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Transmission Costs

Transmission Costs. Summary. RPS Calculator Valuation Framework. The availability and cost of transmission are primary components in the Net Market Value (NMV) calculation used to rank competing resources in the RPS Calculator

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Transmission Costs

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  1. Transmission Costs

  2. Summary RPS Calculator Valuation Framework • The availability and cost of transmission are primary components in the Net Market Value (NMV) calculation used to rank competing resources in the RPS Calculator • They reflect the cost to deliver new renewable generation to California loads • The methodology of identifying available capacity and transmission costs in Version 6.0 is generally the same as previous version, additional updates planned + Levelized Cost of Energy + Transmission Cost − Capacity Value − Energy Value + Integration Cost* = Net Resource Cost *Not currently quantified in RPS Calculator

  3. Summary Continued • Transmission availability and cost estimates for all existing CREZs will be updated in Version 6.0 of the RPS Calculator to reflect all available CAISO study information • Black & Veatch also identified new major resource areas (“Super CREZs”) for which new transmission cost estimates need to be developed (i.e. 3,000 MW new wind capacity in Sacramento River Valley) • Out of state transmission cost estimates are derived from previously vetted studies

  4. RPS Calculator in Transmission Planning • RPS Calculator receives information from and provides information to CAISO transmission planning processes • Transmission projects included in CAISO Transmission Planning Process (TPP) are recovered through the Transmission Access Charge (TAC) levied on all users of the transmission system • TAC costs are passed on to ratepayers • Generation projects accessing transmission lines in the TPP may avoid additional delivery network upgrade (DNU) costs • Since the CAISO TPP is based on the CPUC’s RPS Calculator portfolios, it is critical the overall process shown here works CAISO GIDAP Transmission Inputs Available Capacity [MW] Delivery Network Upgrade (DNU) Costs [$/kW-yr] Iterative - informs next cycle and other processes RPS Portfolios CAISO TPP Commercial Projects [MW] RPS Calculator CPUC LTPP Generic Projects [MW]

  5. Role of Transmission in RPS Calculator • In developing each portfolio , the RPS Calculator considers the: • Availability of existing transmission • Cost of building new transmission • General treatment of transmission availability and costs has not changed between Version 2.0-5.0 and 6.0 • Updates have been made to inputs and additional updating required, as described in following slides

  6. Transmission Availability

  7. Transmission Availability in RPS Calculator • General treatment of transmission availability has not changed between Version 2.0-5.0 and 6.0: • Each zone has estimates of the amount of fully deliverable capacity (and associated costs) available on existing transmission, minor upgrades, and major upgrades • Existing transmission & minor upgrades assumptions provided by CAISO • Existing transmission capacity is allocated to (1) IOU contracts and (2) most favorably ranked generic projects • These projects have no associated upgrade costs • Remaining projects are bundled together for selection on minor and major upgrades

  8. Transmission Availability by Electrical Zone • Estimates of existing capacity and minor upgrades provided by CAISO • Major upgrades are assumed to represent a new transmission line Note: Graph reflects old transmission cost estimates and available transmission capacity data that will be updated prior to the F15-16 TPP by Q1 2015

  9. Allocation of Transmission Capacity • Resources are ranked and sorted in each zone based on their net cost without accounting for transmission • Available capacity for new transmission is allocated to the most favorably ranked projects • Existing transmission is allocated to IOU contracts prior to ranking/selection process • No upgrade costs for these resources • Higher cost projects assigned minor and major upgrade costs No Tx Cost Major Upgrade Cost Minor Upgrade Cost

  10. Estimating Transmission Costs • General Methodology • Interconnection Cost • Delivery Network Upgrades • Zone Identification • Out-of-state Transmission

  11. Methodology Overview Transmission costs split in three categories: • Interconnection Cost • Delivery Network Upgrades (minor and major upgrades) • Out-of-state Transmission Unit costs based on: • IOU Per Unit Costs • B&V WECC methodology • Previous E3 RPS calculator estimates • CAISO Delivery Network Upgrades

  12. Interconnection Facility Costs Gen-tie line Substation costs • New switching station • New breaker position at existing substation

  13. Interconnection Facility Costs Gen-tie lines • Costs vary depending on interconnecting utility Note: Costs will be updated with 2015 estimates prior to the F15-16 TPP by Q1 2015

  14. Interconnection Facility Costs Sub B 115 kV Two substation options based on project location. Example: • Project A is within reasonable gen-tie distance – new breaker position • Project B is not within reasonable gen-tie distance, but can connect to the 115 kV line – new switching station 115 kV Line Sub A 115 kV Project B 20 MW Project A 20 MW

  15. Interconnection Facility Costs New Breaker Position (Existing BAAH Substation) New Switching Station (Ring Bus) Note: Costs will be updated with 2015 estimates prior to the F15-16 TPP by Q1 2015

  16. Delivery Network Upgrade (DNU) Costs

  17. Delivery Network Upgrade (DNU) Costs DNU costs consist of minor and major upgrades Worked with CAISO to determine best way to incorporate DNU in analysis Proposed method is to use costs for upgrades based on interconnection studies for projects in Competitive Renewable Energy Zones (CREZ) Three categories: • Available transmission capacity with no upgrades • Available transmission capacity with minor upgrades • Available transmission capacity with major upgrades

  18. Delivery Network Upgrade (DNU) Costs Example DNU Costs:

  19. Delivery Network Upgrade (DNU) Costs - Key Issues CAISO has not studied all areas and so transmission availability and costs for minor and major upgrades in several areas have not been established • Currently use costs estimated by E3 in previous version of the RPS Calculator. • CPUC and CAISO have developed a proposed approach to update the costs (see following slides) • Estimates will be updated in time for the F15-16 TPP by Q1 2015 Updated resources need to be assigned to zones. Many are outside original boundaries. • Proposed method and new Super CREZ described in “California Renewable Energy Resource Potential and Cost Update” presentation

  20. Proposed Approach for Updating Transmission (DNU) Cost and Availability The 2010 estimates would be used as an initial starting point for the 6.0 Version of the Calculator The Calculator would be run with the initial estimates, and the most economical Super CREZs would be identified These Super CREZs would then be examined by the CAISO to update the major and minor transmission costs estimates for each area The calculator would be re-run with the updated costs, and the most economical Super CREZs would be identified again If there are any changes in the list of most economical Super CREZs, these would be sent to the CAISO for re-study, returning to step 3 This process would continue until the list of most economical Super CREZs does not change after updating the transmission cost estimates. These costs would be incorporated into Version 6.1 of the RPS Calculator, which would then be vetted by stakeholders.

  21. 1. Starting TxCost and Availability (Past CAISO Studies + E3 Estimates) Proposed Approach for Updating Transmission (DNU) Cost and Availability Updated Major/MinorTx Cost Estimates for Super CREZ 2. RPS Calc Run 4. RPS Calc Run Selected portfolio of most economic Super CREZ from RPS Calc Supply Curve Most Economic Super CREZ New Super CREZ Identified? Costs and availability to Version 6.1 of RPS Calculator 6. No 3. Special CAISO Study of Tx for Selected Super CREZ 5. Yes: re-study new areas

  22. Out Of State Transmission Costs Largely based on previously vetted initiatives: • RETI 2B (2010) • B&V work for WECC on transmission costs (2012-2014) • WREZ Generation and Transmission Cost Model (2009-2013)

  23. Out-of-state (OOS) Transmission Cost Approach Out-of-state transmission costs • Cost basis: 500 kV single-circuit ac transmission, 1500 MW capacity, $1.8 million/mile, federally financed, • Delivered to “gateway CREZs” (e.g., Mountain Pass) • From WREZ Generation and Transmission model • Line utilization based on resource capacity factor In-state transmission costs: • Added CAISODNU costs to OOS costs using same approach as California projects Note: Costs will be updated with 2015 estimates prior to the F15-16 TPP by Q1 2015

  24. OOS Resources Delivered To California Gateway Substations / CREZs Pacific Northwest > Round Mountain Northern & Central Nevada > Owens Valley Southern Nevada, Utah and Wyoming > Mt. Pass Arizona, New Mexico > Riverside East Baja California > Imperial Valley South Focus is on highest quality OOS resources for CA

  25. Estimated Transmission Capital Costs For OOS Zones, 500 kV Single-circuit Notes: Costs are for 500 kV single-circuit ac line. In many cases other options may be more cost effective, particularly HVDC for long distance transmission Costs include the line, necessary substations, and right of way.    Do not include overhead and AFUDC, estimated as an additional 17.5%.Operations and maintenance and losses need to be separately considered. Portions of the BJ_NO zone are very close to the California border.  As such, this average cost for the zone is likely to overestimate the costs for certain resources that might directly interconnect across the border.  Note: Costs will be updated with 2015 estimates prior to the F15-16 TPP by Q1 2015

  26. RPS Calculator Guide • The parameters that affect Transmission can be found on the following tabs: • Tx_Inputs: cost and availability of transmission for each SuperCREZ • Includes existing capacity and minor & major upgrades

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