SCE’s Renewable Auction Mechanism (RAM) Forum January 24, 2014 San Gabriel Hilton, San Gabriel, CA Event address: https://sce.webex.com/sce/onstage/g.php?d=802136483&t=a Topic: SCE RAM Program Forum Date and Time: January 24, 2014 at 9:00 am Pacific Prevailing Time Event Number: 802 136 483 Event Password: RAMforum Dial-In Number: 888-469-1382 Access Code: RAM FORUM
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Microsoft PowerPoint - Presentation - RAM Forum 1-24-14.pptxJanuary
24, 2014 San Gabriel Hilton, San Gabriel, CA
Event address:
https://sce.webex.com/sce/onstage/g.php?d=802136483&t=a Topic:
SCE RAM Program Forum Date and Time: January 24, 2014 at 9:00 am
Pacific Prevailing Time Event Number: 802 136 483 Event Password:
RAMforum Dial-In Number: 888-469-1382 Access Code: RAM FORUM
Page: 1
Agenda for SCE’s RAM Forum January 24, 2014 – San Gabriel, CA
Time Topic
9:15 am Overview of the RAM Contracting Tool and Results
9:45 am Independent Evaluator’s Observations
10:00 am Break
10:45 am Feedback and Discussion
11:30 am Adjourn
Purpose of the RAM Forum
1. SCE will provide a briefing on the progress of RAM to date
a. Data and observations on the four procurements completed to
date, RAM 1 through RAM 4
2. The Independent Evaluator will present his observations
3. SCE will present proposed changes for the next procurement, RAM
5 a. Following discussion today, SCE will propose these changes in
an advice letter to
the CPUC on February 7 b. Today and in that advice letter, SCE will
not discuss “the Future of RAM” c. Nor will we discuss other SCE
procurements at this meeting
4. Open dialog – we encourage participation today!
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Page: 4
5
• Consistent with the goals of Commissioner Ferron’s September 2012
Amended Scoping Memo regarding RPS administration, the Commission
is now reviewing and considering the possible extension of the RAM
Program after RAM 5.
• ALJ Ruling issued December 31, 2013, requesting comments on
questions prepared by Energy Division Staff to help inform the
Commission’s review of RAM.
• Issues to be examined in the proceeding include:
• Whether factors underlying original RAM authorization continue to
apply;
• Whether reauthorization of RAM is appropriate;
• Existing RAM program elements;
• Existing RAM contract terms and conditions.
• Comments Due: January 30, 2014
• Reply Comments Due: February 14, 2014
• Proposed Decision on future of RAM expected Q2 2014.
Page: 6
Page: 7
The RAM Contracting Tool
• In D.10-12-048 (“the RAM Decision”), the California Public
Utilities Commission (“CPUC”) adopted a new contracting tool called
the Renewable Auction Mechanism, or RAM
– To procure eligible renewable resources from generating
facilities not greater than 20 megawatts (“MW”)
– Located within one of the investor-owned utilities’ (IOU) service
territories
• RAM uses a standard non-negotiable power purchase agreement
(PPA)
• SCE is required to procure 754.4 MW in three separate resource
categories – Peaking, as-available – Non-peaking, as-available –
Baseload – Offers must be evaluated and ranked separately within
each category, based on
price, plus transmission adder, minus resource adequacy benefits –
SCE may procure ±20 MW of the MW targeted in each product category
as long as
the total capacity procured in each auction is ±20 MW of the total
MW target
Page: 8
The RAM Contracting Tool as Introduced in the RAM Decision • The
first paragraph of the CPUC’s RAM Decision states:
– This decision authorizes a new procurement process called the
Renewable Auction Mechanism, or RAM, for the procurement of smaller
renewable energy projects that are eligible for the California
Renewables Portfolio Standard (RPS) Program
– The RAM is a simplified and market-based procurement mechanism
for large investor-owned utilities (IOU).
– The Commission adopts RAM as a primary contracting tool for this
market segment because doing so will
• promote competition and elicit the lowest costs for ratepayers, •
encourage the development of resources that can utilize existing
transmission and
distribution infrastructure, and • contribute to RPS goals in the
near term.
– We (CPUC) expect RAM to complement the RPS Program by • reducing
transaction costs and • providing a procurement opportunity for
smaller RPS-eligible projects, which • have not been able to
effectively participate in the annual RPS solicitations to
date.
Page: 9
Evolution of Contracting Terms
• RAM contracting terms have evolved over the course of the four
RFOs
• Listed here are examples from Resolution E-4546, which followed
the IOUs’ first RAM Forums in mid-2012:
– Revisions to guaranteed energy performance requirements –
Increased certainty around the resource adequacy benefits a project
will provide – Introduction of dual time of delivery factors for
energy only and full deliverability – Rules regarding the
eligibility of existing projects – Standardized treatment of
generation in excess of contracted quantities – Elimination of
variable deposit amounts for different sized projects –
Introduction of Woman-, Minority-, Disabled Veteran-owned, Business
Enterprise
reporting requirements
Page: 10
RAM Contracting – a Six Month Process
RFO Auction Date COD1, Months after CPUC Approval 1 November 15,
2011 182
2 May 31, 2012 242
3 December 21, 2012 242
4 June 28, 2013 242
1Commercial Operation Deadline required in the RAM PPA 2RAM PPA
allows for a 6-month extension in the event of regulatory delays
beyond Seller’s control
Page: 11
# MW # MW # MW # MW
Offers 92 1,260 142 2,133 130 1,928 126 2,021
PPAs 7 67 6 97 13 202 10 164 PPAs, % of Offers 8% 5% 4% 5% 10% 10%
8% 8%
• Offers contracted, in terms of both number of offers and
megawatts, have been a small percentage of offers received
– Ten percent or less in each RAM auction
• These results provide a good indication of a competitive
market
Page: 12
RAM 1 RAM 2 RAM 3 RAM 4
# Offers 92 142 130 126
# Firms 28 39 40 39
# Contracts 7 6 13 10
# Firms Receiving Contracts 4 3 9 8
• 28-40 firms have participated in each of the four RAM
auctions
• Firms that submit a large number of offers in RAM auctions have
not received a disproportionately high share of contracts
Page: 13
RAM Resource Categories
• SCE has procured within resource categories as ordered in the RAM
Decision
• The market has been dominated by solar PV offers – Therefore, SCE
established targets (±20 MW) that allowed up to 100% of the
selected offers to be in the peaking, as-available category
Number of MW in PPAs Executed, by Resource Category Resource
Category RAM 1 RAM 2 RAM 3 RAM 4
Peaking, as-available executed MW 67 97 194 128 Peaking,
as-available target MW 55 166 200 146
Non-peaking, as-available executed MW 0 0 7.5 35.8 Non-Peaking,
as-available target MW 5 10 15 20
Baseload executed MW 0 0 0 0 Baseload target MW 5 10 15 15 Total
executed MW 67 97 201.5 163.8
Total target MW 65 186 230 181
Page: 14
# Offers 92 142 130 126
# Screened Out for COD 45 22 16 30
# Screened Out for Other Reasons 1 7 21 16
Total # Screened Out 46 29 37 46
Percentage of Offers Screened Out 50% 20% 28% 37%
• Large numbers of offers were screened out during each procurement
– The primary reason was failure to demonstrate the ability to meet
the required COD
(which was 18 months in RAM 1; 24 months in RAM 2-4) • Based on
interconnection studies and milestone schedules submitted with the
offer
– Other reasons amounted to failure to provide conforming
documentation to support the offer (e.g., interconnection
study)
– Offerors were given the opportunity to cure
Page: 15
RAM 1 RAM 2 RAM 3 RAM 4
COD Requirement, Months 18 24 24 24
Months Since PPA Approval 19 13 6 0
# PPAs Executed 7 6 131 101
# PPAs Terminated 1 0 5 2
# Projects Delayed 4 2 1 0
# On Track to Meet COD 22 4 7 8
1One of the PPAs executed in RAM 3 and two of the PPAs executed in
RAM 4 are existing Qualifying Facilities. 2The two RAM 1 projects
shown as “On Track” as of December 18, 2013 are now
operating.
Page: 16
January 24, 2014 17
RAM Program Recommendations The IE recommended in RAM 3 that the
COD
deadline be extended to 30 months Construction schedules have
gotten no shorter Competitive projects will fail for failure to
meet 24 month
COD
RA Delivery & Interconnection Study should be correlated Issue
= the actual RA Delivery Commencement date
occurs sooner than the Interconnection Study estimated IE
recommends the Offeror should receive the FCDS TOD
factors as of earlier date
18
SCE’s Proposed Changes for RAM 5
• SCE will ask the CPUC to approve the following changes in RAM
5:
– RAM PPA Changes: • Safety - Require independent engineer report
regarding written safety plan • Network Upgrade Costs - Include
termination right if network upgrade costs increase and
Seller does not exercise “buy-down right” • Curtailment - Simplify
curtailment provisions • Resource Adequacy and Full Capacity
Deliverability Status - Provide for payment of FCDS
TOD Factors on date promised in Seller bid (rather than date FCDS
achieved) to align PPA with evaluation
• Shared Facilities - Include provisions related to shared
facilities in the body of the PPA, rather than in a consent
• Ministerial and other minor changes
– RAM Procurement Process Changes: • Specify how SCE prevents
larger projects from being split up into smaller projects to
meet
the RAM 20 MW requirement • Relax procurement targets by resource
category • Ministerial and other minor changes
Page: 23
Proposed PPA Change: Safety
• Prior to the start of construction Seller must provide to SCE a
report from an independent engineer that Seller has a written
safety plan for the safe construction and operation of the
Generating Facility
Page: 24
Proposed PPA Change: Network Upgrade Costs and Seller’s “Buy-Down
Right”
• Seller’s Interconnection Studies identify the estimated cost of
Interconnection Facilities and Distribution Upgrades (i.e.
non-reimbursable costs) and Network Upgrade Costs (i.e. typically
“reimbursable costs”)
• The estimated amount of the total Network Upgrade Costs
(Reliability Network Upgrades and, for FCDS projects, the
Deliverability Network Upgrades, if applicable) is set as a Network
Upgrade Cost Cap in the PPA
• After the PPA is executed, if that estimate goes up in a
subsequent study, revision of the study, or in the final GIA, and
exceeds the Network Upgrade Cost Cap, then SCE can terminate the
PPA
• Seller has the right to pay SCE back the amount in excess of the
Network Upgrade Cost Cap, in which case SCE no longer has this
termination right
Page: 25
Proposed PPA Change: Curtailment
• RAM 4 curtailment language is complex and has been difficult to
administer
• Under simplified curtailment provisions, SCE may curtail and the
primary question is whether Seller is paid for the curtailed
energy
– SCE does not pay for curtailed energy if the curtailment
instruction was ordered by CAISO, Transmission Provider, etc. or
due to an Emergency
– SCE does not pay for curtailed energy if SCE gives Seller a
Curtailment Order and • The Curtailment Order is for Non-On-Peak
hours, and • SCE has hours remaining within the Curtailment Cap
(Contract Capacity x 50 hours/year)
– SCE does pay for curtailed energy if SCE gives Seller a
Curtailment Order and • The Curtailment Order is for On-Peak hours,
or • SCE has used all of the hours within the Curtailment Cap
Page: 26
Proposed PPA Change: Resource Adequacy and Full Capacity
Deliverability Status
• The RAM 4 PPA contains provisions related to Resource Adequacy
and Full Capacity Deliverability Status (FCDS)
– For energy only projects, SCE is not proposing any changes
• For FCDS projects, SCE proposes the following: – Starting on the
RA Guarantee Date, Product Payment will be calculated using
the
FCDS TOD Factors regardless of whether Seller actually is able to
provide any RA Benefits
• This represents a change from the RAM 3 and 4 PPA, which provided
that FCDS TOD Factors would only be used once the project has
achieved FCDS
– Starting on the RA Guarantee Date, if there is an RA Deficit
(calculated as Qualifying Capacity minus Net Qualifying Capacity),
Seller must pay SCE an RA Deficit Payment (RA Deficit amount x
Capacity Procurement Mechanism price)
• For RAM 5, SCE proposes making clean up and other minor
improvements to the provision detailing Seller’s RA Deficit Payment
obligations
Page: 27
Proposed PPA Change: Shared Facilities
• SCE has standard provisions that it requires if a project intends
to share interconnection facilities with another project
• In prior RAM solicitations, SCE included these provisions in a
separate consent and amendment that it then submitted when filing
its Tier 2 Advice Letter for approval of the RAM PPAs
• SCE proposes integrating those standard provisions into the RAM
PPA, rather than a consent
• Terms generally fall into two categories – Permission for the
Seller to utilize shared facilities and to finance the
generating
facilities together as a portfolio – Protections for SCE and its
customers from potential costs and risk that result from
the sharing of facilities
Proposed Procurement Process Change: Subdivision of Projects
• SCE will not enter into contracts with multiple projects that
utilize the same interconnection queue number
– Intended to address subdivision of larger projects to meet RAM 20
MW limitation
• SCE will inform potential Sellers of this policy in the RAM RFO
Instructions
Page: 29
Proposed Procurement Process Change: Relax Resource
Categories
• SCE will propose to the CPUC that the requirement to procure
within resource categories (±20 MW) be relaxed or eliminated
– This would enable technology-agnostic ranking and selection of
lower cost projects
• The relative participation of different technologies is difficult
to predict before each RAM solicitation
– e.g., RAM 4 saw a significant increase in cost-competitive wind
projects
• RAM 4 results were not optimal because of resource category
constraints – Solar procurement range was constrained to 126-166 MW
– Wind procurement range was constrained to 0-40 MW
• To stay within these constraints, SCE was forced to select some
higher cost solar offers in place of more competitively priced wind
offers
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Date Event
February 7 SCE files Tier 3 Advice Letter proposing RAM 5
changes
May 22 CPUC passes Resolution approving RAM 5
May 29 SCE files Tier 1 Advice Letter and launches RFO
June 6 SCE hosts RFO Conference
June 27 Auction – deadline for offer submittal
August 15 SCE notifies offerors of selection status
September 5 SCE executes PPAs
October 10 SCE submits Tier 2 Advice Letter for approval of
PPAs
November 10 CPUC approves PPAs
Page: 31