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HomeMy WebLinkAbout _ 9.5(b)--Accept Oral Update on the Status of Electric Resources CITY OF REDDING REPORT TO THE CITY COUNCIL Recommendation Accept an oral update regarding the status of Redding Electric Utility’s resources, including recommendations regarding potential participation in a Carbon Capture Sequestration project, Senate Bill 100, the 2024 Integrated Resource Plan, and the California Independent System Operator’s Extended Day Ahead Market. MEETING DATE: September 19, 2023 ITEM NO. 9.5(b) FROM: ***APPROVED BY*** nzettel@cityofredding.org btippin@cityofredding.org SUBJECT: 9.5(b)--Consider oral update regarding status of Redding Electric Utility resources. Nick Zettel, Director of Redding Electric Utility RESOURCE PLANNING What’s on the Horizon? Presented by: Joseph Bowers, Assistant Director Agenda Legislative Updates & Requirements Summary of the legislative impacts resulting from the adoption of SB 100 2024 Integrated Resource Plan Overview of the 2024 Integrated Resource Plan development status Carbon Capture Sequestration Opportunity to participate in Calpine’s CCS Project at Sutter Energy Center Extended Day Ahead Market (EDAM) BANC will participate in CAISO’s Day Ahead Market Legislative Updates & Requirements California’s clean energy mandates have been expanded to include, but are not limited to,the following: SB 100:renewable energy and zero -carbon resources must supply 100 percent of electric retail sales to end-use customers by 2045 Renewables Portfolio Standards (RPS):requires that by 2030,at least 60 percent of California’s electricity is generated from renewable resources 3-year Average (2019-2021):36%renewable;80%carbon-free Energy Efficiency Standards:aims to reduce energy consumption and promote energy-saving practices among utility customers Carbon reduction targets established by Senate Bill 1020 starting in 2035 POUs must develop an IRP that sets forth the plan to achieve the above goals and other objectives related to reliability and cost-effectiveness Transportation electrification plans must be included in the IRP 2024 Integrated Resource Plan The 2024 IRP was developed based on the following strategic framework: The preferred 2024 IRP scenario should meet or exceed the State’s clean energy mandates while balancing reliability and affordability. Using this framework, the following scenarios were developed for modeling and evaluation: Low Scenario: “Current Portfolio” -does not meet mandates Mid Scenario: “Net-Zero Carbon 2045” -meets mandates High Scenario: “100% Zero Carbon 2045” -exceeds mandates Net-Zero Carbon Any Energy Can still use fossil fuel resources Allowances Can use allowances to offset carbon emissions Resources Can still dispatch Redding Power Plant Characteristics Characteristics 100% Zero-Carbon Clean Energy Can not use any carbon emitting resources Allowances Can not use allowances to offset emissions Resources Can not run Redding Power Plant as is vs IRP Update Timeline Kickoff Key Stakeholder group workshops JANUARY ‘23 Completed all Stakeholder workshops FEBRUARY ‘23 Identify preferred resource plan for 2024 IRP MARCH ‘23 Finalize models and draft the 2024 IRP report SEPTEMBER ‘23 Present preferred resource plan to public MARCH ‘23 Submit updated report to City Council for approval NOVEMBER ‘23 •Aligns with findings from the Net-Zero Carbon 2045 IRP modeling; a new resource is needed in 2031 due to the Big Horn Wind contract expiring. •BANC members were presented with an opportunity to participate in a project that Sacramento Municipal Utility District (offtaker) is working on with Calpine (developer). •Federal grants and tax credits makes the project more cost-effective and viable. •Calpine is asking interested parties to submit a letter of intent to get soft commitment and continue discussions; Redding is interested in 25 MW of the project. Carbon Capture Project At Sutter Energy Center Project Overview Located in Sutter, CA Interconnected to WAPA transmission Est. Start Date 2027 95-100% carbon-free asset •$100M grant from DOE •$400M IRA tax credit Capital Costs = $500M Retrofit the existing Sutter Energy Center 550 MW natural gas plant to include carbon capture sequestration technology, reducing emissions by 95%. Study Results Power Supply Costs Carbon sequestration is the least expensive and lowest risk resource option when compared to the current base case. •Firm carbon-free generation creates less exposure to markets and results in less risk •Initial cost is 4-7% below modeling assumptions Next Steps Execute a non-binding Letter of Intent allowing the continued evaluation of an agreement for a 25MW portion of the Calpine/SMUD CCS Project; further agreements will be brought to Council for consideration. California Independent System Operator’s (CAISO) Extended Day-AheadMarket (EDAM) •Expands energy balancing models to range from real -time to the day ahead timeframe •Allows participants to retain resource planning, transmission planning, and reliability functions •Voluntary participation framework that provides for ease of entry and exit •Provides economic, reliability, and environmental benefits Current Market Structure Bi-Lateral Energy Trading Market •Energy markets in the Western Interconnect-from the Rocky Mountains west, including parts of Canada and Mexico •Transactions from next hour to years’ long Power Purchase Agreements •REU’s current primary market for Day -Ahead activity through several years ahead CAISO Western Energy Imbalance Market (EIM) •Automatically finds low-cost energy to serve real-time consumer demand across the West. •Enhances grid reliability, generates cost savings for its participants, and improves renewable energy integration. •EIM is REU’s primary real-time energy market (participants joined in March 2021) Key EDAM Benefits for REU and customers •The study estimates an initial annual net value of up to ~$230,000 and a one-time implementation cost of ~$258,000; allowing for potential production cost savings to reduce rate impacts Operational Benefits and Costs •Participation in the Extended Day-Ahead Market (EDAM) supports State policy goals and results in fewer renewable curtailments across California’s power grid Supports Local and Regional Decarbonation Efforts •Maintains the ability to balance supply and demand as higher customer loads and added intermittent renewables make operations and planning more challenging Interagency Coordination in Operations Next Steps Proceed with participation in the CAISO’s Extended Day-Ahead Market under existing Council authorities. Risks and sensitivities resulting from the Utility’s participation, and other potential impacts on the market’s success will continue to be evaluated by the Energy Management team. Conclusion Legislative Updates & Requirements Staff are working diligently to ensure cost-effective compliance with changing mandates and targets 2024 Integrated Resource Plan The finalized IRP will go to Council in November for approval before filing with the Energy Commission Carbon Capture Sequestration A Letter of Intent will be submitted to Calpine on behalf of Northern California balancing area members and REU Extended Day Ahead Market (EDAM) REU will move forward with participation in the California Independent System Operator’s Extended Day-Ahead Market The Resources Division anticipates addressing future challenges with strategic solutions to uphold our commitment to cost-effective, reliable power, aligning with the State's clean energy goals.