Staff Report Item 15
Staff Report Item 15
TO: East Bay Community Energy Board of Directors
FROM: Jim Dorrance, Power Resources Manager
SUBJECT: SunZia Wind Project Contract Approval (Action) DATE: October 18, 2023
__________________________________________________________________ Recommendation
Adopt a Resolution authorizing the Chief Executive Officer to execute an Agreement with contracting entity SunZia Wind PowerCo, LLC for the SunZia Wind Project.
Background and Discussion
The 2023 Long-Term Resource Request for Offers (RFO) is East Bay Community Energy’s (EBCE) fourth long-term contract solicitation. The RFO was launched in March 2023. The RFO is seeking 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 or San Joaquin County. EBCE’s objective is to drive investments in new renewable and energy storage projects within our jurisdiction and throughout California, while securing affordable resources to manage future power price risk. EBCE is currently evaluating the responses and negotiating agreements with some of the offer submittals. EBCE administered the RFO and completed analysis using internal tools and the cQuant valuation platform to calculate the net present value of proposed projects and determine the optimal portfolio to meet the objectives of the RFO. All of these contracts will be used to hedge EBCE against price fluctuation in the California Independent System Operator (CAISO) energy markets and they will contribute to procurement mandates issued by the California Public Utilities Commission (CPUC).
The SunZia Wind Project contract is a 15-year agreement for a 150 MW share of a 3,515 MW project located in New Mexico and providing renewable wind energy and Resource Adequacy to the state of California with an expected online date in Staff Report Item 15
September of 2026. The project will provide renewable energy for EBCE customers, reliability to the California grid from the project capacity through Resource Adequacy and the energy will benefit EBCE as a hedge against price changes in the CAISO energy markets. During EBCE’s contract life, the SunZia project may be financially restructured into two separate wind farms. If this happens, EBCE’s contract would be assigned and turn into two separate agreements containing the same terms as those in the original document.
Attachments
A. Resolution authorizing the Chief Executive Officer to execute an Agreement with contracting entity SunZia Wind PowerCo, LLC for the SunZia Wind Project B. PowerPoint Presentation
Attachment Staff Report Item 15A
RESOLUTION NO. R-2023-XX
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE EAST BAY COMMUNITY ENERGY AUTHORITY AUTHORIZING THE CHIEF
EXECUTIVE OFFICER TO EXECUTE AN AGREEMENT WITH CONTRACTING ENTITY
SUNZIA WIND POWERCO, LLC FOR THE SUNZIA WIND PROJECT
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. The city of Lathrop, located in San Joaquin County, was added as a member to EBCE and party to the JPA in October of 2023.
WHEREAS EBCE issued the 2023 Long-Term Resources request for offers (RFO) in March 2023; and
WHEREAS SunZia Wind PowerCo, LLC, proposed a 150 MW share from a larger project wind energy project located in New Mexico; and
WHEREAS the project is expected to be operational by September 30, 2026, and will provide renewable wind energy and associated environmental attributes and Resource Adequacy for the term of fifteen 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 execute an agreement, which may later be assigned into two agreements, with contracting entity SunZia Wind PowerCo, LLC for the SunZia Wind Project.
ADOPTED AND APPROVED this 18th day of October, 2023.
Elisa Marquez, Chair
ATTEST:
Attachment Staff Report Item 15A
Adrian Bankhead, Clerk of the Board
2023 Long-Term
Resource RFO:
Overview and
Update
OCTOBER, 2023
Attachment Staff Report Item 15B
• Solicitation Overview
• Participation
• Evaluation Process
• Challenges in Marketplace
• Next Steps
• Reminder: Portfolio Summary
2 Agenda
Attachment Staff Report Item 15B
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 current and future CPUC
compliance 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 2024 through 2030
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 15B
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 storage
Same 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 Stand-Alone Energy
Storage Toll or RA-Only offer
Energy storage may offer a full product
“tolling” structure contract. RA-only offers
not accepted in this RFO
Any storage technology
with 2-hr, 4-hr, or 4-hr+
duration capability
Attachment Staff Report Item 15B
5 Participation
More robust project offering than 2022 RFO, comparable to 2020 RFO. 72 unique project sites; 195 project variations (as compared to 44 sites; 185 variations in 2022 RFO)
All 4 products that were solicited were offered
Offers included solar, wind, and battery storage
Projects based in 6 different states (CA, AZ, ID, NM, NV, WY); predominantly CA *6 projects in EBCE service territory; only one of positive economic value Attachment Staff Report Item 15B
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 and NPV. • Each item has 100 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 55%. • The Net Present Value was calculated based on simulations on 6 different forward curves • For each forward curve we took a weighted average of the P5 (50%), P50 (30%), and P95 (20%); and then took a simple average across the 6 curves
• We normalized this number on a $/MW basis and the projects were then assigned a 0-55 score based on the NPV distribution • Other factors considered in qualitative evaluation were Counterparty Execution Risk (20 points), Development Status Risk (20 points) and Local Business Enterprise (4 points) and Small Business Enterprise (1 point) • Scoring and rubric were similar to the selection process for previous RFOs • Previous RFOs used 3 forward curves, this RFO featured 6 curves each representing a unique scenario • Minor changes were made to weighting of local projects, including addition of points for small businesses 6 Attachment Staff Report Item 15B
Challenges in the Marketplace
• Ongoing supply chain disruption & delays
• Uncertainty related to future tariffs for core components • Result: suppliers of core components pricing using Index structure; many Project Developers unwilling to take on price risk thus requiring pricing using index also or extreme mark-ups in price to cover risk • General: prices for generation and storage resources have increased 30- 40% since ~2020.
7 Attachment Staff Report Item 15B
Projects Proposed for Execution
8 Seeking approval for 1 contracts:
Wind power purchase agreement (PPA) submitted into EBCE and SJCE’s joint 2023 Long-Term Resource RFO
• 15-year, 150 MW contract for energy, environmental attributes, and resource adequacy from a wind facility in New Mexico with Pattern Energy.
Expected to be operational September, 2026.
Attachment Staff Report Item 15B
Pattern Energy Project Details
9 • Selected via the 2023 EBCE-SJCE Long-Term Resource RFO • Contract for 150 MW of nameplate capacity including energy, environmental attributes, and Resource Adequacy from wind facility in Lincoln, Torrance, & San Miguel counties, New Mexico
• Total project size is 3,515 MW
• 15-year contract
• Expected Commercial Operation Date is September 30, 2026 • Project has an executed interconnection agreement and site control. • Committed toward paying prevailing wages and seeks union labor to the extent available in New Mexico.
• The contracting entity under SunZia Wind PowerCo LLC.
Attachment Staff Report Item 15B
Pattern Energy – Company Overview
10 • Pattern Energy is one of the world’s largest privately-owned developers and operators of wind, solar, transmission, and energy storage projects • Founded in 2009, Pattern’s operational portfolio includes 30 renewable energy facilities that use proven, best-in-class technology with operating capacity of 6 GW in the United States, Canada, and Japan
• Pattern has a strong track record in CA and experience with CCAs, including EBCE. Projects include:
– Tecolote Wind, New Mexico with EBCE (100 MW)
– Duran Mesa Wind, New Mexico with SVCE and CCCE (200 MW) – Grady Wind, New Mexico with CCCE and SMUD (220 MW)
– Hatchet Ridge Wind, Shasta County with PG&E (101 MW)
– Ocotillo Wind, Imperial County with SDG&E (265 MW)
Attachment Staff Report Item 15B
Next Steps
• Complete negotiations of projects under consideration. Anticipate presentations to Board through 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 December 1, 2023.
• CPUC’s 2024 IRP cycle provides formal opportunity for portfolio review and analysis of open position, cost and risk. Further engagement with board and community as part of IRP process.
11 Attachment Staff Report Item 15B
Portfolio Summary
12 Project Name1 Project Name2 Devloper Type
Nameplate
Capacity COD
Term
(Years) Technology County State
Altamont SHWEC Greenbacker RPS 57.5 7/2/2021 20 Wind Alameda CA Rosamond Central Golden Fields Clearway RPS 112 12/22/2020 15 Solar Kern CA Pattern Tecolote Pattern RPS, no RA 100 12/20/2021 10 Wind Guadalupe & Torrance
NM
Luciana Tulare Idemitsu RPS 56 4/30/2022 15 Solar Tulare CA Henrietta D Henrietta Convergent Storage 10 12/2/2021 15 Storage Kings CA Daggett South Daggett Clearway RPS+Storage 50 9/5/2023 15 Solar + Storage San Bernadino CA RE Scarlet Sonrisa EDPR RPS+Storage 100 12/15/2023 20 Solar+Storage Fresno CA Oberon Oberon Intersect RPS+Storage 125 1/1/2024 15 Solar Riverside CA Edwards Solar II Edwards Terra Gen RPS 100 Q2 2024 15 Solar Kern CA Sanborn Sanborn Terra Gen Storage 47 Q2 2024 12 Storage Kern CA Tumbleweed Tumbleweed REV Renewables Storage 50 6/1/2024 15 Storage Kern CA Kola Kola NextEra Storage 125 4/1/2025 20 Storage San Joaquin CA Fervo Corsac Station Fervo RPS 40 2/1/2030 15 Geothermal Churchill NV Attachment Staff Report Item 15B