Large Scale Renewable EnergySummit Farms Power Purchase Agreement

Alignment with Plan for Action on Climate Change

Joe HigginsDirector, Infrastructure Business Operations

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Pillar A Improve our understanding of climate change and advance novel, targeted mitigation and adaptation solutions

Pillar B Accelerate progress towards low- and zero-carbon energy technologies

Pillar C Educate a new generation of climate, energy, and environmental innovators

Pillar D Share what we know and learn from others around the world

Pillar E Use our community as a test bed for change

One year ago….

Goal: Reduce campus carbon emissions by at least 32% by 2030from a 2014 baseline

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Summit Farms

60 Megawatts650 Acres255,000 Panels

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Summit Farms

60 Megawatts650 Acres255,000 Panels

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Why not New England?

Weak Market Fundamentals in New England

• Oversupply: Hydro from Quebec, new wind capacity and more stable gas sourcing costs expected to depress clearing price

• Congestion: Increasing risk for wind projects in ME• Scale: Few large scale projects in New England due to

land constraints

• Development Cost: Expensive due to high land cost and regulatory hurdles

• Resource Availability: Lower wind and solar resource hampers project economics

We evaluated 41 projects, across 14 states. Targeting a renewable energy project in New England was highly desirable, but came with many challenges.

11/41

2/41

0

> 11 New England Projects Evaluated

NE Project Selection Progression

> 2 NE projects projected positive NPVs (both ME wind projects)

Leve

lized

Sav

ings

($/M

Wh)

($40.00)

($30.00)

($20.00)

($10.00)

$0.00

$10.00

$20.00

Two New England projects were forecast to produce positive NPVs, however they weren’t selected due to elevated risk profiles

> Weak market fundamentals, community opposition, and developer risk weighed against NE projects

• Capacity Caps: Massachusetts placed a cap on the total amount of solar capacity net metering customers can connect to the grid—4 percent of peak demand for private installations. This cap has been reached in most all utility territories. New solar projects had ground to a halt. On April 5, the legislature approved compromise legislation lifting the net metering cap by 3 percent, but also cuts compensation rates by 40 percent for private-sector systems, diminishing project economics.

• Capacity Limits: Solar net metering facilities can’t be larger than 2MW, to reach a meaningful size for MIT we’d need to aggregate many small sites.

Challenges in Massachusetts

SummitFarmsNCSolar

Leveled Economics of 41 Projects Evaluated New England Projects

Favorable

Unfavorable

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Project significance

“ Largest aggregated purchase by non-affiliated parties in the U.S.

“

MIT’s purchase is the largest higher education solar purchase in the Eastern U.S.

““Reduces MIT’s campus emissions by 17% from our 2014 baseline

““Provides renewable energy equivalent to 40% of MIT’s campus electric use

““

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Plan for Action on Climate Change - Alignment

AImprove our understanding of climate change and advance novel, targeted mitigation and adaptation solutions

Technology solutions & strategies

B Accelerate progress towards low- and zero-carbon energy technologies Research opportunities

C Educate a new generation of climate, energy, and environmental innovators Educational opportunities

D Share what we know and learn from others around the world

Demonstrates leadership

Collaboration & partnerships

E Use our community as a test bed for change

Contributes to 32% reduction goal

Additionality

Environment & health benefits

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Programgrowth

2014MIT

Baseline

213,000

Exceed Goal

CentralUtility

Plant (CUP) enhancements

Efficiency gains in buildings

10% 10%

12 -15%

On-siteSolar

1-3%

Large scaleSolar project

17%

TBD Metric tons CO2e

Emissions reduction from2014 baseline

Large scale renewable energy plays a significant role in emissions reduction and alignment with our Plan for Action on Climate Change

Stage 1

Stage 2

Reduce campus carbon emissions by at least 32% by 2030 from a 2014 baseline

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Power Purchase Agreement (PPA) – How it works

Summit Farms

25 Year NPVRevenue $99 MCost $82 MSavings $17 M

Wholesale Energy Market

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

38,000 posts

Sun tracking panels

200 miles of wire

40 inverters

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Transmission connection 230,000 V

Collector substation34,500 V

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

What’s next?

• Performance validation

• Operationalizing

• Research & education integration

MA S S A C H U S E T T S I N S T I T U T E O F T E C H N O L O G Y

Sean AdamsOffice of Treasury and Planning

Margaret BrillOffice of the General Counsel

Don HolmesMaintenance and Utilities

Tom KileyOfficeoftheProvost

Monica LeeDepartment of Facilities Communications

Allen Marcum Office of Treasury and Planning

With special thanks to:Richelle NessrallaOffice of the General Counsel

Julie NewmanOffice of Sustainability

Nate NickersonOffice of VP for Communications

Frank O’SullivanMITEnergyInitiative

Ken PackardMaintenance and Utilities

Patrick RoweMITInvestmentManagementCompany