Opening of Proposals - WWTP Solar Guaranteed Energy Savings Contract Proj. No. 124-015 - Veregy

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City of South Bend, IN – Department of Public Works RFQ Response: Guaranteed Energy Savings Contract Page | 15 Financial Guarantees Throughout the engineering process, Veregy compares and optimizes cost to savings during the design process to provide the City of South Bend with the best value project. Veregy will also work with the City to find the most financially viable option for their project. Below is a summary of financial assumptions and results, with a sample cashflow provided later in this section. An energy escalation rate of 6% was used for the financial analysis. Veregy believes this is a conservative application for the financial analysis considering escalation of energy in Indiana has been upwards of 10% annual increase over the past five years. Also analyzed in the financial model was the application of Federal benefits from the Inflation Reduction Act (IRA). The IRA provides for a base of 25.5% direct pay to the City of South Bend. The City can also sell the environmental attributes from their solar to states like Ohio through Solar Renewable Energy Credits (SRECs). As part of our process, Veregy will assist the City in selling their SRECs for additional revenue at no cost. Proposed Project Cost $2,375,000 Annual Electric Rate Escalation 6% Solar Service Escalation 2% SREC Value $5/SREC Cumulative 25 Year Savings $6,031,435 ENERGY SAVINGS CALCULATIONS The project is in the preliminary stages, so final savings calculations have not been developed for all measures. For solar arrays, the savings calculations were developed using an industry standard modelling program called Helioscope. The outputs of these models are included in the appendix. For other ECMs, savings were based on industry standard practices and final calculations will be done and provided after selection. INCENTIVES The City of South Bend would realize Inflation Reduction Act incentives in the amount of approximately $600,000 based on final sale price of solar installations. These monies are applied for the tax year following system start up and are paid that same year. Additional savings may be available; however, we modeled the base IRA amount. Indiana Michigan Power offers incentive programs for Lighting, HVAC, Building Controls, and Retro-Commissioning, all of which are energy conservation measures outlined for your project. DISCLOSURES Veregy is not working with any financial institutions or municipal finance advisors for the benefit of this project but can recommend or provide contact information of other municipalities who have used municipal financing for their projects,