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Opening of Proposals - WWTP Solar Guaranteed Energy Savings Contract Proj. No. 124-015 - Veregy
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Opening of Proposals - WWTP Solar Guaranteed Energy Savings Contract Proj. No. 124-015 - Veregy
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5/28/2024 3:14:07 PM
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Board of Public Works
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Projects
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5/28/2024
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City of South Bend, IN – Department of Public Works <br />RFQ Response: Guaranteed Energy Savings Contract <br /> Page | 15 <br />Financial Guarantees <br />Throughout the engineering process, Veregy compares and optimizes cost to savings during the <br />design process to provide the City of South Bend with the best value project. Veregy will also <br />work with the City to find the most financially viable option for their project. Below is a summary <br />of financial assumptions and results, with a sample cashflow provided later in this section. <br /> <br />An energy escalation rate of 6% was used for the financial analysis. Veregy believes this is a <br />conservative application for the financial analysis considering escalation of energy in Indiana <br />has been upwards of 10% annual increase over the past five years. Also analyzed in the financial <br />model was the application of Federal benefits from the Inflation Reduction Act (IRA). The IRA <br />provides for a base of 25.5% direct pay to the City of South Bend. The City can also sell the <br />environmental attributes from their solar to states like Ohio through Solar Renewable Energy <br />Credits (SRECs). As part of our process, Veregy will assist the City in selling their SRECs for <br />additional revenue at no cost. <br /> <br /> <br />Proposed Project Cost $2,375,000 <br />Annual Electric Rate Escalation 6% <br />Solar Service Escalation 2% <br />SREC Value $5/SREC <br />Cumulative 25 Year Savings $6,031,435 <br /> <br /> <br />ENERGY SAVINGS CALCULATIONS <br />The project is in the preliminary stages, so final savings calculations have not been developed <br />for all measures. For solar arrays, the savings calculations were developed using an industry <br />standard modelling program called Helioscope. The outputs of these models are included in the <br />appendix. For other ECMs, savings were based on industry standard practices and final <br />calculations will be done and provided after selection. <br /> <br />INCENTIVES <br />The City of South Bend would realize Inflation Reduction Act incentives in the amount of <br />approximately $600,000 based on final sale price of solar installations. These monies are <br />applied for the tax year following system start up and are paid that same year. Additional savings <br />may be available; however, we modeled the base IRA amount. <br /> <br />Indiana Michigan Power offers incentive programs for Lighting, HVAC, Building Controls, and <br />Retro-Commissioning, all of which are energy conservation measures outlined for your project. <br /> <br />DISCLOSURES <br />Veregy is not working with any financial institutions or municipal finance advisors for the benefit <br />of this project but can recommend or provide contact information of other municipalities who <br />have used municipal financing for their projects, <br /> <br />
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