City Carbon Neutral CEC Financial Analysis

Feb. 10, 2009

2006 City GHG Emissions

Reference Case Energy Demand

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Giga

watt-

Hour

s

363432302826242220181614121086420

Electricity

Natural Gas

Gasoline and Diesel

Rooftop Solar

Carbon Neutral Energy Demand

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Giga

watt-

Hour

s

34

32

30

28

26

24

22

20

18

16

14

12

10

8

6

4

2

0

Electricity

Natural Gas

Gasoline and Diesel

Rooftop Solar

Electricity Reference Case

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Thou

sand

Giga

joule

s

10095908580757065605550454035302520151050

Natural Gas

Nuclear

Wind

Geothermal

Fuel cells

CoalLarge hydro

Carbon Neutral Electricity Generation

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Giga

watt-

Hour

s25.024.023.022.021.020.019.018.017.016.015.014.013.012.011.010.09.08.07.06.05.04.03.02.01.00.0

Wind

Small hydro

Conversion

Fuel Cells

Natural Gas

Nuclear

Carbon Emissions Compared

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Shor

t Ton

(US)

7,000

6,500

6,000

5,500

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

Reference Case

Carbon Neutral

Financial Assumptions

• Our cost analysis represents the “all-in” cost:– capital costs– available tax credits (which apply even for the City,

under new legislation)– operations and maintenance– amortization costs– savings from electricity and natural gas

• Assumes 14 cents per kilowatt hour for SCE electricity, rising at 1.5% each year (constant 2008 dollars)

Reference Case generation cost assumptions

CN 2020 generation cost assumptions

All-in Costs Compared

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Thou

sand

U.S

. Doll

ars

7,8007,6007,4007,2007,0006,8006,6006,4006,2006,0005,8005,6005,4005,2005,0004,8004,6004,400

Reference Case

Carbon Neutral

Financing Options• Power Purchase Agreements (PPAs)

– The City’s recent solar project is a PPA project > no up-front cost to the City

– PPAs are available for wind power also, and probably will be available soon for other renewable technologies

• Low interest loans– Energy Commission has low-interest loans up to $3

million• CREBs bonds

– Community Renewable Energy Bonds are available from the federal government

End Result?

• Up-front capital cost may be reduced dramatically – Could be zero for renewable energy projects if the

City decided to pursue PPAs for all projects– Energy Service Companies (ESCOs) can retrofit City

buildings for energy efficiency improvements, with no up-front cost

• About $25 million net savings should accrue under the Carbon Neutral by 2020 plan

Opportunity

• By pursuing carbon neutrality, the City:– Saves money through increased energy

efficiency and conservation– May save money through Power Purchase

Agreements for renewable energy– Positions itself to receive state and federal

grants for carbon mitigation

Reference Case

Carbon Neutral

Annual Cost Savings

-$5.00

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$ M

illio

ns

Annual Savings Cumulative Savings

$25 million total cost savings by 2020