Staff Report Item 13
Staff Report Item 13
TO: East Bay Community Energy Board of Directors
FROM: Marie Fontenot, Vice President of Power Resources SUBJECT: Kola Energy Storage, Vitol Ocotillo Solar, Sun Streams 2 Contract Approvals (Action)
DATE: January 18, 2023
__________________________________________________________________ Recommendation
Adopt three Resolutions authorizing the Chief Executive Officer to execute Agreements for three projects awarded short listing through the 2022 Long-Term Resources request for offers (RFO) and bilateral outreach: Kola Energy Storage (NextEra Energy), Ocotillo Solar, LLC (Vitol), and Sun Streams 2 (Longroad Energy).
The project operational dates are listed below:
a. Kola: a 20-year, 125 MW energy storage agreement (ESA) for a battery storage project in Tracy, CA. June, 2025 online date. Developed by NextEra Energy. b. Ocotillo Solar: 10-year, 50 MW RA-only from solar and battery storage project in San Diego County. August 2023 online date. Developed by Vitol. c. Sun Streams 2: 10-year, RA-only from solar project in Maricopa County, Arizona. Already online. Developed by Longroad Energy.
Background and Discussion
The 2022 Long-Term Resource Request for Offers (RFO) is EBCE’s third long-term contract solicitation; it was performed in partnership with San Jose Clean Energy (SJCE). The RFO was launched in February, 2022. The RFO sought several hundred megawatts (MW) of contracts with renewable energy and battery storage projects with a preference for projects located in California, and more preferentially, those located in Alameda County. EBCE’s objective was to drive investments in new renewable and energy storage projects in Alameda County and California, while securing affordable resources to manage future power price risk. EBCE received a very healthy response to its RFO both in volume and quality of projects and proposals.
Staff Report Item 13
EBCE administered the RFO and completed robust analytics using internal tools and the cQuant valuation platform to calculate the net present value of proposed projects and determine the optimal portfolio to meet its objectives. EBCE intends to bring additional contracts from this RFO to the Board for approval in the coming months. All of these contracts will be utilized to hedge EBCE against price fluctuation in the CAISO energy markets and they will also contribute to procurement mandates issued by the California Public Utilities Commission (CPUC). The 2021-2023 Electric Reliability Requirements procurement mandate identified volumes of RA capacity each CPUC-jurisdictional load serving entity must procure and have online in the years 2021, 2022 and 2023.1 The second mandate requires additional volumes of RA come online in years 2023, 2024, 2025, and 2026. That mandate is the “Decision Requirement Procurement to Address Mid-Term Reliability 2023-2026”.2 The Ocotillo Solar and Sun Streams 2 project were offered to EBCE bilaterally, concurrent to ongoing negotiations underway in EBCE’s 2022 Long-Term Resource Request for Offers (RFO) and were evaluated against offers submitted to the RFO.
The Kola project is an ESA from a 125 MW/500 MWh battery storage project. The contracted project, is located in Tracy, CA. It is part of a 400 MW total build-out at this site. The contract is for 20 years with an expected commercial operation date of June 1, 2025. NextEra Energy is an experienced developer having numerous operating renewable energy generation project and energy storage resources in California.
NextEra has executed long-term contracts with several CCAs. The contracting entity is Kola Energy Storage II, LLC.
The Vitol Ocotillo Solar contract is for RA from a solar plus 50 MW/200 MWh battery storage project. The contracted project, Ocotillo Solar, is located in San Diego County. The contract is for 10 years with an expected commercial operation date of August 1, 2023. Vitol is a global energy business founded in 1966. Vitol is an experienced renewables developer with 750 MW of wind and solar projects in operation across the U.S. and over 2 GW in development across the U.S. The contracting entity is Ocotillo Solar LLC.
The Longroad Sun Streams 2 contract is for RA from a 150 MW solar project. The contracted project, Sun Streams 2, is located in Maricopa County, Arizona. The contract is for 10 years. The project is already operational, having achieved commercial operate on July 1, 2021. The energy and associated environmental attributes are committed to a long-term offtaker but the RA attribute is currently uncontracted and was offered to EBCE. Longroad is an experienced developer; Longroad is led by former executives of First Wind Energy. Since 2019, Longroad has brought to eleven major projects to COD, including 1.9 MW of solar projects.
Longroad is currently contracted to operate 3.5 GW of operating or under-1 https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M319/K825/319825388.PDF 2 https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M389/K603/389603637.PDF Staff Report Item 13
construction solar and wind projects across the United States, of which Longroad owns
1.8 GW. The contracting entity is Sun Streams 2 Solar, LLC.
Attachments
A. Resolution Authorizing the CEO to Negotiate and Execute an Energy Storage Agreement with Kola Energy Storage II, LLC
B. Resolution Authorizing the CEO to Negotiate and Execute a Resource Adequacy Agreement with Ocotillo Solar LLC
C. Resolution Authorizing the CEO to Negotiate and Execute a Resource Adequacy Agreement with Sun Streams 2 Solar, LLC
D. PowerPoint Presentation
Attachment Staff Report Item 13A
RESOLUTION NO. R-2023-XX
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE EAST BAY COMMUNITY ENERGY AUTHORITY AUTHORIZING THE CEO TO
NEGOTIATE AND EXECUTE A RESOURCE ADEQUACY AGREEMENT WITH KOLA
ENERGY STORAGE II, LLC
WHEREAS, The East Bay Community Energy Authority (“EBCE”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, Under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of EBCE and parties to the JPA in March of 2020.
WHEREAS, EBCE issued the 2022 Long-Term Resources request for offers (RFO) in February 2022; and
WHEREAS, Kola Energy Storage II, LLC, proposed an Energy Storage Agreement (ESA) for a 125MW/500 MWh battery storage project in San Joaquin County, developed by NextEra Energy; and
WHEREAS, the project is expected to be operational by June 1, 2025 and will provide energy arbitrage and Resource Adequacy (RA) for a term of twenty years.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE EAST BAY COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The CEO is hereby authorized to negotiate and execute a twenty-year energy storage agreement with Kola Energy Storage II, LLC for a 125MW battery energy storage project in San Joaquin County. The final agreement shall include the key terms outlined in the staff report associated with this Resolution.
ADOPTED AND APPROVED this 18th day of January, 2023.
Dan Arriola, Chair
ATTEST:
Attachment Staff Report Item 13A
Adrian Bankhead, Clerk of the Board
Attachment Staff Report Item 13B
RESOLUTION NO. R-2023-XX
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE EAST BAY COMMUNITY ENERGY AUTHORITY AUTHORIZING THE CEO TO
NEGOTIATE AND EXECUTE A RESOURCE ADEQUACY AGREEMENT WITH OCOTILLO
SOLAR LLC
WHEREAS, The East Bay Community Energy Authority (“EBCE”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, Under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of EBCE and parties to the JPA in March of 2020.
WHEREAS, Ocotillo Solar LLC, proposed 50 MW of Resource Adequacy (RA) from a 50W solar and 50 MW/200 MWh battery energy storage project in San Diego County, developed by Vitol;
WHEREAS, the project is expected to be operational by August 1, 2023 and will deliver RA for a term of ten years; and
WHEREAS, EBCE staff considers this is a competitive proposal based on submissions to the 2022 Long-Term Resources Request For Offers (RFO).
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE EAST BAY COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The CEO is hereby authorized to negotiate and execute a ten-year RA agreement with Ocotillo Solar LLC for a 50 MW RA-only agreement from a solar and battery energy storage project in San Diego County. The final agreement shall include the key terms outlined in the staff report associated with this Resolution.
ADOPTED AND APPROVED this 18th day of January, 2023.
Dan Arriola, Chair
ATTEST:
Attachment Staff Report Item 13B
Adrian Bankhead, Clerk of the Board
Attachment Staff Report Item 13C
RESOLUTION NO. R-2023-XX
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE EAST BAY COMMUNITY ENERGY AUTHORITY AUTHORIZING THE CEO TO
NEGOTIATE AND EXECUTE A RESOURCE ADEQUACY AGREEMENT WITH SUN STREAMS 2, LLC
WHEREAS, The East Bay Community Energy Authority (“EBCE”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, Under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of EBCE and parties to the JPA in March of 2020.
WHEREAS, Sun Streams 2, LLC, proposed Resource Adequacy (RA) from a 150W solar project in Maricopa County, Arizona, developed by Longroad Energy; WHEREAS, the project is already operational as of July 1, 2021 and will deliver RA for a term of ten years; and
WHEREAS, EBCE staff considers this is a competitive proposal based on submissions to the 2022 Long-Term Resources Request For Offers (RFO).
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE EAST BAY COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The CEO is hereby authorized to negotiate and execute a ten-year RA agreement with Sun Streams 2, LLC for RA-only from a solar generation resource in Maricopa County, Arizona. The final agreement shall include the key terms outlined in the staff report associated with this Resolution.
ADOPTED AND APPROVED this 18th day of January, 2023.
Dan Arriola, Chair
ATTEST:
Attachment Staff Report Item 13C
Adrian Bankhead, Clerk of the Board
2022 Long-Term Resource RFO:
Project Update
PRESENTED BY: Marie Fontenot
DATE: January 18, 2023
Attachment Staff Report Item 13D
• Solicitation Overview
• Participation
• Evaluation Process
• Current RFO Portfolio Characteristics
• Challenges in Marketplace
• Next Steps
• Appendix: Portfolio Summary
2 Agenda
Attachment Staff Report Item 13D
Goals & Objectives
• Secure a portfolio of contracts
to provide EBCE customers
with affordable renewable
and clean energy sources
• Meet IRP Near- and Mid-Term
Resource Adequacy Reliability
Procurement mandates
• Meet a significant percent of
SB350 long-term contracting
requirements, equal to 65% of
RPS obligations
• Create new renewable energy
projects to deliver PCC1 RECs
• Contract low-cost energy
hedges to compliment
existing portfolio
• Partner with SJCE for
efficiency, to minimize
expenses, and lead the
market in contract terms
Actions
• Issued a broad, open,
competitive solicitation to
ensure wide array of
opportunities considered
• Evaluated combinations of
projects to achieve desired
volume targets
• Typically prioritize project risk,
location, workforce
development, economics, and
other characteristics; limited
ability to do so in this RFO due
to limited offers in earlier years
• Encouraged RFO participants
to be creative and provide
proposal variations on
individual projects and include
battery storage
3 Project Characteristics
Facilities:
• Location: Projects may be within or outside
of California. All energy must be deliverable
to CAISO & must provide RA
• Construction Status: Energy and related
products may come from new resources or
add incremental capacity to existing
resources.
Capacity:
• Minimum Contract Capacity: 5 MW
• Maximum Contract Capacity: none
Delivery Date:
• Energy and RPS attribute delivery must be
within calendar years 2023, 2024, 2025, or
2026 with a preference for projects that
begin delivery earlier within this window.
Contract Duration:
• 10-20 year durations
Technology:
• Renewables, Large Hydro
• Storage – short or long duration; any
technology
Solicitation Overview
Attachment Staff Report Item 13D
4 Solicitation Overview – Eligible Products
Product # Product Name Description Example
Product 1 As-Available RPS Product New or incremental capacity to an existing stand-alone PCC1-eligible generating resource solar, wind, geothermal, small
hydro or ocean (thermal,
wave, or current)
Product 2 As-Available RPS plus
Energy Storage
New or incremental capacity to an existing stand-alone PCC1-eligible generating resource with co-located energy storageSame as above plus storage with 2-hr, 4-hr, or 4-hr+
duration capability
Product 3 Firm or Shaped RPS
Product
New PCC1-eligible generating resources; likely
paired with energy storage
Energy delivered during
specific hours
Product 4 High Capacity Factor, No
On-Site Emissions RPS
Energy
New stand-alone PCC1-eligible generating
resource
Geothermal or Biomass
Product 5 Stand-Alone Energy
Storage Toll or RA-Only
offer
Energy storage may offer a full product “tolling”
structure contract or and RA-only offer
Any storage technology with
2-hr, 4-hr, or 4-hr+ duration
capability
Product 6 Zero-Emitting Capacity
Resources
Must be available every day from 5pm to 10pm
(hours ending 17 through 22); must be able to
deliver at least 5 MWh of energy for every 1 MW
of incremental capacity
Emission-free generation
resources, emissions-free
generation paired with
storage, or demand response
Attachment Staff Report Item 13D
5 Participation
• Less robust project offering than 2020 RFO. 44 unique project sites; 185 contract variations (as compared to 70 sites; 400 project variations in 2020 RFO) • All 6 products that were solicited were offered
• Offers included solar, wind, geothermal, pumped hydro, and storage • Projects based in 6 different states (CA, AZ, ID, NM, NV, OR); predominantly CA – *Only 1 projects in EBCE service territory.
Attachment Staff Report Item 13D
Evaluation Process
• Evaluation Rubric scored 3 areas:
– Counterparty Execution, Offer Competitiveness, and Project Development Status – Multiple items under each area
• Two reviewers were assigned to each project.
• Staff reviewed all submitted information and provided scores for all categories except for Term Sheet Markups and NPV.
– Each item has 10 point max. at its own weighting.
– Term Sheet Markups were scored by one assigned reviewer. – NPV scores were directly incorporated into overall project score with a weighting of 45%. • The Net Present Value was calculated based on simulations on 3 different forward curves • For each forward curve we took a weighted average of the P5 (50%), P50 (25%), and P95 (25%) and then took a simple average across the 3 curves
• We normalized this number on a $/MW basis and the projects were then assigned a 0-10 score based on the NPV distribution
• Scoring and rubric were consistent with the selection process for the 2018 California Renewables RFP and 2020 RPS and Storage RFO.
6 Attachment Staff Report Item 13D
Projects Proposed for Execution
7 Seeking approval for three contracts: one Energy Storage Agreement and two RA-only Agreements (ESA, submitted into EBCE and SJCE’s Joint 2022 Long-Term Resource RFO; RA-only submitted bilaterally)
• Kola Energy Storage: 20 year, 125 MW / 500 MWh energy storage agreement (ESA) in Tracy, CA. Expected to be operational in June, 2025. Developed by NextEra Energy.
• Ocotillo Solar: 10-year, 50 MW RA-only from solar and battery storage project in San Diego County. Expected to be operational August, 2023. Developed by Vitol. • Sun Streams 2: 10-year, RA-only from solar project in Maricopa County, Arizona.
Already operational. Developed by Longroad Energy.
Attachment Staff Report Item 13D
NextEra – Kola Energy Storage
Project Details
8 • Selected via the 2022 Joint CCA Long-Term Resource RFO • Energy Storage Agreement for 125 MW / 500 MWh battery storage project in San Joaquin County (Tracy), CA
• Total site is expected to be 400 MW; EBCE’s 125 MW contract is for a standalone resource • 20-year contract
• Expected Commercial Operation Date is June 1, 2025
• Project has an executed interconnection agreement.
• Project will execute a Project Labor Agreement with local unions. • The contracting entity under NextEra Energy is Kola Energy Storage II, LLC.
Attachment Staff Report Item 13D
NextEra Company Overview
9 • NextEra Energy is one of the world’s largest owner/operators of renewable energy projects. • NextEra is a holding company; it includes ownership of Florida Power & Light. • NextEra owns and operates 28,000 MW of renewable generation resources with an additional 18,000 MW under development.
• NextEra has 4,500 MW of battery storage in operation and under development • Through 2022, NextEra had ~$55 B in planned investments in North American infrastructure including generation, storage and transmission assets.
• NextEra is a large, diversified energy company. Across its business units, NextEra employs 266 people in California. development team is comprised of three individuals who all live in the state.
• NextEra has experience with CCAs; owns and operates generation and storage projects with:
– SVCE, MCE, CleanPower SF, SCP, CPA, VCE, Pioneer, CCCE, PCE Attachment Staff Report Item 13D
Vitol – Ocotillo Solar Project Details
10 • Originated and negotiated bilaterally
• Contract for 50 MW Resource Adequacy from solar and energy storage project in San Diego County
• Total project size is 50 MW solar, 50 MW/200MWh energy storage • 10-year contract
• Expected Commercial Operation Date is August 1, 2023
• Project has an executed interconnection agreement.
• Project has an executed Project Labor Agreement with local unions. Labor procurement plans include a local diverse workforce.
• The contracting entity under Vitol is Ocotillo Solar LLC.
Attachment Staff Report Item 13D
Vitol Company Overview
11 • Founded in 1966, Vitol is a global energy business and active electricity market participant. • Vitol’s renewables platform has over 750 MW of wind and solar projects in operation and over 2 GW in development pipeline across the US.
• Vitol's parent company is investment grade.
• Vitol’s California development team is comprised of 5 individuals who live in the state. The project’s EPC contractor has 155 California employees. The project will have 130 individuals on site at its peak.
• Vitol has experience with CCAs, PUD’s, IOU’s and Retail Providers in California.
Attachment Staff Report Item 13D
Longroad – Sun Streams 2
Project Details
12 • Originated and negotiated bilaterally
• Contract for Resource Adequacy from solar project in Maricopa County, AZ • Total project size is 150 MW
• 10-year contract
• Project is operational as of July 1, 2021
• The contracting entity under Longroad Energy is Sun Streams 2, LLC.
Attachment Staff Report Item 13D
Longroad Company Overview
13 • Longroad is led by former executives of First Wind Energy. • Since 2019, Longroad has brought to eleven major projects to COD, including 1.9 MW of solar projects, with over 400 MW delivering to CAISO
• Longroad has significant experience as owner and operator of solar and wind projects.
Longroad is currently contracted to operate 3.5 GW of operating or under-construction solar and wind projects across the United States, of which Longroad owns 1.8 GW. • Longroad has experience with CCAs with at least 1 executed contract with CCAs:
– PPA with MCE; 211 MW solar project that achieved COD 2020 Attachment Staff Report Item 13D
Portfolio Characteristics
14 Developer Project Location Product Offtake COD Nameplate Sept NQC
Gener
-ation
None at this
time
Storage
NextEra
Energy
Kola Energy
Storage
San Joaquin County
(Tracy), CA ESA EBCE 6/1/2025 125 MW 116.75
RA Only
Vitol Ocotillo Solar San Diego County,
CA RA only EBCE 8/1/2023 50 MW 50
Longroad Sun Streams 2 Maricopa County,
AZ RA only EBCE 7/1/2021 150 MW 16.65
Broad Reach
Power Noosa Energy Storage San Joaquin County, CA RA only EBCE & SJCE 6/1/2024 30 MW 27 Broad Reach
Power
Cascade Energy
Storage San Joaquin County, CA RA only EBCE & SJCE 6/1/2024 5 MW 4.5 Attachment Staff Report Item 13D
Next Steps
• Finalize the three contracts and execute agreements.
• Complete negotiations of projects under consideration. Anticipate final presentations to Board through the winter.
• Assess projects as they hit key milestones and mature further. • Update filing to CPUC on status of 2021-2023 and 2023-2026 Electric Reliability Requirements due February 1, 2023.
15 Attachment Staff Report Item 13D
Appendix
16 Attachment Staff Report Item 13D
Portfolio Summary
17 Attachment Staff Report Item 13D