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California's Silicon Valley, Monterey OK solar, storage and geothermal contracts


According to Market Intelligence, December 2022


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California's Silicon Valley, Monterey OK solar, storage and geothermal contracts

Monterey Bay Community Power and the Silicon Valley Clean Energy Authority are set to execute major geothermal and solar-plus-storage power purchase agreements with Coso Operating Co LLC and First Solar Inc.

The contracts resulted from a joint request for offers the two community choice aggregation agencies issued in April 2019.

Monterey Bay's operations board on April 8 authorized the agency's CEO to execute a 15-year power purchase agreement for geothermal energy with Coso for a total cost not to exceed $496 million over the contract period, according to agency spokeswoman Shelly Whitworth and the board's agenda packet. Coso will provide 11% of Monterey Bay's load with this baseload resource capable of supplying round-the-clock power, she said.

Coso has been operating four geothermal plants with a combined capacity of 270 MW on land leased at the U.S. Naval Weapons Center in Inyo County since 1987 with "near-perfect reliability," according to the company's web site. The Coso geothermal project has been under a long-term contract with Edison International subsidiary Southern California Edison Co. that expired on Jan. 31, 2019, according to the Monterey board's agenda packet.

That board also authorized the execution of a 15-year power purchase agreement for 60% of First Solar's Rabbitbrush Solar LLC project, which features 100 MW of photovoltaic panels and 20 MW lithium-ion battery storage, for a total cost not to exceed $97 million, according to Whitworth and the board's presentation.

Meanwhile, Silicon Valley's board of directors on April 8 unanimously authorized the execution of a power purchase agreement with Rabbitbrush Solar LLC for 40 MW of solar and 8 MW of battery storage from the Rabbitbrush project, which is under development in Kern County, Calif. The fixed-price contract for Silicon Valley must not exceed $64.32 million over the 15-year contract period starting on June 30, 2022, according to agency documents.

Another solicitation in the offing

The Rabbitbrush Solar facility is just one of six projects for which Silicon Valley has been working to negotiate contracts. The agency recently executed agreements for two geothermal projects owned separately by Ormat Technologies Inc.'s Ormat Geothermal subsidiary and Coso and is continuing negotiations with the developers of three more solar-plus-storage projects, Silicon Valley Director of Power Resources Monica Padilla said during the April 8 board meeting. If those negotiations are not concluded by the time the board meets in June, the authority will look elsewhere for its future power needs, she said.

Those six projects were selected for negotiation based on the results of the April 2019 joint solicitation with Monterey Bay, according to Padilla. She also noted that Silicon Valley is preparing to issue another request for offers for future renewable energy projects.

Silicon Valley's agreement with Coso Geothermal Power Holdings LLC, which was executed March 22, has a $330.75 million cost cap over 15 years and a delivery start date of Jan. 1, 2022. The Ormat contract, which was approved by the board in January and executed shortly thereafter, is for a 10-year term at a cost of no more than $43 million.

During the April 8 meeting at which the Silicon Valley board authorized the agency's CEO to execute the Rabbitbrush contract, board member Javed Ellahie asked if the geothermal contracts are those on which "we are doing a force majeure," apparently in reference to unforeseeable circumstances related to the ongoing coronavirus pandemic that prevent fulfilling a contract. Without naming which, Silicon Valley CEO Girish Balachandran said only one contract is under a force majeure, adding that the matter had been discussed in closed session and therefore no details would be made public.

Silicon Valley Board Chair Howard Miller added, "I would just say all projects in the world have their constraints and their issues with COVID-19, and that's probably all we should say. It's good we have the geothermal. It's a good balance."

Meanwhile, in another community choice renewable energy development, Fitch Ratings upgraded Peninsula Clean Energy to a BBB+ rating, as one of only two community choice aggregation programs in California to obtain an investment-grade rating. Moody's Investors Service in May 2019 assigned Peninsula Clean Energy a first-time Baa2 rating, which is one notch below Fitch's new rating.

In its ratings upgrade announcement, Fitch pointed to the 200-MW Wright Solar Park, the largest renewable energy installation ever completed for a community choice agency, which started producing power exclusively for Peninsula's customers in January, and the 100-MW Mustang Two Solar Park, which could start providing power to Peninsula by the end of the year.