HomeMy WebLinkAbout0292.095. \
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City of Palo Alto
City Manager's Report
TO: HONORABLE CITY COUNCIL
FROM:
AGENDA DATE:
CITY MANAGER
IV~ U, 1995
DEPARTMENT: UTILITIES
CMR:l92:9S
SU8JECT, SM"J A ~'LAllA JlJEL CELL DEMONSTRATION PROJECT
SVPPORT
REQUEST
This n:pm is 10 infOl1ll C<Ml<:iI of ibein:eD! 10 support !be Santa Clara Fuel Ceo
Demooscration Project (SCOE') with • Palo AIu> Electric Utili:-i contribution of $200,000.
This «mtributioD wi!1 be made through tI>e NO<Illent California Power Agency (NCPA). The
Ulilm.. Adyjsory Coounission orlginany 1tC0!JlJIlC00ed p.-.Jo Ah.,'s participation in Ilili
progtam at !be April 1, 1994 n=ting.
RF1".QlfMENQATlQNS
This n:pm is for information ooIy.
POUCY IMPLICATlONS = are DO p<>rlC)' implications by offering Ilili support.
EXECUTIl'E SUMMARY
"""I cell ;echoology is • clean and quiet 'Ii' 10 coavert !be chemical energ-j of • fuel 10
electrical energy similar 10 chemical batteries, altbough in • coDtiwous process. Palo AIu>
has ~ an infu&tr:y effort 10 =iallze !he fuel cell t.echnology si!K:e !be mid-
1980', tbrougIl its participation in !he Fuel Cel! CommerdarlZ3tioo Group (FCCG). In !be
early 1990'., 1he City of Santa Clara, also. member of fCCG, exprused interest in
becoming !be host utility roc !be 2 M<ga .... 11 fuel cen estimattdlO cost approximately $46
million. This demonstra!ioo is being tupported by the DeparImenI of Energy, Electric Power
Resean:Jo Institute and I number of lIlWlicipal niiIities oationll>'ide. The support tbose
municip.Wties are committing 10 !he projea range from several tbousands of dollars 10 $3.2
milli:>n. On April \, 1994, !be UAC voted 10 recoolmeIlCi an earlier $400,000 Palo AIu> ",,10
panicipation. $200,000 of which "'IS 10 be funded through !he EP!U', Tavored Colbboration
cvp·m=""
program. SII1f tllen obIained !be UAC approval 0( tile SCDP Conso<tium Agreement and
tile EPRI TIIil<lred Collaboration Agreement. However. due 10 d<:Lty. in fInalizing tile
Coaso<tium ~ and during 1haI lime. nncertainty IIUnOIlIldlng our level 0( continued
membonhip in EPRI, sII1f opt<d '" join several 0( lIIe Nonheno California Power Agency
Membm lit !he $200,000 coDlrll>ution \cvel. To pro~ 1l!is support. Polo Aho will join •
CODSO<"Iium 0( NCPA members (Alameda. BiW, <JridIey. Healdsburg. Lompoc, Plumas
Sie:Ta, Roseville, Santa Clara. Turloct and Ukiah). Palc AlIo's contribution 10 !be NCPA's
$400,000 supponpacbge will be $200,000.
FJSCeU. IMPACI
I'Il1icipotioD in !be SCDP through tile NCPA ccnsortium will cost Palo Alto $200,000 paid
0-= k>w" years (~5,OOO in 1995.555,000 in 1996, $45.000 in 1997 and' $45,000 in 1998).
It is lIlIicipated _ Palo Alto will get bact twice .-bat it cOQlributod 10 tile SCDP upon tile
...xessfuI coouneICialintiioo 0( !be Molten Cart>ooate fuel celllc<:bnology. This is
lIlIicipated \0 occur through roM paymet>a on 1l!e sale 0( approJ<ima1f.\y 750 fuel <:en
wilis. Tbc funding for this project is c:urre""y in Palo Aho', NCPA Reserves.
EN\'IRONMENTAI. ASSf'SSMENT
No Em.ironmenu/ Assessment is =dod !Jy Palo AlIo, since tile fuel <>:11 is being sited in
Santa Clara.
ATIACHMENTS
April I. 1994 Santa Clara Foel eon Demoostrollion Project Participation Report 10 !be UAC
PREPARED BY; Tom Kallal, Senior Rcsowce Planner
Tom Habashi. !wistanl Direclor 0( Utilities, Resource Managemeni
DI'l'ARTMENT HEAD APPROVAL: f£-,~
roW.. ZEX
Din:cIO< 0( Utilities
CIT\" MANAGER APPROVAL:
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April 1, 1934
Utilities Advisory Commission
Palo Alto, California
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'soPt' Cl'TI full 0:11 Demonstra;;,ion Project participation
Member5 of tbe commission:
Report in Brief
fib report .... quest. that the utilities J.dvieory (>;lAC}
Cccmd&sion recommend City Council approval of two
coatract.. the firs~ would authorize Palo Alto's
p.art1cipation in the Sant.a Cla.ra 2-MN Molten Carbonate
Fue.l Cell Demonstration I'roject {SCOP}. The second """"ld
enable Palo Alto to use Electric Power Res.,arch Institute
(EPRII T&ilored COllaboration (TCI funding to defray half
of Palo Alto'. coot of Uti. project. The SCOP la
designed to demonstrate the ~rcial benefit. of fuel
cell power plants tor utUiU... As a participant in the
SCOP, Palo Alto will be able to remain involved with and
learn IlIOn about thi. emerging technology. With EPRI TC
funding, the project >IOI11d require that Palo Alto
contribute $200,000 during the period 1994-19518, $100.000
of which is Bvailabl. in the Ruource Planning operating
budget for the fiscal year 93/94. Additional funds,
needed for later yens.. viii be requested during t-be
appropriate budget process.
Backqroupd
Aa atated in the 1992 Electric Resource Report. molten
carbonat.e fuel cells are clean.. q.liet.. and efficient
modular power plants that can run in unsupervised
operation. These attributes make them desirable to
utilities similar to Palo~to who may want to generate
power locally in order to derive the benefits of waste
be.&t utillz.atl.oo., increased system reli&.bilit.y .. decreased
electric transud •• ion and distribution 108.e. and
enh&nce~ voltage oupport.
palo Alto bal recognized tbe". potential beoefits tor .everal years
and -therefore baa been involve~ in other efforts to commercialize
fuel cells i%lcluding the effort to become tbe host site and
demc:>ruJtrate an 11 MIl pboephorie add fuel cell. That demonstratiOll
effort ....... ab<lndone<\ in Uge ... a fundiog gap developed due to
ri8ing cost. and a change in technclogy emphasis. Palo Alto and
<>tl:er interested uti1iti.. worked witb the Fuel Cell
COmmercialization Group and ilauea a DOtiee of market opportunity
to developer. of fuel cell. for a demonstration of potentielly
commercia.l utility 8cale fue-l cells. Tbe SCD-P is the direct result
of that market opportunity competition.
Di§Ql •• 'op
The $COP is proj ectecl
lifetime of 1'94-1'97.
proj eet is to be shored
to cost $46 mllion "uriog the project
Tbe $46 mlllon cost of the demonstration
in the f~llowiog manner,
Proj eet Cost,
Total Coot.
Remaining Cost:
$4' .. 00-0" 000
• 1,,30q.(tGQ
C7,300,OOO
-16"eOO .. CXlO
.. 3 ... 00-0 .. 000
$22,100,000
CO!Itiogency Funding
Department of 8nergy
COot Shared by manufacturer (Fuel
Cell Engineering Corp.) (FCE)
Electric Power Ae&earCh Institute
The remaining cost of $23'" 100, 00-0 i. to be split into ee-ven share.
as" foll"",,",:
Seven Individual Shores,
$3,150,000
3~lSO.Se-g.
3 ... 150.,,«10
3 ... 150.0-00
3.150, ~O
3,1.S0,OOO
;),,300,000
Ci t y of Santa Cl ala
Los Angeles Dept. of w .. tu " Pow .. r
Ci ty of Vernon
SOUthern california Edison
Sacramento Municipal ~ility District
National Rural Electric CoopeTati~e ~8OCiat1OD
Consortium (8 Organizations)
Palo Alto bas expressed interest in being one of eight
org.a..T1.Iz:atiO!l8 who join together t.o font a consortium to purchase
and support & siogle $3.2 odlHon .bare of tbe SCDP. Since Palo
Alto .t. a member of EPRI, And EPRI 10 a SCDP supporting
participant, Palo Alto may elect to ose EPRI Tailored Collaboration
fund& of up to 2St of Palo Alto'. l!PRI d1.1es as a portion of the
COtltribu:ti.;)!l t.o the BCDI'.. Aa a consortium member .. the: suggested
..tnimum cost to Palo Alto wou14 be $200,000 matched by $200,O~O
from Palo Alto's EPRI TC ftm<!a. palo Alto'. $200,000 contribution
""",14 be apreaiS over 5 pa}'ftlellts as .hown in Table 2. Should the
demonstration come in below budget, each COIUIortium .... mber would
receive a pro rata rebate of unspent c:>ntributions. However,
coa.oEtium IIIt!mbers will not be ">peeted to fund any budget
overruna.
If the commercialization .1.& 8ucce •• ful, Palo Alto would then be
eligible to potanHally receive up to two times its direct funding
of the SCI)p in royalties paid from sales of commercial units. The
royalties are scheduled to be $lS/ltw of commercial unit salu, i. •.
$30,0.00 per .2 MW fuel cell. To pay the full .2 time5 contribution
lilnit of royalties ltOUld re;uire the sale of 1473 _ of fuel ceUs .
.Because it would require a large number of ERe MCFC power plant
.ales for full royalties •• taft feels that ~titive forces make
the roya.lties highly uncertain and that they should = he ..
consideration in malting the R~ support decisions ..
Table 1 .bows the SCDP <=est. and ~lty revenues to Palo Alto and
EPIlI under a csse with TC funding and .. case without TC funding.
Table 2 shows, for the period 1"4 through 1"7, the amount of
exce.ss EPR.I TC matching funds available for other projects at Pillo
Alto's directioc.
Cogcluljon
The. fuel -cell is one of t.he few loc.lly sitable generation
technologies that. Palo Alto can develop~ '!'he SCDP is an important
step in fuel cells becoming a commercial reality~ palo Alto has an
opportunity to help Santa Clara fund tb. SCDP while learning more
about this emerging teehnology~ EPR.I Tailored Collaboration
funding offers an opportunity to:
• Direct EPRI matching f~ towards projects su~h as SCDP that
may assist smaller utilities like Palo Alto .
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• Deere ••• t.he uno:erta1nty usociated with Palo Alto"lI 4irect net
COIIt of. wpporting the SCDP by joining the Consortium.
Staff nqu .. ns the OAC· to reCClClll!lelld City Council approval of the
attached .~~~. for Palo Alto'. zemberehip in the Consortium
and the uae of SPIll Tailored Collal>ontioo tun4i:>g to provi6e up to
50% of tbe $~OQ,OOQ coat of the four-year SCDP.
Je&pectfully e~tted,
rr(l'fl.~
1'CH l!1IIIASBI
Ma.n.ilger,
?ii;l
Director of Qt~lltie8
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OOS'I'8 AND PO'I'ENTX~ ROY~'I'XBS UNOBR VARIOUS SUPPORT OPTXONS
, Palo Alto aa COnaorttum Member
w~th "ithwt
Tailored COllaboration Tailored COllaborA~ion
Palo Alto Contribution $ 200.000 $ 400 000
EPRI 'I'C Matching Fund. $ lOO 000 RIA
Potential Royalti ••• 2X $(400,000) $(800.000)
Oi.~ounted Royalties (5. over , Y*.~.) $ (29.,496) $(5",972)
Range of! Coat;81
with Zero Royaltia. $200.000 $ 400.000
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Wj.tll~u}l ROYalti ... $(98.(85) $(196.9'/2)
TABLE 2
EPRI DUES AND TC PQNDS POTENTIAL USAGE AND AVAILABILITY
FY 93/94 FY 94/95 flY 95/96 FY 96/9' rry 97/98 'l'O'I'AL
EPRX Ou.. • Aotual and
Pl."01Botad
$232,033 $208,830 $187,(8) $189,3)' $191.195
Total EPRI 'I'C MatOh,nq Fund. $ 52,207 $ 52,207 $ 46,871 $ 47,335 $ 47,799
EPRl 'I'C Matching Pund. alter $ 46,457 $ 46,457 $ 41,121 $ 46,585 $ 47.049
Exl.ting Commitment . .,
SeDP Obligation ($400K) $ 92,915 o .2,915 S 71,390 $ 71,390 $ 71.390 $400,000
Palo Alto Contributions '1'0 $ 4fj,4~"1 $ 46,457 $ 35,695 $ 35,695 $ 35.695 $200,000
Meet SCDP Obligation
EPRI 'I'C Matohing Fund. '1'0 $ 46,4$7 '$ 46.457 $ 35.695 $ H.695 $ ~5,69S $200,000
Meet SCDP Obligation
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