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Southwest Renewable Energy Transmission Conference: Renewable/Transmission Developer Panel. Moderator: Dian M. Grueneich, Commissioner California Public Utilities Commission. Our Panel. Robert Jenkins, Director of Transmission, First Solar Lawrence Willick, Senior Vice President, LS Power - PowerPoint PPT Presentation
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January 2010
Southwest Renewable Energy Transmission Conference:
Renewable/Transmission Developer Panel
Moderator: Dian M. Grueneich, Commissioner
California Public Utilities Commission
2January 2010
Our Panel
Robert Jenkins, Director of Transmission, First Solar
Lawrence Willick, Senior Vice President, LS Power
Arthur Haubenstock, Chief Counsel & Director, Regulatory Affairs, BrightSource
Jerry Vaninetti, Western Transmission Development, NextEra
James Caldwell, President, Solar Millennium Tom Wray, Project Manager, SunZia
Transmission Project
3January 2010
Our Task
Renewable energy project and merchant transmission developers will present their views on plans for and barriers to renewable energy transmission, with a focus on perceived bottlenecks in the existing utility infrastructure system and challenges associated with financing projects.
Dimbach, Germany (1.4 MW); Blitzstrom / Beck Energy
Southwest Renewable Transmission ConferenceRobert JenkinsMay 21, 2010
© First Solar, Inc.First Solar Confidential & Proprietary 5
First Solar/NextLight Advanced Development
Gates Peaker
Devers
Miguel
Lugo
Vincent
Midway
N. Gila
Moenkopi
Navajo (SRP)
Crystal River
Imperial Valley
Hassayampa
El Dorado
Palo Verde
Project Size COD
Sunlight 550 MW Q4 2014
Topaz 550 MW Q2 2014
Stateline 300 MW Q4 2015
Agua Caliente 290 MW Q2 2014
AV Solar Ranch 230 MW Q4 2013
Silver State 2 50 MW Q4 2011
© First Solar, Inc.First Solar Confidential & Proprietary 6
• PPA Structures are typically volumetric energy based– Project revenues entirely dependent on energy deliveries to the grid– Physical congestion that results in curtailment of energy reduces project
revenues– Financing entities are very sensitive to risk to project revenues
– If project bears curtailment risks, it needs to be bounded– Pressure for Firm Transmission/Network Service (or Full Delivery in
CA markets) as congestion mitigation• Firm Transmission/Full Delivery Service
– Involves the engineering analysis of boundary, or extreme, conditions– Presumption that if transmission capacity is available under the
boundary condition(s), then Available Transmission Capacity (ATC) exists– If ATC is not available under the boundary condition(s), little
information is generated to quantify the extent of the deficiency– Transmission Upgrades are identified, potentially involving large,
expensive new lines in order to satisfy the boundary conditions (and the financing parties)
PPA Structure/Project Financing/Transmission
© First Solar, Inc.First Solar Confidential & Proprietary 7
• Underutilized Transmission Assets– Boundary conditions seldom, if ever,
experienced– 25% (+/-) capacity factor resource vs
24x7 transmission• Unclear Justification for Large Investments in
New Transmission Facilities – Cost versus value assessment is not
comprehensive and is dispersed in the LSE procurement processes
– Few tools available for risk management if the value/cost ratio is low– Tools such as Conditional Firm
Transmission have nominal value when the risk/financing question is not addressed.
• Long Delay and Great Uncertainty in Renewable Generation Development
– 7-10 year lead time for major new transmission lines.
– Many renewable generation projects cannot sustain such delays
Outcome of Current PPA & Transmission Practices
•Path 46 (West of River) Rating - 10,623 MW•Path 49 (East of River) Rating - 9,300 MW
Bringing Energy ForwardBringing Energy Forward
Lawrence WillickSenior Vice President
LS Power
9
LS Power Transmission Portfolio
10
Current Project Status and HurdlesProject description
Purpose Planning Permitting Cost Recovery
Cross Texas Transmission
200+miles double circuit 345 kV
Renewables within Texas – CREZ
Complete Underway Complete
SWIP Phase 1
SWIP Phase 2
235 mile single circuit 500 kV335 mile single circuit 500 kV
Renewables, energy, capacityRenewables, energy, capacity
Complete
Complete
Complete
Underway
Underway
Initiated
Wyoming-Colorado IntertieHigh Plains Express
180 miles single circuit 345 kV >1,000 miles 500 kV
High-capacity factor wind to marketEconomic resource benefits
Complete
Underway
Future
Future
Future
Future
Overland 560 mile DC High-capacity factor wind
Underway Underway Underway
LaSalle 160 mile double circuit 345 kV
Congestion relief with renewable access
Initiated Future Initiated
11
Independent Transmission Barriers
• Planning, Permitting, Cost Recovery
• RTO Practices and the Right of First Refusal
• Transmission Interconnection Process
• Regulatory Wish List: Level Playing Field• Project evaluation, approval, and cost recovery or• Competitive process after planning is complete
12
The need for Southwestern planning and coordination has never been greater. Renewable integration and balancing demands interlinking Southwestern load with renewable resources.
• 2001-2005 STEP (Southwest Transmission Expansion Plan)• By 2007, STEP was to be succeeded by a CAISO-led sub-regional
planning group • In 2008, SCE convened a Pacific Southwest Planning Association (PSPA)• In 2009, PSPA was overtaken by the California Transmission Planning
Group (CTPG)• DOE/WECC transmission planning process is taking broad view of
overall transmission plan• Currently, there is no forum for working out cooperative approaches
to transmission planning , permitting, cost allocation and operation specific to the Southwestern states.
Regional Transmission Planning : Prerequisite to a Robust Renewable Energy Supply & VERS Balancing
13
Allocating Cost to Ratepayer and Renewable Energy Advantage
• FERC & Order 2003Financing burden intended to provide incentives for efficient transmission use and lessen need for new transmission by influencing generator siting- not anticipating location-constrained renewable resources in remote locations.
•Texas SB 20 ApproachTexas approach provides for lines to Competitive Renewable Energy Zones (CREZs).
• Southwest Solution: Promote Interstate Flow of Renewable Energy, Enhancing Reliability & Reducing Overall Cost
Without a cost allocation solution, pancaking will deter southwest solar development and create a barrier to the lowest-cost, reliable renewables infrastructure.
14
Beginning this important journey with a few sure steps
• Ultimately, we need a comprehensive, robust Southwestern transmission web.
• This journey will never reach its destination unless we begin with some concrete steps immediately.
• Joint nomination of pilot projects by any two states would provide sufficient lines for a proof of concept, with planning and permitting completed to commence construction in 2013.
• With demonstrated progress, mid- and longer-term planning is more likely to achieve results- and maintain renewables investment.
15
MM
M
M
M+
High Plains Express (Renewables)12 Parties – 1,300 miles>3,500 MW2-500 kV (AC)2015-2020
Wyoming-Colorado Intertie (Wind)LS Power, WIA & WAPA850 MW – 180 miles345 kV (AC)2013-2015
Blythe Gentie (Gas & Solar)NextEra>600 MW – 67 miles230 kV (AC)2010
Peetz Logan Gentie (Wind)NextEra>600 MW – 75 miles230 kV (AC)2007
Jerry Vaninetti, NextEra EnergyWECC Transmission Project
Development Experience
16
• Double-Circuit vs. Single-Circuit Lines– Double-circuit more
expensive but more cost-effective, when fully utilized
– Optimal use of ROW – Install the second circuit
when needed– Path rating limitations
• Who pays & how do they recover their costs?– Cost allocation– Cost recovery
Right-Sizing Transmission Lines
Single-Circuit Structures
Double-Circuit Structures
17
Cost Allocation/Recovery for HPX
600 mile 500 kV example, based on WREZ model
• Cost allocation doesn’t apply for non-RTO regions that dominate WECC
– Voluntary agreements for cost-sharing• Investments typically justified for
serving load & for reliability– How to fund to meet public policy goals?– Who pays for right-sizing?– How to assure cost recovery?
• HPX & PacifiCorp-Gateway Dilemma– Double vs. single-circuit 500 kV– Matching need with cost over time
$-
$0.5
$1.0
$1.5
$2.0
$2.5
Single-Circuit 1st Line Double-Circuit Double-Circuit
$ B
ILLI
ON
S
$-
$500
$1,000
$1,500
$2,000
$2,500
$/M
EG
AW
ATT
-MIL
E
$ BB (left axis) $/MW-MI (right axis)
20% more
30% less
18
Issues to be Addressed by State Regulators
• Cost recovery to meet need & public policy goals– Nothing gets built without the assurance of cost recovery– How to assure cost recovery in non-RTO regions & for non-
jurisdictionals?– Right-sizing to optimize land use & future demand– Potential solution: socialize the incremental costs for the 2nd circuit
• Regional cooperation between states– Clarity in public policy: siting, permitting, RPS & cost recovery
• Without the foregoing…..– Some renewable projects will continue to be sited in sub-optimal
locations ……to the detriment of consumer costs & renewable development
– Incremental transmission expansion will be the norm…...to the detriment of land use optimization where economies of scale are forgone
Near Term Transmission Enhancements to Serve CA
Renewable Projects
Southwest Renewable Energy Transmission Conference
Arizona State University
Tempe, Arizona
May 21, 2010
James H Caldwell Jr.
President, Solar Millennium, LLC
Page 20Solar Millennium LLC Presentation to REPG – 1.22.10
Company OverviewStructure Solar Trust of America (STA) – joint venture of Solar Millennium AG and MAN Ferrostaal AG. 75 years of EPC market experience; 25 years of solar thermal experience. Solar Millennium, LLC is wholly owned subsidiary of Solar Trust of America.
Development Projects Developed and built first parabolic trough plants in Spain (Andasol) 1–3 plants, total 150 MWs, with 7.5 hours of molten salt storage. 30 MW Solar field integrated into 150 MW CCGT plant in Egypt (under construction). More than 2,000 MWs currently in development in the U.S. Southwest.
Page 21Solar Millennium LLC Presentation to REPG – 1.22.10
Southern California Transmission Projects
DSWL (500 kV)
Page 22Solar Millennium LLC Presentation to REPG – 1.22.10
Near Term CA Transmission Enhancements
Up to 5000 MW of new transfer capacity from the Colorado River to California load centers could be available in the near term.
Each of the new projects comprising this capacity has “essentially” been through the planning, siting, permitting, cost allocation, “approval” hurdles, however none are completely cleared for construction.
In addition, roughly 2500 MW of new transfer capacity should become available over the next eight years as California phases out coal imports in compliance with SB 1368.
The focused attention of state/federal policy makers is required to allow the bulk of this potential new transmission capacity to be made available to renewable energy projects to achieve state/regional renewable energy generation targets.
MAY 21, 2010SUNZIA SOUTHWEST TRANSMISSION PROJECT 24
• 470 miles• Two 500 kV lines; five substations• AZ and NM; 14-county study area
MAY 21, 2010SUNZIA SOUTHWEST TRANSMISSION PROJECT 25
MAY 21, 2010SUNZIA SOUTHWEST TRANSMISSION PROJECT 26
Renewables are remotely located in the West New long-distance EHV RTPs are needed RTP investors need assurances that:
Competitive interstate wholesale supply markets exist Regulatory impediments to utility supply choices do not
exist Not all proposed RTPs will be permitted Resulting in a scarce supply of deliverable
renewable energy from remote sources
MAY 21, 2010SUNZIA SOUTHWEST TRANSMISSION PROJECT 27
National policy of more renewable energy requires significant capital for RTP development on the grid: SENR is considering a national RPS FERC is requesting siting authority for interstate EHV
lines Some state procurement policies disregard benefits
of higher capacity factors and lower delivered prices in favor of in-state renewable generation resources
Procurement policies favoring in-state generators are eliminating incentives for investment in RTPs across the western grid
MAY 21, 2010SUNZIA SOUTHWEST TRANSMISSION PROJECT 28
How can PUC regulatory procurement policy be coordinated to reduce interference with interstate commerce of renewable energy?
How is “economical” electricity provided to customers by reducing wholesale competition across state lines?
What is better than the market for allocating scarce commodities?