Energy Storage
Agreement
February 1, 2024
CPA launched the 2023 Clean Energy and Reliability Request for Offer (RFO) in June 2023 to fill a larger portion of its portfolio needs with long-term contracts, reducing the need to procure products such as Resource Adequacy (RA) and Renewable Energy Credits (RECs) in short-term markets, which are often volatile CPA set a procurement target of 1,300,000 MWh of energy and 400 MW of Resource Adequacy (RA) for the RFO which is approximately one-quarter of what CPA anticipates needing to procure through long-term contracts each year for the next four years in order to adequately reduce short-term market risk o To reach the procurement target and account for projects that fail to reach an agreement or achieve COD, a shortlist target of 3,250,000 MWh of energy and 1,200 MW of RA was established CPA received 128 compliant bids. The majority of offers received were from standalone storage, however all product categories received a robust response
On September 27, 2023, the Energy Committee approved the RFO shortlist of 10 projects and waitlist of 17 projects.
Staff then entered into exclusivity for various shortlisted projects and some waitlisted projects before commencing negotiations
The Board approved one project from the RFO (SunZia Wind). Staff has now concluded negotiations with 1 additional project from the shortlist, Drifter, and is requesting Board approval for the Chief Executive Officer to execute this agreement
2 Executive Summary
Agenda
Action Requested
Background
Project Overview – Drifter
3 Action Requested
CPA is seeking Board approval for the Drifter Energy Storage Agreement (ESA):
Project Technology Capacity Commercial
Operation Date
Contract
Length Process
Drifter
Four–hour
Standalone
Storage
300 MW 6/1/2027 20 Years 2023 RFO
4 Drifter
5 Project Overview
300 MW / 1200 MWh battery project
Located in Moorpark, Ventura County
Contract Start Date: June 1, 2027
Seller: Prologis
• Prologis is a global leader in logistics real estate.
Prologis’ Global Energy team has developed over 400
MW of generating capacity across 12 countries and is
developing a $200 million portfolio of front of the meter battery storage projects in Texas.
Rationale
The project will help CPA meet its long-term RA
obligations and build its energy storage portfolio
The has a high NPV and scores well on
qualitative criteria, including being in located in
CPA service territory
Criteria Rank
Quantitative Value 1st NPV quartile
Environmental
Stewardship
Neutral
Benefits to DACs Neutral
Workforce
Development
High
Project Location High
Development Score Medium
Evaluation Summary
Drifter and Resource Adequacy
In order to provide RA, a project must receive Full Capacity Deliverability Status (FCDS) from the California Independent System Operator (CAISO) In the 2023 RFO, CPA shortlisted a number of projects that have not yet received FCDS • All of the shortlisted projects that are still pursuing FCDS expect to find out their status from CAISO in May 2024 Projects without FCDS are at greater risk of failure, yet it is still worthwhile to pursue contracts with them
• Once a project receives FCDS, its value/desirability goes up and the seller may find another off-taker willing to pay a higher price
• A Power Purchase Agreement (PPA) with CPA helps increase the chance that a project will be awarded FCDS In order to accommodate the CAISO timeline and deal with the possibility a project does not receive FCDS, CPA is negotiating unique termination clauses into its Power Purchase Agreements and ESAs, including Drifter
• These terms include the ability to terminate the contract with no penalty to CPA if the project does not receive FCDS The Drifter contract that the Board considers today could be terminated in a few months if the project does not receive FCDS. However, the likelihood that it will receive FCDS increases with an executed contract.
6 Summary
7 The Drifter project will advance CPA’s goals for meeting Resource Adequacy procurement targets from the 2023 RFO
Drifter is a local project, with good qualitative scores and is ranked in the first NPV quartile Action Requested: Approve and Authorize the Chief Executive Officer to execute the Drifter Energy Storage Agreement