In addition to the perfect match from a transmission model perspective, New Mexico’s wind profile peaks in the evening and at night, which complements many California Load Serving Entities’ (LSE) supply portfolios, which are dominated by solar resources. Independent transmission development is challenging even for an experienced team. For example, I had the opportunity to work with Pattern Energy on the Transbay Cable (53 miles of cables from the city of Pittsburg, CA (in the East Bay) to San Francisco (near Potrero Hill), 400 Megawatts (MW): ?200 kV DC) and the 35 miles of 345 kV that connects the 324 MW Broadview wind project in eastern New Mexico that is currently serving California load. Over ten years in the making, Pattern acquired the SunZia Transmission Project (STP) in July 2022 and beginning this year, the project is finally coming to fruition. A truly remarkable endeavor, the project is designed to collect high quality wind produced in New Mexico and transmit it to a scheduling point between Arizona and the CAISO. STP is a 550-mile ? 525 kV high-voltage direct current (HVDC) transmission line between central New Mexico and south[1]central Arizona with the capacity to transport 3,000 MW of clean, renewable energy to the Pinal Central substation which will become a scheduling point (see chart below, Segment 1). SunZia also secured 2,131 MW of firm Arizona transmission entitlements from Pinal Central to Palo Verde, which is a CAISO scheduling point (see Segment 2). Segment 3 is energy that is scheduled at Palo Verde serving CAISO loads.
California LSEs have taken advantage of this opportunity as they appear to have executed PPAs for about 1,520 MW SunZia wind.1 This is about 70% of the 2,131 MW available to Palo Verde.
| Entity | Capacity (MW) | Estimated Annual Cost ($million) | Basis for Estimate |
| Clean Power Alliance (CPA) | 575 MW | $155 – $180 | Scaled from SMUD benchmark (~$31million/100MW). |
| Ava Community Energy | 250 MW | $68 – $80 | Scaled from 15-year contract benchmarks. |
| Peninsula Clean Energy | 220 MW | $57 | Calculated: $858 million total over 15 years. |
| 3CE / SVCE (Joint) | 325 MW | $88 – $105 | Combined 200 MW (3CE) + 125 MW (SVCE). |
| SMUD | 150 MW | $41 | Confirmed: Per SMUD 2024 Board Memo. |
Using a 40% capacity factor, the PPA cost which I assume covers the wind energy[1], renewable energy credits (RECs) and capacity all the way to Palo Verde range between $72/MWh and $90/MWh.
Pattern Energy (the developer) has placed the 550-mile HVDC line (Segment 1) under CAISO’s operational control. This means CAISO operators treat the New Mexico wind resources as if they were located inside California for the purposes of dispatch and reliability. The transmission line capacity from Pinal Central to Palo Verde (Segment 2) is owned by Salt River Project, WAPA, and Tucson Electric operational control but is committed to SunZia Wind. Participants’ usage rights and associated costs are summarized in the table below.
| Participant Type – Subscriber | Transmission Access Charge (TAC) | Congestion Charges |
| Segment 1 | DC line is within CAISO BA. Transmission Owners recover their cost from the users of the DC line not the TAC. Subscription rate is estimated at $8.18/kW-month plus 2% to 3% losses for the 550 miles. | The user’s subscription rights act as a “perfect hedge” against congestion costs between the New Mexico wind farms and Pinal. |
| Segment 2 | Arizona transmission entitlements of 2,131 MW are not in the CAISO BA. TAC is not applicable, but subscriber pays transmission wheeling cost which ranges from $1.75/kW-month to $2.33/kW-month for firm transmission. | Not applicable |
| Segments 3 | Once the energy hits the main CAISO grid (at Palo Verde), the TAC is assessed on the energy into the CAISO market. | Subscribers pay congestion, but they can get CRRs as a hedge. |
The remaining transmission is available under the non-subscriber (NSUR) rate which is approximately $14/MWh. To encourage market participation, the actual collection of this rate is suspended for two years. This means that for the first two years of operation, non-subscribers might be able to “wheel” across this path into CAISO without paying the full rate to Pinal on Segment 1, creating a temporary period of high competition at the Pinal Central hub.
It’s time to apply the SPTO model to all non-CAISO California balancing entities, so we have one balancing area within the state. The SPTO solves many seams issues associated with integrating operation of multiple balancing areas that California has faced for the last 20 years.