19-1029 v3.X Donating Power as Equity Investment (and Confirming Off-Site Power Arrangement)

QUESTION

Our LBC v3.1 is using the urban project exception to scale-jump and provide a 195kW off-site PV array on the roof of a nonprofit affordable housing project within the same utility grid. The LBC project will own the system for 15 years as required by ILFI. In a typical LBC arrangement for this exception, we are assuming that the LBC project must retain the RECs for this off-site array, since these are critical to meet the Energy Imperative; however, we also assume that the produced energy (but again not the RECs) from this off-site could be sold (through a PPA if not another mechanism) to the local host (or other entity), since the LBC project will already be purchasing additional (clean) energy from the grid to make up its onsite deficit (otherwise we are buying energy twice essentially).
Our team would like to propose in addition to subsidizing the cost of electricity for the nonprofit (e.g., the PPA would set the per kwh rate at 10% their provider rate), that we would donate a portion of the produced energy (e.g., up to the first $90,000) so that the nonprofit would not to have pay until this usage is exceeded. We would also provide basic maintenance of the array, and are planning to donate the array to the nonprofit at the end of the fifteen year term as it nears the end of its expected life.
Our question is twofold. Does our proposed offsite power meet the requirements of scale-jumping for net zero energy, and assuming so, will ILFI allow this donation (the free power to the first $90k as well as the per kwh subsidy) to be considered toward our required charitable contribution, assuming of course it meets the 501(c)3 requirement?


ANSWER

There are two pathways for locating PV offsite: I06-E15 Off-site Renewables, or Scale Jumping. Per the 3.1 Energy Petal Handbook, in order to use scale jumping, the team will need to demonstrate that there is one of the following; a constraint (such as shading), an opportunity through a local offsite natural asset, or it is a campus/multi-building project. In addition to meeting at least one of these three conditions, the project must meet all other criteria for scale jumping (listed on page 19 of the LBC 3.1 Energy Petal Handbook).

Alternatively, in order to use I06-E15 Off-site Renewables, the team will need to make the case that the project is one of the following; a tenant improvement project where there is no ownership interest by the project owner or developer in the core building HVAC systems and/or the building envelope or grounds, a high density/high EUI project, or a utility-constrained project. In addition to meeting at least one of these three conditions, the project must meet all other criteria for I06-E15 Off-site Renewables (listed on pages 17-18 of the LBC 3.1 Energy Petal Handbook).

Based on the information provided, the high density/high EUI pathway within I06-E15 Off-site Renewables may be the most applicable option for this project. 

Regarding off-site PV, the team's assumptions that the RECs must be retained and that the team may sell the energy to the host through a PPA are correct. 

If the project uses scale jumping or I06-E15 Off-site Renewables, the team may count the free and/or subsidized power towards the charitable donation required in Imperative 17 - Equitable Investment, given that the organization to which the power is donated meets the 501(c)3 requirement and the organization approves of this donation methodology in lieu of one or multiple cash donations over a similar period in an equivalent amount.

The team must provide calculations for the equivalent donation amount using local utility rates and energy use data from the non-profit organization. The donation must occur prior to certification. Documentation of the non-profit organization's approval of this donation method (in lieu of cash) must be provided when submitting for certification. If the monetary equivalent of the power donation is less than what is required in I17 Equitable Investment (0.5% of the project cost), the balance must be met by a monetary donation to a non-profit organization.

Additionally, if the PV array is donated to the affordable housing nonprofit after 15 years, the value of the array may be considered part of the equitable investment. The team must make a reasonable estimate of the future value of the array, accounting for 15 years of depreciation. If the array is donated to the nonprofit upon installation, the current value of the array may be considered as part (or all, if value is greater than or equal to the amount required under I17) of the equitable investment.

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