GEOTHERMAL
PROCUREMENT
San José City Council
August 30, 2022
Lori Mitchell, Director of Community Energy
Jeanne M. Solé, Deputy Director of Power Resources
WHAT IS GEOTHERMAL?
• Geothermal uses heat from the earth
to create steam and generate
electricity.
• Can generate all hours of the day
(operates 24x7: firm power).
• Generation profile similar to baseload
gas or hydro plant.
• Clean GHG-free power.
• Limited supply due to siting issues.
2 Source: www.geysers.com/geothermal
BACKGROUND
• 2021 CPUC Decision 21-06-035 requires SJCE to buy 247 MW of clean capacity by 2026, including 21.5 MW of geothermal or biomass power. • SJCE participated in a CC Power RFP for geothermal and biomass power with offers due December 2021.
• Bids from 6 bidders and 16 projects (5 in CA). CC Power shortlisted:
• Small project (13 MW) from Open Mountain Energy, LLC (OME) • A portfolio of projects (up to 125 MW) from Ormat Nevada, Inc. (Ormat), including 3 projects in CA and 5 in NV
• Seven other CCAs* participating in both agreements: 5 are investment grade credit rated; other 2 are each taking less than 5% of the project. 3 *Central Coast Community Energy, CleanPower San Francisco, Peninsula Clean Energy, Sonoma Clean Power, Redwood Coast Energy Authority, Silicon Valley Clean Energy, and Valley Clean Energy.
PROJECT 1: ORMAT PORTFOLIO OF
GOETHERMAL PROJECTS
Ormat is a leading geothermal company:
• Over 5 decades experience developing projects.
• Developed over 3,000 MW.
• Owns a portfolio of 1,100 MW in the California, Nevada, Oregon, Idaho, Hawaii, Guatemala, Guadeloupe, Kenya, and Indonesia.
Project size: Portfolio of projects. Min of 64 MW, max of 125 MW. • Ormat to offer projects as they become available up to 125 MW; CC Power may accept or reject.
• At 64 MW, SJCE share will be 12.5 MW.
• At 125 MW, SJCE's share will be 24.5 MW.
• SJCE to possibly bring forward additional recommendation depending on development progress.
4 PROJECT 1: ORMAT PORTFOLIO OF
GOETHERMAL PROJECTS
• Cost not to exceed: $21.5 million annually,
$430 million in aggregate.
• Location: 3 projects are in CA, 5 are in NV.
• Online date: Varies per project. As early as
June 2024.
• Term: 20 years from online date of first
project.
• Seeking approval for up to 31 MW to be
able to take additional capacity if other
CCAs forgo their share. Can be used to
meet resource adequacy and energy
needs.
5 Ormat’s Mammoth geothermal facility in CA
PROJECT 2: OPEN MOUNTAIN ENERGY’S
FISH LAKE GEOTHERMAL PROJECT
OME has entered into PPAs with Southern California Public Power Authority (SCPPA) for two projects in Nevada:
• Whitegrass No. 1 was constructed in 2017 and has been delivering energy since February 2018.
• Star Peak Geothermal is very similar in size and technology as Fish Lake Geothermal and began delivering power in August 2022.
Project size: 13 MW; SJCE share: 2.26 MW
• SJCE step-up: 0.57 MW
• SJCE max: 2.83 MW
• Small volume, best price, reduces risk of relying exclusively on Ormat portfolio. 6 PROJECT 2: OPEN MOUNTAIN ENERGY’S FISH
LAKE GEOTHERMAL PROJECT
• Cost not to exceed: $1.9 million
annually; $38 million in aggregate
• Location: Esmeralda County,
Nevada
• Online date: June 1, 2024
• Term: 20 years
• Seeking approval for up to 3 MW
to be able to take additional
capacity if other CCAs forgo their
share. Can be used to meet
resource adequacy and energy
needs.
7 Open Mountain Energy’s geothermal facility in NV
AGREEMENT STRUCTURE
1. Power Purchase Agreements
• CC Power buys the energy from the project developers.
2. Project Participation Share Agreements
• Each participating CCA receives from CC Power its share of the energy and agrees to pay CC Power for these services.
• CC Power Board makes key decisions relating to the projects pursuant to voting by only the project participants.
3. Buyer Liability Pass Through Agreements
• The developers have direct recourse to each participating CCA for its share of the contract payments, but only for that CCA’s share of the payments. • Required as CC Power has no assets or revenues, though it maintains insurance.
4. Coordinated Operations Agreements
• Defines how the resources will be operated between CC Power and the participating CCAs. 8 QUESTIONS?
Recommendations:
• Authorize the City Manager to procure up to 31 MW
from Ormat’s portfolio of geothermal projects not to
exceed $21.5 million annually and $430 million in
aggregate over 20 years.
• Authorize the City Manager to negotiate and execute
a Coordinated Operations Agreement for the Ormat
portfolio of geothermal projects.
• Authorize the City Manager to procure up to 3 MW
from Fish Lake Geothermal not to exceed $1.9 million
annually and $38 million in aggregate over 20 years.
• Authorize the City Manager to negotiate and execute
a Coordinated Operations Agreement for the Fish
Lake Geothermal project.
Staff:
• Lori Mitchell, Director
• Jeanne Solé, Deputy Director
9 Environmental Protection Agency