REU and Redding’s Energy Future

A few words about the net metering issue, downtown Redding’s new parking plan, and REU’s (Redding Electric Utility) solar plus battery projects.  It’s a ‘connect the dots’, straw-to-gold kind of thing.

Here are the dots:

1)  Two major new electric grid point loads are currently being developed downtown. One is the 166,000 square foot LEED Gold Courthouse. The other is 78 new apartments with 12,000 square feet of new commercial space downtown. Neither of these projects include power generation.

2)  Redding’s new downtown parking plan…with financing options still under consideration.

3)  REU’s 2019 Integrated Resource Plan (IRP)…REU’s 20 year planning document laying out short and long term options for Redding’s grid. Think of it as the business plan for REU.

4) Community Choice Aggregation (CCA): Community Choice Aggregation allows separate purchase/sale of energy over a host utility’s grid. While CCA is not included in Redding’s 20 year plan, it deserves attention as an alternative utility service model.

5)  PACE (Property Assessed Clean Energy) and/or EIFD (Enhanced Infrastructure Finance Districts- Successor to Tax Increment Financing…TIF). These two financing programs would enable property owners and utilities to work together and finance utility scale renewable energy projects with long-term, low interest payment structures.

6)  REU’s proposed Solar 3.0 Meters ($4mln), Energy Imbalance Market Membership ($1.4 mln), and 10 mW Solar + Battery project at Stillwater. REU’s plan for new meters will enable Time of Use (TOU) purchase/sale of renewable energy. The Energy Imbalance Market membership enables REU to buy/sell renewable energy on the energy spot market. The proposed solar + storage project will give REU experience in the world of battery stored solar energy sales. Taken together, these three ingredients enable Redding utility customers to take advantage of emerging opportunities within the green energy sector.

Here’s a combination worth considering:

a)  REU becomes a Community Choice Aggregator, supplying TOU meters (time metered and valued generation), connecting to the Energy Imbalance Market (time metered and valued sales), while adding utility scale battery storage.

b)  In addition to the Stillwater 10 mW solar + battery project, new battery storage is placed at the switching station near the overpass on Eureka Way…close to the two new point loads.  Minimal transmission system upgrades would be necessary.

NOW COMES THE MAGIC:

c) The Aggregator with batteries (REU) purchases locally generated renewable solar (every rooftop…downtown parking lots, commercial and residential buildings). Rooftop solar pricing would make it economically rational for both government and building owners to invest in solar. How to pay for downtown parking? Add solar + battery!

d) The Aggregator sells renewables to:  Courthouse and Downtown Meters: These sales contracts serve as collateral and security for financing; AND

e) The Aggregator sells battery stored renewables during the high demand 4-7 P.M. window on the Energy Imbalance spot market…making money.

f)  Finance tools (PACE and EIFD) provide capital: no down payment, low interest, long repayment = profitable cash flows.  Finance 100% of these projects.

How feasible (profitable) for Redding is utility scale battery storage and excess power sales?  REU recently selected the solar + battery option out of 8 options evaluated (See Option A, Solar Plus Storage, in the IRP). Option A is a 10 mW Stillwater Park solar farm plus 10 mW battery, operational in 2021, along with TOU meters ($4 mln) and Energy Imbalance Market software ($1.4 mln).

A feasibility study for the solar + storage option exists.  That study predicts summer statewide brownout potential in coming summers.  Spot market renewable energy will be valuable.  Early adopters of utility scale renewable energy will be financially rewarded IF they can access the Energy Imbalance Market.  REU can.

How does the magic work?

The Aggregator (REU) turns ‘behind the meter’ rooftop solar into ‘front of the meter’ qualified renewable portfolio standard (RPS) energy!  That’s valuable stuff, and REU has necessary talent and assets to realize the potential. Behind the meter solar into front of the meter renewable energy for sale on the spot market…that’s the magic, straw to gold.

How does one begin to even discuss this option?

Start with ‘The Vision’:  Redding…the solar implementation capital, using existing financing tools, parking structure solar and new local point load cash flows to secure cost effective, locally generated renewable energy to power both the building and the transportation sectors!  That’s big scale production, requiring a public/City partnership featuring transparency, collaboration and inclusion.

The Big Change:  REU becomes an investment center, not a profit center.  That simple language is needed at the council level to steer the ship of state onto another direction, one that embraces fast changing energy markets.

Redding has a long history as an energy entrepreneur.  Let’s continue in that vein.

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Jeff Morrow is the operating partner of Affordable Housing Associates, and a proponent of entrepreneurial communities. Affordable Housing Associates produces accessory dwelling unit home kits, which in January will be required to be ZNE, even if located in the shade.
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10 Responses

  1. Avatar Bruce Vojtecky says:

    Almost every school in the Phoenix and surrounding area have leanto covered parking with solar panels. This gives shaded areas in Phoenix’s brutal heat, when school started temps were in triple digits, as well as solar power during the day when it is most needed. Unlike roofs, leantos need minimal maintenance, if a leanto leaks during rain it is no big deal. Overlooked in solar panels on roofs is the cost of removing and reinstalling the panels if the roof leaks and needs repairs. That cost, added to the roof repair, can be very expensive as it has to be done by the panel installers or the warranty is void.

    • Steve Towers Steve Towers says:

      While driving past Foothill HS this morning, I noticed that the student parking lot is a construction zone. They’re putting up steel frames. The tops of the frames are tellingly tilted toward the south.

  2. Avatar Karen Calanchini says:

    Sierra Nevada Brewery has had some sort of panels in their parking lot which provide shade, they have been there for years. Is that the same as the leanto covered parking you are speaking of?

  3. Avatar dick says:

    “MW”, megawatt = one million watts, not mW, milliwatt = one thousanth of a watt (I hope).

  4. Avatar David Ledger says:

    Shasta College now gets up to 80% of its power from solar with battery backup. Their east parking lot is covered with solar panels and EV charging stations, all made possible by high PGE electric rates and the recently passed bond measure.

    REU cannot count private residential/commercial solar power towards its renewable energy requirements set by CA legislature. Public Owned Utilities need to lobby to legislature to allow them to count this as it creates a disincentive to encouraging private solar electric generation, not to mention the competition. Currently Redding has about 5% private solar power generation.

  5. Avatar John E Livingston says:

    The City of Redding should value residential and commercial solar generation and provide a reasonable incentive so that people will invest in this earth-friendly energy. Having solar systems locally incentivizes people to use energy wisely and take other steps to reduce their carbon footprint. REU should encourage residential and commercial solar but instead provides no encouragement for customers in the fear of loosing electrical load and hence revenue. Turning a battleship is not easy but if we elect city council members that value renewable energy then we can change REU.

  6. Avatar Steve says:

    It’s been many years since I learned (in 1994) the City of Redding was $199 million dollars in debt, mostly with Certificate of Parcipitation Bonds (which I believe City of Redding residents were never asked to vote on) supporting Redding Electric Utilities. It might be interesting to learn from the Redding City Manager….what the status is of that debt…City of Redding residents are obligated to pay…some 25 years later.

  7. Avatar Richard Christoph says:

    Thanks for this interesting and informative article which I passed on to a friend at REU, and received the following response:

    per # 1: The new 78 apartments for income-qualified folks, as part of their grant application to the state, included on-site generation. That building will have at least a 200 KW system.

    #4 The whole point of CCA’s is for local determination of resources within utilities that serve large geographic areas. REU already provides local determination of resources.

    #6 The meters selected will not provide TOU billing for residential.

  8. Avatar Jeff Morrow says:

    Excellent and enjoyable commentary on a topic of continuing importance…

    The City created a Standing Committee to recommend a successor rate, a daunting task for a hastily assembled group of citizens. That Committee did an excellent job in moving this issue back to Council for deliberation and a final decision. Stay tuned…

    REU’s position is guided by current policy. Until there is a change in core policy, REU’s response to solar is largely predictable. REU’s mission is provide reliable electricity, with highest levels of safety and lowest possible rates for consumers. The industry standard for rate setting is lowest avoided cost of energy. In Redding’s case, lowest cost energy comes from the west coast’s impressively productive, and ultimately highly subsidized hydro-electric system. It’s impossible for any new production to beat hydro’s price structure.

    Redding’s current rate setting policy gives no consideration for environmental, social, economic , carbon budget or costs of externalities. Lowest avoided cost is the sole criteria for evaluation by which solar is to be evaluated. This policy direction affords little breating room for solar, or any other new energy production. Change in policy is necessary to effect a change in direction and outcome.

    Council’s use of standing committees to guide policy has all the hallmarks of a resounding success. The community had ample opportunity to participate, staff was able to engage in meaningful exchange with the community, and Council was able to leverage their time in weighing policy options.

    Strategically, REU is a profit center. Imagine what Redding could be like if REU were an investment center to the same extent as it is a profit center. That simple change in policy direction could take solar implementation in entirely new direction.

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