Southwest Renewable Energy Transmission Conference: Renewable/Transmission Developer Panel

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Southwest Renewable Energy Transmission
ConferenceRenewable/Transmission Developer
Panel

• Moderator Dian M. Grueneich, Commissioner
• California Public Utilities Commission

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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

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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.
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Southwest Renewable Transmission Conference

• Robert Jenkins
• May 21, 2010

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First Solar/NextLight Advanced Development
Navajo (SRP)
Crystal River
Gates Peaker
El Dorado
Moenkopi
Midway
Vincent
Lugo
Devers
Palo Verde
Hassayampa
Miguel
N. Gila
Imperial Valley
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PPA Structure/Project Financing/Transmission

• 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)

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Outcome of Current PPA Transmission Practices

• 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

• Path 46 (West of River) Rating - 10,623 MW
• Path 49 (East of River) Rating - 9,300 MW

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• Lawrence Willick
• Senior Vice President
• LS Power

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LS Power Transmission Portfolio
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Current Project Status and Hurdles
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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

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Regional Transmission Planning Prerequisite to
a Robust Renewable Energy Supply VERS Balancing

• 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.

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Allocating Cost to Ratepayer and Renewable
Energy Advantage

• FERC Order 2003
• Financing 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 Approach
• Texas 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.

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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.

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Jerry Vaninetti, NextEra Energy WECC Transmission
Project Development Experience
Wyoming-Colorado Intertie (Wind) LS Power, WIA
WAPA 850 MW 180 miles 345 kV (AC) 2013-2015
M
Peetz Logan Gentie (Wind) NextEra gt600 MW 75
miles 230 kV (AC) 2007
M
M
High Plains Express (Renewables) 12 Parties
1,300 miles gt3,500 MW 2-500 kV (AC) 2015-2020
M
M
Blythe Gentie (Gas Solar) NextEra gt600 MW 67
miles 230 kV (AC) 2010
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Right-Sizing Transmission Lines

• 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

Double-Circuit Structures
Single-Circuit Structures
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Cost Allocation/Recovery for HPX

• Cost allocation doesnt 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

600 mile 500 kV example, based on WREZ model
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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

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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

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Company Overview

• Structure
• 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) 13 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.

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Southern California Transmission Projects
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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.

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PUC Policies and Development of RTPs in the West
Southwest Renewable Energy Transmission
Conference
Tom Wray Project Manager
May 21, 2010
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• 470 miles
• Two 500 kV lines five substations
• AZ and NM 14-county study area

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PUC Missions are Similarfor Regulating
Electricity Supply

• AZ need for an adequate, economical and
  reliable supply of electric power
• CA safe, reliable utility service and
  infrastructure at reasonable rates promote
  competitive markets
• CO safe, reliable, and reasonably-priced
  services consistent with the economic,
  environmental and social values of our state
• NM reasonable and adequate services
• NV reliable service at rates that are just and
  reasonable
• UT reliable, adequate, and reasonably priced
  utility service

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PUC Policies Affect RTP Development

• 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

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Federal Preemption is likely

• 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

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Policy Topics for Panel

• 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?