Title
Biomass Power and Solar Power Production Partnership with Salt River Project (Ordinance S-49754)
Description
Request to authorize the City Manager, or his designee, to enter into two agreements between the City of Phoenix and Salt River Project for the production of Biomass Power and Solar Power. Further request authorization for the City Treasurer to accept and for the City Controller to disburse funds related to this item. The total amount will not exceed $13 million.
Report
Summary
Arizona forests are a high risk for catastrophic fires and will continue to be devastated each year without proactive forest restoration efforts. These fires could significantly impact the watersheds that feed the Salt River Project's (SRP) reservoir system and provide water to Phoenix. Wildfires degrade water quality, increase water treatment costs, and impact water system resiliency by filling reservoirs with debris and sediment. Phoenix has a history of partnering with SRP and other City partners in developing and executing strategic forest thinning projects to better protect the health of the forests and the watershed system.
The challenge to reforestation efforts is finding marketable industry options for the enormous amount of low-value, small ponderosa pine trees found in Arizona’s forests. Bioenergy is one of the few options available to dispose of these trees and supports the industry to ensure thinning projects move forward to continue protecting watersheds. Bioenergy is a renewable energy resource that generates electricity through a wood-burning boiler. Currently, SRP is contracted to receive power from a biomass plant located in Snowflake, Arizona, owned and operated by Novo BioPower, that uses small trees from forest thinning, other non-marketable woody material such as branches that are left over from thinning operations and sawmill residues.
The new agreement between Phoenix, SRP, and other Valley cities, supports SRP's continuance of the biomass power purchase agreement with Novo BioPower to work on forest thinning projects in areas at risk of devastating wildfires. This agreement will assist to restore critical watersheds that provide water to the Valley by investing in forest thinning projects and biomass power.
Through the agreement, SRP will purchase power and associated environmental attributes from Novo BioPower’s use of forest thinning sourced within SRP watersheds. SRP will retire in Phoenix’s name renewable energy certificates (“RECs”), water benefits, acres treated benefits, and carbon benefits associated with the clean energy generation and forest thinning efforts. In addition to the many environmental benefits specific to watershed protection and biomass investment, the City is working with SRP on a 20 megawatt solar development project that will produce annual renewable energy credits.
The Water Services Department is seeking approval for two agreements with SRP for the biomass power and solar power respectively for a total investment of $1.3 million per year for a 10 year term.
Concurrence/Previous Council Action
The Transportation, Infrastructure, and Planning Subcommittee recommended approval of this item on May 17, 2023.
Financial Impact
The total amount will not exceed $13 million for the 10 year term. Funding in the amount of $1.3 million, per year, for the term of the agreement, is available in the Water Services operating budget.
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Water Services Department.