Board of Directors Special Board Retreat – Power Procurement Wednesday, March 8, 2023
12:00 pm
In person:
The Lake Merritt Room
Cal State East Bay - the Oakland Center
In the Transpacific Centre
1000 Broadway, Suite 109
Oakland, CA 94607
Or from the following locations:
• Berkeley City Hall - 5th fl, Rosebud Room - 2180 Milvia St, Berkeley, CA 94704 (For access, please contact James Chang at 415-527-7765.) • City Council Conference Room - 200 Old Bernal Ave, Pleasanton, CA 94566 • Scott Haggerty Heritage House - 4501 Pleasanton Ave, Pleasanton, CA 94566 • 300 Reunion Boulevard, Dallas, Texas 75207
• Ledding Library - 10660 SE 21st Ave St, Milwaukie, OR 97222 Via Zoom:
https://us02web.zoom.us/j/87023071843
Dial(for higher quality, dial a number based on your current location): US: +1 669 900 6833 or +1 346 248 7799 or +1 253 215 8782 or +1 929 205 6099 or +1 301 715 8592 or 888 475 4499 (Toll Free) or 877 853 5257 (Toll Free)
Webinar ID: 870 2307 1843
Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least 2 working days before the meeting at (510) 906-0491 or [email protected].
If you have anything that you wish to be distributed to the Board of Directors, please email it to the clerk by 5:00 pm the day prior to the meeting.
1. Welcome & Roll Call
2. Pledge of Allegiance
3. Public Comment
East Bay Community Energy
Board of Directors Page | 2
This item is reserved for persons wishing to address the Board on any EBCE-related matters that are not otherwise on this meeting agenda. Public comments on matters listed on the agenda shall be heard at the time the matter is called. As with all public comment, members of the public who wish to address the Board are customarily limited to two minutes per speaker and must complete an electronic speaker slip. The Board Chair may increase or decrease the time allotted to each speaker.
4. Power Procurement Update (Informational Item)
Receive update on Power Procurement activities.
5. Board Member and Staff Announcements including requests to place items on future Board agendas
6. Adjournment to Wednesday, March 15, 2023 at 6:00 pm.
How EBCE
Procures
Electricity
MARCH 9, 2023
Agenda
2 • Section 1: Power Resources Team
• Section 2: California Energy Markets Overview
• Section 3: Overview of Key Compliance Obligations
• Section 4: Building a Clean Energy Portfolio
• Section 5: Contract & Project Lifecycle
SECTION 1
Power Resources
Team
3 4
EBCE’s Power Resources Team
Marie Fontenot Jim Dorrance Chris Eshleman Karen Lee
Izzy Carson Alan Siebuhr Ray Dai Matt Chiodo
Shannon Rivers Jason Zeng
What We Do
5 Portfolio Management
SECTION 2
California Energy
Landscape
6 North American Balancing Authority Areas
7 California Balancing Authority Areas
8 CAISO BAA
• Avg. Peak Load ~47,000 MW
o 2022 Peak: 52,061 MW (September)
• 26,000 circuit miles of transmission
Role of CAISO
• Competitive Wholesale Power Market
o Efficiently match supply & demand
• Reliable Operations
• Grid Planning and Development
CAISO Markets
9 Day-Ahead Market
• Matching Supply / Demand
• Majority of Transitions
• Market Processes
Real-Time Market
• Matching Supply / Demand
• Incremental Adjustments to Day-Ahead
• 15-Min. and 5 Min. settlements
• Market Processes
SECTION 3:
Overview of key
compliance rules
10 11
Compliance & Other Obligations
• Annual Year-Ahead System/Local/Flexible
Resource Adequacy Filing
• Energy Division Resource Adequacy Price
Data Request
• Ten-Year Resource Adequacy Data Request
• Historical Load Data (Previous Year)
• Independent Audit of the Annual Power
Source Disclosure Report and Power
Content Label
• Integrated Resource Plan
• Required Electric System Reliability
Procurement 2021-2023
• Required IRP Procurement 2021-2028
• Annual IRP Data Request
• Power Source Disclosure Report
• Renewable Portfolio Standard Compliance
Report
• Renewable Portfolio Standard Compliance
Report - Supplemental
• Renewables Portfolio Standard
Procurement Plan
• R100: 100% RPS tariff
• Bright Choice: RPS % exceeds compliance
requirements
• Commitment to 0 emission portfolio by 2030
• Financial prudence
• Managing costs for EBCE customers (~20%
low income)
• Revised Year-Ahead Load Forecast
• Year-Ahead Load Forecast
• Flexible Capacity Needs Assessment
and Allocation
• Monthly Load Migration Forecast
• Monthly System/Local/Flexible
Resource Adequacy Filing
• Quarterly Revised Load Forecast for
Cost Allocation Mechanism
• Retail Sales Report
• Energy Storage Requirement Report
• RPS-PCIA Quarterly Data Report
• RA-PCIA Quarterly Data Report
• Imports/Exports Report
• Imports/Exports Report Verification
• LCFS Annual Fuel Pathway Report
• Registration of Specified Source
Facilities
• Renewables Portfolio Standard
Reporting & REC Retirement
• Revised August Load Forecast for
Local Resource Adequacy
Reallocation
Compliance Commitments
Regulatory Bodies
12 CAISO
California Independent System Operator
• Manages the flow of electricity on high-voltage power lines, operates a wholesale energy market, and oversees
infrastructure planning.
FERC
Federal Energy Regulatory Commission
• United States federal agency that regulates the transmission and wholesale sale of electricity and natural gas in interstate commerce.
NERC
North American Electric Reliability Corporation
• Nonprofit corporation created by the electric utility industry to promote the reliability and adequacy of bulk power
transmission in the electric utility systems of North America.
CPUC
California Public Utilities Commission
• Regulatory agency that regulates privately owned public utilities in the state of California, including electric power, telecommunications, natural gas and water companies.
CEC
California Energy Commission
• As the state’s primary policy and planning agency, the Energy Commission is committed to reducing energy costs and
environmental impacts of energy use while ensuring a safe, resilient, and reliable supply of energy.
And more!
• CARB, CSWRCB, DWR, etc
Resource Adequacy
13 Resource Adequacy (RA):
• A compliance product to ensure there is a plan for adequate resources to match customer demand with available generation at any hour of the day in the CAISO • Resource Adequacy is purchased as available capacity per month Requirements:
• EBCE is required to procure in each month:
Peak customer demand + Planning Reserve Margin (16%)
• Load serving entities (LSEs) must demonstrate
compliance to both the CPUC and CAISO,
annually and monthly 0
10,000
20,000
30,000
40,000
50,000
60,000
1 2 3 4 5 6 7 8 9 10 11 12
Example Monthly CAISO System RA Requirement
Resource Adequacy - Types
14 EBCE currently has two types of RA requirements: System and Flexible System
• Interconnected to CAISO
• Imports: energy imported
from outside the CAISO
Flexible
• Determined by resource
ability to increase output
during hours of “flexible
need”
• Battery storage resources
are flex
*Local RA and Central Procurement Entity (CPE): EBCE was responsible for a Local RA requirement in 2022 and years prior. Starting in 2023, CPE is responsible for Local RA procurement. 15 • Effective Load Carrying Capability (ELCC) is used to determine the contribution of intermittent resources to system reliability.
• Solar and wind offer diminishing contributions to RA as penetration grows, particularly for solar.
• Dramatic decrease in solar ELCC in summer months is contributing to a more constrained RA market in summer.
0%
5%
10%
15%
20%
25%
30%
35%
40%
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Solar ELCC
2020 2023
0%
5%
10%
15%
20%
25%
30%
35%
40%
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Wind ELCC
2020 2023
Resource Adequacy - Renewables
16 • Intent of RA Reform: Minimize customer cost, meet hourly reliability needs, be adaptable to a changing grid.
• Full implementation starts with compliance year 2025. • Under Slice of Day, RA obligations based on EBCE’s hourly share of CAISO load for the “worst day” of each month.
Example:
RA Reform and Slice of Day
RA – Reliability Procurement Mandates
17 • Three CPUC procurement orders
• Incremental capacity to be procured from resources such as solar, wind, storage, hybrid, geothermal, demand response.
Near-Term
Reliability
Mid-Term Reliability Supplemental Mid-Term Reliability
Compliance Term 2021-2023 2023-26 2026-27
Total Procurement
(MW NQC) 3,300 11,500 4,000
EBCE Requirement
(MW) 99.6 418 136
Penalty none Cost of New Entry Cost of New Entry
Compliance with Renewable Portfolio Standard
18 What is Renewable Portfolio Standard (RPS)?
• Key program for building more renewable energy facilities • Sets increasing renewable energy purchase requirements for CA Load-Serving Entities
• Must be procured from RPS-eligible facilities
• Targets verified on multi-year period rather than annually CP#
Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
RPS % 36% 39% 41% 44% 47% 49% 52% 55% 57% 60%
CP4 CP5 CP6
Renewable Energy Credits and Portfolio Content
Category Classifications
19 PCC 1 Energy and REC are from same source and delivered into a California Balancing Authority (CBA) without any substitution
PCC 2 Substitute Energy not from the same source as REC PCC 3 Electricity Products Not Qualified as PCC 1 or PCC 2, Including Unbundled RECs Renewable Energy Credits (RECs):
• Represent clean energy attributes of renewable electricity • Each REC is equivalent one MWh of renewable electricity generated • Limitations to the amount that each group can count towards RPS requirements • Classified into three distinct categories Portfolio Content Categories (PCC) RPS Compliance vs Power Content Reporting
20 Power Content
• Annual requirement, for 1
calendar year of purchases
• Detailed breakdown on
sources of energy used to
provide electricity
• Resembles a nutrition label
RPS Compliance
• Multi-year compliance
periods with annual
reporting requirements
• Minimum required percent
of electricity from
designated renewable
energy resources
vs.
Long-Term Renewable Procurement
21 • The chart below is renewables plus large hydro as a percent of sales through 2030 • Shows long- and short-term renewables, large hydro contracted to date with the additional Carbon-free or renewable purchases needed to reach annual goals 22 Emissions Reporting
• EBCE reports annual emissions
through the Power Source Disclosure
Report o Emissions Factor is calculated as
lbs CO
2e/MWh for power
purchased from emitting sources,
or unspecified power
o Annual emissions for purchased
power is shared with customers
every year on the Power Content
Label
SECTION 4:
How do we build a
clean energy
portfolio?
23 Hypothetical Future January
Asset Values
24 Hypothetical Future July
Asset Values
25 Step 1: Needs Assessment
Asset Values
26 • Demand forecast o Peak vs average monthly loads • Quantity Compliance Requirements o RPS o RA • Other EBCE-goals • Market Dynamics o Open position o Market price exposure • Risk Management o Hedge strategies o Finance-ability of transactions Step 2: Prioritization & Valuation
Asset Values
27 Prioritization
• Compliance Requirements
o RPS
o RA
• Market Dynamics
o Open position
o Market price exposure
• Risk Management
o Hedge strategies
o Finance-ability of transactions
• Other EBCE goals
Valuation
• Quantitative Inputs
o Forward Curve Development (Energy, RA,
RPS)
o Estimated Value of Location
o Others
• Qualitative Inputs
o Open position risk (+ or -)
o Credit terms & seller creditworthiness
o Counterparty concentration
o Project risk/ability to construct in a
timely manner
o Environmental considerations
Key Market Drivers
28 Step 3: Define Eligible Products
Asset Values
29 Example: “un-hedged” January, 2024
30 Currently
unhedged
Fill open position with:
• Fixed-price energy
purchases (short-term
hedges)
• Additional generating
resources
• Dispatchable energy
storage
CAISO Wide Curtailment
31 Step 4: Go-to-Market
Asset Values
32 • Identify Product
• Develop Timeline
• Market/Seller Outreach
• Evaluate Offers
• Negotiate
• Calculate final, proposed notional values
• Execute Agreements
EBCE Priorities
33 •Resource
Adequacy
•RPS
Program
•RECs
•Carbon-free Energy
•Physical
hedges
•Financial
hedges
•Resource
Adequacy
•Incremental
Resources
Grid
Reliability
Financial
Prudence
Clean /
Customer
Commit-ments
Compliance
34 Roles of Different Hedge Products
CAISO Energy
Market Purchases
Day-Ahead Market
Realtime Market
Power Purchase
Agreements
Physical
•Energy
•Energy + REC
•Energy + REC + RA
•Energy + RA
•REC
•RA
Financial
•Energy
Forward/Futures
Contracts
Physical: Forward
Hedges
•Block
•Shaped
•Options
•Import RA
Financial: Exchange
Traded Futures
•Block
Example Portfolio – Market Exposure
35 Modeling exhibits a preference for portfolios that, on average, limit EBCE’s sales of excess electricity into the market. This leads to periods of market reliance in “high load” months to limit exposure to low / negative prices in “lower load” months
Sample week
– April 2030
Sample week
– July 2030
Portfolio is “long”
36 Risk Management
Development Performance Volume Profile Basis Credit
Balancing Price Length of
Contract
Change in
Law Compliance Force Majeure
SECTION 5:
Contract & Project
Lifecycle
37 Long-Term Contract Lifecycle
38 Execute PPA
Before
Commercial
Operation
Commercial
Operation Online Contract Expiration
• Executed by
counterparty
and EBCE’s
CEO and
General
Counsel
• Post
Development
Security
• Finalize
Permits
• Start
Construction
• Finish
Construction
• Test Resource
• Post
Performance
Security
• Begin
delivery
under
contract
• Generate or
Deliver other
contracted
Products
• Ongoing
performance
assessments
• Test Resource
• Pay Damages
to Buyer if
applicable
• Buyer pays
Seller
After contract negotiation & EBCE Board approval…
• Return
unused /
eligible
Performance
Security
• Some
elements of
contract
continue
(e.g.
reporting &
audit) for a
limited
period
Common Challenges in Long-Term Offtake
During Delivery Term:
• Generation/weather
impact on
performance
• Curtailment of Energy
• Outages (Planned or
Forced)
• Equipment failures
(“lemons”)
39 Before Project is Online:
• Finalizing permits
• Interconnection
• Securing all materials
to begin construction
o Anti-circumvention
o Supply Chain
disruption
o Delays at ports
• Construction
“surprises”
Financial Performance:
• Resource location is
“congested”
• Changes to CAISO
model make resource
location less valuable
• Event based changes
to energy value (gas,
weather, build-out)
Summary: EBCE’s Current Long-Term Portfolio
40 Developer Project Tech Size (MW) Online Date Term (Years) Clearway Golden Fields Solar 112 Dec. ‘20 15
Greenbacker SHWEC Wind 58 July ‘21 20
Pattern Tecolote Wind 100 Dec. ‘21 10
Convergent Henrietta D Battery Storage 10, 4-hr Dec. ‘21 15 Idemitsu Tulare Solar Solar 56 April ‘22 15
Clearway Daggett 3 Solar + Storage 50 (12.5, 4-hr) Aug. ‘23 15 EDP Renewable Scarlet Solar + Storage 100 (30, 4-hr) Dec. ‘23 20 Intersect Power Oberon Solar + Storage 125 (125 RA only) Dec. ‘23 15 LS Power Tumbleweed Battery Storage 50, 4-hr June ‘24 15 Nextera Kola Battery Storage 125, 4-hr April ‘25 20
Fervo Energy FEC Nevada 1 Geothermal 40 June ‘26 15
Questions & Discussion
Acronym Key
Acronym Definition Acronym Definition
ACS Asset-Controlling Supply EPE Electric Power Entitty CAISO California Independent System Operator FTR Firm Transmission Rights CEC California Energy Commission GEP Guaranteed Energy Production CPUC California Public Utilities Commission GT Green Tariff DR Demand Response HLH High Load Hour
ERRA Energy Resource Recovery Account ICE Intercontinentals Exchange IOU Investor-Owned Utility IEPR Integrated Energy Policy Report IRP Integrated Resource Plan IST Inter-SC Trades (Inter-Scheduling Coordinator Trades) LSE Load-Serving Entity LCOE Levelized Cost of Electricity NCPA Northern California Power Agency LHL Low Load Hour NQC Net Qualifying Capacity LMP Locational Marginal Price PCIA Power Charge Indifference Adjustment LSE Load Serving Entity PCL Power Content Label Mid-C Mid-Columbia (located at Washington-Oregon border) PPA Power Purchase Agreement MRTU Market Redesign and Technology Upgrade PDR Proxy Demand Response NERC North America Electric Reliability Corporation RA Resource Adequacy NOB Nevada-Oregon Border
REC Renewable Energy Credit NP CAISO Zone (standing for Northern Path) RPS Renewable Portfolio Standard OCEI Oakland Clean Energy Initiative SQMD Settlement Quality Meter Data OTCGH OTC Global Holdings ADS Automated Dispatch Signal Pnode Pricing node
APN Aggregated Pricing Node POU Public-Owned Utility
COB California-Oregon Border PSDR Power Source Disclosure Report CRR Congestion Revenue Rights PTO Participating Transmission Owner CS Community Solar RTO Regional Transmission Organizations CUP Conditional Use Permit SC Scheduling Coordinator
DA Direct Access SP CAISO Zone (standing for Southern Path) DAC Disadvantaged Community TO Transmission Owner
DLAP Default Load Aggregation Point UIE Uninstructed Imbalance Energy DLC Departing Load Charges WAPA Western Area Power Administration DRAM Demand Response Auction Mechanism WECC Western Electricity Coordinating Council EFC Effective Flexible Capacity WREGIS Western Renewable Energy Generation Information System ELCC Effecitve Load Carrying Capacity