To: BOARD OF SUPERVISORS
From: Executive Office
Meeting Date: May 5, 2026
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Department Contact: |
Sara Pierce |
Phone: |
707-463-4441 |
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Department Contact: |
Doug Anderson |
Phone: |
707-264-6054 |
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Item Type: Regular Agenda |
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Time Allocated for Item: 30 Minutes |
Agenda Title:
title
Discussion and Possible Action Including Direction to Staff Regarding Updated Cash Flow Projections for the Ameresco Proposed Energy Saving Performance Project and Whether to Continue with the Project or Not
(Sponsor: Executive Office)
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Recommended Action/Motion:
recommendation
Present updated cash flow projections for the Ameresco Proposed Energy Saving Performance Project and provide direction to staff on whether to continue with the project or not.
End
Previous Board/Board Committee Actions:
During the August 3, 2021, Board of Supervisors General Meeting the Mendocino County Board of Supervisors signed Resolution No. 21-117 declaring its intent to reduce and eliminate the carbon footprint of buildings and operations of the County of Mendocino, with an initial investment of at least $2,000,000. Among the resolutions was direction to staff to leverage this investment with grants and low interest financing resources.
During the July 25, 2023, Board of Supervisors meeting the Board of Supervisors accepted the proposed Carbon Footprint Reduction Priority Plan and approved the priority projects identified for funding with the Carbon Reduction Funds in the amount of $1,000,000.
During the September 10, 2024, Board of Supervisors Meeting, the Board of Supervisors awarded the ESCO Request for Proposals to Ameresco and approved a Project Development Agreement (PDA) with Ameresco to complete Investment Grade Audits for the development of Energy Savings Projects at selected County facilities.
During the December 17, 2024 Board of Supervisors Meeting the Board of Supervisors expressed support for the Willits Library project and directed staff to proceed the Metal Roof option and include the solar component, while requesting additional information and options for the Battery Energy Storage System (BESS) component.
On April 22, 2025, The Board of Supervisors provided direction to proceed with the Willits Library project in phases beginning with the roof replacement as required by California Public Contract Code and to bring back the solar and battery options for future direction.
During the July 29, 2025 Board meeting, there was discussion regarding the development of an energy saving project Agreement with Ameresco and staff requested direction from the Board on 1) County’s desire to incur additional debt through equipment financing; 2) on how to prioritize between cost saving measures and carbon reduction measures; and 3) on the maximum capital contribution to the project. Direction was provided to have staff continue with option 2 as presented, which includes: utilizing the Carbon Reduction funds from PG&E in the Amount of $1.52M, no financing, single solar site, and net savings of $1.99M over 25 years. For reference, option 1 was to utilize Carbon Reduction Funds from PG&E in the amount of $1M and incur roughly $3.9M in debt through equipment financing which would have potentially seen net savings of roughly $8.14M over 25 years.
During the March 24, 2026 Board meeting, there was discussion regarding updated cash flow projections and whether to continue with the project or not. During the meeting and Ad Hoc of Supervisor Williams and Supervisor Haschak was created to work with staff to review new information and return to the Board with a completed plan to either continue or stop the Ameresco project.
Summary of Request:
During the March 24, 2026 Board meeting staff was provided direction to work with the newly created Ad Hoc to review new information and return to the Board with a completed plan to either continue or stop the Ameresco project.
The Ad Hoc and staff met with Ameresco on April 16, 2026, to discuss the most recent changes to the cash flow projections. Below is a recap of the changes.
• Price increases due to utilizing new Foreign Entity of Concern (FEOC) compliant modules and inverters.
• Inclusion of the Investment Tax Credit (ITC) of 30%.
• Energy savings escalations at 6.5% based on City of Ukiah published rates for 2026-2028.
In order for the County to claim the ITC, the County must pay in full >5% of project costs on/before July 3, 2026, take delivery of equipment within 105 days of purchase, and complete the project within 4 years of start date. If the County is unable to pay in full >5% of the project costs on/before July 3, 2026, the County could still be eligible for the credit, but the project must be completed and placed in service prior to December 31, 2027. Ameresco indicated the project timeline after contract execution is around 14 months for design, permit, equipment lead time and construction. Staff believe it would be extremely difficult to get a contract in place and >5% of the project procured before July 3, 2026, which leaves the County with the alternative option to claim the credits. However, due to the timing of County operations, Board meetings, and Ameresco’s estimated timeline, staff also believe it would be difficult for the entire project to be completed and placed in service prior to December 31, 2027.
Additionally, the Ad Hoc and staff went back and reviewed the 6.5% energy savings escalation provided by Ameresco. In comparison PG&E rates increase approximately 92% over the 2014-2024 period, which equates to roughly 6-7% Compound Annual Growth Rate (CAGR). However, that period for PG&E includes extraordinary cost drivers, including wildfire mitigation, deferred maintenance, and bankruptcy-related recovery. More importantly, PG&E’s forward-looking filings and guidance indicate expected increases in the range of approximately 2-4% annually, with around 3.5% projected for the 2026-203 period. This calls into question the 6.5% as a long-term assumption being used in the cash flow projections.
It is also important to note that the project is proposed for the County Administrative Cetner at 501 Low Gap Road, which is served by the City of Ukiah electric utility. As a result, the relevant escalation rate for the analysis is not PG&E, but the City of Ukiah’s rates. The value of solar energy generated by the project is directly tied to the future costs of electricity from the city, and therefore the City’s long-term rate trajectory is the appropriate basis for evaluating savings. The Ad Hoc reached out to City representatives to obtain a long-term view. The City noted, “If you look at a short term CAGR for the City’s electricity, it too would be very high. This is largely because we did not raise electricity rates at all between 1996 and 2016. Twenty years without a rate increase, significant infrastructure improvements, including a new substation reduced the Utility’s reserves to a low level. Playing catch up is never fun. If you look at our CAGR, even over a 10-year period, it will appear quite high (approx. 8.8%)- but the reality is that the prices we charged in 2016, before our first rate increase in January 2017 were the same as what we charged in 1996. I believe a longer-term view provides better context, over a 30-year period, the CAGR would be 2.85%.”
Taking a middle of the road approach, staff created various cash flows for discussion.
Attached to the agenda item are six cashflows:
• One with the ITC include and energy savings escalation at 6.5%
• One with the ITC included and energy savings escalation at 4%
• One with the ITC included and energy savings escalation at 2.85%
• One without the ITC included and energy savings escalation at 6.5%
• One without the ITC included and energy savings escalation at 4%
• One without the ITC included and energy savings escalation at 2.85%
It is staff’s recommendation we focus on the cashflows without the ITC due to concerns noted above.
As a reminder the County allocated funds for a solar energy project to a) reduce the County’s carbon footprint; and b) reduce the County’s ongoing energy costs. As a baseline condition, a proposal must demonstrate that savings exceed total expenses over the life of the project. It is fiscally responsible to factor in net present value calculations.
Alternative Action/Motion:
Provide Direction to Staff
Strategic Plan Priority Designation: A Prepared and Resilient County
Supervisorial District: District 2
Vote Requirement: Majority
Supplemental Information Available Online At: N/A
Fiscal Details:
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source of funding: PG&E Funding |
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current f/y cost: $1.5M |
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budget clarification: N/A |
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annual recurring cost: |
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budgeted in current f/y (if no, please describe): No |
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revenue agreement: No |
AGREEMENT/RESOLUTION/ORDINANCE APPROVED BY COUNTY COUNSEL: N/A
CEO Liaison: Executive Office
CEO Review: Yes
CEO Comments:
FOR COB USE ONLY
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Executed By: Atlas Pearson, Senior Deputy Clerk |
Final Status: Direction Given to Staff |
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Date: May 5, 2026 |
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