A subsidiary of LS Power Associates LP has been chosen to build, own and operate a 500-kV dynamic reactive power support project aimed at ensuring reliability on a major portion of the state's electric grid, according to the California ISO.
Reactive power is critical for maintaining proper voltage levels on a transmission system. LS Power's installation is designed to prevent voltage collapse that can severely damage electrical equipment and result in widespread blackouts. The project will provide reactive power support absent baseload power capacity that would typically do so.
With the expected retirement of Pacific Gas and Electric Co.'s Diablo Canyon nuclear plant in 2025, a major source of reactive power will be lost to a crucial part of the grid that includes the PG&E Corp. subsidiary's Gates substation, which is where the new reactive power support project will be located. The Gates substation interconnects a major transmission channel from Diablo Canyon to Path 15, which forms part of the Pacific AC Intertie. Path 15 is California's primary corridor for moving electricity from power plants in Southern California to consumers in the San Francisco Bay area, according to the Western Area Power Administration.
"The Gates Project was approved by the CAISO governing board in March 2019 as a critical reliability project to mitigate high transmission grid voltages upon the shutdown of the Diablo Canyon Power Plant in 2025," LS Power said in a press release.
CAISO conducted a competitive solicitation and selected LS Power Grid California LLC's proposal from a total of 10 qualified proposals, according to the grid operator's project sponsor selection report. "LSPGC proposed a robust, 15-year annual revenue requirement cap that will provide lower cost, greater rate certainty, and less cost risk than the proposals of the other project sponsors," CAISO said.
The grid operator estimated the cost of the proposed Gates project to be between $210 million and $250 million, including the portion of the project not subject to competitive solicitation, the report said. LS Power agreed to a binding capital cost cap of $68 million and a binding annual revenue requirement cap for the first 15 years not to exceed a total of $110.2 million, the report added.
Total costs will be less than half the estimated cost the incumbent utility provided to CAISO, LS Power said.
The grid operator in early 2016 selected LS Power's DesertLink LLC to finance, construct, own, operate and maintain the 500-kV Harry Allen-Eldorado transmission line to import renewable energy from Nevada into California. CAISO said it made the decision, in part, because that company issued the "strongest binding cost containment commitment proposal."
The Gates project is one of two proposed dynamic voltage support projects CAISO approved as part of its transmission plan for meeting the state's need for grid upgrades over the next decade. The other project is the Round Mountain 500-kV reactive support facility, which would be installed in the northern part of PG&E's system to address high voltage issues at the Round Mountain substation.
LS Power also is among the companies that have submitted qualified proposals for that project, CAISO said in a Dec. 4, 2019, notice.