Vallejo's solar, wind projects hit snags

source: east bay business times 2001.11.09 Alan Doyle

Vallejo's drive for energy independence and a 40 percent reduction in the cost of electricity for its 4,200
businesses and 120,000 residents has hit two speed bumps.

One obstacle ­ from the 19th century ­ has delayed startup and forced relocation of what was planned as the
nation's largest municipal solar power plant when it was proposed last spring.

A second, less-serious, obstacle has emerged in negotiations over the long-term cost of a demonstration
project to show that Vallejo could generate up to 500 megawatts an hour ­ more than enough to power
Vallejo's industrial, commercial and residential users ­ from wind power.

Those alternative sources are part of Vallejo's plan to free itself from the grid, high prices and the threat of
rolling blackouts by becoming its own generator, producing electricity for about 60 percent of the rate charged
by Pacific Gas & Electric Co.

In addition to increased conservation, the city may also turn its two reservoirs into modest sources of
hydroelectric power and resurrect the power plant at the old Mare Island Naval Shipyard as a cogeneration
facility.

But first, Vallejo must resolve its problems with the solar facility, to be built by BP Solar of Fairfield, and settle
on a contract with TMA Inc., a wind power company based in Cheyenne, Wyo.

The solar plant, which at full capacity would produce 1 megawatt an hour to power city offices, can't be built
at its original intended location, the old Kaiser Steel Corp. property near downtown Vallejo, because of the
high water table and residual contamination, according to Alvaro da Silva, the community development
director, and Larry Asera, the city's energy consultant.

Instead, the plant will be built on 5 to 7 acres near Columbus Drive in northeast Vallejo, close to a fire station
and a PG&E substation.

The relocation means not only a one-year delay, to the end of 2002, in bringing the solar online at full
capacity, but also additional expenses. Construction now is scheduled to begin in January. The plant is being
built through a city-BP Solar partnership, with additional funding from the state.

The new site is near high-growth residential areas and will require some visual mitigation, such as planting
trees, according to Mark Mazzaferro, the city's public information officer.

The proposed original site was on a vacant 40-acre parcel southwest of Sonoma Boulevard and Curtola
Parkway near downtown in the waterfront redevelopment district.

The problem with that site is that the water table is 6 feet, but supports for the solar plant equipment must be
sunk to 10 feet, Asera said. The depth requirement also raised the possibility of contaminated water leaching
into the plant, and there were concerns about the effects of cleanup work under way on other parts of the
property, Asera said.

The site formerly housed a Kaiser metals fabrication facility and still houses a PG&E substation. But the
pollution dates from the 19th century, when a PG&E predecessor, Vallejo Light and Power Co., used coal
gasification to light the city and dumped the coal residue in a marsh along the Mare Island Strait, da Silva said.

Vallejo is developing a cleanup plan for the site that will involve PG&E payments, da Silva said.

Da Silva said he and Asera hoped part of the site could be used for the solar plant, but engineering tests
showed otherwise.

Vallejo's solar power project was the most ambitious in the nation until Tuesday's election in which San
Francisco voters approved a measure authorizing a $100 million bond issue to build facilities generating 20
megawatts an hour within a year and another 50 megawatts within three years.

That 70-megawatt total not only dwarfs Vallejo's plans but will, if brought online, virtually double the nation's
output of solar power, which now stands at 80 megawatts for all users, commercial and private.

While San Francisco looks to the sun to cut electricity costs, Vallejo is betting heavily on wind power, which
experts say could generate up to 500 megawatts an hour ­ more than enough to meet peak commercial and
residential needs, with a healthy surplus to sell on the power market. And the delay in the wind turbine
demonstration project actually may work to Vallejo's advantage.

TMA has proposed a "10-10-10" package for the pilot wind turbine project ­ 10 megawatts an hour for 10
years at a cost of 10 cents per kilowatt hour ­ and the city has responded with a counterproposal, da Silva
said. The city currently pays PG&E 20.6 cents per kilowatt-hour, according to Asera.

Da Silva declined to reveal the terms of the counterproposal. "I don't want to negotiate this in the newspaper,"
he said.

The 10-cent rate is less than Asera's original prediction of 12 cents a kilowatt hour but not as low as TMA is
willing to go, said Duane Rasmussen, the turbine company's CEO.

"That's only a proposal," Rasmussen said, adding that his company could accept a rate of 8 cents or 9 cents a
kilowatt-hour.

With a power purchase agreement in place, TMA says it has a commitment for $13 million in private financing
to install and operate turbines at several city-owned sites in Vallejo and at a water pumping station in
Cordelia.

Asera and da Silva, the community development director, are negotiating contracts with TMA and BP Solar.
The contracts must be approved by the City Council.

The wind turbine project is intended not only to provide power, but also to buttress TMA studies conducted
last summer that predict the Vallejo hills can generate 500 megawatts and have a higher potential than the
California's two major windfarm areas ­ Altamont Pass in the East Bay and Tehachapi Pass east of
Bakersfield.

Asera has said 500 megawatts of wind power, combined with other sources contemplated in Vallejo's energy
independence plan, should be sufficient to handle the city's peak industrial, commercial and residential
demands. Asera said he doesn't have figures on commercial-industrial usage, but Vallejo's 49,000 homes
consume an average of 50 megawatts an hour and peak at 75 megawatts.

"That's more than enough to handle peak, emergency and reserve for all of Vallejo," Asera said.

A 500-megawatt wind turbine facility would cost $650 million and require public financing but would pay for
itself in 10 years as opposed to 20 years for a traditional plant, Asera has said.

Reach Doyle at adoyle@bizjournals.com or 925-598-1404.