DEPARTMENT Power Enterprise
AGENDA NO.
15 MEETING DATE
February 22, 2022
APPROVAL:
COMMISSION
SECRETARY
Donna Hood
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
Approve and A uthorize CleanPowerSF’s Participation in California Community Power’s Long- Duration Storage Project with Tumbleweed Energy Storage, LLC: Regular Calendar
Project Manager: Michael Hyams, Deputy AGM, Power - CleanPowerSF
Approve and Authorize CleanPowerSF’s Participation in California Community Power’s Long-duration Energy Storage Project with Tumbleweed Energy Storage, LLC
Summary of
Proposed
Commission Action:
Approve the Project Participation and Share Agreement , the Buyer Liability Pass-Through Agreement, and the Coordinated Operations Agreement, so that CleanPowerSF may participate in California Community Power’s long- duration energy storage project with Tumbleweed Energy Storage, LLC ; and authorize the General Manager to execute the agreements on behalf of the CleanPowerSF program with total contract costs not-to-exceed $65 million for a term of twenty (20) years; and authorize the General Manager to seek approval from the Board of Supervisors to execute the agreements.
Background: In 2016 CleanPowerSF initiated service to eligible customers within the City in multiple phases until citywide enrollment of all eligible customer accounts was completed in June 2020. CleanPowerSF is g uided by Commission- adopted program goals (affordable service, cleaner energy, local investment, and financial and rate stability) and Business Practice Policies (Resolution No. 15-0267, amended by Resolution No. 18-0028) Today
, CleanPowerSF is
successfully serving more than 380,000 customer accounts with annual electricity sales of about 3,000 gigawatt -hours and an annual peak demand of 550 megawatts.
Since the launch of the CleanPowerSF program, the SFPUC has successfully acquired an electricity supply under short and long-
term contracts that has
enabled the SFPUC to deliver cleaner and more renewable electricity to its customers at rates that are affordable and competitive.
In August 2020, the Commission adopted C leanPowerSF’s Integrated Resource Plan (IRP), which set forth a roadmap for CleanPowerSF to achieve a 100% renewable electricity portfolio by 2025, five years sooner than San Francisco’s citywide goal (Resolution No. 20 -0182). The adopted IRP called Agreement: Approve Tumbleweed Long-Duration Energy Storage Agreements Commission Meeting Date: February 22, 2022
1 Net Qualifying Capacity refers to the amount of an electric resource’s generating capacity that can be counted towards meeting the CPUC’s Resource Adequacy requirements.
for CleanPowerSF to procure, among other resources, 15 megawatts (MW) of long-duration energy storage (LDS).
LDS is a technology that is capable of storing energy and then discharging it at the plant’s rated capacity for at least eight hours. LDS technology will allow CleanPowerSF to store energy from the grid when it is abundant (e.g., during the middle of the day when solar is available) and discharge it when demand for electricity is high . LDS is viewed as a critical technology to ensure the reliability of the electric grid as it transitions away from fossil fuels.
California Public Utilities Commission (CPUC) Mandate to Procure LDS Capacity
On June 24, 2021, the CPUC adopted Decision (D.) 21-06-035 directing CleanPowerSF and other retail sellers of electricity under its jurisdiction to collectively procure 11,500 MW of new electricity resources between 2023 to 2026 to meet grid reliability needs, which includes 1,000 MW of new LDS resources.
Under Decision 21-06-035, the CPUC required CleanPowerSF to procure 15.5 MW of Net Qualifying Capacity of new LDS resources. 1 Under the CPUC’s decision, CleanPowerSF’s LDS resources are required to be operational by the middle of 2026.
Failure to procure the resources ordered by the CPUC could result in significant financial penalties to CleanPowerSF. In addition, the CPUC could order Pacific Gas and Electric Company (PG&E) to procure “backstop” LDS resources with the cost of such procurement assigned to CleanPowerSF directly or recovered through a non-bypassable charge on its ratepayers’ monthly energy bills.
Formation of California Community Power (CC Power) and the Request for Offers for LDS Resources
In June 2020, CleanPowerSF , along with 10 other CCAs issued a request for information (RFI) from LDS technology providers and project developers. The information collected through the RFI was used to develop a request for offers (RFO). This RFO was issued on October 15, 2020, and bids were due on December 1, 2020. The RFO
received a robust response with 51 entities
submitting offers representing over 9,000 MW of new LDS capacity in California and surrounding states.
On February 1, 2021, a group of CCAs formed CC Power, a new joint powers agency (JPA), to increase their collective buying power for the purchase of new clean energy and reliability resources to advance state and local climate action goals. On February 9, 2021, the Commission adopted Resolution No. 21-0023, authorizing CleanPowerSF to become a member of CC Pow er.
Subsequently,
the Board of Supervisors and Mayor authorized CleanPowerSF’s membership in CC Power through the adoption of Ordinance No. 25 -21. CleanPowerSF Agreement: Approve Tumbleweed Long-Duration Energy Storage Agreements Commission Meeting Date: February 22, 2022
2 See Item 8a from the Commission’s December 14, 2021 meeting for a briefing on the California Community Power Long- duration Storage Procurement, available at: https://sfpuc.sharefile.com/share/view/sc37e6bf157d84d94b73a53b6eb38e0a0 (accessed on January 26, 2022).
3 CC Power Resolution No. 21-10-02, available at: https://cacommunitypower.org/wp-content/uploads/2021/10/CC- Power_BoD-Mtg_100821_FINAL.pdf (accessed on January 26, 2022). formally became a member of CC Power when the CC Power Board of Directors unanimously approved Resolution 21-04-09 on April 21, 2021.
Once the JPA was formed, CC Power assumed management of the LDS RFO.
Projects were scored based on the projects’ economic value, development status, project viability , ability to meet state regulatory requirements, technology viability, project team experience, compliance with workforce policy, and environmental impact.
Based on its evaluation process and negotiations , the CC Power Project Oversight Committee recommended the CC Power Board approve the long- duration energy storage project with Tumbleweed Energy Storage, LLC, (Tumbleweed LDS Project) to be developed by the firm LS Power. 2 On October 8, 2021, the CC Power Board issued a notice of intent that it would consider the Tumbleweed LDS Project for approval, no sooner than 60 days subsequent to the notice.3
CC Power Approval of the Tumbleweed LDS Project Agreement On January 19, 2022, the CC Power Board approved the Tumbleweed LDS Project and authorized the CC Power General M anager to execute the Tumbleweed Project Agreements on behalf of CC Power. The CC Power General Manager will enter into an Energy Storage Serv ices Agreement (ESSA) directly with the LDS project company, Tumbleweed Energy Storage, LLC. This agreement covers standard electric industry terms, including project requirements and milestones, project capacity, price, term, payment obligations, and othe r key terms. Some of the terms of the ESSA are confidential and proprietary, so a redacted version of the ESSA is attached to this staff report.
Separately, participating CC Power members must follow their own individual approval processes to execute the Project Participation and Share Agreement (PPSA) and Buyer Liability Pass -Through Agreement (BLPTA) , described below. The project agreements are structured to be dependent upon each other.
Approval of the agreements by a sufficient number of participating members is a condition precedent to the effectiveness of the agreement between CC Power and the Tumbleweed LDS Project. Thus, even though the CC Power Board has approved the project and executi on of the ESSA , the effectiveness of th at agreement depends on approval and execution of the PPSA and BLPTA by individual participating members.
The ESSA gives CC Power 90 days to
secure approval from each participating CCAs’ governing Board.
Overview of the Project
Agreement: Approve Tumbleweed Long-Duration Energy Storage Agreements Commission Meeting Date: February 22, 2022
Project Name Tumbleweed Energy Storage, LLC
Technology Li-Ion Storage
Storage Capacity 69 MW / 552 megawatt-hour (MWh)
Commercial Operation Date 6/1/2026
Developer REV Renewables, a subsidiary of LS
Power
Location Kern County, CA
The Tumbleweed project is a 69 MW / 552 MWh lithium-ion battery storage facility located near Rosamond, CA in Kern County. CleanPowerSF’s share of this project is approximately 11.1 MW / 89 MWh. The Commercial Operation Date is June 1, 2026.
The project has an executed interconnection agreement with Full Capacity Deliverability Status (FCDS) for the energy storage component, meaning it will provide Resource Adequacy capacity attributes in addition to energy benefits.
Under the contract, CC Power will pay for the use of the storage project at a fixed-price rate per kW-month, with no escalation, for the full 15-year term of the contract. CC Power is entitled to all electricity products from the facility, including the energy dispatched and Resource Adequacy capacity. Project participants will pay CC Power for their share of the project capacity and in turn receive their share of the associated electricity products and project benefits.
Workforce Requirements
The Tumbleweed LDS Project has committed that the construction of the project will comply with California prevailing wage requirements and be conducted using a project labor agreement, community workforce agreement, work site agreement, collective bargaining agreement, or other similar agreement, providing for terms and conditions of employment with applicable labor organizations.
Participating CCAs
Seven CC Power member CCAs are participating in this project. The participating CCAs, and their applicable shares are identified in the table below. The project’s capacity was allocated to the participating CCAs based on their LDS capacity procurement requirement ordered by the CPUC.
CCA
CPUC
Capacity
Obligation
MW NQC
Entitlement
Share
Tumbleweed
Allocation
(MW)
Tumbleweed
Allocation
NQC
Agreement: Approve Tumbleweed Long-Duration Energy Storage Agreements Commission Meeting Date: February 22, 2022
CleanPowerSF 15.5 16.1% 11.1 8.7
PCE 19 19.7% 13.6 10.6
RCEA 3.5 3.6% 2.5 2.0
SJCE 21.5 22.3% 15.4 12.0
SVCE 20.5 21.2% 14.7 11.5
SCPA 12.5 12.9% 8.9 7.0
VCE 4 4.2% 2.8 2.2
Total 96.5 100.00% 69.0 54.0
Description of
Agreement:
For CleanPowerSF to participate in the Tumbleweed LDS Project, the SFPUC will need to execute the following agreements.
A. Project Participation Share Agreement (PPSA): This agreement will be executed by CC Power and each of the participating CCAs. This agreement specifies the products (e.g., energy dispatched and Resource Adequacy capacity) and benefits from CC Power to each of the participating CCAs. It also details payment timelines from each CCA to CC Power and covers terms and procedures if a CCA does not make payments when due and if a CCA needs to be removed from the contract for non-performance. Under this agreement, each CCA commits to a 25% “step-up” obligation. If one of the participating CCAs defaults and is removed from the agreement, each CCA commits to take additional capacity up to 25% of its initial share.
Under this agreement, each CCA also commits to pre-pay three months of expected project payments. This provides a cushion to CC Power to allow it to make payments to the project developer on a timely basis. The PPSA is attached to this agenda item.
B. Buyer Liability Pass Through Agreement (BLPTA): This agreement will be executed by CleanPowerSF, CC Power and Tumbleweed Energy Storage, LLC. The form of this agreement is an appendix to the ESSA. This agreement is a guaranty by CleanPowerSF of its share of CC Power’s payment obligations under the ESSA. The BLPTA is attached to this agenda item.
C. Coordinated Operations Agreement (COA): This agreement will be executed by CC Power and each of the participating CCAs. This agreement details how the CCAs and CC Power will work together to operate the project including hiring a scheduling coordinator and making decisions on charging and discharging the project. This contract will be finalized and executed at a later date, prior to the start of project operations. A draft of the COA is attached to this agenda item.
Budget & Costs: CleanPowerSF’s share of the Tumbleweed Energy Storage LLC project costs will not exceed $65 million over a 20-year contract term. The expected annual project costs will be funded from CleanPowerSF revenues and included in CleanPowerSF’s annual budget.
Agreement: Approve Tumbleweed Long-Duration Energy Storage Agreements Commission Meeting Date: February 22, 2022
Result of Inaction: CleanPowerSF may not be able to procure the LDS capacity it needs to comply with CPUC Decision 21-06-035. If CleanPowerSF is unable to procure the LDS capacity required by the CPUC, it may be subject to financial penalties for non-compliance. In addition, t he CPUC may order PG&E to procure “backstop” LDS resources with the cost of such procurement assigned to CleanPowerSF directly or recovered through a non-bypa ssable charge on its ratepayers’ monthly energy bills.
Schedule: Joint CCA Request for Offers for Long Duration Energy Storage Capacity • Advertised: October 15, 2020
• Proposals due: December 1, 2020
• CC Power notice of intent to approve: October 8, 2021 • CC Power approval: January 19, 2022
• Participating member CCA approvals: February-March 2022 • Project Construction Start: December 31, 2025
• Project Commercial Operation: June 1, 2026
Environmental
Review:
The Tumbleweed LDS project is currently undergoing environmental review in Kern County. The ESSA and other Agreements allow CC Power, CleanPowerSF, and the other participating CCAs to terminate their participation in the project if the developer fails to obtain all applicable discretionary permits and complete CEQA review, which may include consideration of any alternatives and requirements for implementation of a mitigation monitoring and reporting program, and begin construction of the Tumbleweed LDS Project by the date specified in the ESSA. The developer is required by the agreement to comply with all applicable laws during the term of the agreement, which includes CEQA requirements for implementation of mitigation measures, if any.
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
Attachments: 1. December 14, 2021 Staff presentation to the Commission
2. California Community Power-Tumbleweed Energy Storage PPSA
3. Tumbleweed Energy Storage BLPTA
4. California Community Power-Tumbleweed Energy Storage ESSA
5. Tumbleweed Energy Storage Coordinated Operations Agreement
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. :
WHEREAS, The San Francisco Board of Supervisors (“Board”) established a Community Choice Aggregation ( “CCA”) program in 2004 (Ordinance 86- 04) and has implemented the program, called CleanPowerSF, through the work of the San Francisco Public Utilities Commission (“SFPUC” or “Commission”) in consultation with the San Francisco Local Agency Formation Commission (Ordinances 146-07, 147-07, and 232-09); and WHEREAS, The SFPUC has adopted program goals for CleanPowerSF that guide CleanPowerSF’s planning and operations, including leading with affordable and reliable service, providing cleaner electricity alternatives, and investing in local renewable projects and jobs while providing for long-term rate and financial stability; and WHEREAS, CleanPowerSF and other interested CCAs formed a new joint powers authority (“California Community Power Agency” or “CC Power”) to leverage their combined buying power to achieve economies of scale, lower costs, and more favorable terms and conditions for products and services; and
WHEREAS, The Commission by Resolution No. 21-0023 and the Board by Ordinance No. 25-21, authorized CleanPowerSF to become a member of CC Power , and in April 2021 the CC Power Board approved CleanPowerSF’s membership; and
WHEREAS, By Resolution No. 20-0182, the Commission adopted CleanPowerSF’s 2020 Integrated Resources Plan, which called for CleanPowerSF to procure long- duration energy storage (“LDS”) resources. LDS is a technology that can store and discharge energy for at least eight hours; and
WHEREAS, On June 24, 2021, t he California Public Utilities Commission (“CPUC”) ordered CleanPowerSF and other retail power providers under its authority to procure 11,500 megawatts of new resources, including 1,000 megawatts of LDS. CleanPowerSF’s share of the LDS requirement is 15.5 megawatts; and
WHEREAS, CleanPowerSF’s failure to comply with the CPUC order could result in significant financial penalties; and
WHEREAS, CleanPowerSF, as a member of the CC Power, has participated in a request for offers for LDS resources; and
WHEREAS, On January 19, 2022, the CC Power Board approved entering into an Energy Storage Service Agreement with Tumbleweed Energy Storage, LLC (“Tumbleweed ESSA”) under which CC Power may purchase 69 megawatts of LDS with 552- megawatt hour eight -hour discharge capacity on behalf of CleanPowerSF and the other participating CCAs; and
WHEREAS, CleanPowerSF ’s share of the long-duration energy storage project with Tumbleweed Energy Storage, LLC, (Tumbleweed LDS Project) would be 16 percent of the project capacity, which would provide more than half of CleanPowerSF’s LDS procurement obligation ordered by the CPUC; and
WHEREAS, To participate in the Tumbleweed LDS P roject, CleanPowerSF must enter into three separate agreements:
• Project Participation Share Agreement (“Tumbleweed PPSA”) between CC Power, CleanPowerSF and the other CCAs that are participants in the Tumbleweed LDS project. It defines the rights, duties, and obligations of CleanPowerSF and the other project participants;
• Buyer Liability Pass Through Agreement (“BLPTA”) between CleanPowerSF, CC Power, and Tumbleweed Energy Storage, LLC. Under the BLPTA, CleanPowerSF guarantees the prompt payment of its share of CC Power’s obligations; and • Coordinated Operations Agreement between CleanPowerSF, CCPower, and the other participating CCAs. It details how the CCAs and CC Power will work together to operate the project including hiring a scheduling coordinator and making decisions on charging and discharging the project; and WHEREAS, On January 19, 2022 the CC Power Board of Directors approved the Tumbleweed LDS Project and authorized the CC Power G eneral Manager to execute the project agreements on behalf of CC Power; and
WHEREAS, The Tumbleweed LDS project is currently undergoing environmental review in Kern County and the ESSA and other Agreements allow CC Power, CleanPowerSF, and the other participating CCAs to terminate their participation in the project if the developer fails to obtain all applicable discretionary permits and complete CEQA review, which may include consideration of any alternatives and requirements for implementation of a mitigation monitoring and reporting program, and begin construction of the Tumbleweed LDS Project by the date specified in the ESSA; and
WHEREAS, The developer is required by the agreement to comply with all applicable laws during the term of the agreement, which includes CEQA requir ements for implementation of mitigation measures, if any; now, therefore, be it
RESOLVED, That the Commission hereby approves and authorizes the General Manager to execute and seek Board of Supervisors approval for the Tumbleweed BLPTA, the Tumbleweed PPSA, and the Tumbleweed Operations Agreement for a no t-to-exceed amount of $65,000,000 over a twenty (20) year term on behalf of CleanPowerSF; and be it
FURTHER RESOLVED, That the Commission authorizes the General Manager to make amendments to the agreements that the General Manager and the City Attorney agree are needed to fulfill the purposes of the Agreement and would not materially increase the obligations or liabilities or materially reduce the benefits to the City.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of February 22, 2022.
Secretary, Public Utilities Commission
1 Item 15: Approve CleanPowerSF
Participation in California
Community Power’s
Tumbleweed Project
February 22, 2022
Summary
In June 2021 the California Public Utilities Commission mandated that CleanPowerSF and other power providers procure Long-duration Energy Storage (LDS) resources.
CleanPowerSF participated in a Request for Offers (RFO) for LDS resources as a member of California Community Power (CC Power). We presented the status of the CC Power LDS procurement process at the Dec. 14
th Commission meeting.
On Jan. 19th CC Power approved its first LDS project from a competitive solicitation, the Tumbleweed LDS project.
CC Power member agencies, including CleanPowerSF, are now seeking approval from their governing bodies to participate in the Tumbleweed LDS project.
2 Established in February 2021 to leverage the
combined buying power of Community
Choice Aggregators (CCAs) for energy supply,
programs and services.
CleanPowerSF became a member in April
2021.
Commission approved in Resolution No.
21-0023
Board approved in Ordinance No. 25-21
CC Power conducts its business in open
meetings – for more info visit:
https://cacommunitypower.org/meetings/
3 Background:
California Community Power
or “CC Power”
4 California
Community Power
Agency
Membership
“
5 LDS Request for Offers
Background & Timeline
5 June
‘20
Joint CCAs issue a Request for Information
to understand market opportunity
Oct
‘20
Joint CCAs Issue a Request for Offers (RFO)
for up to 500 MW of LDS
Feb
‘21
California Community Power (CC Power) Formed/Long Duration Storage (LDS) Project Oversight Committee formalized
Jun
‘21
LDS Projects Shortlisted, Negotiations start, and begin development of CC Power/Member Agreements
Jun
‘21
CPUC Issues Mid-term Reliability Procurement Order – LDS Project Oversight Committee Develop Pathways to Achieve Compliance
Oct
‘21 to
Feb
‘22
CC Power and individual member agency approval process for LDS Project #1 – LS Power’s Tumbleweed
CleanPowerSF Ordered
to Procure 15.5 MW of
LDS Resources
On June 24, 2021, CPUC issued Decision D.21-06-035
ordering retail sellers of electricity under its jurisdiction to procure 1,000 MW of new LDS resources.
CleanPowerSF’s share of the LDS order is 15.5 MW.
Failure to comply with CPUC procurement order is expected to result in significant cost to CleanPowerSF.
Tumbleweed project will meet about half of CleanPowerSF’s LDS procurement obligation.
CleanPowerSF will pursue additional procurement through CC Power and independently to meet CPUC order.
6 LDS RFO Objectives &
Specifications
Procure cost-effective LDS
to integrate renewables &
support grid reliability
Joint-procurement to share
resources and project risk
Meet regulatory
requirements, including
procurement mandates
Grid-charged with
minimum 8-hour discharge
duration
Located in or able to
deliver to California ISO
Commercial operation date
no later than June 1, 2026
Minimum delivery term of
10 years
7 SpecificationsObjectives
CC Power LDS Project
#1: Tumbleweed
Project by LS Power
Developer: LS Power/REV
Renewables
Product: 69 MW/552 MWh 8-hour
discharge battery
Location: Rosamond, Kern County,
California
Technology: Lithium-ion
Labor: Project Labor Agreement or
similar agreement required
Wages: Prevailing wages required
Commercial Operation Date: 6/1/26
Proposed contract term: 15 years
8 9
Project Agreement
Structure
(3 documents to be authorized
for GM execution)
#3 executed by
each CC Power
Member
Agency & LDS
Project
#1 & #2 executed
by CC Power &
each
Participating
Member Agency
2 1
3 Tumbleweed LDS
Project Procurement
in Context
CleanPowerSF has:
9 contracts with ≈658 MW of clean energy capacity
under long-term contract of 10-years or more, today.
Total annual power supply budget of $200-250
million/year.
Tumbleweed LDS Project:
Total not-to-exceed cost of $65 million over a 15-year purchase period.
10 Next Steps
Participating CC Power members have 90 days
f
rom Jan. 24th (April 25th) to receive approval and
execute their required agreements.
If approved by Commission, staff will seek Board
o
f Supervisors and Mayoral approval in March and
early April.
Staff is working with CC Power to bring additional
L
DS Projects for approval.
11 12
Questions?