7.
Please provide your organization’s comments on the Preliminary Economic Analysis Results
Cal Western comments on Policy & Economic Preliminary Assessment and Study Updates
2024-2025 Transmission planning process
November 25, 2024
California Western Grid Development LLC (“Cal Western”) appreciates the opportunity to submit comments on the CAISO November 13, 2024, Stakeholder Meeting regarding the 2024-25 TPP Policy and Economic Assessment and Study Updates.
Cal Western has three comments and or requests:
- Support – Cal Western supports CAISO’s preliminary list of high priority study areas to receive detailed consideration for economic study in the 2024-25 TPP.
- Request for additional information – Cal Western urges CAISO to share with stakeholders the gas plant usage findings from 2024-25 TPP production cost modelling and especially gas plant usage in transmission constrained local areas. This information is vital to California meeting its environmental goals, including the goal to reduce reliance on gas plants in transmission constrained local areas by 2035. CAISO has not given this information sufficient visibility in the past.
- Request update to CAISO TEAM methodology valuation – as described in detail below, Cal Western urges CAISO to use battery storage as the marginal RA resource in its TEAM valuation approach in its 2024-25 TPP economic studies and especially the LCR Studies that will be the subject of the CAISO December 9 Stakeholder Meeting.
Support Preliminary List of High Priority Study Areas: Cal Western supports CAISO’s preliminary list of high priority study areas to receive detailed consideration for economic study in the 2024-25 TPP shown on presentation slide No. 52. We especially urge the CAISO to do an in-depth economic analysis of proposed projects that reduce congestion in and into the SCE Metro Area (LA Basin) and reduce congestion on Path 26. Cal Western is confident that when CAISO reviews Cal Western’s Pacific Transmission Expansion Project (PTEP) the findings will show that PTEP is able to reduce congestion on Path 26 and congestion into and within the SCE Metro Area.
Additional benefits of PTEP include significantly reducing LCR needs for Western LA, meeting the policy objective of allowing delivery of clean resources into local load centers (especially transmission constrained West LA) and provide needed local frequency and voltage support. The environmental benefits of PTEP include reduced CO2 emissions, reduced Nox, Sox and PM2.5 emissions to the benefit of disadvantage communities and the larger LA Basin population. PTEP also reduces exposure to wildfire risks and reduced dependence on Aliso Canyon
Finally, on October 15, 2024, Cal Western submitted the PTEP project as a Request Window Submission for Reliability Assessment in the 2024-25 TPP. (“October 15th Filing”). Our filing provides details regarding the reliability and other benefits provided by PTEP that together make it the optimal reliability solution.
We urge CAISO to evaluate PTEP based on the cumulative Economic, Reliability and Policy benefits that the Project provides. And, based on this assessment, we urge CAISO to approve a subsea transmission project from the Diablo Canyon / Morro Bay area to the existing Coastal transmission system in West LA. We also urge the CAISO to utilize the results of the High Gas Plant Retirement Sensitivity Analysis and the results of the LCR study to “right size” the transmission facilities approved in this 2024-25 TPP.
Request For Additional Information Be Shared with Stakeholders:
Cal Western asks that CAISO share with stakeholders gas plant utilization information that is available from the CAISOs Production Cost Modelling (PCM) runs and LCR study. This can be done in summary form, but the critical information TPP stakeholders need is the forecast of how gas plant utilization or capacity factors change over the planning horizon in CAISO LCR studies and economic studies for each of the CPUC base resource plans and High Gas plant Retirement Sensitivity Portfolio.
This information should be relatively easy for CAISO staff to retrieve from the production cost modelling runs that CAISO undertakes to perform economic studies and LCR studies.
This information is critical to stakeholders. Here is why:
When the CPUC approved the base case resource portfolios that are being used in the 2024-25 TPP they depended on an expectation that as new clean resources are added to the portfolio, gas plants rise in the dispatch stack and generation from gas plants is replaced by new clean resources.
The CPUC said it this way in Decision 24-02-047:
“Over time, the capacity factors of thermal resources continue to decrease over time as their energy output is offset in the dispatch stack by zero marginal-cost renewables.” [1]
However the CPUC understands there is a potential flaw in their logic because gas plants located in transmission constrained local areas may have to run more than their RESOLVE and SERVM models forecast because those CPUC models do not have the granularity to determine if new clean resources added to the portfolio can actually be delivered to the transmission constrained urban areas in California and displace the use of gas plants in those urban areas.
According to CPUC Decision 24-02-047:
“Conducting locational analysis within the context of IRP is difficult, because much of our analysis historically has been focused at the system level. The CAISO, however, has the ability to do much more granular and detailed analysis of local reliability needs. Therefore, we find it prudent to ask the CAISO to conduct this sensitivity analysis for the 2024-2025 TPP.” [2]
Furthermore, the CPUC has stated that 70% of the gas plants in the base case portfolio being used in this 2024-25 TPP are in transmission constrained local areas. In other words, the CPUC RESOLVE and SERVM models cannot accurately forecast gas plant utilization for 70 percent of the gas plants in the base or sensitivity resource portfolios.
Cal Western strongly urges the CAISO to provide the critical gas plant utilization forecasts that can be derived from the CAISOs more granular models that are capable of forecasting the actual expected gas utilization of plants located in transmission constrained local areas. An example of the kind of information Cal Western is requesting can be found in Appendix J of the 2022-23 TPP Final Report at Figure J.3.2-77 Western LA Basin LCR Sub-area 2032 Forecast Hourly Profiles. To the extent this information is available by December 9, 2024, it should also be provided to the CPUC and all Stakeholders at the December 9, 2024, TPP Stakeholder meeting.
Request Update to CAISO TEAM Methodology Valuation for the 2024-25 TPP:
Cal Western urges CAISO to modify and update its historic assumption that gas plants are the marginal system RA resource in TEAM valuations. In previous TPP cycles the CAISO has assumed gas plants are the marginal RA resource when evaluating LCR benefits of proposed transmission projects.
This assumption used by CAISO in past TEAM valuations is out of date. The net CONE of utility scale batteries has continued to fall. In an independent study commissioned by Cal Western, consulting firm E3 concluded that in the 2030s batteries should be assumed by CAISO as the marginal system RA resource. The results of the E3 Study are included in Cal Western’s October 15th Filing.
Also critically important, E3 found that existing gas resources in transmission constrained local areas such as the LA Basin should continue to be assumed to be the marginal local RA resource in TEAM valuations. The rational is that utility scale batteries located in transmission constrained local areas have limited use, they cannot be fully charged for use in the following day since the local area transmission constraints limit access to clean energy resources outside of the local area. For example, CAISO found in the 2022-23 TPP LCR studies that no more than 1,141 MW of local batteries could be located in West LA due to Transmission constraints into West LA.[3] By the early 2030’s this 1,141 MW of local area batteries in West LA are expected to be fully built out.
Cal Western urges CAISO to update its TEAM assumptions regarding marginal local and system RA resources in this 2024-25 TPP.
Cal Western also urges CAISO to identify this change to LCR valuation at the upcoming 2024-25 TPP Stakeholder meeting on December 9 to allow stakeholders an opportunity to comment.
In summary, Cal Western (1) supports CAISO preliminary list of high priority economic study areas to receive detailed consideration for economic study in the 2024-25 TPP, (2) Requests additional information on gas plant utilization from CAISO economic and LCR Studies, and (3) Requests CAISO assume utility scale batteries are the marginal system RA resource and in areas where local transmission constraints limit battery usage, and continue to assume gas plants are the marginal local RA resource in TEAM methodology Economic and LCR Study valuations in the 2024-25 TPP.
Thank you for the opportunity to submit these comments for your consideration.
Respectfully submitted on behalf of Cal Western.
By Marty Walicki
Managing Member
(240) 277-8968 November 25, 2024.
[1] CPUC February 15, 2024, Decision 24-02-047, Adopting Preferred System Plan, and other matters…. - page 76
[2] Ibid. page 79
[3] CAISO 2022-23 TPP final report, appendix J, Figure J.3.2-76 Western LA Basin LCR Sub-area 2032 Peak Day Forecast Profile