HomeMy WebLinkAbout3/4/2025 Item 6d, Hermann and Pohlman - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: March 4, 2025
TO: Mayor and Council
FROM: Greg Hermann, Deputy City Manager
Prepared by: Lucia Pohlman, Sustainability and Natural Resources Analyst
VIA: Whitney McDonald, City Manager
SUBJECT: ITEM 6D - AUTHORIZE PG&E AGREEMENT, ADOPT GOVERNMENT
CODE 4217 FINDINGS, AND ISSUE WORK ORDER TO ADVANCE
MUNICIPAL FACILITY ENERGY SYSTEM RETROFITS
Staff received the following question, regarding the proposed participation in PG&E’s
Sustainable Solutions Turnkey program for priority Lead by Example Energy Projects.
The question is below with staff’s response shown in italics:
1) Willdan examined BESS [Battery Energy Storage Systems] potential at
several city facilities (page 701) but appears to base the recommendation on
cost saving associated with electricity use and peak shaving. Some did not
meet this criterion (Ludwick, City Hall, Library). Can the proposed BESS
systems also be used as backup electricity supply? Is that a benefit was
considered?
Willdan included small battery systems at the Corp Yard, Police Station, and Swim
Center in their response to PG&E’s Request for Proposals. This BESS measure
was estimated to have a simple payback period 1 of 25.5 years. As described in the
Council Agenda Report, a scope of work pursued through Government Code
Section 4217 must provide cost savings to the agency. The City interprets “cost
savings” to mean that the savings from all of the assets in a project portfolio are
greater than the cost of the assets over the span of those assets’ useful lives. After
further review, Willdan, PG&E, and the City agreed to remove BESS from the
project portfolio because BESS typically have a useful life of 20 years and the
proposed BESS measure had a 25.5-year payback period, which undermined the
overall cost savings from the project portfolio. Further evaluation may be
completed as part of the proposed Investment Grade Audit to determine whether
there is a viable BESS at any site that could deliver cost savings. If any cost saving
systems are identified, BESS may be reintroduced into the scope of work for the
Investment Grade Audit, and any resilience benefits would be estimated at a high
level in the final Investment Grade Audit report.
1 Simple payback period means the savings from the proposed project would pay for the capital cost of the
project over the specified time period.
Item 6d. Authorize PG&E Agreement, adopt Government Code 4217 Findings, and issue Work
Order to advance Municipal Facility Energy System Retrofits Page 2
It is important to note that battery storage and related resilience benefits are
referenced in the Climate Adaptation and Safety Element of the General Plan and
Lead by Example 2025-29 Work Program. Staff will continue to monitor external
funding opportunities outside of the Sustainable Solutions Turnkey program to
implement battery systems at City Facilities that have the potential to deliver both
cost savings and resilience benefits.