To: Sonoma County Water Agency
Department or Agency Name(s): Sonoma County Water Agency
Staff Name and Phone Number: Dale Roberts 707-547-1979
Vote Requirement: Majority
Supervisorial District(s): All
Title:
Title
Termination of Floating Solar Agreements
End
Recommended Action:
Recommended action
Authorize Sonoma County Water Agency’s General Manager to execute the Termination Agreement Between Sonoma County Water Agency, Cratus Energy TSI, and CT Energy, LLC which would end the project to develop a floating solar system on the Oceanview recycled water storage pond located at 4151 Mark West Station Road, Windsor.
end
Executive Summary:
Sonoma County Water Agency (Sonoma Water) entered into a power purchase agreement and a lease agreement with Pristine Sun to develop a floating solar facility on Sonoma Water’s Oceanview recycled water storage pond. Pristine Sun experienced financial hardship in 2017. And, in 2018, Pristine Sun sold and assigned its agreements to Cratus Energy TSI and CT Energy, LLC. The Cratus Energy TSI and CT Energy, LLC team have requested to terminate the agreements because they cannot cost effectively implement the project at the price indicated in the power purchase agreement due to expenses unanticipated at the time of execution of the agreements. The unanticipated expenses are primarily due to the fact that the anchoring technologies have been rejected as unacceptable by state regulators. Execution of the Termination Agreement would terminate the lease agreement and power purchase agreement for development of floating solar systems on the Oceanview pond. Renegotiating for a different power price under the agreements would result in a project that is not cost effective or beneficial for Sonoma Water.
Discussion:
Sonoma County Water Agency (Sonoma Water) Energy Policy, adopted by the Board on March 22, 2011, directs Sonoma Water to pursue projects that reduce Sonoma Water's greenhouse gas emissions and to collaborate on regional energy projects. The Energy Policy set the goal of achieving a net carbon neutral energy supply by 2015, which Sonoma Water met and continues to cost effectively meet.
As Sonoma Water pursued development of renewable energy power resources on Sonoma Water-owned assets, staff explored development of floating solar systems on recycled water ponds. Floating solar systems could take advantage of this otherwise unusable large surface area at a lease rate reasonable to solar developers with minimal environmental impacts.
Sonoma Water issued a Request for Proposals in April 2014 to develop floating solar photovoltaic systems on recycled water ponds owned and/or operated by Sonoma Water. The intent of the Request for Proposals was to give solar developers an economies of scale opportunity to develop floating solar systems on up to seven separate recycled water ponds at 4151 Mark West Station Road, Windsor.
Using Sonoma Water’s standard competitive selection process detailed in previously approved board actions, Sonoma Water staff ultimately selected Pristine Sun as the solar developer with whom to begin negotiating agreements of the proposed floating solar projects. Sonoma Water's Board of Directors approved lease agreements with Pristine Sun for the seven recycled water ponds in late 2014 and early 2015. Seven of the ponds were to be leased to Pristine Sun. Floating solar power from six of the ponds would be sold to Sonoma Clean Power under separate contractual agreements. Due to financial and technical difficulties, Pristine Sun was unable to implement floating solar systems on those six ponds. So Sonoma Clean Power and Pristine Sun terminated their agreements in 2017. And Sonoma Water and Pristine Sun subsequently terminated the respective lease agreements for those six ponds by filing quit claims on those pond properties.
However, Pristine Sun indicated they remained committed to developing a floating solar system on the Oceanview pond with the power to be sold to Sonoma Water at the cost-effective price of $0.072 per kilowatt-hour, under a power purchase agreement approved by the Board in December 2016.
The fixed cost for power would have saved Sonoma Water’s power fund approximately $43,000 per year. In addition, approximately $10,000 would have been paid annually by the solar developer to the Airport-Larkfield-Wikiup Sanitation Zone to lease the pond surface.
The Oceanview pond is under the jurisdiction of the Department of Water Resources’ Division of Safety of Dams (DSOD) due to its height, storage capacity, and inundation potential in the event of embankment failure. The Oceanview pond lease agreement includes a provision that the floating solar system be approved by DSOD upon submission of an Application for Approval of Plans and Specifications for the Repair or Alteration of a Dam and Reservoir Form (Alteration Application). Pristine Sun originally assumed for Oceanview pond that a conventional anchoring system for floating solar systems could be used, as are used in floating solar systems worldwide. The conventional anchoring system for floating solar systems includes hammering up to 100 steel rods into the embankment at depths of 10 to 40 feet. But when Pristine Sun preliminarily proposed this approach to DSOD, DSOD indicated they would not approve an Alteration Application that includes an anchoring system that penetrates the depths of the embankment.
Pristine Sun redesigned the anchoring system to one that would not penetrate the embankment and informally introduced the alternate approach to DSOD. DSOD indicated they would consider approving such a redesign, but a formal Alteration Application with extensive engineering calculations would need to be submitted for evaluation and review.
Unrelated to the Oceanview project, Pristine Sun experienced financial hardships in 2017. In 2018, Pristine Sun sold and assigned the Oceanview power purchase agreement and lease agreement to Cratus Energy TSI and CT Energy, LLC (Cratus). Cratus prepared detailed plans and specifications of the revised anchoring system and floating solar system with the intent of submitting a formal Alteration Application package to DSOD. But in summer of 2020 Cratus informed Sonoma Water staff that they could not cost-effectively complete the project using the redesigned floating solar system.
The Termination Agreement includes a provision to waive liquidated damages within the Power Purchase Agreement such as $1,000 per day Construction Delay Damage for failing to begin construction by June 30 2017. Cratus experienced delays due to unforeseen requirements outside their control, so Sonoma Water Staff recommend waiving the damages.
Upon the execution of the Termination Agreement, Sonoma Water would also file at the County of Sonoma Recorder’s office a quit claim to record that Sonoma Water has clear title to the property.
Prior Board Actions:
12/14/2016: Authorized the Sonoma Water's General Manager to execute a Power Purchase Agreement with Pristine Sun Corporation for a floating solar system at Airport-Larkfield-Wikiup Sanitation Zone's Oceanview Reservoir
04/14/2015: Authorized the Sonoma Water's General Manager to execute a Lease Agreement for a floating solar project on 12 acres at Oceanview Reservoir
03/22/2011: Approved the updated Energy Policy and authorized and directed the General Manager to implement the Energy Policy
07/08/2008: Authorized the Sonoma Water's General Manager/Chief Engineer to execute the Memorandum of Agreement for the Internal Service Fund for Electrical Generation and Supply on behalf of Sonoma Water and the County Sanitation Districts
Fiscal Summary
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Narrative Explanation of Fiscal Impacts:
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Narrative Explanation of Staffing Impacts (If Required):
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Attachments:
Termination Agreement Between Sonoma County Water Agency, Cratus Energy TSI, LLC and CT Energy, LLC
Related Items “On File” with the Clerk of the Board: