June 25, 2024 Item #7
City Council
Item #7: Authorizing the City Manager to
Negotiate and Execute Agreements with
Westlands Grape, LLC to Purchase
CITY OF esource Adequacy Capacity up to $3
Million Annually from the Westlands Grap
Battery Storage Project
1852
RTC 24-537
THE MISSION CIT
June 25, 2024
1 SILICON
VALLEY
POWER
CITY OF SANTA CLARA
Resource Adequacy
• Resource Adequacy or "RA", is a regulatory construct that ensures there will be sufficient resources available to serve electric demand under the most extreme conditions.
• The RA program is administered through a combination of the state's Energy Division and the CAISO.
• SVP must provide RA minimum of no less than 115% of its forecasted peak load for each month from:
- Owned generation resources
- RA Capacity of other existing generation that is not claimed by another entity • SVP must submit RA plans for the following year around October and then file updates 45 days prior to each month to ensure it has sufficient capacity. 2 POST MEETING MATERIAL
1 June 25, 2024 Item #7
• SILICON
VALLEY
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CITY OF SANTA CLARA
RA Needs
• SVP's electric load has increased by more than 20%
over the last decade.
• SVP to purchase 150 MW of RA from a battery
storage project (Westlands Grape) co-located with
solar in Kings County, California with an option to
buy an additional 75 MW. (SVP is not buying the
energy)
• Grape has a projected commercial operation date of
June 2026
- 10-year contract
- Immediately meets current need depending on month
- Helps fill significant RA "gap" starting in 2028
3 SILICON
VALLEY
POWER.
CITY OF SANTA CLARA
RA Needs
• The annual cost is estimated to be between $21
million to $34 million depending on the commercial
operation date and amount of options exercised by
the City
- The value of SVP's RA portfolio for 2024 is estimated at $337 M based on actual transactions and market broker
quotes (cost of contract = 6-10% of portfolio value)
• SVP's failure to procure sufficient RA compromises
the grid's ability to serve its customers and can result in financial exposure
- CAISO assessed financial penalties
- Spot Market Prices that have been extremely volatile the last 5 years
- Example: current year exposure would have cost $45 M to $89 M if SVP were short for the same quantities
4 June 25, 2024 Item #7
* SILICON
› VALLEY
POWER.
CITY OF SANTA CLARA
Recommendation
Authorize the City Manager or designee to negotiate and execute an agreement (Agreement) with Westlands Grape, LLC for the purchase of resource adequacy capacity on the terms presented subject to review and approval as to form by the City Authorize the City Manager or designee to execute all documents, agreements, and certificates as may be required under the terms of the Agreement, subject to the review and approval as to form of the City Attorney, including, but not limited to, collateral assignment agreements, estoppel certificates, and performance security documentation, and take any and all actions as are necessary or advisable to implement and administer the Agreement; and
5 City Council
SATA CHARACARE
Million Annually from the Westlands Grape
1852
RTC 24-537
THE MISSION CIT
June 25, 2024
3