MEETING of the Energy Planning & Resources Committee
of the Clean Power Alliance of Southern California
Wednesday, July 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 Access 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 July 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 June 22, 2022, Energy Committee Meeting
2. Receive and File June 2022 Risk Management Team Report
REGULAR AGENDA
3. Approve the Shortlisted Projects as Recommended by the Review Team for the 2021 Power Share RFO
4. Approve Entering into Bilateral Negotiations for Power Purchase Agreements for Two (2) Geothermal Resources as Recommended by the Review Team
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING AUGUST 24, 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
MINUTES
REGULAR MEETING of the Energy Planning & Resources Committee of the Clean Power Alliance of Southern California
Wednesday, June 22, 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
Chair Parkhurst called the meeting to order at 12:15 p.m. and, Gabriela Monzon, Board Clerk, conducted roll call.
ROLL CALL
Alhambra Jeffrey Maloney Committee Member Remote
Culver City Daniel Lee Committee Member Absent
Oxnard Kathleen Mallory Committee Member Remote
Sierra Madre Robert Parkhurst Chair Remote
Thousand Oaks Helen Cox Committee Member Absent
Ventura County Carmen Ramirez Committee Member Remote
Director Diana Mahmud, South Pasadena, was also in attendance.
All votes are unanimous, unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from May 25, 2022 Energy Committee Meeting
2. Receive and File May 2022 Risk Management Team Report Motion: Committee Member Ramirez, Ventura County
Second: Committee Member Maloney, Alhambra
Vote: The consent agenda was approved by a roll call vote.
REGULAR AGENDA
3. Review and Recommend Approval of Proposed Energy Risk Management Policy (ERMP) Amendments to the Board of Directors
David McNeil, Chief Financial Officer, invited questions from the Committee about any of the proposed changes to the ERMP. Committee Member Ramirez asked if insider trading is addressed on the ERMP. Natasha Keefer, Vice President, Power Supply, noted that Section 3 of the policy discusses business practices including the code of conduct and trading for personal accounts. Subsequent to any revisions made to the ERMP, all Board members are required to review and sign an acknowledgment indicating an understanding of obligations. Committee Agenda Page 3
Clean Power Alliance Energy Planning & Resources Committee Page 2 of 3 June 22, 2022
Member Mallory pointed to Section 6.1 and inquired as to who approved modifications to standard credit terms and confirmations previously. Mr. McNeil clarified that the new language affirms current practice, as there are standard credit terms and conditions in all agreements that require approval from the CFO already.
Chair Parkhurst requested confirmation that the two main changes to the ERMP are verbiage clarifications and a change in the maximum procurement for carbon free energy. Mr. McNeil agreed and added that a form was created to formalize the process by which the CEO delegates energy transaction execution authority.
Chair Parkhurst inquired why the change in maximum procurement for carbon free energy was necessary, and Ms. Keefer explained that the market conditions for carbon free energy are tightening. Carbon free product requires the procurement of existing large hydro that contributes zero emissions product to CPA’s portfolio.
Ms. Keefer indicated there is little probability of any development of new hydroelectric facilities in California, and CPA is importing a high quantity of large hydro from the pacific northwest, but that supply is also becoming limited.
Therefore, the increase in the maximum procurement availability ensures CPA can purchase supplies quickly as they become available. Director Mahmud suggested that a report of energy contracts executed pursuant to the CEO’s authority would be a beneficial internal reporting process for the CEO. Ted Bardacke, CEO, agreed and added that all contracts are executed pursuant to conditions that the Risk Management Team has approved.
Motion: Committee Member Ramirez, Ventura County
Second: Committee Member Mallory, Oxnard
Vote: Item 3 was approved by a roll call vote.
4. Energy Procurement Update
Ms. Keefer provided a presentation on several procurement efforts and outlined details of the 2021 Mid-Term Reliability RFO and 2021 Power Share RFO. Two remaining projects are in negotiation from the 2021 MTR RFO, one standalone storage project, and one geothermal project. Other projects dropped out because of the industry-wide supply chain challenges that have impacted developers’ ability to bring projects online at the prices originally bid for this RFO. CPA received eight bids from three unique developers for the two programs under the 2021 Power Share RFO, and staff is evaluating the offers. Ms. Keefer identified the focus of the 2022 MTR RFO is procuring additional conventional, baseload (geothermal), and long-duration storage resources, with the geothermal category posing the greatest difficulty primarily due to delivery and development challenges. The Power Ready RFO will launch later this summer and will install back-up power systems at member agency critical facilities during power outages. Ms. Keefer discussed issues impacting CPA’s existing contracts, such as interconnection delays, ongoing pandemic-related supply chain impacts, rising commodity prices, and U.S. trade actions, including the Department of Commerce (DOC) investigation on solar panel tariff circumvention. On June 6, President Biden released an executive order to shield imported solar panels from duties imposed by the DOC during the next two years. Staff is working with developers to determine what impact this will have on solar supply chain pricing. CPA is in the process of negotiating amendments with existing contracts for solar and storage, critical for compliance and grid reliability, and the Board may consider amendments in July. The amendments would allow sellers to extend their guaranteed commercial online dates due to industry-wide challenges and include a reduction in solar plus storage capacity.
CPA will request extensions of PPA terms, community benefits funding, and/or replacement products.
Agenda Page 4
Clean Power Alliance Energy Planning & Resources Committee Page 3 of 3 June 22, 2022
Committee Member Ramirez agreed with staff’s course of action. Responding to Director Mahmud’s question regarding the approximation of resources to a disadvantaged community (DAC), Ms. Keefer clarified that the DAC Green Tariff (DAC-GT) Program requires that the project be located in a disadvantaged community within SCE’s service territory, but not necessarily CPA’s. Director Mahmud asked how CPA determines who receives the energy from that program and whether there was any merit in contacting the respondents who dropped out of the 2021 MTR RFO, given the executive order. Ms. Keefer explained that enrollment into the DAC-GT Program is limited to CPA customers that meet low-income eligibility requirements. Additionally, because of the increase in pricing, the proposed approach is to have respondents rebid in the next RFO with the new price levels. Director Mahmud also inquired about the California Public Utilities Commission’s (CPUC’s) reconsideration of the compliance deadline, and staff noted that CPA has informed the CPUC and California Independent System Operator (CAISO) regarding the challenges and is awaiting a response and what financial penalties, if any, will be imposed. Committee Member Maloney asked if supply chain production and distribution would return to normal levels in the future even if energy pricing remained high. Staff stated that it’s unknown, but there is a push to increase panel manufacturing capacity in the U.S. to mitigate these issues in the long term. Domestic supply might be more costly but less risky because there are no tariffs or forced labor issues. Chair Parkhurst inquired about the market’s impact on long-duration storage. Ms. Keefer indicated that the last RFO yielded lithium-ion batteries as the major long-duration storage offer. Lithium and nickel prices have increased tremendously, particularly due to sanctions against Russia. Market changes provide the opportunity for other technologies to be more cost competitive; CPA may see other types of projects in the RFO that may be more price competitive. Chair Parkhurst asked clarifying questions regarding the Power Ready RFO. Matt Langer, Chief Operating Officer, indicated that staff is looking to have a certain number of MOUs signed and can include a caveat in the RFO that cities may need to drop off if they don’t make it to the end of the process.
Each city with a signed MOU will be included in the sites within the RFO package that developers will bid on. Director Mahmud inquired about the inclusion of the geothermal challenges in CPA’s IRP filing and the signup response for DAC-GT customers. Staff confirmed the IRP will indeed address those challenges; there is 50% capacity left in the DAC-GT program. Staff is experimenting with modes of outreach to increase customer signups. Director Mahmud requested that an update on the DAC-GT program be included in the CEO report at the next Board meeting. Committee Member Mallory added that staff has been using social media posts to draw attention to the program in the City of Oxnard.
COMMITTEE MEMBER COMMENTS
Chair Parkhurst commented that the next few months would be busier than normal with the upcoming new and existing programs, contract updates and amendments, the IRP.
ADJOURN
Chair Parkhurst adjourned the meeting at 1:20 p.m.
Agenda Page 5
Staff Report – Agenda Item 2
To: Clean Power Alliance (CPA) Energy Committee
From: Geoff Ihle, Director of Market Risk
Approved by: David McNeil, Chief Financial Officer
Subject: June 2022 Risk Management Team Report
Date: July 27, 2022
June 2022 RMT REPORT
Key Actions
• Reviewed May 2022 load forecast update
• Discussed May 2022 market performance
• Reviewed energy positions and approved 2022-2025 hedges • Reviewed positions for RPS and carbon free products
• Reviewed Resource Adequacy (RA) positions. Approved a solicitation for 2023- 2025 System RA via an RFO
• Reviewed proposed annual Energy Risk Management Policy revisions Policy Compliance
The following policy deviation was reported:
Policy Deviation Required Action
Due to an update to the load forecast
(resulting in higher forecast energy usage)
and a delay in commercial online date of
two projects under long term contract
(resulting in lower forecast supply), the Q2
2023 period did not meet the 85% Energy
Risk Hedging Strategy minimum at the
time of the June 26, 2022, measurement.
No immediate action required. Based on
CPA’s planned hedging activities over
the next several months, the deviation is
expected to be corrected by the end of
September 2022.
ATTACHMENT
None.
Agenda Page 6
Staff Report – Agenda Item 3
To: Clean Power Alliance (CPA) Energy Committee
From: Natasha Keefer, Vice President, Power Supply
Approved by: Matthew Langer, Chief Operating Officer
Subject: 2021 Power Share Request for Offers (RFO)
Date: July 27, 2022
RECOMMENDATION
Approve the shortlisted projects as recommended by the Review Team for the 2021 Power Share RFO
ATTACHMENT
1. 2021 Power Share RFO Presentation
Agenda Page 7
2021 Power Share
Request for Offers (RFO)
Shortlist
Recommendation
July 27, 2022
Agenda Page 8
Executive Summary
2 Under two CPUC-approved programs (DAC-GT and CS-GT1), CPA may procure energy from small-scale renewable projects within Disadvantaged Communities (DACs)2 in order to provide 100% renewable energy to low-income customers at a 20% bill discount In December 2021, CPA launched the 2021 Power Share RFO, with bids due on June 1, 2022; this RFO is the second RFO supporting CPA’s Power Share program
The RFO Review Team, which included three Board members, reviewed confidential offer information and developed a recommended shortlist
CPA intends to fill its program cap of 12.19 MW for DAC-GT and 3.37 MW for CS-GT over multiple RFOs
The recommended shortlist will fill 73% of the DAC-GT and 15% of the CS-GT program capacity caps ACTION REQUESTED: The purpose of this meeting is to present the recommended shortlist to the Energy Committee for consideration and approval
(1) Disadvantaged Community Green Tariff (DAC-GT) and Community Solar Green Tariff (CS-GT) (2) DACs are defined as communities that are identified in the CalEnviroScreen 3.0 as among the top 25 percent of census tracts statewide, plus the census tracts in the highest five percent of CalEnviroScreen’s Pollution Burden that do not have an overall CalEnviroScreen score because of unreliable socioeconomic or health data.
Agenda Page 9
Agenda
Background
Disadvantaged Community
Green Tariff Offers
Community Solar Green
Tariff Offers
Recommendation
Agenda Page 10
Background
Agenda Page 11
4 Disadvantaged Communities (DAC) Programs
5 Community Solar
Green Tariff
(CS-GT)
Disadvantaged Community
Green Tariff
(DAC-GT)
Power Share – CPA Branded – Customer Facing
Enrolled customers receive 100% renewable energy and a 20% bill discount Promotes the development of renewable generation in and for underserved communities Agenda Page 12
Regulatory Background
6 In June 2018, the CPUC approved D. 18-06-027 which created the DAC-GT and CS-GT programs
CPA was allocated a total of 12.19 MW for its DAC-GT program and 3.37 MW for its Community Solar program
o This will provide ~8,600 income-qualified customers in disadvantaged communities with 100% renewable energy from new, DAC-located renewable energy resources The CPUC will make CPA whole on program costs
o CPUC funds the above-market procurement cost for these resources, the 20% discount on customers’ total electric bill, and CPA’s program implementation costs (administration, marketing, education, and outreach)
CPA must implement the programs consistent with CPUC guidelines o Customer and project eligibility
o CPUC-approved program design and RFO solicitations, including PPA approval Agenda Page 13
Current DAC Positions
7 The 2021 DAC RFO is CPA’s second DAC RFO
In the 2020 DAC RFO, CPA received 3 offers:
o DAC-GT – 1 offer from Radiant which was shortlisted and successfully made it through negotiations to contract execution
o Community Solar – 2 offers which were shortlisted but did not make it through negotiations due to engineering design issues
CPA’s Total Allocation (MW) 2020 DAC RFO Procured Capacity (MW)
CPA’s Remaining Allocation
(MW)
DAC-GT 12.19 3.00 9.19
Community Solar 3.37 0.00 3.37
Agenda Page 14
RFO Overview
8 CPA expects to fill its eligible program capacity over multiple RFOs. The 2021 Power Share RFO was the second of CPA’s DAC-GT and Community Solar program RFOs The 2021 Power Share RFO for DAC-GT and Community Solar resources was released in December 2021, with offers due on June 1, 2022
CPA received 8 offers for projects:
o 6 DAC-GT offers
o 2 Community Solar offers
CPA is encouraged by the number of offers received in this year’s RFO o CPA marketed the RFO to potential developers, community sponsors, and CBOs o CPA will continue to market the programs ahead of the next RFO to encourage participation Agenda Page 15
Evaluation Criteria
Individual projects received a rank for each of the following criteria:
In addition, CPA included the following workforce development requirements for all projects:
o Prevailing wage requirements and targeted hire commitments for all projects, with a preference for Project Labor Agreements (PLAs)
Environmental
Stewardship
Workforce
Development
Quantitative
Evaluation
Development
Score
Project
Location
Other
Preferences1
9 (1) Other Preferences – CPA will prioritize projects that leverage other government funding, or that provide evidence of support or endorsements from local climate initiatives.
Agenda Page 16
Valuation Results
All 2021 Power Share RFO offers were priced under the CPUC-designated price cap o The CPUC funds any above-market costs that CPA incurs for the procured power In addition, the RFO Review Team evaluated the offer prices against historical offer prices for relevant solicitations, and deemed them reasonable
o Utility-scale solar offer prices are lower, but are not a good benchmark for Power Share RFO offer prices
o Offers in the RFO were compared to rooftop and small-scale ground-mounted solar from the 2020 Power Share RFO and 2019 Distributed Track RFO
Agenda Page 17
10 DAC-GT
Disadvantaged
Community Green
Tariff
Agenda Page 18
11 DAC-GT Program Description
DAC-GT customers will receive energy from new Renewable Portfolio Standard (RPS)-eligible projects located within a DAC in Southern California Edison (SCE) territory Project eligibility:
o In-front-of-the meter and 500 kW -13 MW in size
o New solar, wind, hydroelectric, or biomass/biogas RPS-eligible generating facility o PPA price must fall within CPUC-designated price cap (confidential) Enrolled customers must be eligible for the CARE or FERA low-income programs and live within a DAC in CPA territory
o Enrolled customers will receive 100% renewable energy based on their monthly usage at a 20% bill discount
o ~3,000 current Power Share (DAC-GT) customers are being served by interim resources acquired from Southern California Edison
Agenda Page 19
12 DAC-GT Offers Results Summary
CPA received offers for rooftop solar PV projects totaling 5.92 MW of capacity (Projects B-F) located in Carson, Hawthorne, and Whittier (same developer)
o CPA recommends shortlisting all 5 offers since their PPA prices are underneath the CPUC price cap, are local projects, and have good qualitative scores
o The developer has committed to paying Prevailing Wage on the projects which put union-affiliated contractors on an equal playing field in bidding (similar to a Public Works project), and the developer and its EPC routinely use NECA (e.g., union-affiliated) contractors CPA received 1 offer from a second developer for ground mounted solar PV in Cantil, CA (Project A) o While the PPA price was the lowest offer received, CPA does not recommend shortlisting due to a low environmental stewardship score Recommendation Project Capacity
(MW) Technology COD Location Environmental
Stewardship
Benefits to
DACs
Workforce
Development
Project
Location
Development
Score
Average
Generation
(MWh/year)
Don’t Shortlist A 4
Solar PV –
Ground-mount8/1/2023 Cantil, CA -
Kern County Low High High Medium High 11,606
Shortlist B 1.8 Solar PV -
Rooftop 6/30/2023 Carson High High Medium High High 4,048 Shortlist C 1.92 Solar PV -
Rooftop 6/30/2023 Whittier High High Medium High High 4,676 Shortlist D 0.64 Solar PV -
Rooftop 6/30/2023 Hawthorne High High Medium High High 1,408 Shortlist E 0.6 Solar PV -
Rooftop 6/30/2023 Carson High High Medium High High 1,457 Shortlist F 0.96 Solar PV -
Rooftop 6/30/2023 Carson High High Medium High High 2,380 Agenda Page 20
13 Recommended DAG-GT Projects
14 Development Risk
o The five projects are sited on rooftops of industrial properties involved in warehousing and logistics o The developer owns the property on which the five projects are sited o Structural review and building permits will be required, environmental permitting is not required o All five projects have received positive determination of Fast Track eligibility from SCE Developer Experience
o The developer is a global leader in logistics real estate and has a dedicated Global Energy team to deploy energy projects
o To date, the developer has permitted and built 54 solar rooftop projects within Los Angeles, Riverside, and San Bernardino counties
o The planned engineering, procurement, and construction (EPC) contractor for the projects has installed over 420 MW of onsite solar at over 200 facilities in 30 utility territories Agenda Page 21
CS-GT
Community Solar
Green Tariff
Agenda Page 22
15 Community Solar Program Description
16 Community Solar customers will receive a portion of the renewable energy output from a local community solar project sized at 3 MW or less
Project eligibility:
o Projects located within a DAC that is within 5 miles of CPA customers’ DAC census tract o New, RPS-eligible solar, in-front-of-the-meter generating facility o PPA price must fall under CPUC-designated price cap (confidential) o Community Solar projects require a Community Sponsor1 who assists with customer enrollment and ensures project development is consistent with community priorities Enrolled customers will subscribe to a portion of the Community Solar project capacity based on their historical energy usage
(1) Community sponsors must be a non-profit community-based organization (CBO) or local government entity Agenda Page 23
17 CPA Territory
DACs in CPA Territory
Agenda Page 24
Community Solar Offer Results Summary
18 CPA received 2 offers for rooftop solar PV projects located in Pico Rivera o Both projects were shortlisted in CPA’s 2020 Power Share RFO but failed to receive PPAs when developer identified concerns with project engineering
o Project engineering concerns have been addressed in the 2021 Power Share RFO offer o CPA recommends shortlisting both offers since their PPA prices are underneath the CPUC price cap and have good qualitative scores
Recommendation Project
Name
Capacity
(MW) Technology COD Location Environmental Stewardship
Benefits to
DACs
Workforce
Development
Project
Location
Development
Score
Average
Generation
(MWh/year)
Shortlist G 0.265 Solar PV -
Rooftop 12/1/2023 Pico Rivera High High High High Medium 542 Shortlist H 0.24 Solar PV -
Rooftop 12/1/2023 Pico Rivera High High High High Medium 417 Agenda Page 25
Recommended Community Solar Projects
19 Development Risk
o The projects have begun the interconnection process and have received Fast Track status from SCE
o A roof lease between the developer and the projects’ site host has been executed o The projects require no land use permitting; building and electrical permits will be requested upon construction start
o CPA has confirmed there are numerous eligible customers within the vicinity of the projects for program enrollment
Developer Experience
o Founded in 2009, the developer is headquartered in Denver, Colorado and has extensive expertise in community solar with 261 MW installed to-date across 27 states Agenda Page 26
Recommendations
Agenda Page 27
20 Recommendations
The RFO Review Team recommends shortlisting all projects except Project A o All recommended projects are compliant with the RFO and program eligibility guidelines o All recommended projects are underneath the CPUC price cap o All recommended projects have good qualitative scores, reasonable project timelines and experienced developers CPA’s Total Allocation
CPA’s Remaining
Allocation After 2020
RFO
2021 DAC RFO Shortlist
Recommendation
CPA’s Remaining
Allocation after
Recommendation
CPA’s Remaining
Allocation (%)
DAC-GT 12.19 MW 9.19 MW 5.92 MW 3.27 MW 27%
CS-GT 3.37 MW 3.37 MW 0.505 MW 2.865 MW 85%
Program Project Name Capacity (MW) COD Location
DAC-GT B 1.80 6/30/2023 Carson
DAC-GT C 1.92 6/30/2023 Whittier
DAC-GT D 0.64 6/30/2023 Hawthorne
DAC-GT E 0.60 6/30/2023 Carson
DAC-GT F 0.96 6/30/2023 Carson
CS-GT G 0.265 12/1/2023 Pico Rivera
CS-GT H 0.24 12/1/2023 Pico Rivera
PPA execution with all recommended projects will make incremental progress towards filling CPA’s program allocation for CS-GT and DAC-GT:
Agenda Page 28
21 Next Steps
22 Date Action
July 27, 2022 Energy Committee shortlist consideration
August 1, 2022 Bidders notified of shortlist status
August 2022 – November 2022 PPA negotiations
November 2022 – January 2023 Board consideration of PPAs January 30, 2023 Executed PPAs submitted to CPUC for approval* TBD Next Power Share RFO Release
*CPA is required to submit PPAs for CPUC approval within 180 days of bidders’ receipt of shortlist notification Agenda Page 29
Action Requested
23 The RFO Review Team is seeking Energy Committee approval of the recommended shortlist for the 2021 Power Share RFO
Agenda Page 30
Staff Report – Agenda Item 4
To: Clean Power Alliance (CPA) Energy Committee
From: Natasha Keefer, Vice President, Power Supply
Approved by: Matthew Langer, Chief Operating Officer
Subject: Bilateral Offers for Long-term Geothermal Resources Date: July 27, 2022
RECOMMENDATION
Approve entering into bilateral negotiations for power purchase agreements for two (2) geothermal resources as recommended by the Review Team.
ATTACHMENT
1. Bilateral Offers for Long-Term Geothermal Resources
Agenda Page 31
Bilateral Offers for
Long-term Geothermal
Resources
July 27, 2022
Agenda Page 32
Per the CPUC Decision Requiring Procurement to Address Mid-Term Reliability (2023-2026)1 CPA is required to procure a total of 59 MW of new baseload renewables, which is limited to biomass and geothermal resources Geothermal capacity is difficult to procure due to the scarcity of potential sites and lack of available transmission CPA has the opportunity to enter into two bilateral power purchase agreements with an in-state geothermal project to procure geothermal capacity and energy
o First Offer: 18 MW of new incremental capacity coming online in 2025 that would count towards Mid-Term Reliability compliance requirements o Second Offer: 100 MW from an existing resource starting in June 2027 (not eligible for compliance) On July 14th, the MTR RFO Review Team (including Board members) met to consider these two offers and is recommending the offers for Energy Committee consideration today Executive Summary
1. D.21-06-035 under Rulemaking 20-05-003
Agenda Page 33
Agenda
Background
Offer Overview
Recommendation
Agenda Page 34
Background
Agenda Page 35
4 CPA’s Procurement Need
Under the Mid Term Reliability (MTR) decision, CPA is required to procure 59 MW of new build (“incremental”) capacity for Baseload Renewables Baseload/Firm Renewable Energy is generation capacity that has no on-site emissions or is eligible under the requirements of the RPS program and has at least an 80% capacity factor. Projects in this category should have a generation size of 5 MW – 100MW. No storage qualifies (per CPUC requirements).
Projects must come online by June 1, 2026
Only biomass and geothermal resources can meet the Baseload Renewable requirement
Agenda Page 36
Availability of Incremental Baseload Renewables
Opportunities for new biomass facilities are virtually non-existent due to the high cost, technology risk, and/or permitting/pollution considerations Opportunities for new geothermal resources are more viable, but are also constrained due to resource-dependent siting potential (mostly outside of CAISO and out of state) and lack of transmission capacity into CAISO Agenda Page 37
For an import resource to count for MTR compliance and Resource Adequacy (RA), it needs both transmission to CAISO and Import Allocation Rights (IARs)
Securing transmission to CAISO is the responsibility of the developer; securing IARs are the responsibility of the load-serving entity
IARs are awarded annually to load-serving entities by CAISO and can be difficult to obtain. Because IARs are awarded annually, CPA will not know if it can acquire IARs for a project until its COD approaches
The uncertainty of IAR awards creates risk for CPA because CPA must make long-term procurement decisions with uncertainty around whether the resource will count towards RA compliance Geothermal capacity located within CAISO does not require IARs or transmission into CAISO which makes these resources
extremely valuable and expensive
Import Resource Risks
CPA must secure
IARs to receive RA
credit for the
imported power
Developers of out-of-state projects looking
to import power into
CAISO must secure
transmission into
CAISO
Agenda Page 38
Offer Evaluation
Per CPA’s Energy Risk Management Policy, CPA is able to evaluate and negotiate bilateral offers for long-term PPAs
The approval process follows a similar process as long-term PPA offers from solicitations in that CPA evaluates bilateral offers based on the same six criteria and evaluation methodology:
o Value, Environmental Stewardship, Workforce Development, Development Score, Project Location, Benefits to Disadvantaged Communities
The RFO Review Team compared the two new offers discussed today to projects and pricing received in the 2021 MTR RFO as well as a recent bilateral offer for new geothermal For context, in the 2021 MTR RFO, CPA received 7 geothermal offers, all of which were imports into CAISO and 4th quartile in value
o CPA shortlisted and entered into negotations with two projects; one negotiation already terminated due to import-related risk
Agenda Page 39
8 Offer Overview
Agenda Page 40
9 First Offer: Incremental Capacity
CPA has the opportunity to purchase 18 MW of new, incremental geothermal capacity from an in-state geothermal resource (i.e. not an import) located in a well-developed and reliable geothermal area
The bilateral offer comes by way of another CCA that is unable to take full offtake of the available incremental resource
o CPA would purchase 18 MW of capacity and the other CCA would purchase the remaining 7 MW of capacity1
CPA would receive all the Resource Adequacy, RECs, and energy associated with the incremental capacity
1) This is not a joint procurement; CPA and the CCA would execute separate and standalone PPAs for each offtaker's respective output of the facility Agenda Page 41
10 First Offer Evaluation (Incremental Capacity)
Offer summary:
The offer price is higher than the geothermal offers received in the 2021 MTR RFO, however, pricing reflects the scarcity of incremental geothermal resources available to meet the CPUC’s procurement order o The price is lower than a bilateral offer that CPA recently received for an incremental geothermal import project, which is higher risk
o Limited transmission into CAISO and higher demand due to the CPUC procurement order has created scarcity pricing for incremental geothermal resources; CPA expects to receive higher pricing for geothermal in its upcoming 2022 MTR RFO compared to its 2021 MTR RFO
Development risk is low as the project has a developed geothermal resource, site control, and will utilize existing interconnection and transmission infrastructure 11 Location Capacity
(MW)
Annual
Energy
(MWh)
COD Term (Yrs) NPV
Quartile
Environmental
Stewardship
Workforce
Development
Development
Score
Project
Location
Benefits to
DACs
Within CA 18 157,680 6/1/2025 20 4 High Medium High Medium Neutral Agenda Page 42
MTR Compliance Position
CPA will be short on its Baseload Renewable MTR compliance requirement regardless of the outcome of 2021 MTR RFO negotiations and the proposed offers
CPA will launch its 2022 MTR RFO on August 1st to procure additional Baseload Renewable capacity 12 CPA MTR Compliance Position
MTR Baseload Renewable Procurement Requirement 59.0 MW
2021 MTR Offer Under Negotiation 32.7 MW
Proposed Incremental Offer 18.0 MW
Remaining MTR Compliance Need 8.3 MW
Agenda Page 43
Second Offer: Existing Capacity
The same seller is also offering CPA the opportunity to purchase 100 MW of existing geothermal capacity; this offer is not contingent on the incremental capacity This capacity already exists and will be made available to CPA on 6/1/2027 when the existing offtaker's agreement expires
o This capacity is not incremental and will not count towards CPA’s MTR compliance requirements but will provide valuable benefits to CPA including adding technology diversity to CPA’s portfolio and a consistent, baseload generation profile
CPA would receive all the Resource Adequacy, RECs, and energy associated with the 100 MW of capacity Agenda Page 44
13 Offer summary:
Given the CPUC’s proposed Resource Adequacy program reform, it’s expected that baseload renewable resources will become highly valuable for RA
Pricing is in line with current market pricing for geothermal and forecasted revenues exceed forecasted costs; geothermal will become more and more scarce as LSEs seek to fill their RA requirements with 24 x 7 renewable resources
Development risk is extremely low since the capacity is already online, and therefore not subject to development or construction risks
While no new construction jobs will be created, ~250 people are employed full-time at the facility and local residents fill the majority of the independent contractor jobs, which average another 150 full time positions Second Offer Evaluation (Existing Capacity)
Location Capacity
(MW)
Annual
Energy
(MWh)
COD Term
(Yrs)
NPV
Quartile
Environmental
Stewardship
Workforce
Development
Development
Score
Project
Location
Benefits to
DACs
Within CA 100 876,000 6/1/2027 10 4 High Medium High Medium Neutral Agenda Page 45
14 Recommendation
Agenda Page 46
15 The RFO Review Team recommends that Energy Committee approve CPA entering negotiations for both the incremental and the existing geothermal offers
Recommendation
The incremental offer will contribute 18 MW towards meeting CPA’s MTR compliance requirement for Baseload Renewable resources
o Additional procurement of new, incremental geothermal or biomass capacity will be required to meet the MTR compliance requirement of 59 MW of Baseload Renewable resources o Although higher-priced, the project is the least risky incremental geothermal resource available in the market given the already proven geothermal resource, existing generation and transmission infrastructure, developer track record, and location within CAISO The offer for existing capacity will not count towards MTR compliance but will provide long-term renewable energy and capacity 24 x 7 and contribute to CPA’s future compliance requirements for Resource Adequacy
Agenda Page 47
16