Humboldt Redwood Company Humboldt Redwood Company Power Purchase - - PowerPoint PPT Presentation

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Humboldt Redwood Company Humboldt Redwood Company Power Purchase - - PowerPoint PPT Presentation

Oct 11, 2022 240 likes •577 views

Humboldt Redwood Company Humboldt Redwood Company Power Purchase Agreement Power Purchase Agreement March 20, 2017 Board-adopted Guidelines for Biomass Procurement 1. Issue a Request for Offers targeting power purchase agreements with 1-2

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Humboldt Redwood Company Humboldt Redwood Company Power Purchase Agreement Power Purchase Agreement

March 20, 2017

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Board-adopted Guidelines for Biomass Procurement

  • 1. Issue a Request for Offers targeting power

purchase agreements with 1-2 existing facilities.

  • 2. Structure overall biomass procurement strategy

around local waste-management and forest restoration priorities and needs. restoration priorities and needs.

  • 3. Include environmental, community, and

economic considerations in selection process.

  • 4. Contingent on price and market conditions,

contract for a target of around 20MW of local biomass energy.

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Logging Thinning, Slash Fuels-reduction & Restoration Thinning, Slash Timber Lands Saw Logs - Sent to Mills

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Logging Thinning, Slash Fuels-reduction & Restoration Thinning, Slash Timber Lands Paper- Saw Logs - Sent to Mills Residual Waste Dimensional Lumber Paper- quality Chips (exported)

Animal Bedding & Landscaping

Waste Biomass

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Logging Thinning, Slash Fuels-reduction & Restoration Thinning, Slash Timber Lands Paper- Saw Logs - Sent to Mills Residual Waste Dimensional Lumber Paper- quality Chips (exported)

Animal Bedding & Landscaping

Waste Biomass Biomass Plant

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Logging Thinning, Slash Fuels-reduction & Restoration Thinning, Slash Timber Lands Paper- Saw Logs - Sent to Mills Residual Waste Dimensional Lumber Paper- quality Chips (exported)

Animal Bedding & Landscaping

Waste Biomass Fertilizer Activated Carbon Electricity (& Heat) Biomass Plant

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Logging Thinning, Slash Fuels-reduction & Restoration Thinning, Slash Timber Lands Paper- Saw Logs - Sent to Mills Residual Waste Dimensional Lumber Paper- quality Chips (exported)

Animal Bedding & Landscaping

Waste Biomass Biomass Plant

Total Humboldt County mill residuals = ~400,000 Bone dry tons

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Logging Thinning, Slash Fuels-reduction & Restoration Thinning, Slash Timber Lands Paper- Saw Logs - Sent to Mills Residual Waste Dimensional Lumber Paper- quality Chips (exported)

Animal Bedding & Landscaping

Waste Biomass Biomass Plant

~50% of residuals typically sold for

  • ther uses, leaving ~200,000+ BDT
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Logging Thinning, Slash Fuels-reduction & Restoration Thinning, Slash Timber Lands Paper- Saw Logs - Sent to Mills Residual Waste Dimensional Lumber Paper- quality Chips (exported)

Animal Bedding & Landscaping

Waste Biomass Biomass Plant

Processing 200,000 BDT requires about 25MW of operating power plant capacity

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SLIDE 10

Current or projected wholesale power costs ($/MWh, approximate)

$35.00 $37.50 $40.50 $49.50 $130.00 $83.00 $82.00 $89.23 $113.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $- $20.00 $40.00

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Current or projected wholesale power costs ($/MWh, approximate)

$35.00 $37.50 $40.50 $49.50 $130.00 $83.00 $82.00 $89.23 $113.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00

Market prices are low

$- $20.00 $40.00

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Market prices = big projects

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Current or projected wholesale power costs ($/MWh, approximate)

$35.00 $37.50 $40.50 $49.50 $130.00 $83.00 $82.00 $89.23 $113.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00

local/community- scale power comes at a premium

$- $20.00 $40.00

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Humboldt Redwood Company PPAs

  • $83/MWh bid price, 5-year contract period
  • 9 month-term initial PPA at reduce volume for

$83, additional generation at market price

  • 51-month term at $83 for full volume
  • 51-month term at $83 for full volume

– Includes “Material Change” clause to reduce RCEA risk exposure for multi-year commitment to above-market pricing.

  • Environmental & regulatory compliance

provisions

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Humboldt Redwood Company PPAs

MWh per Month

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Material Change Policy Elements

Creates opportunity to renegotiate if:

  • 1. RCEA forecasts for the coming year show that

we won’t be able

– Maintain 3% customer rate savings (~$2M/yr) – Maintain 3% customer rate savings (~$2M/yr) – Meet minimum power portfolio requirements and

  • perating costs

– Reserve accumulation of $2M/yr

  • 2. Customer participation levels are not met
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Reserve accumulation

$12,000,000 $14,000,000 $16,000,000

Reserves

$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22

$6M minimum reserve

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Reserve accumulation

$12,000,000 $14,000,000 $16,000,000

Reserves

Example $2M Board allocation in 2020

$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22

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Future-year Budget Headroom

Reserve contribution Rate savings Procurement budget above base cost

$70 $80 $90 $100

PG&E PCIA &

  • ther fees

Operations Base/minimum power costs

$- $10 $20 $30 $40 $50 $60 PG&E RCEA price per MWh

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Future-year Budget Headroom

Reserve contribution Rate savings Procurement budget above base cost

$70 $80 $90 $100

Costs determined by Board Policy

PG&E PCIA &

  • ther fees

Operations Base/minimum power costs

$- $10 $20 $30 $40 $50 $60 PG&E RCEA price per MWh

Fixed/base costs of providing service

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Future-year Budget Headroom

$70 $80 $90 $100

Material Change Clause ensures base operating

$- $10 $20 $30 $40 $50 $60 PG&E RCEA price per MWh

base operating costs met and also sets minimum values for reserves and rate savings

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$70 $80 $90 $100

Future-year Budget Headroom

Example: PG&E Rate decrease

$- $10 $20 $30 $40 $50 $60 PG&E RCEA price per MWh

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$70 $80 $90 $100

Future-year Budget Headroom

Material Change allows for maintaining

$- $10 $20 $30 $40 $50 $60 PG&E RCEA price per MWh

maintaining minimum rate savings and reserve contributions by renegotiating price/volume

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Humboldt Redwood Company PPAs

Volume at $83 reduced to maintain 3% rate-

MWh per Month

3% rate- savings and $2M reserve accumulation

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Environmental/regulatory compliance provisions

Questions?

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Biomass Procurement Phase 2

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Proposed terms for additional biomass procurement

  • Additional contract(s) layered on after HRC for

available budget

  • Base price would be $83/MWh
  • PPA terms would be modified version of HRC

PPAs Including adjusted version of Material Change clause

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Options

  • 1. Pursue negotiations with one additional

facility

  • 2. Pursue negotiations with both, with one

ranked ahead of the other for allocations of ranked ahead of the other for allocations of available headroom

  • 3. Pursue negotiations with both, split any

headroom equally

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Additional PPA(s) layered onto HRC

12,000 14,000 16,000 18,000 2,000 4,000 6,000 8,000 10,000 Jun-17 Oct-17 Feb-18 Jun-18 Oct-18 Feb-19 Jun-19 Oct-19 Feb-20 Jun-20 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22 Facility 2 @ Market Price Facility 2 @ $83/MWh HRC Market price HRC Purchases @ $83/MWh

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Additional PPA(s) layered onto HRC

Example: budget moderately constrained

12,000 14,000 16,000 18,000

PPA #2 volume at $83 reduced due to budget

2,000 4,000 6,000 8,000 10,000 Jun-17 Oct-17 Feb-18 Jun-18 Oct-18 Feb-19 Jun-19 Oct-19 Feb-20 Jun-20 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22 Facility 2 @ Market Price Facility 2 @ $83/MWh HRC Market price HRC Purchases @ $83/MWh

due to budget

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Additional PPA(s) layered onto HRC

12,000 14,000 16,000 18,000

Example 2: budget significantly constrained

Both PPAs volume at $83 reduced due to budget

2,000 4,000 6,000 8,000 10,000 Jun-17 Oct-17 Feb-18 Jun-18 Oct-18 Feb-19 Jun-19 Oct-19 Feb-20 Jun-20 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22 Facility 2 @ Market Price Facility 2 @ $83/MWh HRC Market price HRC Purchases @ $83/MWh

due to budget

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Considerations

  • Technical analysis/forecasts do not project being

able to afford 3 biomass PPAs at $83/MWh

  • Preliminary analysis suggests the capacity

provided by two operational facilities would be provided by two operational facilities would be sufficient to process currently-available biomass waste stream.

  • The more budget committed to biomass = less

available for other priorities (customer programs, new local generation, lowering power mix GHG emissions)

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SLIDE 33

Staff recommendation

  • Pursue negotiations with one additional facility
  • Select DG Fairhaven for negotiation base on RFO

review team’s “offeror viability” scoring.