted with NREL to
analyze the City’s renewable energy alternatives, and devise a work plan that encourages informed
decision-making on the part of Council to meet the 100% by end of 2015 goal (or as close to it as
practicable).
NREL delivered their first presentation to Council on November 19 th , 2013 during which Council
approved of staff’s recommended renewable energy and REC policies, and each Council member had an
opportunity to choose their highest priority renewable energy project criteria. NREL’s second
presentation was delivered on April 21 st , 2014, during which Council chose their preferred renewable
energy alternatives and instructed staff to research these alternatives in more depth.
BACKGROUND:
• Step 1 : November 19 th , 2013. During that work session, Staff and NREL representatives
covered foundational concepts and background information (contract history, conceptual
definitions, etc.)—effectively laying the groundwork for steps 2 and 3.
• Step 2 : April 21 st , 2014. This involved a surface-level presentation of all alternatives explored
by NREL, and assessment according to the project criteria chosen during Step 1. Staff requested
that Council select ~3 alternatives from this list for final research/investigation by staff. The
results of this research is the subject of Step 3.
• Step 3 : December 9 th , 2014, and spring, 2015. This two-part step will involve a more in-depth
discussion of the alternatives chosen by Council, as well as other opportunities beyond 2015.
The objective of this step is to develop contracts with the Municipal Energy Association of
Nebraska (MEAN) that facilitate our renewable goals, but also ensure that said contract(s) aligns
with the City’s stated environmental values, and fiduciary responsibilities.
Tonight’s discussion marks the third in a series of meetings related to the City’s 100% renewable
goal. We will discuss progress since the April 21 st , 2014 meeting, as well as provide a general
timeline for the completion of the 100% renewable goal. Staff expects to return to Council in the
spring with a ready-to-execute contract which will signify Aspen’s completion of the renewable
energy goal. After Step 2 (see above), NREL completed their tasks and handoff to staff for
further analysis and follow-through.
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DISCUSSION:
MEAN Contract Renewables
Based on the outcome of the April 21 st , 2014 meeting, during which Council instructed staff to procure
the most ideal combination of landfill gas (LFG) and/or additional wind purchases, staff has entered into
negotiations with MEAN to do just that. Negotiations progressed smoothly through the summer, until
MEAN notified City staff that the Association was preparing to undergo a structural change to their
business model, and that negotiations with Aspen on renewables would be slowed until this institutional
change was implemented in January, 2015 (to take effect in Spring of 2015). Generally speaking, Aspen
will see a higher “fixed cost” charge component on all energy bills from MEAN, in exchange for
reduced “variable costs” associated with energy purchases. Seeing as this change is expected to occur
commensurate with the execution of our renewables contract(s), staff’s objective in their negotiations is
to achieve a budget neutral impact (i.e., to achieve a cost that is consistent with 2015 approved budget).
Staff has determined that landfill gas energy—while more convenient from an energy dispatching
perspective—is an inferior product, both in terms of price and environmental impacts. Accordingly, the
emphasis in these negotiations has shifted towards an “all wind” contract, with RECs used as true-ups at
year-end due to the intermittent nature of this energy type (unbundled RECs would only be used up to
10% of gross annual demand, and only when absolutely necessary). The current cost of the wind
product is $73/MWh (compared to ~$62/MWh for MEAN’s standard energy product), but staff is
working on renegotiating this unit cost downwards as part of our ongoing discussions with MEAN
(inclusive of capacity charges but exclusive of transmission charges).
Non-MEAN Opportunities
• Olmsted Hydropower Replacement Project
The Olmsted project was one of the project alternatives included in the April 21 st , 2014 NREL work
session. Since late 2013, staff has been in contact with the lead agencies on this project about selling
the City of Aspen power from this forthcoming facility. After the April 21 st , 2014 NREL work
session, City staff also began to inquire about whether the agencies would be interested in utilizing
our unused hydroelectric equipment (turbine, generator, controls) at their site. Staff is continuing to
explore these opportunities with the project’s lead agencies.
• Community Solar
During the summer of 2014, staff has been in discussions with Yellow and Red Brick staff about
installing a community solar garden on the roofs of said buildings. Certain design and cost
challenges remain, and are being addressed, but the general concept would provide a combined
capacity of ~130-180kW, and offer Aspen Electric customers the opportunity to purchase shares in
these two arrays and benefit from long-term net metering of their electric bills. Staff is looking to
use these two smaller projects as pilots to gauge feasibility and interest for larger projects in the
future.
• Microhydro
Since 2009, staff has been exploring the possibility of installing microhydro generators on City
infrastructure on Maroon and Castle Creeks. While expensive on a strictly $/kWh basis, this
technology offers the added benefit of water rights protection. Recently, staff has been in
discussions with Holy Cross about a distribution arrangement for this project, and with consulting
water engineers to update the preliminary project designs and cost estimates. Staff anticipates
moving this project forward in 2015.
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FINANCIAL IMPACTS: In preparation for the 2015 budget, staff estimated—and included—the
added costs to achieve 100% renewable energy at $283,940. This number refers to the costs over and
above the null alternative (which also assumed no change to MEAN’s business model, which we now
know is likely to happen). Staff believes that this number is still attainable—however, the significant
structural changes to MEAN’s business model, and the likely increases to our fixed wholesale electric
costs, have the potential to push this figure higher. We will not have a precise financial impact until
after the January 2015 MEAN Board Meeting.
The price of Aspen’s wholesale fossil-fuel based energy has been escalating quickly (8% in 2013, and
18.5% in 2014), making wind energy increasingly competitive from a pure cost standpoint.
ENVIRONMENTAL IMPACTS: The end goal of this analysis is to find the best possible way(s) to
meet Aspen’s 100% renewable energy goal, reducing Aspen’s GHG emissions, and setting an example
for other municipal electric utilities to follow. Locally speaking, reaching 100% renewable energy
means reducing consumption of coal/gas-based electricity by approximately 15-20 million kWh/yr (this
equates to approximately 30-40 million lbs of avoided CO2 emissions per year). Achievement of this
goal will also place Aspen amongst an elite group of municipalities nationally who have been able to
meet this goal without significant reliance on unbundled RECs. According to the website Go 100%
Renewable Energy (http://www.go100percent.org/cms/ ), Aspen will become the first municipality in
Colorado to achieve such a goal, and the third to do so nationally (according to that database, only
Burlington, VT and Scituate, MA have already done so). Accomplishment of this goal further solidifies
Aspen’s leadership position with regard to environmental initiatives.
CITY MANAGER COMMENTS:
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
ATTACHMENTS:
1) Aspen Renewables Progress Graph
2) 2015 Projected Resource Mix
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1) Aspen Renewables Progress (2002
2) 2015 Projected Resource Mix
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Aspen Renewables Progress (2002 -2015) Graph
Projected Resource Mix
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Aspen’s
Renewable
Energy Goal
Progress Towards 100%
December 9, 2014
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Agenda
1.The Task at Hand
2.Where We Are and Where We’re Going
3.Previous Decisions
4.Current Status
5.Budget Impacts
6.Next Steps
7.Discussion
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1. The Task at Hand
NOT TO SCALE
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2. Where We Are and
Where We’re Going
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Renewables and Demand (2002-2015)
Demand (MWh)Renewables (MWh)
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2. Where We Are and
Where We’re Going
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3. Previous Decisions
Pursue additional Wind and/or Landfill
Gas to meet 100% goal;
Use RECs up to 10% of total annual load to
more effectively balance portfolio at
100%;
Preserve ability to act on future
opportunities (e.g., fulfilment of WAPA
contract, more Ridgway in 2023);
Aim to minimize cost increases and
maximize long-term rate stability
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4. Additional Wind (NE and WY)
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4. Additional Wind (NE and WY)
Aspen already purchases 21,000 MWh/yr. of wind
Under the proposed plan, we would double our
purchases of wind
The renegotiated cost of wind energy would be
equal to—or less than—the current contract price
of $73/MWh
Intermittent resources such as wind may require
the limited use of unbundled RECs at the end of
each year for “truing up”
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4. Landfill Gas (Ames, IA)
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4. Landfill Gas (Ames, IA)
LFG product is an “environmental attribute” that is
bundled with coal energy
Aspen would pay normal Schedule M rate plus
“adder”, totaling ~$90/MWh
Price of LFG product subject to market volatility
More expensive than wind
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4. Olmsted Hydro (Provo, UT)
Staff is working with
CUWCD, Dept. of Interior,
and WAPA to explore
Aspen’s participation in
the project
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4. Microhydro (Aspen)
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4. Microhydro (Aspen)
Preliminary studies indicate potential for ~100kW-
500kW installed capacity on Maroon and Castle
Creeks
Protects senior water rights
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4. Community Solar (Aspen)
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4. Community Solar (Aspen)
In discussions with Red Brick and Yellow Brick staff
and boards
Combined project capacity of ~130 kW
Portions of output benefit those buildings, and
portions would be sold to interested Aspen
Electric customers
Would provide model for additional gardens to
be installed elsewhere in Aspen
Price of solar has dropped dramatically since this
was last considered
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5. Budget Impacts
2015 budget includes $283,940 for
remaining renewable energy purchases
New MEAN rate structure will affect
budget regardless of added renewables
in 2015
Net impact will be known in late January
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6. Next Steps
Return to Council in the spring with new
power purchase agreements for final
approval
Update to Council on financial impact of
proposed contracts
Staff will continue to pursue “non-MEAN”
opportunities and keep Council updated
Staff will update Council in January as to
next steps for FERC permit re: microhydro
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7. Discussion
Questions/Comments?
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