CAISO dove into Track 3 of its Interconnection Process Enhancements (IPE) initiative Aug. 28, as staff and stakeholders grappled with how to solve problems related to the proposal’s allocation of transmission plan deliverability (TPD). 

In California, TPD refers to the amount of transmission capacity needed in an individual study area to allow proposed generation projects in the area to reach their expected deliverability status. CAISO will allocate TPD to the most viable projects in an area, which then will be reimbursed for their needed network upgrades. 

The initiative’s Track 2 proposal, approved by the board in June, will apply to Cluster 15 of the interconnection queue and beyond, but the ISO still struggles to address the “unprecedented volume” of interconnection requests for Cluster 14. (See CAISO Board Approves Interconnection Enhancements Proposal.)  

Although Cluster 14 projects already have been studied, they’re “log-jammed” behind major network upgrades, according to the Track 3 straw proposal, causing concerns about how to allocate TPD to projects with long lead times.

The ISO’s proposal identified three main issues with the TPD allocation process. 

The first is related to TPD allocation issues for long lead-time projects with delayed deliverability network upgrades (DNUs). The second involves allocations for projects with long lead-time reliability network upgrades (RNUs). The third is for long lead-time resources that have met defined resource policy goals of the local regulatory authorities (LRAs) in California for specific technologies and project locations. 

The structure for TPD allocation prioritizes projects that have a power purchase agreement. For those with longer lead times, the window of opportunity to seek an allocation can be several years before network upgrades are complete, making it challenging for such projects to know when to enter the queue. Projects will have three consecutive opportunities to seek an allocation; if they don’t receive one, they’ll be converted to “energy-only” (EO) projects, which are not included in resource adequacy counts.  

Bob Emmert, CAISO senior manager of interconnection resources, said projects with longer timelines and needed upgrades may struggle to execute a PPA.  

“It may be difficult for long lead-time network upgrades and long lead-time generation resources to actually get that PPA or be shortlisted before they’re converted to energy only, even if the number of opportunities were increased to four,” Emmert said during the Aug. 28 workshop. “We want to at least discuss ways that we might be able to rectify that situation.”  

Proposed Solutions

For projects with long lead-time DNUs, Emmert presented a potential interim solution: increasing the number of PPAs for projects to come online as EO while waiting for Full Capacity Deliverability Status (FCDS). 

“We definitely think that offering a pathway for early interconnection for energy-only projects is critical,” said Sushant Barave, senior director of grid integration at Clearway Energy Group. “I also think this pathway has to be paired with an interim deliverability framework because that’s what makes standalone energy-only projects coming online earlier financeable.” 

“I would encourage CAISO to think about it as part of the larger solution, where, because of long lead-time upgrades, even projects that have deliverability sometimes cannot get the contractual assurance and show up early on as energy only,” Barave added.  

Other stakeholders were concerned about the proposal’s implications for storage resources.  

“I see this being a struggle for storage projects, which are a lot of the projects that are seeking deliverability,” said Soumya Sastry, senior manager of structured energy transitions at PG&E. “I think that there would be a lot of challenges from a buyer’s perspective. I don’t know if we would want to pay the same price for something that is EO.” 

The proposal also raised concerns about the uncertainty of procuring on such long timelines.  

“I think this could lead to potential over-procurement in the reliability space or just stranding projects that there’s not a need for this sort of conversion from energy only to FCDS that far in advance,” said Michael Freeman, contract origination manager at Southern California Edison. “If you’re in a market where you’re procuring for long-term assets, how are you judging when a project is going to come online or get RA at year six, year eight, year 10? … It just makes planning for reliability more difficult, and I could see projects that have that sort of option be stranded because LSEs may not want to take that sort of risk.”  

Emmert reiterated concern about the risks associated with the proposal.  

“There may be certain project conditions that are just too risky, and you would not be willing to go down that road. But there may be other projects that the risk profile is less.”  

Regarding the second issue — projects with long lead-time RNUs — Emmert suggested that contracting with projects that won’t be in operation for five to seven more years could enable such projects to obtain a TPD allocation within the three or four opportunities provided.  

“From an LSE perspective, if there’s a path forward to getting TPD and there’s certainty and a robust pool to select from, I don’t see an issue,” Freeman said.  

The third issue considers whether special TPD allocation criteria should be developed for long lead-time resources that meet defined resource policy goals of LRAs. The idea is that unique criteria could allow these projects to avoid the risk of being converted to EO before procurement begins.  

“There may be infrastructure such as offshore wind that needs to be put in place before you can even start building it,” Emmert said. “The question is, will the central procurement entity be authorized and willing to contract for these resources within the period where these resources are eligible to seek an allocation? Or should we look in another direction to try and solve this problem?” 

Stakeholders showed support for the third solution.  

“Capacity needs to be reserved for generic long lead-time resources because developers don’t invest in remote resource areas where transmission doesn’t currently exist and isn’t being planned for,” said Nancy Rader, executive director of the California Wind Energy Association. “The 10-year timeline for planning and building those is just too far out to enable a PPA, so these resources really need to be treated separately from non-long lead-time resources in the intake process.”  

The ISO hopes to publish a revised straw proposal for Track 3 by October and is targeting a Board of Governors vote in March 2025.