Abengoa, Starwood Energy to sponsor Delaney–Colorado River transmission project
The sponsorship represents a move by Abengoa into the U.S. transmission market
The California ISO July 10 selected DCR Transmission, a joint venture of Spain-based Abengoa’s U.S. unit Abengoa Transmission and Infrastructure (ATI) and Starwood Energy, as the approved project sponsor for the 500 kV Delaney–Colorado River project.
In its 2013-2014 transmission plan, the California ISO identified an economically driven need for a 500 kV transmission line with associated series compensation between Southern California Edison’s (SCE) Colorado River substation and Arizona Public Service’s Delaney substation.
Santiago Seage, CEO of Abengoa, said in a July 13 statement: “This new award will help us to accelerate our development in the power transmission market in the United States, where we expect to continue leveraging our global expertise in order to become a significant player in development, engineering, construction and maintenance of large transmission assets.”
Abengoa said in the statement that ATI would be responsible for construction, operation and maintenance of the 114-mile, $300 million transmission line.
As part of the competitive solicitation for the project, the California ISO evaluated project sponsor applications from:
· DCR Transmission
· California Transmission Development, a unit of LS Power
· Duke-American Transmission Co., a joint venture of Duke Energy and American Transmission Co., in conjunction with Western Area Power Administration and Citizens Energy
· NextEra Energy Transmission West, an affiliate of NextEra Energy
· TransCanyon DCR, a joint venture of Pinnacle West Capital unit Bright Canyon and Berkshire Hathaway unit Berkshire Hathaway Energy, in collaboration with SCE
In its July 10 competitive analysis report, the California ISO said that while there were either no material differences or only slight differences among the project sponsor applications with regard to most of the selection factors and qualification criteria, DCRT’s cost-containment measures outweighed any slight advantages of the other applicants’ proposals over DCRT’s proposal.
California ISO added that the cost-containment factor “is particularly important … given that the justification for the project is solely based on economic benefits to ratepayers.”
According to the report, DCRT’s proposal had the overall advantage primarily because:
· DCRT offered the lowest projected revenue requirements of all the project sponsors’ proposals
· The binding cost-containment proposal covers capital costs and return on equity
· The capital cost-containment limits cover up to a specified amount in route risk
In addition, California ISO determined that, although the other project sponsors have better financial metrics than DCRT, DCRT has sufficient financial resources to complete the project, and its financial backers have a successful track record of financing projects.
DCRT proposed an in-service date for the project of March 25, 2020, which is about two months ahead of the latest in-service date of May 1, 2020, specified by California ISO, according to the report.