VCE Board of Directors Meeting – September 12, 2024
Item 14 - Introduction and update on Virtual Power Plants (VPP) 1 yvonnehunterphotography.com
Public Comments
2 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
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Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
3 Item 14 – Virtual Power Plants: Meet your Intern: Catherine Rowen From Santa Cruz, California
Masters in Sustainable Systems ‘22
Masters in Community Development ‘25
Post grad plan: work in programs at a CCA!
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
4 Item 14 – Virtual Power Plants: California needs to “Flatten the Curve” Source: EIA 2023
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
Estimated enrollment:
3,100–3,1400 MW in
demand response
programs
5 Item 14 – Virtual Power Plants: Demand Response in California Statewide goal:
7,000 MW of flexible load
shifting capacity
2022 2030
Source: CEC 2023 SB 8414 Load Shift Goal Commission Report Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
VPPs are aggregations
of grid-connected
Distributed Energy
Resources (DERs) that
can be dispatched as
one resource to
balance loads and
provide grid services
(Adapted from DOE and Wood Mackenzie
definitions)
6 Item 14 – Virtual Power Plants: Harness DERs for the Grid Source: DOE Pathways to Commercial Liftoff
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
7 Item 14 – Virtual Power Plants: Benefits to the Grid and to Society Source: DOE Pathways to Commercial Liftoff
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
Value for VCE
8 Item 14 – Aggregating DERs: What are the True Benefits to VCE? Resource Adequacy
Source: Brattle Group 2023
Cost per year of 400 MW of Resource Adequacy
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
9 Item 14 – Virtual Power Plants: Supply-side v Load Modifying VPPs Supply Side VPP
Selling resources and
services on the market
Expensive to
participate in market
Regulatory limit on use
for resource adequacy
Load Modifying VPP
Reducing load locally,
not monetizing services
Save money on energy
purchases
Reduce obligations for
resource adequacy
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
10 Item 14 – Organizational Models for Load Modifying VPPs Third Party Operator
Access to expertise
Low staff time
Mid-high contractor
expenses
In-house Operation
Data access
No contractor costs
High program control
High staff time
High complexity
Flexibility Market
Adaptable
Tech inclusive
Low staff time
High contractor
expenses
Low program
oversight/control
Cost Benefits
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
Grant: Virtual Power Plant Approaches for Demand Flexibility $21,000,000 for community-based automated VPPs
VCE plans 1 MW VPP with UC Davis and PG&E
Using real-time-price data to time deployment
Demand Side Grid Support Program
Two programs available to CCA customers through aggregators:
Incentives for market-integrated demand response
Payment for BTM battery VPP triggered by market price spikes 11 Item 14 – Virtual Power Plants: CEC Support for Aggregated DER Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
12 Item 14 – Ongoing Research: the value of a VPP for VCE Goal Activities
Determine potential
program designs for
CCA VPPs
Background research
Interviews on CCA VPPs
Survey of CCA VPP programs
Estimate VPP potential
in Yolo County
Analyze rate enrollment data
Survey VCE customers on
DER installation, VPP interest
Report on strategic VPP
pathways for VCE
Present value and tradeoffs of
lowest cost VPP designs
1 2
3 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
• California Energy Commission. “Light-Duty Vehicle Population in California.” California Energy Commission, current-date. https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics-collection/light. • Coignard, Jonathan, Samveg Saxena, Jeffery Greenblatt, and Dai Wang. “Clean Vehicles as an Enabler for a Clean Electricity Grid.” Environmental Research Letters 13, no. 5 (May 2018): 054031. https://doi.org/10.1088/1748- 9326/aabe97.
• Downing, Jennifer, Nicholas Johnson, Mailinh McNicholas, David Nemtzow, Rima Oueid, Joseph Paladino, and Elizabeth Bellis Wolfe. “Pathways to Commercial Liftoff: Virtual Power Plants.” US DOE, 2023. • Gerke, Brian F., Giulia Gallo, Sarah J. Smith, Jingjing Liu, Peter Alstone, Shuba Raghavan, Peter Schwartz, Mary Ann Piette, Rongxin Yin, and Sofia Stensson. “The California Demand Response Potential Study, Phase 3: Final Report on the Shift Resource through 2030,” 2020. https://doi.org/10.20357/B7MS40. • Hertz-Shargel, Ben, and Ken Norris. “North America Virtual Power Plant (VPP) Market.” Wood Mackenzie, 2023. • Hledik, Ryan, and Kate Peters. “Real Reliability: The Value of Virtual Power.” Brattle Group, May 2023. • Hledik, Ryan, Kate Peters, and Sophie Edelman. “California’s Virtual Power Potential: How Five Consumer Technologies Could Improve the State’s Energy Affordability.” Brattle Group, 2024. • Neumann, Ingrid, and Erik Lyon. “SB 846 Load Shift Goal Commission Report.” California Energy Commission, 2023. • NREL. “Modeling Distributed Generation in California.” California Energy Commission, 2024. https://www.energy.ca.gov/sites/default/files/2024-07/CEC-200-2024-011.pdf. 13 Item 14 – Virtual Power Plants: References
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
14 Questions?
Catherine Rowen
[email protected]
Thank you!
VCE Board of Directors Meeting – September 12, 2024
Item 15 – VCE 2024-2026 Outreach & Marketing Plan Outline 15 yvonnehunterphotography.com
yvonnehunterphotography.com
Public Comments
16 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
➢ “Raising Hand” on Zoom Meeting
OR
➢ Press *9 if joining by phone
Emailed comments received before the item has concluded will be read into the record.
Emailed comments received after the item has concluded but before the end of the meeting will not be read but will be included in the meeting record.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Background & Purpose
• First Outreach and Marketing Plan
2021
• Following 2020 Strategic Plan
• Link between Strategic Plan and
Outreach and Marketing priorities,
implementation, and day-to-day
staff workflow
• Complementary to Programs Plan
(2021)
17 Item 15 – VCE 2024-2026 Outreach & Marketing Plan Outline Photo: YvonneHunterPhotography.com
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Progress Since 2021 Plan
• 93% Completion or In-Progress (vast majority having been completed) • Some items became obsolete or were modified due to changing market conditions • Many items are planned to continue or move on to next phase of existing goals/tactics, etc. 18 Item 15 – VCE 2024-2026 Outreach & Marketing Plan Outline 2023 Events: 8 events; 10,000+ people reached
(including media, in-person)
2023 Media: 6 press releases, 8 press
placements, 2 op-eds, 200 media contacts
Customer inquiries: rapid, tailored responses with
emphasis on authenticity and engagement
Outreach: Meeting Our Customers Where They Are
Photo: YvonneHunterPhotography.com
Item 15 – 2023 Year in Review: Portfolio, Marketing and Outreach, Programs, and Finance Photos:
YvonneHunterPhotography.com
Item 15 – VCE 2024-2026 Outreach & Marketing Plan Outline 19 Item X – 2023 Year in Review: Portfolio, Marketing and Outreach, Programs, and Finance 2023 Website Analytics: Page Views & Engagement
Average Time Spent on Websites
Across Industries: 53 seconds
(VCE: 1 minute 33 seconds)
E-Commerce Pages:
44 seconds-1
minute 22 seconds
Blog Posts: 2-5
minutes
(Likely VCE Home)
Item 15 – VCE 2024-2026 Outreach & Marketing Plan Outline 20 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] New for 2024-2026
• Progress Since 2021
• Industry Peer Analyses
• Enhanced Analytics & Metrics
• Brand voice, comms and brand
strategy, hashtag strategy
• SWOT Analysis (Strengths,
Weaknesses, Opportunities, Threats)
21 Item 15 – VCE 2024-2026 Outreach & Marketing Plan Outline Photo: YvonneHunterPhotography.com
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Proposed Goals:
1. Increase customer satisfaction and
retention
2. Continue to Enhance VCE’s Role as a
Trusted Community Resource
3. Spotlight VCE’s Role in
Decarbonization and Grid Innovation
22 Item 15 – VCE 2024-2026 Outreach & Marketing Plan Outline Photo: YvonneHunterPhotography.com
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Next Steps:
1. Integrate Programs & Outreach Task
Group, Community Advisory
Committee (CAC), and Board feedback
2. Finalize plan
3. Return to CAC and Board with
finalized plan
23 Item 15 – VCE 2024-2026 Outreach & Marketing Plan Outline Photo: YvonneHunterPhotography.com
VCE Board of Directors Meeting – September 12, 2024
Item 16 – Financial Outlook Update 24
yvonnehunterphotography.com
Public Comments
25 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
If in person, complete a COMMENT CARD
OR
Join the Public Comment Queue by
➢ “Raising Hand” on Zoom Meeting
OR
➢ Press *9 if joining by phone
Emailed comments received before the item has concluded will be read into the record.
Emailed comments received after the item has concluded but before the end of the meeting will not be read but will be included in the meeting record.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
26 Item 16 – Financial Outlook (Update)
Overview
This report updates VCE’s general financial position going into the second half of 2024 and outlines key factors that will help shape the 2025 Fiscal Year budget This presentation will provide:
• Update 2024-25 Strategic Financial Activities (Timeline) • Update on 2024 Operating Results and Multi-Year Forecast • Update on Power Cost Management Strategies
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
27 Item 16 – Financial Outlook (Update): 2024/2025 Timeline
1. Update 2024-25 Strategic
Financial Activities (Timeline)
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
28 Item 16 – Financial Outlook (Update): 2024/2025 Timeline 2024/2025 Strategic Financial Activities (Timeline)
2024 Budget
• October 2024 – Preliminary Update - Includes additional power cost activities for RA & energy • November 2024 – Budget Update
• Includes updated ERRA (PCIA and PG&E Bundled Rates) proceeding • Includes additional Budget Scenarios for discussion and feedback • December 2024 – Recommended 2025 VCE Customer Rates and Budget for Adoption Pre-Payment Transaction – Approval January 2025
Investment Grade Credit Rating – Internal Evaluation for Initial credit rating in January 2025 (est. June 2025)
2024 Audited Financials – April 2025
Net Margin /Customer Dividend Allocation – May 2025
Strategic Plan Update – Major Update targeted September 2025 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
29 Item 16 – Financial Outlook (Update): 2024 Budget Development 2024 Rates & Budget Background: Key Financial Objectives • Operating Days Cash – Maintain Board approved cash target of +180 days (Forecasted 2024) • Debt Repayments – Early repayment of term loan with River City Bank in 2023. (Completed) • Power Cost Contingencies –
• Operational Contingency 5%/ $3.6 M
• $1.5M budgeted for 2024 Resource Adequacy (RA) /Renewable Energy Certificates • Power Purchase Agreement (PPA) Covenants – Maintain PPA covenants (no letters of credit) • Investment Grade Credit Rating – Update Timeline (Possible 2025) • Customer Dividends and Programs
• ~$2.2M/2% in customer dividends paid in rate discounts • ~1.2M/2.5% additional rate discounts for CARE/FERA cutomers • $2M in programs budgeted for 2024
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
30 Item 16 – Financial Outlook (Update): Operating Results / Forecast
2. Update on 2024 Operating Results
and Multi-Year Forecast
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
31 Item 16 – Financial Outlook (Update): Operating Results / Forecast *The table does not account for increased power market prices, heat-wave or drought load impacts, renewable energy credits, and resource adequacy costs above 5% budgeted contingencies.
Reserve Building (+180 Minimum) Net Margin Policy Targets VCE Multi-Year Outlook
Key Highlights
• VCE expects continued 2025 power cost volatility due to higher resource adequacy. • VCE has the ability to continue cost mitigation by adjusting RPS (sell RECS), Net Margin, and reserve targets.
Description 2022 2023 2024 2025 2026 2027
Customer Revenue 85,323 96,250 101,500 88,750 99,500 102,250 Power Cost 75,130 72,500 78,367 73,000 79,500 78,000
Other Expenses 4,469 6,100 6,250 7,350 7,800 8,200
Net Income 5,724 17,650 16,883 8,400 12,200 16,050
Gross Margin 12% 25% 23% 18% 20% 24%
Net Margin 7% 18% 17% 9% 12% 16%
Preliminary Forecast*
2024 Proforma
(7 Month Actuals +
5 Month Budget) Actuals
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
F A F A F A F A F A F A F A F A F A F A F A F A
January February March April May June July August September October November December MWh
Lighting Industrial Large Commercial Med. Commercial Small Commercial Agriculture Residential Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
Item 16 –Financial Outlook (Update): 2024 VCE Retail Load VCE Retail Load Update (Forecast v. Actual)
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
33 Item 16 – Financial Outlook (Update): 2024/2025 Timeline
3. Update on Power Cost
Management Strategies
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
34 Item 16 – Financial Outlook (Update): 2025 Power Costs 2025 Power Cost Outlook
• Slice of Day Transactability (Hourly) - no trading (buy/sell) or swap market currently allowed • Final Slice of Day decisions / allocations have been released • Initial RA peak prices have continued for 2025. Forecasted to come down by end of 2027. • Increased Power Costs → increase power cost trading collateral (cash or letters of credit) 2025 Power Cost Management Strategies (Reduce Costs)
• January 2025 – Board Approved Power Purchase Agreement Prepay Transaction – decrease overall power costs (Debt Policy)
• July 2025 – Board Approved Initial Sale of RECs to maintain positive net margin targets for 2025.
• Additional options:
• Sell additional long positions of Renewable Energy Credits and Resource Adequacy - market value at all-time high (Procurement Policy)
• Increased timeline for initial investment grade credit rating (2028 Strategic Plan Goal) 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Compliance Period 4 Compliance Period 5 Compliance Period 6 VCE RPS Compliance
RPS % Compiance Ave VCE RPS w/RECs
RPS Compliance Ave.
(VCE, PG&E)
(60% by 2030)
VCE Total Portfolio RPS
(Standard Green)
VCE’s Above Compliance
Portfolio Performance ~30%
Item 16 – Financial Outlook (Update): Long-Term Power Costs Power Cost Management Strategies (REC Example)
Note: VCE’s long-term RPS forecast includes increasing load and current PPA agreements resulting in a lower total RPS% 35 -
10.00 20.00
30.00 40.00
50.00 60.00
70.00 80.00
2019 2020 2021 2022 2023 2024
Renewable Energy Credits (Historical Pricing)
PCC1 PCC2 PCC3
Item 16 – Financial Outlook (Update): Long-Term Power Costs
VCE RPS
Targets
VCE
Programs
Customer
Rates /
Discounts
VCE Net
Margin/
Reserves
Power Cost Management Strategies (REC Example)
Notes:
• VCE has build a strong renewable portfolio that generates Renewable Energy Credits in excess of minimum compliance requirements (as shown on previous slide).
• VCE is in a unique position to evaluate that long position and record high REC prices to inform its portfolio and fiscal policies. • CCAs have taken multiple approaches to setting RPS targets based on rate competitiveness and community preference. CCAs do provide customers 100% renewable product options (e.g. VCE’s Ultra-Green 100% Renewable). 36 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
37 Item 16 – Financial Outlook (Update): Summary
Next Steps and Discussion
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
38 Item 16 – Financial Outlook (Update): Summary
Next Steps
2024 Budget
• October 2024 – Preliminary Update - Includes additional power cost activities for RA & energy • November 2024 – Budget Update
• Includes updated ERRA (PCIA and PG&E Bundled Rates) proceeding • Includes additional Budget Scenarios for discussion and feedback • December 2024 – Recommended 2025 VCE Customer Rates and Budget for Adoption Pre-Payment Transaction – Approval January 2025
Investment Grade Credit Rating – Internal Evaluation for Initial credit rating in January 2025 (est. June 2025) 2024 Audited Financials – April 2025
Net Margin /Customer Dividend Allocation – May 2025
Strategic Plan Update – Major Update targeted September 2025 Discussion