Hawaiian Electric Companies' Request for Proposals for ... · 5/2/2019 · Title: Hawaiian...

Hawaiian Electric Companies' Request for Proposals for

Variable Renewable Dispatchable Generation and Energy Storage Stage 2 &

Grid Services from Customer-Sited Distributed Energy Resources

Docket No. 2017-0352 Status Conference #2

May 2, 2019 PUC Hearing Room

T T Hawaiian Electric Maul Electric

4 4 Hawal'i Electric Light

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Agenda Updated RFP Scope - Increased Targets - Background and Numbers

Benefits, Challenges and Considerations Benefits of Updated Scope Accelerating Renewable Additions Will Also Require Accelerating System Upgrades & Operational Integration Company Challenges and Proposed Mitigations Help needed from Developers Timelines for Procurement Other Considerations & Potential Mitigations

Contingency Plans for AES/KPP Lana'i RFP Moloka'i RFP Self-Build Commitments to Level Playing Field Grid Services Code of Conduct

T T Hawaiian Electric Maui Electric

4 4 Hawai'i Electric Light

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Updated Renewable RFPs Scope O'ahu Maui

Targeted Annual MWhof

As Filed on April 1

Updated May2

As Filed on Apri l 1

Updated May2

Variable Renewable Dispatchable 160,000 590,000 65,000 295,000

Generation annual MWh annual MWh annual MWh annual MWh

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Targeted MW and Annual MWh of Energy Storage

200 MW/ 438,000 annual MWh

Load Shifting

40 MW/ 58,400 annual MWh

Load Shifting

Hawaiian Electric ......... Maui Electric Hawai'i Electric Light

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Hawaiian Electric Maui Electric Hawai'i Electric Light

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Renewable RFP - O'ahu The Stage 1 Renewable RFP for O'ahu sought to procure the renewable resources in the 2016 PSIP action plan, expanded to year 2022. The PSIP had identified 180 MW of PV in 2020 and 40 MW of PV in 2022. The updated Stage 2 target seeks to procure the remaining energy from the Stage 1 RFP and accelerates procurement of the 200 MW of additional PV contemplated for 2025 in the 2016 PSIP.

Step

Stage 1 RFP Target

Stage 1 Final Award Group

Remainder from Stage 1 RFP / Stage 2 Proposal

PSI P: 200 MW PV Addition in 2025

Updated Stage 2 RFP Target

Energy (MWH)

485,000

323,000

160,000

430,000

590,000

Renewable RFP - Maui The Stage 1 Renewable RFP for Maui sought to procure the renewable resources in the 2016 PSIP action plan. The PSIP had identified 60 MW of Wind in 2020. The updated Stage 2 includes the remaining energy from the Stage 1 RFP and adds the 40 MW addition of biomass in 2022 contemplated in the 2016 PSIP.

Step

Stage 1 RFP Target

Stage 1 Final Award Group

Remainder from Stage 1 RFP

PSIP: 40 MW Biomass Addition in 2022

Updated Stage 2 RFP Target



Energy (MWH}

270,000

205,000

65,000

230,000

295,000

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Renewable RFP - Hawai'i Island The Stage 2 RFP target for Hawai'i Island remains the same, 70,000 MWh and 18 MW of Contingency Storage. If PGV returns to service and Hu Honua comes on line, and the RFP targets for Stage 1 and Stage 2 are met, Hawai'i Island will achieve approximately 96% RPS in 2022, consistent with the 2016 PSI P. PSIP assumed the following deactivations - 2020: Hill 5, Hill 6, Puna Steam - 2040: Keahole CT2

• • Hawaiian Electric Maui Electric


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Renewable RFP - Hawai'i Island Based on proposed schedule, earliest project selection will occur is February 2020. The status of PGV and Hu Honua should be better known at end of 2019. The Company can select an increased amount of energy and storage if, at the time of project selection, it is clear that PGV and/or Hu Honua will not be placed into service. -Approximately 271,000 MWh if no PGV -Approximately 103,000 MWh if no Hu Honua



•• Maui Electric Hawai'i Electric Light

Hawaiian Electric

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Updated Grid Services RFP Scope O'ahu O'ahu Maui Hawai'i Island

I FFR I

Capacity Capacity Capacity

As Filed Updated As Filed Updated As Filed Updated As Filed Updated on April 1 May 2 on April 1 May 2 on April 1 May 2 on April 1 May2

2020 26.0MW 27.0MW 37.0MW 87.0MW 11.SMW 12.0MW 4.0MW 4.0MW

2021 27.0MW 29.0MW 62.0MW 103.0MW 12.0MW 16.0MW 4.0MW 4.0MW

2022 27.0MW 39.0MW 87.0MW 119.0MW 16.0MW 21.0MW 4.0MW 4.0MW

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2023 27.0MW 39.0MW 87.0MW 119.0MW 16.0MW 21.0 MW 4.0MW 4.0MW

2024 27.0MW 39.0MW 87.0MW 119.0MW 16.0MW 21.0 MW 4.0MW 4.0MW

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9 Grid Services RFP Updated Scope

Companies followed a similar approach to Variable Renewable RFP -> updated Grid Services targets based on accelerating 2025 PSIP targets to 2022 This approach was not pursued previously because initial DR Portfolio targets were: - Reflective of achievable enablement/market uptake;

and, - Subsequently with system needs and overall PSIP plan

Aggregators can determine capability commitment levels and schedule to manage their execution risk



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Benefits of Updated Scope

Gain more renewable dispatchable generation sooner Increased/Accelerated RPS Fossil Fuel and GHG emissions reduced sooner than in PSIP - Increased bill stabilization

Take advantage of low pricing Economies of scale from larger projects



Accelerating Renewable Additions Will Also Require 11

Accelerating System Upgrades & Operational Integration

Synchronous condensers will be required to provide short circuit current and voltage regulation, consistent with the PSIP Short circuit current requirements are driven by adequate fault clearing times, transient voltage stability, and harmonics to ensure public safety and equipment protection Additional items may be needed based on final project selection Total cost will be considered in evaluations Operational integration efforts, including modifications to AGC programs and EMS upgrades, will be critical to integrating the projects T T Hawaiian Electric

Maui Electric 4 4 Hawai'i Electric Light

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Estimated Synchronous Condenser Needs

Actual requirements will be dependent on protection studies and short circuit ratio analysis in PSCAD

Synchronous Condensers

Island PSIP Stage 2 RFP

MVA Year MVA Notes Oahu 127 2021 0 Hawaii 25 2020 25 LM-2500 conversion

Maui 30 2020 54@ 69 kV 30@ 23 kV

LM-2500 conversion K3 & K4 conversion

Molokai 2.8 2019 2.8 RFP service date Lanai 2.8 2019 2.8 RFP service date


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Company Challenges & Proposed Mitigations

Companies have some concerns, as well as some ideas that could help Based on average size of projects in Stage 1, updated targets in Stage 2 could result in a large number of projects Company has limited resources to complete interconnection work and test and commission facilities in one year. Company proposals to address challenges: - Consider use of consultants for testing - Provide preference for larger project sizes and cap total number of

projects selected - Developers must meet and accept accountability for testing

obligations - Alternative to preference for project size/cap is to allow for a

portion of energy needs to have 2024 CODs T T Hawaiian Electric


14 Help Needed from Developers Need help from everyone, including developers, to achieve this goal. Developer to: - Build switching station and line work (excluding final tap) - Provide the following (4 weeks prior to submittal of final

construction drawings): - Relay/Protective device settings - Protection coordination study

- Have drawings approved by Company prior to testing - Be ready for testing

- Entire facility must be ready-No piece-by-piece testing - Communication infrastructure and equipment must be tested by

Developer and ready for operation prior to Company testing T T Hawaiian Electric


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Help Needed from Developers If Developer has not provided drawings or is not test ready: - Moved to end of queue if not ready, as scheduled, or

if tests are not passed within allotted scheduled time. - Liquidated damages assessed if Company test

engineers are asked to be onsite and facility is not ready

- Developer allowed to cure within originally allotted time

- No adjustment to milestones allowed if tests are not completed within original allotted time. Liquidated damages for missing milestones will be assessed per terms of PPA.



16 Timelines for Procurements Execution risk to complete multiple projects at one time 2022 Project dates coincide with many other major initiatives -competing for hold-offs and resources:

• 5 Renewable RFPs (O'ahu, Maui, Hawai'i, Moloka'i, Lana'i)

• Grid Services RFP (O'ahu, Maui, Hawai'i) • Grid Modernization ADMS (all islands) • Rail Transit: Airport & City Center segments

(O'ahu) • West Loch BESS (O'ahu) • CIP BESS (O'ahu) • Integration of DER, DR & CBRE (all islands)

• Central Maui (Maui) • Waena Switchyard (Maui) • Transmission Line Rebuild (6200 and 3300

Lines) (Hawai'i) • Hokukano Sub and feeders (Hawai ' i) • On-going asset management projects (all

islands) • Upgrades/Equipment needed to accelerate

procurement (a ll islands)

Proposal - Preference for 2022 bids, with requirement to take original Stage 2 MWh energy and MW storage targets in 2022 and additions in updated scope no later than 2024

Fulfills 2022 PSIP renewable additions by 2022 Provides potential for increased competition Still accelerates future PSIP targets Removes some execution risk Allows for retirement of Kahului Power Plant and expiration of AES PPA in 2022



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Other Considerations & Potential Mitigations

RISK POTENTIAL MITIGATION

Economic impact of additional system upgrades and equipment

Include costs in evaluation Only select projects with a cost benefit (including additional system upgrades/equipment)

Timeline to install additional system upgrades and equipment Improve efficiency of Company-Developer Execution risks from multiple projects to be completed in partnership (slides 13 and 14) 2022

Possible preclusion of future firm resource on Maui, Incorporate grid charging of new resources resiliency risk Look at other system additions

Resource constraint of 6 RFPs running concurrently Stagger RFPs and prioritized based on urgency of need

Increased time for negotiations due to larger number of projects

Non-technical provisions of contracts non-negotiable


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Other Considerations & Potential Mitigations

RISK

Multiple, concurrent interconnect requirements studies may extend study timelines

Potential for decreased competitiveness if limited number of projects can meet 2022 GCOD

Significant amount of land needed

Potential community opposition

Future costs could be lower

POTENTIAL MITIGATION

Companies proposed stricter requirements for developers to provide correct models timely to begin IRS

Companies retain right to not select full targets if bids do not provide benefits to customers Proposed allowance of some projects having a later GCOD

Land RFI

Companies have strengthened community outreach requirements for developers


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Contingency Plans/Parallel Plans "To carry out its competitive bidding obligations consistently, the electric utility must conduct, or consider conducting, three types of activities: self-build, parallel planning, and contingency p I an n . Ing. ,, Sec. I1.D.1. Comp. Bid Framework

Company's self-build proposals will serve as parallel and contingency plans • • Hawaiian Electric


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Moloka'i and Lana'i RFPs

Public/ Engagement Stakeholder

with Key Draft Comments File Final Stakeholders RFPs to Draft RFPs

0000000 Community File Draft PUC Engagement RFPs Feedback

Lana'i 10/19

Moloka'i 11/19


Considerations for 21

Lana'i and Moloka'i RFPs Draft RFPs - Lana'i: File draft RFP by end of July 2019 - Moloka'i: File draft RFP by end of August 2019

Community outreach is especially important on Lana'i and Moloka'i - RFP process is new on Lana'i and Moloka'i - No Stage 1 RFP

Issue RFPs after stakeholder, community, and PUC comment period - Lana'i: Issue RFP in October 2019 - Moloka'i: Issue RFP in November 2019



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Lana'i RFP Single landowner presents unique case - Preference as to siting, technology, etc. - Ongoing engagement with landowner

Community outreach crucial to success of RFP

Feedback will be incorporated into the RFP

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Procure 13,300 MWh to 20,800 MWh 2022 of Renewable Energy Paired With

Storage


Hawaiian Electric Maui Electric Hawai'i Electric Light •• .........

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Lana'i RFP - Potential Timetable

Activity

Issue RFP

Selection of Final Award Group

PPA Filing PPA Amendment Filing

PUC Approval Environmental Studies, Permitting, Engineer, Procure, Construct Total Time

Time Dates

10/10/19

6/12/20

12/9/20 4/19/21

5/3/21

18 Months to 53 Months* 10/28/22 to 10/3/25 * * 3 Years to 6 Years*

*Dependent on technology selected **Assumes need for air permit and EIS for firm type resource

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Moloka'i RFP Community outreach crucial to success of RFP

Further community outreach will be conducted as part of the RFP process

Feedback received will be incorporated

Year Amount

2022 Procure 7,200 MWh to 15,800 MWh of Renewable Energy Paired With Storage



Hawaiian Electric ......... Maui Electric Hawai'i Electric Light ••

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Moloka'i RFP - Potential Timetable Activity Time Dates

Community Meeting Timeframe 7/2/19

Issue RFP 11/18/19

Selection of Final Award Group 7/20/20

PPA Filing 1/15/21

PPA Amendment Filing 5/26/21

PUC Approval 6/9/21 Environmental Studies, Permitting, Engineer, Procure, Construct 12/09/22 to 11/15/25**

Total Time

18 Months to 53 Months*

3 Years to 6 Years*

*Dependent on technology selected **Assumes need for air permit and EIS for firm type resource

Self-Build- Proposed Customer Protections26

Held to capped $ amount of capital costs and O&M submitted in Proposal - Only actual capital costs recovered; capped at lower of capital costs bid or

actuals - Annual O&M capped (w/ allowed inflation)

Held to same milestones, including GCOD, as an IPP - Milestones and GCOD to be set based on IRS, oversight of 10 - LDs assessed in amounts set forth in PPA - LDs to be paid from shareholder funds and returned to customers through PPAC

Will be held to same performance metrics as an IPP under the ROG PPA, Article 2 - LDs assessed in amounts set forth in PPA, however - LDs to be paid from shareholder funds and returned to customers through PPAC - To retain benefit of operational flexibility, allow for ability to adjust operational

requirements and performance metrics with PUC approval, similar to Company's ability to negotiate amendments to PPAs and seek PUC approval of such amendments



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Self-Build- Proposed Customer Protections

Shared Savings As Self-build will accept risk similar to an IPP; Companies propose there should be a cost sharing savings if the Self-Build comes in under the cost cap, similar to how 3rd parties retain profit if they come in under assumed costs

Oversight Self-build must submit certification form, based on other jurisdictions Requirements reconfirmed in G07 application and any resulting approval order for such application Company to provide notice of completion of milestones and any delay to PUC and CA Company to provide notice to PUC and CA of any LDs assessed and amount of LDs for missed milestones upon completion of missed milestone Company to provide yearly report to PUC and CA on performance metrics


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Grid Services Code of Conduct • Self-deliver option is not practical at this stage in the

development of the grid services market - The Companies will not be submitting a "Self-deliver" bid in

response to this RFP. Given this decision, the Code of Conduct will not be developed at this time; in particular, the Companies have concerns about: - Assigning an RFP team and a Self-deliver team while the DR team is

extremely resource limited. - Committing Self-deliver resources now and precluding them from

engaging in RFP support. - Committing to a Code of Conduct and associated requirements

when the Companies have not fully defined what a Self-deliver option would look like.

- Advancing this option without sufficient in-house capabilities to support a Self-deliver option at this time (related to previous point).



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