Published on March 18th, 2016 | by Susan Kraemer38
CPUC Gets It Right: PG&E Can Keep Its Ivanpah Contract
March 18th, 2016 by Susan Kraemer
A completely innovative technology that is one of the keys to slowing climate change was today allowed by the CPUC to fine-tune energy production. The decision results in no harm to ratepayers.
The California Public Utilities Commission (CPUC) has approved PG&E’s December 18 request for a Forbearance Agreement for Ivanpah Units 1 and 3, giving the two units at least six months, and possibly a year, to meet current production targets of 448,000 MWh annually.
In unanimously approving the resolution, the CPUC noted that the plant has “substantially increased” its production.
The production targets escalate for a four-year ramp-up period till 2018, when 640,000 MWh should be generated by the two units under contract with PG&E. But there is a ramp-up period of 4 years.
Under averaged annual generation over its first two years, according to filing documents quoted by KQED’s Pete Danko, Units 1 and 3 were contracted to generate 70% of the 640,000 MWh; or 448,000 MWh.
In the first two years, according to the EIA data seen above, Ivanpah 1 and 3 generated an average between both years of 361,576.5 MWh, falling nearly 20% short of the targeted 448,000 MWh. But 2015 ramped up considerably.
Adding up Ivanpah’s — much improved — 2015 output, generation increased to 433,331 MWh of its 448,000 MWh target; around 97% of the goal.
“There was a more than 50% increase in production during the second year of operation compared to the first,” said Joe Desmond, spokesman for BrightSource, the initial developer and solar technology provider of Ivanpah, now operated by its partner NRG on behalf of Solar Partners (Google was the third partner).
Desmond told Cleantechnica that the Solar Partners are confident the plant can ramp up to full production by 2018 as originally planned.
“Now entering its third year, this first-of-its-kind solar thermal project continues to set new production records,” he said.
In December, PG&E had petitioned the CPUC to approve a Forbearance Agreement between PG&E and Solar Partners, giving more time for Ivanpah Unit #1 and Unit #3 to reach the contracted percentage of targeted generation under the PPA.
PG&E’s December filing stated:
“The Forbearance Agreements benefit PG&E’s customers because they:
(1) ensure the continued operation of innovative solar thermal resources that provide Renewable Portfolio Standard (“RPS”)-eligible energy;
(2) require the Solar Partners to pay consideration, which is not currently required under the PPAs;
(3) allow the Projects time to continue to improve performance to meet the requirements of their respective PPAs.”
PG&E’s contract had envisioned a four-year ramp-up, because of the size and degree of innovation in Ivanpah.
As the largest CSP tower in the world, Ivanpah had over six times the capacity of its only US predecessor at the time. Nevada Solar One, a single tower, was just 60 MW net. (It also used molten salt-based technology, unlike Ivanpah).
Ivanpah was an enormous jump, as the first to use purely water-based thermal power towers, and the world’s largest CSP tower project, going right to 390 MW gross, of which 377 MW is available for net generation to the grid.
What “Parasitic Power” Means
All turbine-driven power plants — including gas and coal, hydro, geothermal and CSP — normally include some extra generation to supply “parasitic” (onsite) needs, such as for condenser cooling or overnight power to keep turbines turning slowly overnight so they don’t crack upon morning startup or (in CSP) moving the heliostats.
Ivanpah also added up to 5% natural gas to supply some of this overnight onsite need. (It had no storage to take care of parasitic power, as PG&E had no interest in storage back in 2008, thinking pumped hydro at Hetch Hetchy was plenty back then.)
If fossil energy gets ramp-up periods, why not innovative clean energy tech?
It is erroneously suggested in media accounts that Ivanpah’s ramp-up period is unique, and that Ivanpah asked for it after the fact.
“In fact, a multi-year ramp-up period was always assumed in the financial and operating plan for each unit,” Desmond explained.
BrightSource’s 2010 DOE filings had already noted that “initial performance will be less than full design,” then would rise due to “realization of the operator’s learning curve, procedural optimization, and fine-turning of equipment and systems for increased plant performance.”
“The DOE was made aware of the ramp-up period in connection with the Loan Guarantee application, as were the project’s equity investors and PG&E who negotiated the terms of the PPA,” he explained. “Moreover, the California Public Utility Commission approved the PPAs which included those target dates.”
Ramp-up periods are actually routine in traditional thermal carbon-combustion technology (where instead of leveraging simply sunlight and water, carbon combustion “burns up the fenceposts” as Edison put it). What is burned in such cases is gas or coal, of course.
“Even conventional systems, using tried-and-true technology, are afforded 180 days after commercial on-line dates before EPA presumes they are in full operation,” Desmond pointed out. “And that is just the default; they may petition for additional time if they have not yet reached their potential.”
(Kevin Smith, CEO of SolarReserve, who previous to developing Crescent Dunes CSP, had spent 20 years in the traditional thermal energy business, confirmed that traditional thermal plants normally also are expected to have ramp-up periods.)
PG&E Battled Opposition to Keep its Ivanpah PPA
In light of the demonstrated improvement as reflected in the EIA numbers, PG&E had asked the CPUC to approve a new forbearance period to allow Ivanpah time to meet the contracted generation percentage for this pre-2018 generation.
The CPUC is to be congratulated in making the right decision, in consideration of Ivanpah being so close to the first two-year target by 2015, given the data on improvements in performance. The decision was unanimous.
The Office of the Ratepayers Advocates (ORA) previously fought net metering for rooftop solar, contending that grid maintenance costs are increasingly being dumped on non-solar customers.
ORA attempted to get the CPUC to refuse PG&E’s request and to force it to simply terminate the PPA as too expensive. In response to ORA objections, the PG&E stated in Reply to Protests of AL 4761-E.pdf:
“The Forbearance Agreements avoid the time, cost and uncertainty of dispute resolution by providing a limited period during which the Solar Partners can demonstrate that the Projects will be able to meet the Guaranteed Energy Production (‘GEP’) going forward.”
CSP is more expensive than today’s PV. But PV was nearly as expensive in 2008, and ORA has not objected to those old utility-scale PV PPAs at those much higher rates than today.
Like PV, CSP has lower costs in more recent plants, within the global markets that kept awarding PPAs after 2008 (when the US stopped awarding CSP). The most recent CSP prices bid in global markets are now under 10 cents per kWh — and these include 12 or more hours of storage.
ORA’s extra expense argument is not valid, not only because ORA did not object to the Ivanpah PPAs back in 2008 when they were agreed to, but also because Solar Partners will pay damages for any shortfall in generation.
A payment for damages is fairly standard, according to PG&E’s filing, when any plants have a shortfall in generation:
“However, the consideration provided for in the Forbearance Agreements is consistent with other Guaranteed Energy Production (‘GEP’) damage provisions approved by the Commission, which generally base GEP payments on a rate substantially lower than the contract price. For example, in PG&E’s most recent Renewable Portfolio Standard (‘RPS’) Request for Offers (‘RFO’) form PPA, approved by the Commission in 2014, GEP damages are calculated as the difference between the current market price and the contract price, with a minimum amount of $20/MWh for GEP damages.”
So, what’s the bottom line? As PG&E put it in response to ORA’s objection, the decision results in no harm to ratepayers:
“The Forbearance Agreements also provide compensation for PG&E’s customers during this limited period.”
As a result of the unanimous decision by the CPUC, a completely innovative technology that is one of the keys to slowing climate change was today allowed to continue to improve.
We were that generous when oil; that brand new energy technology in 1880, was first dug out of the ground and cost the 2010 equivalent of $500 a barrel. Potentially dispatchable solar technologies need to be given the same chance to develop.
Solar thermal technologies are important now that we know something about climate that we didn’t know in 1880, because, with storage, CSP can be entirely dispatchable and replace fossil energy at night.
The CPUC made the right decision.
Photos by BrightSource