Consent Item 8. MRP Incremental BESS — Ava Community Energy Board of Directors, September 20, 2023

Consent Item 8
Consent Item 8
TO: East Bay Community Energy Board of Directors
FROM: Marie Fontenot, Vice President of Power Resources SUBJECT: Ratifying Resolution No. R-2023-18, Clarifying and Affirming that such Board authorization includes the CEO’s authority to negotiate and execute an agreement with MRP Pacifica Marketing, LLC regarding the 16 MW/MWh battery storage project in Kings County (Action) DATE: September 20, 2023
__________________________________________________________________ Recommendation
Adopt one Resolution ratifying Resolution No. R-2023-18, clarifying and affirming that such Board authorization includes the CEO’s authority to negotiate and execute an agreement with MRP Pacifica Marketing, LLC regarding the 16 MW/MWh battery storage project in Kings County and authorizing CEO take necessary action to implement such project. The project components and operational date are detailed below:
a. Malaga: This encompasses a 15-year, financial hedge and RA from a co-located 96 MW natural gas peaker, a 96MW/96MWh battery storage project in Fresno County, CA, and a 16MW/64MWh battery storage project in Kings County. The expected online date for the battery projects is April 1, 2024.

The project is developed by Middle River Power, LLC.

Background and Discussion
The 2022 Long-Term Resource Request for Offers (RFO) is EBCE’s second long-term contract solicitation. 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 Consent Item 8
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.

The Malaga project is a financial hedge and RA agreement. It will be comprised of a co-located 96MW natural gas peaking facility and a 96MW/96MWh battery storage project in Fresno County and a 16MW/64MWh battery storage facility in Kings County.

The natural gas peaking facility is already built and operational; the battery is new and not yet developed. The contract is for 15 years with an expected commercial operation date of April 1, 2024. Middle River Power is an experienced developer and project owner having numerous operating natural gas facilities in California. Middle River Power has executed a similar agreement with another CCA. The contracting entity is MRP Pacifica Marketing, LLC.

Attachments
A. Resolution Ratifying Resolution No. R-2023-18, Clarifying and Affirming that such Board authorization includes the CEO’s authority to negotiate and execute an agreement with MRP Pacifica Marketing, LLC and authorizing CEO take necessary action to implement the 16MW/64MWh battery storage project with MRP Pacifica Marketing, LLC in Kings County.

B. Resolution No. R-2023-18.
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 Attachment Consent Item 8A
RESOLUTION NO. R-2023-XX

A RESOLUTION OF THE BOARD OF DIRECTORS

OF THE EAST BAY COMMUNITY ENERGY AUTHORITY CLARIFYING BOARD AUTHORIZATION IN RESOLUTION NO. R-2023-18
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. The city of Stockton, located in San Joaquin County was added as a member of EBCE and party to the JPA in September of 2022.

WHEREAS EBCE issued the 2020 Long-Term Resources request for offers (RFO) in October 2020;
WHEREAS EBCE re-evaluated the previously offered project while negotiating contracts from the 2022 RFO and saw new value in the unique commercial structure; WHEREAS MRP Pacifica Marketing, LLC, proposed a Financial Hedge and RA Agreement for a co-located 96MW natural gas peaking facility and a 96MW/96MWh battery storage project in Fresno County and a 16MW/64MWh battery storage project in Kings County, developed by Middle River Power;
WHEREAS the project is expected to be operational by April 1, 2024 and will provide a financial hedge and Resource Adequacy (RA) for the term of fifteen years; WHEREAS on March 15, 2023, the EBCE Board of Directors adopted Resolution No. R-2023-18 authorizing the CEO to negotiate and execute a fifteen-year financial hedge and RA Agreement with MRP Pacifica Marketing, LLC for a co-located 96MW natural gas peaking facility and a 96MW battery energy storage project in Fresno County;
WHEREAS the 16MW/64MWh battery storage project in Kings County was described in the staff report associated with R-2023-18 and called out in a recital but was inadvertently omitted from the Board action section of the Resolution; and WHEREAS the Board of Directors would like to clarify and affirm that the Board authorization in Resolution No. R-2023-18 includes the 16MW/64MWh battery storage project in Kings County.

NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE EAST BAY COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:

Attachment Consent Item 8A
Section 1. The EBCE Board of Directors hereby ratifies Resolution No. R-2023- 18, clarifying and affirming that such Board authorization includes the CEO’s authority to negotiate and execute an agreement with MRP Pacifica Marketing, LLC for a 16MW/64MWh battery storage project in Kings County.

Section 2. The EBCE Board of Directors hereby authorizes the CEO to take any necessary action to implement the 16MW/64MWh battery storage project in Kings County.

ADOPTED AND APPROVED this 20th day of September, 2023.

Elisa Márquez, Chair
ATTEST:

Adrian Bankhead, Clerk of the Board
Staff Report Item 12
Staff Report Item 12
TO: East Bay Community Energy Board of Directors
FROM: Marie Fontenot, Vice President of Power Resources SUBJECT: Middle River Power Malaga Contract Approval (Action) DATE: March 15, 2023
__________________________________________________________________ Recommendation
Adopt a Resolution authorizing the Chief Executive Officer to finalize negotiations and execute an Agreement with contracting entity MRP Pacifica Marketing, LLC for the Malaga contract. The Malaga contract is a 15-year, multi-product agreement comprised of a financial hedge backed by physical resources and RA from a co-located existing natural gas peaker plant and an incremental battery storage project in Fresno County as well as RA from an incremental battery storage project in Kings County, CA. with April 1, 2024 as the date for contract deliveries to begin. The project is being developed by Middle River Power, LLC.

Background and Discussion
The 2022 Long-Term Resource Request for Offers (RFO) is EBCE’s third long-term contract solicitation. 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 healthy response to its RFO both in volume and quality of projects and proposals.

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. All of these contracts will be utilized to hedge EBCE against price fluctuation in the CAISO energy markets and they will contribute to procurement mandates issued by the California Public Utilities Attachment Consent Item 8B
Staff Report Item 12
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 Malaga contract is comprised of multiple products and three resources; the deal structure includes a financial hedge backed by physical resources and two RA agreements. The Malaga contract was originally offered to EBCE in its 2020 RFO but was re-evaluated during the 2022 RFO process. Staff sees value to this unique mixture of products: a financial hedge offered in part by an existing asset is especially valuable in the current climate: supply chain problems continue to delay the construction of new facilities and investor-owned utilities experience delays in their ability to interconnect new generating resources, and RA provided by a natural gas plant will contribute to EBCE’s position and is needed as the RA rules undergo redesign. The hedge is intended to provide financial coverage, a form of insurance policy, for EBCE during the highest demand periods of the year and will provide some coverage of EBCE’s open position. The proposed hedge structure is a financial transaction only, EBCE will not take possession of or title to the energy generated by the natural gas plant or the energy charged and discharged by the co-located battery; as such the transaction will not add emissions to EBCE’s portfolio.

The physical resources that comprise the contract are a co-located 96MW natural gas peaking facility and a 96MW/96MWh battery storage project in Fresno County and an additional 16MW/64MWh battery storage project in Kings County. The natural gas peaking facility is existing; the batteries are new and not yet developed. The 96MW battery storage project co-located with the gas plant is noteworthy in the addition of this new resource is intended to result in reduced dispatch of the co-located natural gas peaking facility by the CAISO market. The contract is for 15 years with is expected to begin delivery on April 1, 2024. Middle River Power is an experienced developer and project owner having numerous operating natural gas facilities in California. Middle River Power has executed a similar agreement with another CCA.

The contracting entity is MRP Pacifica Marketing, LLC.

Attachments
A. Resolution Authorizing the CEO to Negotiate and Execute a Fifteen-Year Financial Hedge and RA Agreement with MRP Pacifica Marketing, LLC.

B. PowerPoint Presentation
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 Attachment Consent Item 8B
Attachment Staff Report Item 12B
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 DISPATCHABLE ENERGY AND ENERGY STORAGE

AGREEMENT WITH MRP PACIFICA MARKETING, 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.

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 fifteen-year financial hedge and RA Agreement with MRP Pacifica Marketing, LLC for a co-located 96MW natural gas peaking facility and a 96MW battery energy storage project in Fresno County. The final agreement shall include the key terms outlined in the Staff Report associated with this Resolution.

ADOPTED AND APPROVED this 15th day of March, 2023.

Attachment Consent Item 8B
Attachment Staff Report Item 12B

Elisa Marquez, Chair
ATTEST:

Adrian Bankhead, Clerk of the Board
Attachment Consent Item 8B
Bilateral Contract for Board
Consideration
PRESENTED BY: Marie Fontenot
DATE: March 15, 2023
Attachment Staff Report Item 12B Attachment Consent Item 8B • Context:
– Recent 2022 RFO Solicitation Overview
– 2022 RFO Participation
– Evaluation Process
• Current RFO Portfolio Characteristics
• Projects Proposed for Execution
• Challenges in Marketplace
• Next Steps
• Appendix: Portfolio Summary
2 Agenda
Attachment Staff Report Item 12B Attachment Consent Item 8B 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 12B Attachment Consent Item 8B 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 12B Attachment Consent Item 8B 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 12B Attachment Consent Item 8B 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 12B Attachment Consent Item 8B 2022 RFO Portfolio Characteristics
7 Developer Project Location Product Offtake COD Nameplate Sept NQC
Gener
-ation
Longroad Sun Pond Maricopa County,
AZ
PV and
ESA EBCE 4/1/2025 85 MW 34.4
Stor-age
NextEra
Energy
Kola Energy
Storage
San Joaquin County
(Tracy), CA ESA EBCE 6/1/2025 125 MW 116.75
RA Only
ConEd Alpaugh BESS Tulare County, CA RA only EBCE 6/1/2024 5 MW 4.5 Vitol Ocotillo Solar San Diego County,
CA RA only EBCE 8/1/2023 50 MW 50
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 12B Attachment Consent Item 8B “Existing” Portfolio Summary
8 Attachment Staff Report Item 12B Attachment Consent Item 8B Middle River Power – Malaga Dispatchable Energy and
Energy Storage Project Details
9 • Originated and negotiated bilaterally. Originally offered into 2020 Renewable Resource and Energy Request for Offers (RFO).
• Financial Hedge back by physical assets and RA Agreement. – Existing gas peaker plant
– Two new batteries
• 15-year contract
• Expected Initial Contract Delivery Date is April 1, 2024 • Project has an executed interconnection agreement.
• The contracting entity under Middle River Power (MRP) is MRP Pacifica Marketing, LLC.

Attachment Staff Report Item 12B Attachment Consent Item 8B Middle River Power Company Overview
10 • Middle River Power is a private equity sponsored investment and asset management platform focused on US power generation assets. • Middle River Power owns and operates 2300 MW of natural gas fired generation with 160 MW of peaker and 100 MW of solar in development within California and a combined total of over 3000 MW throughout the US.
• Middle River Power has 420 MW of co-located natural gas and battery storage in development within California.
• MRP has successfully developed and contracted several assets in California such as a 100 MW solar project with a 50 MW battery in Victorville, a 60 MW standalone battery, and a 130 MW geothermal project in Coso Junction, California • Middle River Power is an experienced power owner and operator in California with several their projects contracted with PG&E ending in 2022.

Attachment Staff Report Item 12B Attachment Consent Item 8B Example Portfolio – Market Exposure
11 • 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”
Attachment Staff Report Item 12B Attachment Consent Item 8B Challenges in Marketplace
• Supply Chain
• Permitting Delays
• Interconnection Delays
• Risk of additional governmental intervention, similar to solar anti-circumvention investigation of 2022 12 Attachment Staff Report Item 12B Attachment Consent Item 8B Next Steps
• Finalize contract and execute agreements.
• Assess project as it hits key milestones and matures further. • Update filing to CPUC on status of 2021-2023 and 2023-2026 Electric Reliability Requirements due June 1, 2023.
13 Attachment Staff Report Item 12B Attachment Consent Item 8B Appendix
14 Attachment Staff Report Item 12B Attachment Consent Item 8B

Ava Community Energy Board of DirectorsSeptember 20, 2023

Ava Community Energy Board of Directors
September 20, 2023