Transcript Tres Amigas

UNITING THE NATION’S ELECTRIC POWER GRID
Pure Energy Conference & Expo
Clovis Civic Center
July 18, 2012
Uniting The Nation’s Electric Power Grid
The Tres Amigas Transmission Superstation will utilize high voltage direct current (HVDC) technology to link the
Eastern, Western, and Texas U.S. Interconnections at a single location in Curry County, near Clovis, New Mexico
and will be strategically positioned in proximity to the junction of these three grids
Western
Interconnection
Eastern
Interconnection
166 GW
Peak Load
585 GW
Peak Load
Clovis,
NM
Texas
Interconnection
64 GW
Peak Load
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Proximity to Wind Power
The principal economic rationale for transmission investment is that it allows power to be moved
from where it is most cost effectively produced to where it is most valuable.
• The Need for Transmission Infrastructure: while growth
in electricity demand and investment in generation has
continued unfettered over the past four decades ,
investment in the transmission grid has not kept pace.
• Moving Electricity to Where it is Most Valued: the
Eastern, Western and Texas Interconnections each have a
different mix of generation /demand characteristics. There
is scarce connection between these grids and little
coordination. This results in regular, sizable price
differences.
• Structural Price Differences: an analysis of historic
market prices indicates evidence of material structural
price differences, due to the timing of demand, availability
of local supply resources, and asynchronous price patterns
in gas markets due to transmission bottlenecks.
• Access for Renewables : the US is experiencing
significant and growing demand for renewable electricity,
and there is substantial wind and solar power potential in
the vicinity of the Tres Amigas site, as demonstrated in the
figure at left. Tres Amigas is well-positioned to capture the
value associated with linking renewable energy supply to
multiple markets.
© 2012 Tres Amigas. All rights reserved. Confidential and proprietary.
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Voltage Source Converters – The Key to Smart Grid
 Mature technology with a
proven track record
 Key technology for smart
transmission grids and for
integrating renewables
 Provides a more precise and fast
reactive power control and
increased stability of the power
system
 Tres Amigas has partnered with
Alstom Grid, a leading provider
of this technology
It operates a 25MW demonstrator plant providing customers a unique opportunity
Regularly picked for major projects by advanced utilities such as in Sweden
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Scope of the Business
The Tres Amigas Transmission Superstation can be mapped against the NIST Smart Grid
Conceptual Model to illustrate the scope of the Tres Amigas business.
Transmission: The fundamental offering of
Tres Amigas is transmission service. From this
base it is possible to offer other services, both
to support stable system operations, in the
interconnected grids, and to facilitate
commercial transactions.
Operations: Tres Amigas Operations will
serve as the hub for both the transmission
operator and market/exchange services. It will
ensure reliability and interchange coordination,
and it will carry out a number of core market
functions necessary to support robust markets
© 2012 Tres Amigas. All rights reserved. Confidential and proprietary.
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Revenue Structure and Business Model
Point-to-Point Transmission Service
• Will be sold in blocks ranging from 1 to 20 years in duration and on shorter-term basis (seasonal, monthly,
weekly, daily and hourly)
20 years
Anchor Tenant
Agreements
Firm Capacity Sales – up to 50%
of firm capacity
Annual
Open Season Auctions
Monthly
Daily
Hourly
Spot Sales
(via Portal)
Remaining available firm capacity after Anchor Tenant Agreements
All non-firm capacity and
secondary trading of
previously purchased capacity
Target Customers
• Retailers / Load-Serving Entities (Utilities)
• Existing Generators
• New Generation Projects (especially Renewable)
• Power Merchants / Traders
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Revenue Structure and Business Model (continued)
Power Exchange and Other Services
• By linking the three electric interconnections of the United States, Tres Amigas is firmly positioned to be a
natural trading hub
• Tres Amigas will provide an exchange facility for the trading of electricity and various other electricity-related
physical and financial products (e.g. RECs) providing liquidity and transactional efficiency through price
transparency and robust financial clearing processes
Target Customers
• Financial Traders
• Execution Brokers
• OTC Brokers
• Futures Commission Merchants
• Transmission Service Customers
Ancillary Services
• Tres Amigas will also offer ancillary services, including
–
spinning reserves and supplemental non-spinning reserves that transmit increased output in
response to major generator or transmission outage to maintain system frequency
–
frequency regulation that rapidly injects/withdraws energy to correct unintended fluctuations in
generator output
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Development Plan – Phased Approach
Tres Amigas’ development strategy emphasizes a phased approach to growth, building the
Superstation overtime using 750 MW VSC block increments. The phases are designed to add VSCs
as needed, dictated by customer demand, as follows:
© 2012 Tres Amigas. All rights reserved. Confidential and proprietary.
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Development Plan
2012
Phase I
2013
2014
2015
2016
2017
Construction
2018
2019
2020
2021
Operation
Incremental Capacity: 750MW for WECC and SPP
Expected Cost: ~$500mm
Phase II
Construction
Operation
Incremental Capacity: 1,500 MW for ERCOT and SPP
Expected Cost: ~$400mm
Phase III
Construction
Operation
Incremental Capacity: 3,000 MW for ERCOT and SPP
Expected Cost: ~$1.0 billion +
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Development Plan – FERC Filings and Status
As a merchant transmission facility, Tres Amigas requires FERC approval to sell transmission
service at negotiated rates, which has been granted in March 2010, and Tres Amigas is in the
process of making additional filings at FERC.
•
Market-Based Rates: in March, 2010, Tres Amigas obtained all of the necessary FERC
approvals to sell transmission service at negotiated, or market-based, rates. FERC approvals
apply to all phases of the development plan. Occidental has appealed the FERC approval in
DC Circuit court, but should be resolved shortly.
•
Jurisdiction: FERC declined to disclaim jurisdiction over prospective transmission facilities to
interconnect Tres Amigas and the Electric Reliability Council of Texas ("ERCOT"), stating it did
not have the information necessary to grant the request. The Commission went on to state that
upon receipt of a valid application (210/211 process), the Commission could issue orders to
allow Tres Amigas to proceed and interconnect with ERCOT without conferring FERC
jurisdiction over ERCOT utilities.
•
Open Access Transmission Tariff (OATT): Tres Amigas is developing an OATT filing which is
expected to filed during the second quarter. As part of the filing, Tres Amigas will provide an
ancillary services plan, and seek market-based rates for those services.
•
Anchor Tenant: Tres Amigas is negotiating with anchor tenant prospects and has ongoing
discussions with local wind generators, gas producers, CAES developers, and trading
companies. We are also working on plans related to ‘open season’ auctions.
•
Interconnection Agreements: Tres Amigas is negotiating IA’s with PNM and
SPS/SPP. These studies are nearing completion with exchanged drafts. We expect to file with
FERC in third quarter 2012.
© 2012 Tres Amigas. All rights reserved. Confidential and proprietary.
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Funding – Tres Amigas Merchant Transmission
Unlike traditional transmission facilities, merchant transmission project owners assume all market
risk. Tres Amigas has been successful in receiving significant capital through investors and private
placements.
Phase II – III
~$1.5B
Private Placement
Raises $15 Million
Phase I
~$500 Million
Phase II-III: construction & operations, Texas node, additional HVDC
converters, facilities, and business infrastructure
Preconstruction
Startup
Phase I: construction & operations, East/West transmission node,
including HVDC converters, buildings and business infrastructure
Preconstruction: detailed engineering, vendor selection/contracts,
product development, additional filings and detailed business plans.
Startup: research, regulatory and local filings, ROW, preliminary
engineering, environmental, economics and business plan.
concept
© 2012 Tres Amigas. All rights reserved. Confidential and proprietary.
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