Practical Ways For Towns to Save Money With Clean Energy Projects

1. Practical Ways For Towns to Save Money With Clean Energy Projects Paul Michaud Murtha Cullina LLP 860.240.6131 pmichaud@murthalaw.com April 30, 2014

2. Toolbox Items Renewable Energy Energy Efficiency CPACE Finance Program Energy Savings Performance Contracting Small Business Advantage Program • ZREC & LREC Program • Net Metering Rule • Virtual Net Metering Rule • Microgrid Program • Power Purchase Agreements

3. ZREC & LREC Program • General Project Eligibility Criteria • Class I renewable energy project • Located behind the utility meter • ZRECs • No larger than 1,000 kW • Zero Emissions • May include Solar, Hydro, Wind • LRECs • No larger than 2,000 kW • Must have low emissions • May include fuels cells and other low emissions Class I resources, plus all zero emission Class I resources

4. Z-REC & L-REC Program –continued Bid Selection Process • Project bids are ranked by REC price, with the lowest bid REC price ranked first • Projects are selected until the annual ZREC and LREC Program budgets are met for each utility: • Large ZREC Project (250 kW to 1,000 kW) Budget: $2.7 million • Medium ZREC Project (101 kW to 249 kW) Budget: $2.7 million • LREC Project (1 kW to 2,000 kW) Budget: $4.0 million • Small ZREC Project (1 kW to 100 kW) Budget: $2.7 million • Separate Solicitation under a utility tariff rider

5. Net Metering Rule • Net Metering is a state policy incentive to encourage customers to install distributed renewable energy generation at their place of work • Town’s offset own electricity usage with on-site renewable energy generation • If monthly generation exceeds consumption, the net excess generation (surplus amount) is credited to customer’s next bill at retail rate, excess reconciled annually at either the avoided-cost rate, or time-of-use generation rate (Solar PV only) • Delivery (kWh) charges are reduced by the amount of the on-site renewable generation • 2 MW Limit

6. Municipal Virtual Net Metering • Class I or Class III Renewable Resource • Municipality can own, lease or enter into a long-term contract (Power Purchase Agreement) for the VNM facility • 5 beneficial accounts • Microgrid Exception: • Municipal Host can serve an additional 5 non-municipal and non-state “critical facility” accounts if connected to the microgrid • $10,000,000 VNM money cap (annual) with 40% sub-cap

7. Municipal Virtual Net Metering –continued • Virtual Net Metering Bill Credit • Generation Service Charge (GSC) • 100% allocation based on energy produced by the renewable energy system • Distribution & Transmission Charges (D&T) • 80% allocation – Operational Year 1 • 60% allocation – Operational Year 2 • 40% allocation starting on and after Operational Year 3

8. Municipal Virtual Net Metering – continued Town Hall 50 kW Host 2,000 kW solar array Fire Station 200 kW Middle School 600 kW High School 900 kW Customer Host: - High School Beneficial Accounts: - Town Hall - Fire Station - Town Library - Policy Station - Middle School Police Station 200 kW Town Library 50 kW

9. Municipal Microgrid Systems • A Microgrid is a discrete energy system; • Consisting of two distributed generation sources; and • Tying critical facilities (e.g. Police Station, Fire Station, Public Works Facility, Town Hall, Library and High School) together electrically so that they can operate in parallel with, or independently from, the main power grid.

10. Benefits of the Microgrid • Reliability/Resiliency • Engineered to “island” from the grid when the main grid goes down, the microgrid will continue to provide critical services to residents at the Town Center and Amity High School • Price Stability • Enhances the integration of distributed and renewable energy sources

11. Who Pays for the Microgrid Capital Costs? • No out-of-pocket capital costs incurred by the Town • The State of Connecticut, under a competitive RFP, may select a Town to receive a state grant to cover the “distribution” related capital costs of the microgrid • Private Generation Developers will pay the “generation” related capital costs of the microgrid under a Power Purchase Agreement (PPA)

12. State of Connecticut: First Round RFP - Grant Results Source: CT DEEP

13. Woodbridge Microgrid Diagram Woodbridge Microgrid Underground Distribution Line Main Utility Electricity Grid Microgrid controller Substation Transmission Lines Centralized Generation Plant

14. What is a Power Purchase Agreement? • A Power Purchase Agreement (PPA) is a long-term power contract between the Municipality and the PPA Provider for the energy generated by the renewable energy system at a predetermined price • The PPA Provider absorbs the costs of designing, constructing, operating and maintaining the renewable energy system • The PPA Provider owns the renewable energy system and not the Municipality

15. What are the Benefits of a PPA? • Zero upfront capital costs to the Municipality • Hedge against future electricity price increases • Municipality does not operate or maintain the generation equipment • No performance risk for the Municipality

16. Energy Efficiency • Energy Savings Performance Contracting • Implementation of comprehensive energy savings measures paid for by guaranteed energy savings • Small Business Energy Advantage • Cash incentives, and on bill payment, for smaller energy efficiency measures • CPACE • Enables property owners to access financing for energy upgrades and repay through a benefit assessment on their property tax

17. Thank You! Mr. Michaud leads the firm’s Renewable Energy practice group. Mr. Michaud’s experience extends to all elements of renewable energy project development, operations, finance, and permitting including drafting and negotiating complex power purchase agreements, real estate leases, renewable energy certificate agreements, equipment procurement agreements, and construction agreements. Mr. Michaud represents a diverse client-base, including local and national solar, fuel cell, wind, CHP, small hydro and energy efficient companies, as well as municipalities in renewable energy and microgrid RFP matters. Mr. Michaud also represents renewable energy off takers, including municipalities, commercial and industrial companies, hospitals and other health care facilities. In addition, Mr. Michaud represents renewable energy clients on regulatory matters before state public utility commissions and siting councils. He is the founder and Executive Director of the Renewable Energy and Efficiency Business Association, Inc. where he has extensive experience as a certified lobbyist on renewable energy policy matters.