MEETING of the Energy Planning & Resources Committee
of the Clean Power Alliance of Southern California
Wednesday, April 27, 2022
12:15 p.m.
SPECIAL NOTICE: Pursuant to the Proclamation of the State of Emergency by Governor Newsom on March 4, 2020, AB 361, and enacting Resolutions, and as a response to mitigating the spread of COVID19, the Energy Planning & Resources Committee will conduct this meeting remotely.
Click here to view a Live Stream of the Meeting on YouTube If the YouTube stream is not working, please use the zoom link. *There may be a streaming delay of up to 60 seconds. This is a view-only live stream.
To Listen to the Meeting:
https://us06web.zoom.us/j/85975901993
or
Dial: (720) 707-2699 Meeting ID: 859 7590 1993
PUBLIC COMMENT: Members of the public may submit their comments by one of the following options:
• Email Public Comment: Members of the public are encouraged to submit written comments on any agenda item to [email protected] up to four hours before the meeting. Written public comments will be announced at the meeting and become part of the meeting record. Public comments received in writing will not be read aloud at the meeting. • Provide Public Comment During the Meeting: Please notify staff via email at [email protected] at the beginning of the meeting but no later than immediately before the agenda item is called.
o You will be asked for your name and phone number (or other identifying information) and agenda item similar to filling out a speaker card so that you can be called on when it is your turn to speak.
o You will be called upon during the comment section for the agenda item on which you wish to speak on. When it is your turn to speak, a staff member will unmute your phone or computer audio.
o You will be able to speak to the Committee for the allotted amount of time. Please be advised that all public comments must otherwise comply with our Public Comment Policy. o Once you have spoken, or the allotted time has run out, you will be muted during the meeting.
If preferred, you may also submit written comments during the meeting via email to:
[email protected]. The written comments will be shared with Committee. *While downloading the Zoom application may provide a better meeting experience, Zoom does not need to be installed on your computer to participate. After clicking the webinar link above, click “start from your browser.” Agenda Page 1
Clean Power Alliance Energy Planning & Resources Committee April 27, 2022
Meetings are accessible to persons 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 two (2) working days before the meeting at [email protected] or (323) 640-7664. Notification in advance of the meeting will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
PUBLIC COMMENT POLICY: The General Public Comment item is reserved for persons wishing to address the Board on any Clean Power Alliance-related matters not on today’s agenda. Public comments on matters on today’s Consent Agenda and Regular Agenda shall be heard at the time the matter is called.
Comments on items on the Consent Agenda are consolidated into one public comment period. Members of the public who wish to address the Board are requested to contact the Board Clerk, as specified above, at the beginning of the meeting but no later than immediately prior to the time an agenda item is called.
Each speaker is limited to two (2) minutes (in whole minute increments) per agenda item with a cumulative total of five 5 minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from March 23, 2022 Energy Committee Meeting
2. Receive and File March 2022 Risk Management Team Report
REGULAR AGENDA
3. Approve 2021 Mid-Term Reliability RFO Revised Shortlist Offer as Recommended by the Review Team
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING MAY 25, 2022
Public Records: Public records that relate to any item on the open session agenda for a Committee Meeting are available for public inspection. Those records that are distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all, or a majority of, the members of the Committee. Those documents are available for inspection online at www.cleanpoweralliance.org/agendas.
Agenda Page 2
ENERGY COMMITTEE ITEM 1
MINUTES
REGULAR MEETING of the Energy Planning & Resources Committee of the Clean Power Alliance of Southern California
Wednesday, March 23, 2022, 12:15 p.m.
Pursuant to the Proclamation of the State of Emergency by Governor Newsom on March 4, 2020, AB 361, and enacting Resolutions, and as a response to mitigating the spread of COVID19, the Energy Planning & Resources Committee conducted this meeting remotely.
CALL TO ORDER & ROLL CALL
Committee Member Maloney called the meeting to order at 12:19 p.m. and Clerk of the Board, Gabriela Monzon, conducted roll call.
ROLL CALL
Alhambra Jeffrey Maloney Committee Member Remote
Carson Reata Kulcsar Committee Member Remote
Culver City Daniel Lee Committee Member Absent
Oxnard Kathleen Mallory Committee Member Remote
Sierra Madre Robert Parkhurst Chair Absent
Thousand Oaks Helen Cox Committee Member Remote
Ventura County Carmen Ramirez Committee Member Absent
All votes are unanimous, unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from February 23, 2022, Energy Committee Meeting
2. Receive and File February 2022 Risk Management Team Report Motion: Committee Member Mallory, Oxnard
Second: Committee Member Cox, Thousand Oaks
Vote: The consent agenda was approved by a roll call vote.
REGULAR AGENDA
3. Review PCIA Voluntary Allocation & Market Offer (VAMO) Natasha Keefer, Vice President, Power Supply, and Ted Tardif, Senior Portfolio Manager, Environmental Products & Compliance, provided a presentation on the item. CPA can secure voluntary allocations (VA) of Power Charge Indifference Adjustment (PCIA) eligible renewable resources from Southern California Edison (SCE) in May 2022 for deliveries beginning in 2023. Available allocations include short-term renewables as well as long-term (10+ years) contracts. Ms. Keefer provided a brief refresher of the workings of the PCIA and outlined the PCIA Agenda Page 3
Clean Power Alliance Energy Planning & Resources Committee Page 2 of 2 March 23, 2022
voluntary allocation processes. Ms. Keefer noted that SCE will remain the counterparty of the resource contracts, and CPA will receive the attributes of those contracts transferred to CPA’s portfolio. Load Serving Entities (LSEs) such as CPA may resell the elected VAMO renewable energy. Any remaining short-term and long-term allocations not elected by LSEs will be sold to the market through the market offer process. CPA may be able to secure additional RECs through this same process, although the price will be subject to a confidential price floor. Ms.
Keefer highlighted several considerations for CPA moving forward, including that allocations help offset additional renewable energy demand of member agency default rate opt-ups; they effectively reduce CPA’s demand for new-build renewables; and long-term allocations contribute to CPA’s SB 350 long-term contracting obligations.
Mr. Tardif discussed the pros and cons of short-term and long-term voluntary allocations. Mr. Tardif commented that CPA has received an indicative forecast from SCE on the available resources and outlined those indicative allocations. Mr.
Tardif advised the Committee of three options staff is considering for long-term voluntary allocation. Staff is recommending CPA take 50% of the long-term voluntary allocations. CPA’s final action on the short-term voluntary allocations will be contingent on the California Public Utilities Commission’s (CPUC) clarification on the treatment of out-of-state PCC0s. Ms. Keefer advised the Committee that CalCCA and CPA are currently seeking to clarify the treatment of out-of-state PCC0s with the CPUC. CPA will present a long-term allocation approach to the Board on April 7 and will finalize enrollment by May 13. Staff invited feedback from the Energy Committee’s feedback on the voluntary allocation approach.
Committee Member Cox asked for clarification on the various PCC categories, time commitments for contracts, and if CPA will take over specific contracts with third-party generators. Ms. Keefer indicated PCC1 represents the highest quality renewable energy credit purchased generally from in-state renewable resources; PCC2 is a lower quality renewable energy credit purchased generally from out-of-state resources; PCC3 is a low value out-of-state renewable energy credit containing energy that is not required to be delivered into California (often called an unbundled renewable energy credit). Ms. Keefer explained that PCC0 is the grandfather designation for contracts that Investor-Owned Utilities (IOUs) have entered into prior to 2010 when these PCC classifications were established.
PCC0s are treated as and priced as PCC1s, but there is some uncertainty if they will be transferred over as PCC1s or PCC3s. Ms. Keefer also explained that CPA will only be receiving a slice of SCE’s overall portfolio and will not be rewriting any contracts. Ms. Keefer indicated that for short-term contracts the commitment would run through 2024 and for long-term contracts the commitment would run for the remainder of the individualized contract term. Chair Maloney asked about the timeline for the PCC0 transfer decision, and Ms. Keefer noted that CPA is asking the CPUC to make a decision prior to the May enrollment period but there is no timeline in place yet. Committee Member Kulcsar requested that a future Committee agenda item include a more detailed description and timeline of the PCIA. The Committee expressed support for the staff recommendation.
COMMITTEE MEMBER COMMENTS
None.
ADJOURN
Committee Member Maloney adjourned the meeting at 1:18 p.m.
Agenda Page 4
Staff Report – Agenda Item 2
To: Clean Power Alliance (CPA) Energy Committee
From: Geoff Ihle, Director of Market Risk
Approved by: Ted Bardacke, Chief Executive Officer
Subject: March 2022 Risk Management Team Report
Date: April 27, 2022
March 2022 RMT REPORT
Key Actions
• Discussed February 2022 market performance.
• Reviewed energy positions and approved 2022-2025 hedges. • Reviewed positions for RPS, carbon free, and Resource Adequacy. • Reviewed Community Default-Change impacts on Load Forecast.
Policy Compliance
There were no policy deviations reported for February.
ATTACHMENT
None.
Agenda Page 5
Staff Report – Agenda Item 3
To: Clean Power Alliance (CPA) Energy Committee
From: Natasha Keefer, Vice President, Power Supply
Approved By: Ted Bardacke, Chief Executive Officer
Subject: 2021 Midterm Reliability RFO Revised Shortlist Offer Date: April 27, 2022
RECOMMENDATION
Approve revised shortlist offer as recommended by the RFO review team.
ATTACHMENT
1) 2021 Midterm Reliability RFO Revised Shortlist Offer Presentation Agenda Page 6
2021 Midterm
Reliability RFO
Revised Shortlist Offer
April 27, 2022
Agenda Page 7
To comply with the CPUC Mid-Term Reliability Decision, CPA ran its 2021 Midterm Reliability (MTR) RFO, with a Shortlist and Waitlist approved by the Energy Committee in January 2022
Since Fall 2021, a number of unprecedented challenges have strained renewable energy developers' ability to hold the prices submitted in the RFO One shortlisted project, the 30 MW Clearway storage proposal, informed CPA that it can only move forward with a re-priced offer due to these industry-wide challenges
On April 18th, the MTR RFO Review Team (including Board members) met to consider this re-priced offer and is recommending the re-priced offer for Energy Committee consideration today
2 Executive Summary
*D.21-06-035 under Rulemaking 20-05-003
Agenda Page 8
Agenda
Background
Status of RFO Selection
Clearway Proposal
Next Steps
3 Agenda Page 9
Background
4 Agenda Page 10
Conditions Impacting Clean Energy Development
Renewable energy developers are facing several challenges in delivering on new build projects, particularly for projects with 2022-2024 online dates o Ongoing pandemic-related supply chain impacts
o U.S. trade actions
o Rising commodity prices, further exacerbated by the Ukraine War o Investment Tax Credit (ITC) uncertainty
Any one of these factors significantly impact project risk; compounded, they are posing unprecedented challenges for even highly experienced and well capitalized developers
Agenda Page 11
Trade Actions and Supply Chain Hurdles
Trade Actions
Withhold Release Order (WRO)
• In June 2021, Customs and Border Patrol (CBP) issued the Withhold Release Order against Hoshine Silicon Industry, a company located in China’s Xinjiang Uyghur Autonomous Region
• As a result of the WRO, CBP has detained large quantities of modules shipped from countries in Southeast Asia
• Developers report that the threat of detention has caused suppliers to withhold or divert shipments due to uncertainty over CBP’s implementation of the WRO Solar Anticircumvention Investigation
• On March 28, 2022, the Department of Commerce (DOC) has launched an investigation into alleged circumvention of existing antidumping and countervailing duty orders that apply to PV cells and modules from China • If DOC issues an affirmative circumvention ruling, duties as high as 250% could be imposed on solar products coming from southeast Asia
• Developers report that some PV manufacturers are stopping production and/or delivery of panels while waiting for the DOC’s preliminary finding, which is expected in late August 2022
Supply Chain and COVID-19 Impacts
• Ongoing pandemic-related impacts in southeast Asia are driving sharp increases in manufactured equipment costs. Factory shutdowns are delaying manufacture of critical equipment • Disruptions at ports, cargo depots, and inland transit due to inadequate staffing, and container shortages in Asia, are driving ocean freight costs from Asia to the US West Coast to record levels Global Container Freight Rate Index
Agenda Page 12
Rising Commodity Prices and ITC Uncertainty
Rising Commodity Prices
• Generally, the market for both raw materials and manufactured equipment is facing inflationary pressure due to ongoing COVID impacts • Polysilicon prices have increased dramatically and are expected to stay elevated as demand is growing faster than supply
• Lithium costs have increased dramatically as a result of strong demand for utility scale batteries and rising demand in the automotive industry • Steel and Aluminum prices hit all time highs in 2021. Copper prices remain at or near all time highs. These materials are used in PV module trackers, cables, and foundation and fencing materials.
• In March 2022, nickel prices surged due to sanctions against Russia, a major supplier of the metal, as a result of its invasion of Ukraine. Nickel is a key component in lithium-ion batteries.
ITC uncertainty
• An extension to the solar investment tax credit (ITC) could help mitigate pressures on US solar capacity, but federal legislation is stalled Agenda Page 13
Status of RFO
Selection
8 Agenda Page 14
NPV
Qtr
1 F Q1 2025 Standalone Storage 100-149 Neutral Neutral High High High Ventura, CA 4 G Q2 2025 Long-Duration Storage 50-100 Medium Neutral High Medium High San Diego, CA 4 H Q2 2026 Long-Duration Storage 50-100 Neutral Medium High Medium High Riverside, CA 4 I Q2 2026 Geothermal 0-49 Neutral Neutral High Low Low Beaver, UT 4 J Q2 2025 Geothermal 0-49 Neutral Medium Low Medium Medium Imperial, CA Environmental
Stewardship Benefits to DACs
Workforce
Development Project Location
Development
Online Technology Score County
MW Gen
Range
MW
Storage
NPV
Qtr
1 A Q2 2024 Solar + Storage 0-49 0-49 Neutral Neutral High Medium High Kern, CA 1 B Q3 2023 Standalone Storage 50-100 Neutral High High Medium Medium Tulare, CA 1 C Q4 2023 Standalone Storage 50-100 Medium High High High Medium Los Angeles, CA 3 D Q1 2025 Long-Duration Storage 0-49 Neutral Medium High Medium High Riverside, CA 4 E Q4 2025 Geothermal 0-49 Neutral Medium High Low High Eureka County, NV Benefits to DACs
Workforce
Development Project Location
Development
Score County
Environmental
Online Technology Stewardship
MW Gen
Range
MW
Storage
MTR RFO Status
Several projects selected in the CPA MTR RFO shortlist and waitlist were unable to move forward with offers priced in Fall 2021, citing a number of industry-wide factors (e.g. commodity prices, supply chain) Unable to hold original offered price
Currently in exclusive negotations
Agenda Page 15
MTR Compliance
CPA has made progress towards MTR compliance in its 2021 MTR RFO; additional procurement will be necessary to secure CPA’s Baseload Renewables and Long-Duration Storage needs
Product Type Online By Procurement
Need (RA MW)
Current Shortlist
(RA MW)
Remaining Need
(-Short/+Long)
Conventional
Renewables/Storage June 1, 2025 46 127* 81
Baseload Renewables June 1, 2026 59 48 -11
Long-Duration Storage June 1, 2026 59 0 -59
*Includes Clearway project, pending today’s discussion
Agenda Page 16
Clearway
Proposal
11 Agenda Page 17
Clearway Proposal
Clearway originally submitted an offer to add 30 MW of storage to its already operational 40 MW Golden Fields solar project
o Following shortlisting, CPA is currently in exclusive negotations with Clearway for this project Clearway is a highly reputable developer with three other projects under contract with CPA, in addition to Golden Fields
Due to supply chain challenges, Clearway is seeking a material price increase to its originally bid storage offer
On April 18th, the RFO Review Team reconvened to evaluate the re-priced offer within the context of the other offers from the RFO using the evaluation criteria specified in the RFO
The original Clearway offer was in the First Quartile of RFO offers; the updated offer is still priced competitively and still ranks in the First Quartile Agenda Page 18
RFO Review Team Recommendation
Recommendation: Proceed with negotiations for the Clearway project at the revised price
Rationale:
o Despite the prince increase, the Clearway offer is high value and would have been selected for shortlisting using the RFO evaluation criteria o The revised price remains in the first quartile for net present value (NPV) compared to pricing for storage projects
o This offer has unique and beneficial attributes - the addition of storage to an existing, operational solar facility makes the project de-risked from a project development perspective
o The project will contribute towards CPA’s MTR compliance o Given market conditions, CPA may not have the opportunity to secure new storage at this price
Agenda Page 19
NEXT STEPS
14 Agenda Page 20
Next Steps
15 Today, the RFO Review Team is recommending the updated Clearway offer to the Energy Committee for approval
CPA will be releasing another RFO to secure its outstanding MTR compliance needs (geothermal and long-duration storage) CPA is working closely with developers of its existing contracted resources to ensure projects are able to come online
o Several projects have notified that market conditions have put project delivery at risk
Agenda Page 21
Considerations for Future MTR RFO
16 Developers are facing significant uncertainty related to project pricing; offers in the immediate future will include significant risk premiums Market for incremental capacity is highly competitive
Geothermal will be a challenge to secure due to limited import capability o Most new build geothermal will be sited outside of CAISO by virtue of where geothermal resources are located
CPA will seek new long-duration storage opportunities, including non-lithium-ion technologies
Important to retain CPA’s reputation for demonstrating compliance and good faith efforts to secure new reliable capacity
Agenda Page 22