PPA amendment for Rice CSP plant with PG&E approved by CPUC

Published on: Saturday, 26 January 2013
artist rendering of a similar plant to Rice

California Public Utilities Commission (CPUC) has approved an amendment to the Power Purchase Agreement (PPA) between Pacific Gas & Electric (PG&E) and SolarReserve for the Rice CSP plant.

On a CPUC meetng held last January 24, a resolution about a request by PG&E for approval of an amend and restated PPA with Rice Solar, a wholly owned subsidiary of SolarReserve, has been approved by CPUC after reviewing the new terms of the contract -many of them confidential- and highlighting the benefits of the project for California's Renewable Portfolio Standard.

The PPA was previously approved on 2010, but changes in the interconection point from the California Independent System Operator (CAISO) to the Western Area Power Administration (WAPA), moving the guaranteed commercial operation date (GCOD) from October 1, 2013 to June 1, 2016 and a changes of the payment provisions to mitigate any price risk associated with a change in the interconnection point, have resulted in a restated and amended PPA which was filed las January, 17 at the CPUC.

According to CPUC resolution, cost recovery for the amended PPA has been approved for three reasons: First, the price and value of the Amended PPA compare favorably against shortlisted bids resulting from PG&E’s 2009 RPS Solicitation.  Second, the GCOD has been extended to June 1, 2016 which is in better alignment with PG&E’s RPS portfolio need.  Third, the Rice Solar project will be utilizing molten salt storage technology, giving it the ability to strategically shift and optimize load based on changes in electricity demand and the potential need for grid stabilization.

It's worth noting that CPUC has taken into account the technology to be developed in the plant, especially the molten salts thermal energy storage system, which provides dispatchable and stable energy to the grid. This is a key point as new projects to be deployed in California should aim to include thermal energy storage as a differentiatior with other renewable sources, including Concentrated Solar Power without energy storage.

Commissioner Mark J. Ferron stated "It's critical that the State invest in technologies such as concentrated solar combined with molten salts storage", "In my personal view, projects like solar Rice will be important to demonstrate that we can firm and shape intermittent renewables with clean technology, not just with fossil technologies".

In turn, Commissioner Michael Florio said "this is expensive, there's no getting around it, but I think this technology is something that is worth investing in, using molten salts as the medium (...) rather than heating water (...) to reheat the salts, is hopefully more efficient technology, I think time will tell which is the best approach", " 8 to 10 hours of fully dispatchable storage is quite impressive and offers significant benefits to the system", in clear reference to the different tower technologies being deployed in the US; BrightSource's technology, using water as Heat Transfer Fluid (HTF) (without energy storage, by now) and SolarReserve's which uses molten salts as HTF and storage medium.

Although the approval by CPUC commissioners was unanimous, and it was presented as "probably one of the least controversial resolution in a while" by CPUC Energy Division Director, Edward Randolph, some protests where made. The Division of Ratepayer Advocates (DRA) asked the Commission not to approve the amended PPA maily due to "uncompetitive price" and that "PG&E lacks portfolio need for the project". Californians for Renewable Energy stated in the same terms.

PG&E responded to DRA and CARE protests that, first, the technology is unique and allows PG&E to more easily integrate intermittent solar energy delivery from the project, second, the COD is more in alignment with PG&E’s portfolio need, and lastly, the revised terms of the PPA do not add material risk/cost to PG&E’s customers.  PG&E also states that “while the price in the Amended PPA may be higher than market alternatives, the benefits…support a determination that the Amended PPA is just, reasonable and in the interests of PG&E’s customers.”  PG&E also notes that DRA and CARE fail to recognize the unique operational characteristics of the project which includes molten salt storage.

Regarding the price set in the PPA, CPUC agrees that the price in the amended PPA has to be compared with the projects proposed in the 2009 RPS solicitation, whree it results a competitive project, due to no changes in the core characteristics of the Rice project, since otherwise, it would have been compared to 2011 RPS solicitation.

The Commission is sensitive to DRA and CARE’s concern that the Amended PPA does not compare favorably to current market metrics.  The health of the renewables market in California depends on fairness and transparency in the procurement process. The Commission is currently undertaking a procurement reform initiative that proposes to limit the time allowed for contract negotiations with the intention of aligning contract pricing with the most current market conditions.

California Wind Energy Association has also commented on the amended PPA recommending to CPUC to reject it because it's not competitive with projects shortlisted in the PG&E's 2011 RPS solicitation, something that, as it has been mentioned above, was not considered by CPUC.

With the new amended PPA, the commercial operation date is set to June 1, 2016 instead of the previously date of October 1, 2013.

SolarReserve is currently building the Crescent Dunes CSP plant, a 110 MW tower plant in Nevada, similar to the proposed Rice plant. A similar technology but smaller scale plant is already working in Spain, the 20 MW Gemasolar plant.

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