OPERATIONS BOARD
MEETING
January 10, 2024
Consent Calendar
Approve Minutes from the November 8, 2023 meeting of the Operations Board of Directors Approve and authorize the CEO to execute a 2nd amended and restated power purchase agreement with Victory Pass LLC, to effect non-substantive amendments with no changes to previously approved not to exceed amount or term Receive FY 23-24 Energy Programs Update
Receive Regulatory Update
Receive the Treasurer’s Report for the period October 1, 2022, through August 31, 2023
Community Advisory Council Report
CEO Report
Staffing Update
Start Date for the City of Atascadero and County of San Luis Obispo Front of the Meter Energy Storage Update
3CE Review of Behind-the-Meter Energy Storage Focused Demand Response Proposals NET Billing Tariff (NBT) Update
The CPUC approved Decision 22-12-056 on December 15, 2022, adopting NBT as the NEM successor tariff beginning April 15, 2023.
Qualifying NBT customers have been served on the legacy NEM 2.0 tariff while the IOUs prepare their billing systems Initially scheduled for December 15, 2023, SCE and PG&E have both been approved for extensions to implement NBT.
Staff will be proposing a NBT design and start date at the Policy Board meeting on February 21, 2024.
To ensure we can provide a smooth transition for our customers 3CE staff plans to propose an NBT start date of June 1, 2024.
Net Billing Tariff (NBT)
3CE & IOU NBT Implementation Updated Timeline
OPERATIONS BOARD
January 10, 2024
Approve and authorize CEO to execute two (2) Hybrid-Battery Energy Storage System Power Purchase Agreements with MRP Pacifica Marketing II, LLC for the Panoche and Midway Hybrid Projects, in forms substantially similar to the attached, as well as any necessary ancillary documents, with a power delivery term of 15 years starting with an expected Commercial Operation Date of January 1, 2026, in an amount not to exceed $168,000,000 for Panoche Hybrid Project and $368,000,000 for the Midway Hybrid Project. (Action Item)
How we identified these projects
3CE Executive Committee, Operations Board, and Policy Board directed pursuit of an innovative approach to:
Reduce existing natural gas facility emissions; while also, Securing valuable Resource Adequacy product for 3CE through a hybrid natural gas power purchase agreement.
At its September 2023 meeting, the Policy Board directed staff to:
Seek and negotiate a Hybrid Natural Gas plus Battery Energy System agreement whereby 3CE could install a new energy storage system at an existing natural gas facility and thereby reduce existing emissions while also reducing 3CE’s Resource Adequacy non-compliance risks and obtain cost certainty in a volatile market.
In October 2023, 3CE issued a Request for Offers (RFO). 3CE received offers for 5 different projects.
Project Selection Criteria
Selection was made inclusive of 3CE’s Project Selection Criteria 3CE’s Project Selection Criteria assesses potential projects based on six categories:
Ability to cost effectively meet 3CE’s regulatory obligations and 3CE’s goal of 100% Clean and Renewable by 2030 Workforce and Local Workforce Development
Innovation
Location
Environmental Stewardship
Benefits to Underserved and Low-Income Communities
Each category is ranked on a scale of Low, Medium, or High.
Ability to cost effectively meet 3CE’s regulatory obligations and 3CE’s goal of 100% Clean and Renewable by 2030 With the volatile Resource Adequacy (“RA”) market dynamics, inclusive of a major reform called the 24-hour Slice-of-Day paradigm going live in 2025, this hybrid resource will provide valuable fixed-price RA benefits to ensure RA compliance for 3CE.
Panoche Hybrid will meet approximately 5% of 3CE’s RA obligation.
Midway Hybrid will meet approximately 13% of 3CE’s RA obligation.
Each will provide a cost-effective energy hedge to 3CE and the CAISO and will not result in increased emissions for 3CE. 3CE will work to maximize the charging and discharging of each of the new 1-hour BESS’s to provide the greatest value for 3CE customers and to reduce the utilization rate of each Peaker unit – avoiding emissions that would have otherwise occurred absent the BESS’s. 3CE’s ranking is High
Workforce Development
The developer represents the construction phase of both energy storage systems will meet the wage and apprenticeship requirements set forth in the Inflation Reduction Act (“IRA”). Further, the developer represents the construction work will also be bound under a project labor agreement (“PLA”). After the commercial online date, each project will hire one or two additional operators to manage and maintain each BESS resource. 3CE’s ranking is High.
Innovation
These projects are a creative repurposing of existing sites, utilizing its valuable and scarce transmission capacity to transition away from conventional power facilities towards energy storage systems.
The modeling indicates each new energy storage system will compete with each existing natural gas Peaker to use the interconnection capacity and is predicted to reduce emissions on average between 54% to 78%. 3CE’s ranking is High.
Location
While not located within the 3CE jurisdictional footprint, the facilities are in Firebaugh, Fresno County and grid-tied to the CAISO balancing authority. 3CE’s ranking is Medium.
Environmental Stewardship
Projects are in an area zoned for industrial uses with other operating power plants nearby.
The subject project area is, however, surrounded by an agricultural area. The developer has initiated cultural and biological surveys as part of its technical reports to Fresno County. As both the existing and new BESS facility are on a developed parcel, no significant impacts are anticipated.
The projects are anticipated to reduce thermal peaker plant output and thereby lower emissions in the local area. 3CE’s ranking is High.
Benefits Accrued to Underserved Communities
MRP’s submission notes it has a plan to engage with the local community regarding the construction of both of the new energy storage systems. As each Project is integrating an energy storage system to reduce output from the existing natural gas Peaker units, it will thereby lower emissions in the area.
MRP is planning for approximately 75% of their workers to be hired from the local area for the construction of energy storage system. 3CE’s ranking is Medium.
Project Selection Criteria: Panoche and Midway Hybrid
BESS Impact on Existing Facilities
Emissions Reduction Potential
BESS will compete with Natural Gas Plant to use the valuable and scare transmission capacity. The more the BESS operates, the lower the emissions Average Emission Reduction Potential: 54% to 78%
Actual results are contingent on the real time energy market prices affecting the economics around either running the Peaker or charging and discharging the battery.
Panoche and Midway Hybrid PPAs
Counterparty
MRP Pacifica Marketing LLC
SunZia Wind PowerCo LLC
Parent Company
Middle River Power
Pattern Energy
Product
Existing Natural Gas Peaker Power Plants with new construction Battery Energy Storage Systems (BESS), providing Resource Adequacy (RA) benefits and dispatchable energy Natural Gas Peaker Power Plant with BESS, providing Resource Adequacy (RA) benefits and dispatchable energy Delivery Term
15 years
January 1, 2026 – December 31, 2040
15 years
January 1, 2026 – December 31, 2040
Project Name
Panoche Hybrid
Midway Hybrid
Contract Capacity
52 MW Natural Gas Simple Cycle Turbine
57 MW 1-hour discharge duration Lithium-Ion Battery Energy Storage System (BESS) 120 MW Natural Gas Simple Cycle Turbine
120 MW 1-hour discharge duration Lithium-Ion Battery Energy Storage System (BESS) % of 3CE RA Obligation
5%
13%
Location
Firebaugh, Fresno County
Firebaugh, Fresno County
Not to Exceed Amount
$168,000,000
$368,000,000
Staff recommend approval of these two PPAs, in substantial form to attachments, with MRP Pacifica Marketing II LLC LLC as they will:
Provide 3CE a high value RA product,
Reduce 3CE’s RA non-compliance risks,
Obtain cost certainty in a volatile market,
Encourage good-paying jobs in support of battery construction, and Reduce emissions from existing natural gas Peaker facilities. +
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Questions
Dennis Dyc-O’Neal
Chief Operating Officer
Central Coast Community Energy
Thank you!