Team: “RU Clean Energy”

THE ECONOMIST ENERGY CASE STUDY:

CLEAN ENERGY IMPLEMENTATION IN

DOBBS FERRY,NY

Christine Monroy – Chemical Engineering

Kieran Kemmerer – Mechanical Engineering/MBA

Pranay Kumar – Candidate, MCRP

1

Contents

Abstract…..2

Proposal….3

Sources….11

Appendix…12

2

Abstract

The Village of Dobbs Ferry, New York in Westchester County is considered in the

implementation of two solar projects and three commercial grade Tesla Batteries. The total

project cost is estimated using referenced assumptions and projects of similar size. The financial

model includes an upfront cost of $10.9 M to be funded up front by NRG and paid back in yearly

installments of $810,000 by the municipality over the course of thirty years. This proposal

evaluates the benefits and risks for both parties as well as considers plans for implementation and

alignment with both NRG and New York State energy goals. Energy savings are recognized in

the offset of on-peak energy consumption, calculated using NYISO load data and technical

specifications of the equipment used.

Acknowledgements

Special thanks to Beatrice Birrer of the Rutgers Energy Institute for shedding light upon this

opportunity.

3

Meeting the growing electricity needs of modern society presents several challenges from

a policy, regulatory, technological, economic perspective and affects every individual daily.

These problems are compounded by the unique character of the utility industry requiring large

capital investment with long gestation periods, interconnection with grid infrastructure, and

strong interrelationship with other energy systems. Additionally, rapid technological changes and

the impact on the surrounding environment and long term effects on climate have become an

increasingly pressing issue. One must also consider financial obstacles arising out of a natural

monopoly of regulated transmission and distribution infrastructure and the associated sunk costs.

Given these challenges, it was difficult to arrive at a practical and financially viable solution,

which considers of all these concerns for the entire useful lifetime of the project at an affordable

cost. This proposal puts forth a model which attempts to optimize the benefits and minimize the

concerns utilizing PV solar and battery storage technology for implementation within a regulated

tariff for thirty years. The project focuses on providing a clean-energy solution for a 40 MW

community in New York State. The proposed generation assets are in-line with both NRG and

New York State environmental goals, looking to decrease emissions as well as provide additional

solar generation on the grid. The model assumes regulatory certainty for this period and will

have the flexibility to account for the evolving technologies in the field of PV solar, battery

storage and smart metering systems to appropriately value the electricity being used and

generated.

In order to create a realistic model, the team first searched for a region in New York

which demonstrated a need for suitable technology. Westchester County was selected, based on

its proximity to the Indian Point Nuclear Power Plant. The Indian Point facility is set to close in

2021, because of the apparent danger it poses in close proximity to New York City, and currently

4

has a net power output of about 2,000 MW per day, generating about a quarter of the energy

required by New York City and Westchester County [1]. With the loss of such a massive energy

supplier, new energy sources will need to be added to the grid, making this a suitable focus

region. Based on average household energy consumptions, it was estimated that 11,623 homes or

31,500 people would amount to a 40 MW community. Taking into account the variable energy

consumption from municipal buildings, schools, hospitals, restaurants, etc., that estimate was the

mean power consumption of the community. The town of Dobbs Ferry was selected for

modeling purposes based on its population. The community is already recognized as a Bronze

Level Climate Smart Community [2] and the town’s recent leadership in solar solutions implies

the township may be more receptive to a larger-scale project.

The first technology to be implemented in this project is PV solar. PV solar is well

understood and establishing a financial model on a variety of scales is a realistic option. Solar is

favorable in the state of New York; the state ranks impressively for its solar electric capacity [3]

and solar tax credit [4]. Solar is a desirable source of energy because it is noiseless and only

requires sunlight. Panels may be installed in a variety of ways including, but not limited to,

residential rooftops, solar fields, and parking lot “canopies”. The second technology used in this

project will be commercial scale battery storage. Batteries will play a key role in softening the

utility daytime peaks. This technology allows for energy to be allocated more efficiently and

reduces dependence on a single source. Recently, battery storage has made large technological

advances allowing for more capacity and longer sustained discharged rates. Tesla Motors has

been a pioneer in this industry, and for the sake of simplicity the Tesla Powerpack is being

utilized in this proposal, although it is acknowledged there are other equally feasible alternatives.

5

Certain technologies will not be explored in this scenario for specific reasons. Biomass is

an unrealistic source of energy given the geographical selection. Obtaining a large volume of

biomass feed on a consistent basis would be extremely difficult in Eastern New York. Whether

combusting biomass directly or gasifying it to create fuel, it is an expensive process and

disruptive to the community. Additionally, biomass technology is not developed enough on a

distributed energy scale to guarantee profitability [5]. Although New York State has invested in

wind turbine technology projects recently, the model town of Dobbs Ferry does not have a

sufficient land space for wind turbine installment. Most of the available land is park space, on

which installment would face a great deal of push-back from the community. The wind

conditions in Dobbs Ferry are unfavorable and the fluctuating nature of wind makes the

profitability unpredictable. Investment in wind in this community would require field and

potential site audits, which prove impractical in this case.

Fuel cell and gas turbine technologies were also considered. Currently, both options are

utilized with natural gas as a fuel source; mainly because it is very inexpensive and easily

obtainable. Both technologies are fairly efficient when heat recovery is implemented, however

they still result in CO2 emissions. Fuel cells have been implemented, with positive results, on

sites where natural gas isn’t as valuable, such as natural gas wells with leakage [6]. A combined-

cycle gas turbine with a heat recovery steam generation would produce a great deal of power,

depending on the size, but in the model community finding space for a large project would be

difficult. These generation assets also require frequent maintenance and must be managed and

operated.

The proposed project consists of two “solar canopies” covering the parking lots at Mercy

College and the Dobbs Ferry Train Station and three commercial scale Tesla “Powerpacks” that

6

are to be distributed throughout the town to provide the community with energy during peak

hours. This combination of generation assets provides for both utilization of green energy and

resiliency in generation. Given the nature of this community, it is impractical to implement

sufficient diversified generation capable of powering the entire village. Such an effort would

consume valuable property and require higher infrastructure costs incurred in developing the

land to make it suitable for various forms of generation. Rather, this proposal takes a less

invasive approach with the goal of reducing the costs of electricity for the town and its

inhabitants. Additionally, both battery storage and PV solar are available on a residential scale.

The beneficial impact of the proposed project is also intended to encourage homeowners to

invest in similar technologies in their own homes, which would magnify the effect the proposed

project has on the community. It is reasonable to believe that this effect would be prominent, as

the town has already made efforts to conserve energy at a municipal level and is enjoying the

benefits.

The solar canopies were chosen given the size of the two lots. Figures 1 and 2 show the

proposed lots and the approximated area (see Appendix). Both locations are public and are not

invasive to the citizens, as well as will provide the added benefit of shelter from outdoor

elements when walking to and from a car. The Mercy College site is estimated to provide an

average of 725.9 kW and the Train Station site an average of 290.9 kW. These sites are proposed

to be tied into grid to serve the surrounding area.

The Tesla Powerpack’s are 500 kW/5-hour discharge batteries designed to charge in the

overnight when power is the least expensive and discharge at set times during the day to offset

the consumption of more expensive on-peak energy. Both the solar assets and batteries will have

the effect of putting energy on the grid during the peak hours; lowering the need for expensive

7

generation during the on-peak hours and providing the township with clean, reliable energy. The

batteries are to be placed strategically throughout the township to provide power evenly

throughout Dobbs Ferry and remain minimally invasive. At its peak, this model provides 1.72

MW for the community. As stated previously, this is not intended to provide sufficient

generation for the entire community, but rather provide local and reliable generation during the

times of highest consumption during the day.

Using several basic assumptions this option is demonstrated to be financially beneficial

for both NRG and the municipality. The financial model utilizes cash flows from the

municipality paid to NRG for ownership of the assets at the end of thirty years. This period

represents the approximate useful life of the generating equipment (useful life of infrastructure is

assumed to be much longer) and thus the transfer in the full ownership assets at Year 30 will

benefit both NRG and the Village of Dobbs Ferry. NRG will be responsible for any repairs

inside the lifespan of the equipment while Dobbs Ferry will use the savings in energy to offset

the cost of the annual installments made to NRG. In essence, NRG will act as the lessor of this

equipment to Dobbs Ferry, transfer of ownership will be at the end of the useful life of the

equipment, and NRG will not be sacrificing the value of the asset at the end of the thirty years.

This ensures that NRG is repaid in full that the township receives the full benefit of the

generation assets for the perceived future.

The costs of the project total $10,942,015.60 (See Appendix for calculations and

assumptions). This amount is to be fronted by NRG to implement and install the necessary

infrastructure. Although rough estimates are used in this calculation, for the sake of calculating

cash flows it is assumed that if the process were to begin in the beginning of 2017, the project

would be installed and operational by January of 2018. Given a thirty-year payback period the

8

annual installment owed to NRG would be $810,000, the cost of which will be offset by both

NYSUN solar incentives and savings in net generation. In Year 1, the municipality would have a

net loss of $184,000; followed by a net loss of $645,000 yearly until year thirty. After that is

assumed that the savings will act in perpetuity, bringing the NPV of the project to ($9.4 MM).

The municipality has options for financing this debt. The simplest option is simply to pass it on

the homeowners in the form of a tax which would amount to $560 a year per household. Being

that property taxes in this area are above average, this would result in small increase in annual

taxes that in theory should be offset by the reduction in power costs for the inhabitants. If the

municipality opted not to pass it on in the form of a tax, they could issue a municipal bond in the

amount of the net payment. This is another viable option as the payments would be made

regularly and the security would be asset-backed. In this model, however, the risk-free market

rate is used to discount the cash flows so the bond value may not be attractive to potential buyers

as the coupon rate could not be too high.

NRG will see a NPV of $35,000; discounting the future cash flows made by the

municipality by the approximated Weighted Average Cost of Capital (WACC), estimated using

public information. Due to the high number of approximations, there is definitely uncertainty in

this model, but most approximations were made conservatively. The biggest contributor to

uncertainty for NRG is costs; the largest source of uncertainty for Dobbs Ferry is savings. Given

a proper evaluation and investment-grade audit, further decisions could be made on the extent

and time frame of the proposed generation assets.

NRG may also consider incentivizing the formation of similar projects or expanding the

current proposed projects by offering better payment terms in exchange for additional products.

This will increase NRG’s foothold in the area as well as ease the debt taken on by Dobbs Ferry.

9

For the successful implementation of any project, it is essential that the risks associated

with it are balanced and shared equitably amongst the different stakeholders. Further, the model

should account for the technological innovations and associated price impacts on the investment

carried out for the entire useful lifetime of the project. While the present policy and regulatory

framework is quite encouraging in terms of the taxation and other incentives associated with PV

solar and battery storage technologies, they must be secured by regulatory oversight for the

future. It is also contended that any solution, which puts extra burden on the existing distribution

utility (Con Edison) and causes loss of revenue to them will not be sustainable. Accordingly, this

model will have to be adopted and implemented with ConEd in such a manner so that they are

able to recover the cost from their consumers through a competitive tariff.

This model also presupposes enabling smart and net metering regulatory framework in

which the consumers are made aware and responsive to the price variations and the

incentive/disincentive structure associated with energy savings and overall benefits of renewable

energy technologies. In addition, while opting for this model, the price of PV solar is assumed to

have been based on the current market rates. In case the same continues to decline further, as has

been the past trend, or any new technology results in very competitive prices; the sunk

infrastructure cost of the project will have to be insured by suitable regulatory intervention.

For the 40 MW load requirement of a community in New York, the proposed model

electric system based on PV solar and battery storage technology appears to be the optimal

solution in light of the competing requirements of cost and technology and stakeholders

involved. The solution is based on the calculations of the average load requirements of the

community interconnected with the grid, having battery storage facility with intelligent

infrastructure in terms of smart metering and a responsive community. The model can be

10

implemented by an upfront investment by NRG at a project cost of $10,942,015.60, to be paid

back in installments of $810,000 to the developer over a period of thirty years. As the per unit

generation cost of PV solar is expected to be very near the rates of conventional electricity rates,

there will be minimal excess expenditure in the existing cost of electricity. It is expected that the

project model will not just promote the clean technologies but also will be beneficial to the

community in terms of their total cost of electricity and drive investment for economic growth.

11

Sources

[1] McGeehan, Vivian Yee and Patrick. "Indian Point Nuclear Power Plant Could Close by

2021." The New York Times. The New York Times, 06 Jan. 2017. Web. 01 Mar. 2017.

[2] "Climate Smart Communities Certification Program." Climate Smart Communities

Certification Program - NYS Dept. of Environmental Conservation. Department of

Environmental Conservation. n.d. Web. 07 Mar. 2017.

[3] "Top 10 Solar States." SEIA. Solar Energy Industries Association, n.d. Web. 04 Mar. 2017.

[4] "2017 United States Solar Power Rankings." Solar Power Rocks. N.p., n.d. Web. 28 Feb.

2017.

[5] Jin, H.; Larson, E. D.; Celik, F. E. Performance and cost analysis of future, commercially

mature gasification-based electric power generation from switchgrass. Biofuels,

Bioproducts and Biorefining 2009, 3 (2), 142–173.

[6] Phillips, Gabriel. "Natural Gas Fuel Cells: Technology, Advances, and ..." Department of

Energy. GP Renewables and Trading, 04 Mar. 2014. Web. 02 Mar. 2017.

12

Appendix

Community Size ………………….13

Solar Locations……………………14

Estimation of Solar Output………..15

Estimation of Project Costs………..16

Load Profile of Dobbs Ferry………18

Savings Estimates………………….20

Financial Calculations……………..23

Savings Cash Flow.………………..26

Cash Flow Analysis………………..27

13

Calculation of Community Size

103000000 Btu/(yr-home) * (0.000293071 kWh/ 1 Btu) = 30186.3 kWh/(yr-home)

1000 kWh/yr = 114.077116 W = 0.000114 MW

40 MW/community / (0.000114 MW * 1000 kWh/yr) = 350877193 kWh/(yr-community)

350877193 kWh/(yr-community)/30186.3 kWh/(yr-home)= 11623.7 home/community

11623.7 home/community * 2.71 people/home = 31500 people/community

14

Proposed Solar Locations

Figure 1: Mercy College (shown above). Approximately 250,000 ft2 or 5.74 acres

Figure 2: Dobbs Ferry Train Station: Approximately 100,000 ft2 or 2.3 acres.

15

Solar Output Estimation

Energy (kWh/day) = Area (m2) x Efficiency x Geographical Energy Density (kWh/m2-day)1 2

Available Wattage (W) = Energy (kWh/day) x 1000 (W/kW) / 24 (h/day)

1 Equation provided by http://photovoltaic-software.com/PV-solar-energy-calculation.php

2 Energy Density provided by https://maps.nrel.gov/re-atlas

Available Wattage Calculation Mercy College Train Station

Energy (kWh)/day 17421.56 6980.83

Area (m^2) 23228.75 9307.78

Efficiency 0.15 0.15

kWh/m^2/day 5.00 5.00

Available Wattage

Mercy College 725,898.34

Dobb's Ferry Train Station 290,868.06

Total 1,016,766.40

16

Estimation of Project Costs

Cost of Solar

Using a similar NRG Solar Canopy Project at ASU Lot 593 the cost estimation for the project

was projected on a size basis. The 2.1 MW ASU Lot 59 solar project totaled $10,500,000 for a

5.25 acre lot. The project total cost was subdivided into the cost of the solar panels and

accompanying equipment, and the costs of building the infrastructure and other associated costs.

In 2016 the cost of solar in the US was roughly estimated to be $4/Watt,4 implying that a 2.1

MW project would equate to roughly $8,400,000. Thus the remaining $2,100,000 was attributed

to infrastructure and other costs.

Considering the ASU Lot 59 is 5.25 acres in size, the infrastructure and other cost per unit area is

$400,000/acre.

Using $4/Watt and $400,000/acre the costs of the solar project are projected accordingly.

3 See link for project details https://asunow.asu.edu/content/innovative-solar-structure-shades-sun-devils

4 According to energysage.com in 2016 the average solar project cost $2-$4 per Watt. Being that this is a rough estimation the

high-end was used. http://news.energysage.com/how-much-does-the-average-solar-panel-installation-cost-in-the-u-s/

Total Cost of 2.1 MW Project 10,500,000.00$

Cost of Solar 8,400,000.00$

Infrastructure and Other Costs 2,100,000.00$

Available Acreage Infrastructure and Other Costs Available Wattage $ Based on Estimated Wattage Total Project Cost

Mercy College 5.74 2,296,000.00$ 725,898 2,903,593.35$ 5,199,593.35$

Dobb's Ferry Train Station 2.3 920,000.00$ 290,868 1,163,472.25$ 2,083,472.25$

Total Wattage 1,016,766 7,283,065.60$

17

Cost of Tesla Batteries

The Tesla Powerpack was chosen because of the ease in access to performance specs and cost

information.5 The breakdown of costs is shown below.

5 Information pertaining to Tesla PowerPack acquired at https://www.tesla.com/powerpack/design#/

Tesla Powerpack

Power 500 kW

Duration 5 hour duration

Price per Setup 1,069,650.00$

Total 3,208,950.00$

18

Development of Load Profile

To appropriately address the energy consumption of the community and calculate energy

savings, a load profile for the community must be developed. Using 40 MW as the reference, it

was assumed that the daily total energy consumed by the community was 960 MWh (40 MW x

24 hr). Secondly, two model days were chosen to represent a winter and summer day’s load in

New York. Spring/Fall dates were not considered to keep the approximation simple. Using

public NYISO data, load profiles were obtained for the entire RTO on 1/15/2017 and 7/15/2016

to represent summer and winter, respectively. The temperatures on these days reflected average

New York weather conditions.6 Using the hourly loads in the NYISO RTO and dividing by the

sum of the 24 hour integration, a percentage of total usage was obtained on an hourly basis for

both the summer and winter scenario. These percentages were then multiplied by the 960 MWh

to obtain load curves that reflect proportional usage in Dobbs Ferry.

6 On 1/15/2017 the mean, max and min temperatures in Westchester County were 30 F, 37 F, and 23 F; respectively. On

7/15/2016 the mean, max and min temperatures in Westchester Country were 81 F, 90 F, and 73 F; respectively. Weather data

obtained from wunderground.com.

19

Winter Load Profile

Summer Load Profile

20

Savings Estimates

The savings estimates are a rough approximation of what the town saves on electricity.

Actual savings are contingent upon how the generation assets are metered (by net metering or

feed-in tariff) and how ConEdison chooses to classify the generation assets. For the sake of this

proposal, the generation was classified as “Bulk Power” by ConEdison’s standards and the

market rates are based purely upon market supply charges. The tariff undoubtedly incorporates

other elements including transmission and generation type, however for the scope of this project

incorporating other parts of the tariff was impractical.

Furthermore, market supply charges are typically consistent by season; however, this

proposal only considers a summer and winter case to simplify the calculation. For the sake of

estimation this should suffice; the transition months can be assumed to be the average of the

summer and winter months.

Winter pricing was obtained using the ConEd market supply rate average from 12/1/2016

to 3/1/2017. Summer pricing was obtained using the ConEd market supply rate average from

6/1/2016 to 9/1/2016. Both on- and off-peak pricing were given for these time periods.7 The

pricing is displayed below per MWh.

Given winter and summer pricing, savings could be calculated using the generation produced on

the grid. For the solar generation, it is assumed that the savings are directly proportional to the

output, implying that any energy on the grid is energy that the user is not paying for. Due to

sunlight conditions in the winter and the summer, it is assumed that the solar generation operates

7 Pricing obtained using ConEd rate estimating tool. http://apps.coned.com/CEMyAccount/csol/MSCcc.aspx

Winter Summer

On Peak 57.09$ 41.84$

Off Peak 41.61$ 28.49$

21

at 100% load for three hours a day (tapering on and off before and after) and in the summer,

operates at 100% load for six hours a day in the same manner. These approximations do not

account for availability of sunlight in the geographical location, and rather serve as a rough

estimate for the sake of demonstrating the savings potential.

The savings associated with the batteries are calculated in a similar manner. The batteries

charge during the non-peak hours (i.e. in the overnight) when market supply charges are lower

and discharge during peak hours when market supply charges are higher. The difference in these

two rates multiplied by the net operating hours results in the overall savings. It is assumed that

the batteries charge and discharge at equal rates and that the power discharge is constant.

The total winter and summer savings are as follows:

Solar Savings Battery Savings Total Winter Savings

313.45$ 116.07$ 429.52$ per day

12,885.51$ per month

Solar Savings Battery Savings Total Summer Savings

357.37$ 100.16$ 457.52$ per day

13,725.62$ per month

22

Taking Typical NYISO Winter Load Day 1/15/2017

Hour Ending % of Daily Load Energy Usage (MWh) Net Solar Output (MWh) Battery Discharge (MWh)

1 3.88% 37.24 -1.5

2 3.74% 35.89 -1.5

3 3.65% 35.06 -1.5

4 3.61% 34.67 -1.5

5 3.61% 34.68 -1.5

6 3.68% 35.30

7 3.80% 36.48 0.5

8 3.93% 37.74 0.5

9 4.10% 39.33 0.508 0.5

10 4.22% 40.55 0.712 0.5

11 4.29% 41.19 1.02 0.5

12 4.30% 41.28 1.02

13 4.28% 41.06 1.02

14 4.24% 40.72 0.712

15 4.23% 40.64 0.508 0.5

16 4.28% 41.05 1

17 4.44% 42.67 1

18 4.75% 45.65 1

19 4.79% 46.01 1

20 4.71% 45.23 0.5

21 4.62% 44.38

22 4.49% 43.06

23 4.28% 41.11

24 4.06% 39.01

Taking Typical NYISO Summer Load Day 7/15/2016

Hour Ending % of Daily Load Energy Usage (MWh) Net Solar Output (MWh) Battery Discharge (MWh)

1 3.42% 33 -1.5

2 3.21% 31 -1.5

3 3.06% 29 -1.5

4 2.95% 28 -1.5

5 2.92% 28 -1.5

6 3.02% 29

7 3.29% 32 0.5

8 3.70% 36 0.508 0.5

9 4.01% 39 0.712 0.5

10 4.32% 41 1.02 0.5

11 4.52% 43 1.02 0.5

12 4.68% 45 1.02

13 4.82% 46 1.02

14 4.89% 47 1.02

15 4.97% 48 1.02 0.5

16 5.11% 49 0.712 1

17 5.14% 49 0.508 1

18 5.17% 50 1

19 4.96% 48 1

20 4.75% 46 0.5

21 4.59% 44

22 4.47% 43

23 4.19% 40

24 3.85% 37

23

Financial Calculations

From the perspective of NRG the total cost of the project must be recovered in order to justify

relinquishing the rights to the energy produced by the assets. The costs of implementing this

project are detailed below, including the cost of the solar and battery projects with overheads and

a contingency included to fund the completion of this project. The contingency is presumed to

account for any repairs that would fall outside the warranty period of the equipment.

In order to fund this cost, NRG is owed by Dobbs Ferry the amount listed above. The

amount could be repaid in a variety of different ways, however being that Dobbs Ferry will

recognize annual savings, it is reasonable for NRG to receive annual payments from Dobbs Ferry

that can be deducted by the savings and incentives Dobbs Ferry will benefit from. In order to

properly discount these payments, a weighted average cost of capital, or WACC, was developed

for NRG using public information. The details of this calculation are shown on the following

page. Correspondingly the WACC for NRG was calculated to be 6.146%. Using this discount

rate it was determined that the annual payments needed by NRG to recover the initial cost of

investment amounts in $803,383.53 per year. However this results in a net present value of zero;

Total Cost to NRG

Solar

Mercy College 5,199,593.35$

Dobb's Ferry Train Station 2,083,472.25$

Overhead 100,000.00$

Battery

3x Tesla PowerPack 3,208,950.00$

Overhead 100,000.00$

Contingencies 250,000.00$

Total Cost 10,942,015.60$

24

in order to account for downside risk this payment was increased to $810,000 resulting in a net

present value of $35,459.57 for NRG.

Dobbs Ferry is assumed to have a discount rate of the risk free market rate (using the 10 year

treasury yield as a proxy) equating to 2.37%. Due to the difference in discount rates the savings

in energy are far more valuable to Dobbs Ferry than they are to NRG, as shown below.

NPV of Project for NRG

Discount rate PV Year 0 PV Years 1-30 NPV

0.06146 (10,942,015.60)$ $10,977,475.17 35,459.57$

NPV of Savings/Incentives for Muni 4,108,288.68$

NPV of Savings/Incentives for NRG 2,791,745.16$

25

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26

Savings Cash Flows

The cash flows due to the savings are calculated per month and discounted to be recognized by

the municipality at the end of each year as shown below. It is assumed that by 2020 the market

supply rate of energy will increase due to the absence of the generation supplied by Indian Point

and the result will be a 10% increase in spread between on- and off-peak market supply rates.

Thus Dobbs Ferry can expect to recognize $161,403 in savings for the first two years and

$165,337 for the remaining twenty-eight. It is likely that prices will fluctuate and the savings

numbers will not be consistent year to year, but an increase at the time of Indian Point’s

decommission is likely.

Additionally, Dobbs Ferry can recognize savings from NYSUN incentives; a division of

NYSERDA funded by New York State to incentivize the production of solar energy. Using

NYSUN’s incentive calculator and the corresponding “block” rate in which this capacity would

fall, the expected NYSUN payments are outlined below.

Proposed Savings Assume that Municipality Recognizes savings at the end of every month

Month End of Month Savings Year-end Value 2020+ 10% increase in spread

Jan 12,885.51$ 13,168.23$ 13,815.95$

Feb 12,885.51$ 13,142.28$ 13,728.66$

Mar 12,885.51$ 13,116.37$ 13,641.92$

Apr 12,885.51$ 13,090.52$ 13,555.73$

May 13,725.62$ 13,916.51$ 14,348.30$

Jun 13,725.62$ 13,889.08$ 14,257.65$

Jul 13,725.62$ 13,861.70$ 14,167.57$

Aug 13,725.62$ 13,834.38$ 14,078.05$

Sep 13,725.62$ 13,807.11$ 13,989.11$

Oct 13,725.62$ 13,779.89$ 13,900.72$

Nov 12,885.51$ 12,910.96$ 12,967.44$

Dec 12,885.51$ 12,885.51$ 12,885.51$

FV at End of Year for Proposed Cash Flow 161,402.53$ 165,336.62$

Incentives Estimated Using NY-SUN CI Block Incentive Estimator

Location Year 0 Year 1

Mercy College 110,558.43$ 331,675.30$

Train Station 44,300.87$ 132,902.60$

27

Cash Flow Analysis

Accounting for both the savings and incentives, as well as the installments made to NRG, a

statement of cash flows is developed below.

The net present value of these cash flows can be evaluated from the perspective of Dobbs Ferry,

discounting back the first two cash flows to Year 0; treating the Payments from Year 2 to Year 3

as an annuity and discounting back to Year 0, and treating the remaining energy savings as a

perpetuity and discounting back to Year 0. Although these calculations are indeed rough

estimations they serve to encapsulate the nature of this proposal from a financial perspective.

The total net present value for Dobbs Ferry in Year 0 is ($9,446,800.50), as shown below.

From the perspective of the municipality it is reasonable to pass the annual cost along as a tax, as

the residents are the ones recognizing the savings on the energy bill. Assuming approximately

11,624 homes as calculated previously, the annual cost per household would be $557.67.

Cash Flows for Municipality

Year Payment to NRG Savings in Energy Expenditure NY SUN Solar Incentives EOY Cash Flow

0 -$ -$ 154,859.30$ 154,859.30$

1 810,000.00$ 161,402.53$ 464,577.90$ (184,019.57)$

2 810,000.00$ 165,336.62$ -$ (644,663.38)$

3 -> 29 810,000.00$ 165,336.62$ -$ (644,663.38)$

30 810,000.00$ 165,336.62$ -$ (644,663.38)$

31 -$ 165,336.62$ -$ 165,336.62$

31+ -$ 165,336.62$ -$ 165,336.62$

NPV of Project for Municipality

Discount rate PV Year 0 PV Year 1 PV Years 2-30 PV Years 31+ NPV

0.0237 154,859.30$ (179,759.28)$ (12,796,847.19)$ 3,374,946.67$ (9,446,800.50)$

^Assuming savings cash flows in perpetuity