1/9/2024 Item 4
Amendment to
Cimarron Wind Project
SATA CLARAORD
Item 4
CITY OF RTC 24-1442: Action to Authorize the City
Manager to Complete Negotiations and
Execute an Amendment to the Renewable
1852 Energy Purchase and Sale Agreement
with Energia Sierra Juarez U.S., LLC
THE MISSION CIT
January 9, 2024
1 SILICON
VALLEY
POWER.
CITY OF SANTA CLARA
Background
In October 2022, Santa Clara executed a contract to
purchase wind energy from the Cimarron Wind Project
with Energia Sierra Juarez (RTC 22-156).
- 300 MW producing estimated 1,000,000 MWHs annually
- 20 Year Term
- Connected to a substation in San Diego via existing cross- border transmission line
• In September 2023, Santa Clara was notified that the
project could no longer be constructed at the same cost and same timeline.
- Reasons include delay in permits, supply chain constraints, inflation, and increased financing costs.
- Commercial operation date pushed back from 12/2024 to 4/2026
Staff has been working with project developer to discuss options to move forward and assessing potential
alternatives to the project.
POST MEETING MATERIAL
1 1/9/2024 Item 4
• SILICON
VALLEY
POWER.
CITY OF SANTA CLARA
Paths Forward
• Cost of the contract will increase 37%
- $20-$25M additional per year compared to the original agreement - Approximately $93 million a year
Reviewed Other Options
• Decline to move forward with price increase and abandon project - Concerns meeting City and State goals for renewable energy - Exposure to higher range of potential costs in the future • Replace energy with other projects
- Each project is unique and provides different value based on its technology, location, electrical interconnection point.
- Can not compare projects by price alone.
- No available similar projects to compare or consider. - Lack of alternatives is driven by geographic limitations (wind can only be located in certain regions), global supply chain issues, overloaded interconnection study process of the CAISO grid. 3 • SILICON
› VALLEY
POWER.
CITY OF SANTA CLARA
Stronger Agreement
• In exchange for price increase, staff negotiated for a stronger agreement:
1. Increase in Seller's Security Deposit for development and performance of the project.
2. Ability for the City to terminate the Agreement and
forfeiture of development security in the event Seller
misses milestone dates.
3. Added damages for delays in issuance of Notice to
Proceed for Construction.
4. Allows termination of the agreement and retain
applicable portion of security deposit under qualifying conditions.
5. Increase liability cap in the event of default.
4 2
1/9/2024 Item 4
SILICON
VALLEY
POWER.
CITY OF SANTA CLARA
Recommendation
• Staff recommends moving forward with the project with price increase
1. Staff completed an updated analysis based on historical prices at the project location and current market forecasts for future price.
2. Proposed price increase is in line with market events and expectations.
3. This project's unique generation profile and characteristics diversifies SVP's generation portfolio.
4. There is a lack of alternatives for replacing this wind project with its size, stage in the development process, and direct connection to the CAISO grid.
5. Starting over with another project would further postpone timelines and increase risk Staff Recommendation
Authorize City Manager to negotiate, approve, and execute a first amendment to the Renewable resented in an amount of:
approval as to form by the City Attorney
5 Amendment to
Cimarron Wind Project
Item 4
CITY OF RTC 24-1442: Action to Authorize the City
Manager to Complete Negotiations and
Execute an Amendment to the Renewable
1852 Energy Purchase and Sale Agreement
with Energia Sierra Juarez U.S., LLC
THE MISSION CIN
January 9, 2024
6 3