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ARE THERE ALTERNATIVES TO THE SUNRISE POWERLINK?. UCAN’s PRELIMINARY FINDINGS March 1, 2006. San Diego Regional Energy Strategy 2030 , July 2003 www.sdenergy.org/uploads/Regional_Energy_Strategy_Final_07_16_03.pdf prepared by Regional Energy Policy Advisory Council (REPAC) appointed by SANDAG.

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  2. San Diego Regional Energy Strategy 2030, July 2003www.sdenergy.org/uploads/Regional_Energy_Strategy_Final_07_16_03.pdfprepared by Regional Energy Policy Advisory Council (REPAC) appointed by SANDAG Voting membership: • Jim Callaghan, Qualcomm (Vice Chair) • Supervisor Diane Jacob, County of San Diego • Steve Zolezzi, Restaurant & Beverage Association Advisory membership: • Irene M. Stillings, Executive Director, SDREO • San Diego Gas & Electric, Bob Resley • Steve Hoffman, NRG Energy • Bill Powers, Border Power Plant Working Group

  3. San Diego Regional Energy Strategy 2030, July 2003Vision of Strategy: Local Control, Local Benefits Goal 1: Achieve regional consensus, develop inclusive strategy; Goal 2: Generate 65% of peak demand with in-county generation by 2010, 75% by 2030 (priority to replacement of South Bay and Encina plants); Goal 3A: Increase renewables to 25% by 2020, 40% by 2030; Goal 3B: Achieve 50% of total renewables in County.

  4. 2003 SDGE Proposed Transmission AdditionDirect Testimony of David Korinek, SDGE Transmission Planning Manager,April 15, 2003, California Public Utilities Commission proceeding R.01-10-024. Sunrise Powerlink 2006 CEC Supports Sunrise to the Extent it Eventually Interconnects with SCE (2005 IEPR)

  5. 10-year Sempra DWR contract; $7 billion value, customer buys fuel, power sent to SCE; Seller’s choice, ISO can not override; Mitigation payments to Sempra if congestion physically limits power sales opportunites; Governor committed to renegotiating contract, no progress to date.

  6. Reliability and SDGE Resource Plan • Can $1.5 billion get us something more than an electrically incomplete line that traverses Anza Borrego State Park? • Sunrise Powerlink would improve reliability only if SDGE procures additional outside resources that are deliverable over Sunrise. • SDGE Resource Plan: 300 MW Imperial Valley solar by 2011, 200 MW geothermal by 2014. • Without Sunrise, this renewable generation would be delivered over existing 500 kV SWPL.

  7. SDGE 08-27-04 Comment on Anza Borrego SP General Plan:p. 3,“We will not be able to take advantage of a substantial amount of currently identified renewable resources, if land use restrictions such as the Park's exclusionary zoning prevent transmission access to renewable resources." CPUC 12-15-05 Resolution E-3965, SDGE Renewables Contracts:p. 9, “SDG&E’s ability to procure from (renewable) resources bid from locations in the Imperial Valley area are contingent upon SDG&E successfully being able to license and construct a new 500 kV line from the Imperial Valley area to San Diego by 2010.” SDGE to CPUC in 12-14-05 Sunrise Application: p. V-36, The 20% renewable goal in 2010 can be met with imports "even if the Sunrise Powerlink were not built.” Alternative identified for moving renewables – SWPL.

  8. What Are Alternative In-Region Solutions to Reliability Issues and Cost Trade-Offs? • To the extent the ISO's G-1/N-1-1 reliability criterion requires enough local generation to withstand the loss of two transmission lines, meeting reliability needs with in-county generation and conservation will be better than trying to meet reliability needs with imports from unspecified resources using Sunrise. • In terms of local economic development, meeting reliability needs with local resources is clearly preferable to increased imports from remote generation. • Cost of 1,000 MW of in-basin combined-cycle: ~$500M

  9. What Portion of Transmission Line Will Be Paid by SDGE Customers? • SDGE states that customers’ share of project is ~10%, or $100 to $150 million, cost of Sunrise spread across state’s entire ratebase. • However, no free ride. SDGE customers pay for 10% of all utility transmission projects in the state, not just those in SDGE service territory. • If SDG&E is encouraged to build unneeded transmission because others will help pay for it, others will do the same. • 14 of 18 alternatives eliminated by SDGE before CPCN application filed, none identified as technically or cost infeasible, only less desirable on purely technical grounds.

  10. Quantify Renewable Power We Can Access in Imperial Valley if Sunrise Is Developed? • The current bottleneck in delivering Imperial Valley generation to SDGE is not SWPL, but rather the IID system north of the Imperial Valley substation.  • IID's Green Path expansion project includes two new transmission lines to interconnect with SDGE at the Imperial Valley substation. If built as planned in the next few years, they will increase deliverability from IID to the Imperial Valley substation from the current few 100 MW up to 2,000 MW. At that point, the transmission constraint will be SWPL rather than IID's system. • SWPL from the Imperial Valley substation to Miguel can handle up to 1,900 MW. Which generation gets to use that 1,900 MW is a matter of economics, not priority in time, under the ISO's long-term transmission access protocols due to take effect in late 2007. Thus, SDG&E could in principle use the entire 1,900 MW capacity of SWPL for renewables if it was willing to pay to do so.

  11. Alternative 3 500 kV Presented by SDGE in 2002SDGE Area Transmission Expansion 2003-2005, David Korinek, SDGE Transmission Planning Manager, Nov. 1, 2002, CAISO Southwest Transmission Expansion Plan meeting

  12. SDGE - Congestion at Miguel and Same ROW Make Southern Route Undesirable. Yet 500 kV Devers-Palo Verde 2 Has Same Issues and Is SCE Preferred Option.

  13. What Is Plan B for SDGE to Meet Renewable Requirements if Sunrise Is Not Approved? • SDGE already discussing building new substation on SWPL to interconnect to up 500 MW of wind power in East County area. • This wind generation would displace other uses of SWPL. That is 500 MW of renewables not using Sunrise. • For solar and geothermal resources in the Imperial Valley, SDGE could do the exact same thing. • The total import capacity of SWPL, 1,900 MW, is over 40% of SDGE's forecasted 2010 peak demand. • 1,900 MW is far in excess of SDGE's renewable energy obligations under California law.

  14. How Will the New Line Reduce Overall Cost of Achieving Renewable Generation Goals? • It's not clear that it would. On the one hand, ratepayers would have to pay for the new line. On the other hand, renewable generation would face congestion costs if it used SWPL in a world without Sunrise. From a ratepayer point of view, it's not at all clear which is cheaper. • ISO studies (August 2005 LMP Study 3B) predict that the congestion cost between Imperial Valley and San Diego County will drop to under $1/MW-hr in 2006 because of the current round of upgrades to SWPL plus the operation of the Miguel-Mission #2 line. • At $1/MW-hr, 1,000 MW of baseload renewables running 7,000 hours per year would incur a congestion cost of only $7 million per year - far less than the fixed costs of Sunrise.

  15. What Are Projected Savings to Customers Due to Reduced Congestion Attributed to Sunrise? • Any resource contracted to SDGE which is located in SDGE's service area will reduce RMR costs. • Both Otay Mesa and Palomar are being bought by SDGE, and as such they will supply RMR capacity at no cost over their contractual energy costs. • SDGE correctly justified those projects to the CPUC as projects that reduce RMR costs. • Any other resource in the county that SDGE buys the output from will similarly reduce RMR costs. That includes generation from existing or repowered units at South Bay or Encina.

  16. Conclusions • Reliability can be more cost-effectively obtained by adding in-basin generation. • Renewable goals can be met by existing transmission infrastructure as noted by SDGE in Sunrise Powerlink application to California Public Utilities Commission. • Congestion costs on SWPL from 2006 onward are projected by ISO to be quite low due to SWPL upgrades and Miguel-to-Mission No. 2 transmission project. • In terms of local economic development, meeting reliability needs with local resources is clearly preferable to increased imports from remote generation. • Let CPUC evidentiary process play out and all facts put on table before taking a vote whether to support the proposed Sunrise route.

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