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Board delays vote on PUC’s 5 MW Sunset Reservoir solar deal with Recurrent Energy for further negotiation
Summary
The committee heard a detailed SFPUC presentation on a 5 MW Sunset Reservoir rooftop solar project under a 25‑year power purchase agreement with Recurrent Energy. Members praised the climate benefits and job creation but raised concerns about the long PPA price lock, requested waivers of administrative‑code controls, and asked for firmer local‑hire commitments; the item was continued to April 22 for further negotiation.
SFPUC Assistant General Manager for Power Barbara Hale presented the committee with a recommendation to approve a 25‑year power purchase agreement (PPA) and site lease with Recurrent Energy to build a 5‑megawatt photovoltaic system on the seismically upgraded North Basin of the Sunset Reservoir.
Hale said the installation would include roughly 25,000 panels covering about 480,000 square feet, would be financed, designed and operated by Recurrent under a third‑party ownership structure and come online in early 2010 if authorized. Recurrent will lease the rooftop from the city and the PUC would be obligated to purchase the power produced; the PPA structure allows Recurrent to capture federal tax credits and accelerated depreciation that the tax‑exempt city could not. PUC estimates the PPA price at about 23.5¢/kWh in year 1 (approximately $1.878M), escalating 3% annually, with a year‑7 option for the PUC to buy the system (approximate buyout figure cited at $33M).
Budget analyst Deborah Newman raised concerns that the city would pay a premium for municipal power under the PPA (her analysis showed ~$235/MWh vs. a DOE California range of ~$82–148/MWh) and recommended removing references to a second site (Pier 96) from the legislation. Newman also flagged two administrative‑code waivers sought by the PUC (waiving the board’s yearly appropriation requirement for multiyear contracts and the controller’s certification of maximum contract amounts) and described approval of the ordinance as a policy decision by the board.
Supervisors questioned the long‑term price lock and asked whether the city should instead finance and own the plant; PUC said fully city‑financed ownership would have higher annual debt service (PUC estimated ~$3.4M/year vs. ~$1.8M/year under the PPA at the assumed bond rate). Several supervisors asked for stricter local‑hire and disadvantaged‑ZIP‑code reporting. Public commenters — including union representatives, neighborhood workforce coalitions and solar advocates — generally supported the project for job creation and greenhouse‑gas reductions but pressed for firm hiring guarantees and community benefits language.
After extended discussion, the committee voted to continue the item to a date certain (April 22) and directed PUC staff to meet with interested supervisors and Recurrent Energy to negotiate clarifications on pricing, waivers and hiring commitments. The PPA was not approved on March 18.
