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Community Choice Aggregation Feasibility Analysis Alameda County <br />June, 2016 10 MRW & Associates, LLC <br />and $80/MWh for geothermal.22 We used these prices as the starting point for our forecast of CCA renewable energy procurement costs. For geothermal, which is a relatively mature <br />technology, we assumed that new contract prices would simply escalate with inflation. Solar and <br />wind prices are a function of technology costs, which have generally been declining over time; <br />financing costs, which have been very low in recent years; and tax incentives, which significantly reduce project costs, but phase out over time. In the near-term we would not expect prices to increase as technology costs and continued tax incentives provide downward pressure <br />and likely offset any increase in financing costs or other competitive pressure from an increasing <br />demand for renewable energy in California. Thus we have held solar and wind prices constant in <br />nominal dollars through 2020. Beyond 2020, with increasing competitive pressure associated with the drive to a 50% RPS and the anticipated phase-out of federal tax incentives (offset in part by continued declining technology costs), we would expect prices to increase somewhat and <br />have assumed they escalate at the rate of inflation. In addition to this base case price outlook, we <br />also consider a high solar cost scenario based on work performed by Lawrence Berkeley <br />Laboratory on the value of tax incentives. In the high scenario we assume that costs increase with the phase-out of federal tax incentives, without being offset by declining technology costs. Figure 11 shows the resulting solar price forecasts for the two scenarios. <br /> <br />Figure 11. Solar Price Forecast <br /> <br /> <br />22 MRW relied exclusively on prices from municipal utilities and CCAs because investor-owned utility contract <br />prices from this period are not yet public. We included all reported wind and solar power purchase agreements, excluding local builds (which generally come at a price premium), as reported in California Energy Markets, an <br />independent news service from Energy Newsdata, from January 2015-January 2016 (see issues dated July 31, August 14, October 16, October 30, 2015, and January 15, 2016).