On April 1, 2024, the California Independent System Operator ("CAISO") released its draft 2023-2024 Transmission Plan ("Plan") that includes proposals for 26 new projects, with an estimated value of $6.1 billion and significant new infrastructure investments to accommodate and deliver offshore wind output. The proposed projects include a mix of reliability-driven projects and policy-driven projects to bolster the integration of renewable energy resources. The draft Plan will be reviewed with stakeholders and is then expected to be subject to CAISO Board of Governors ("Board") approval in May 2024.
CAISO's 2023-2024 Draft Transmission Plan
CAISO manages most of the high-voltage, long-distance power lines that comprise the backbone of California's electrical transmission grid. In furtherance of this function, CAISO prepares an annual transmission plan, in coordination with the California Public Utilities Commission and the California Energy Commission, to identify transmission needs and recommend solutions to meet those needs, subject to Board approval. The draft Plan for 2023-2024 is based on California's projection in 2023 that it "needs to add more than 85 GW of capacity by 2035 reflecting greenhouse gas reduction goals and load growth including the potential for increased electrification occurring in other sectors of the economy." The draft Plan takes a zonal approach to accounting for priority zones based on resource portfolios and planning for necessary transmission infrastructure, and it includes reliability and policy-driven projects resulting from a series of technical analyses and stakeholder engagements.
The draft Plan identified that 19 transmission projects were needed to mitigate identified reliability concerns and 7 policy-driven projects were needed to meet California's greenhouse gas reduction goals. The draft Plan, and the projects described in the Plan, will enable the development of over 36 GW of solar, 8.6 GW of onshore wind (including 5.6 GW located outside California), 21 GW of geothermal, and 4.7 GW of offshore wind spread from the Central Coast (Morro Bay) and North Coast (Humbolt).
The reliability-driven projects, valued at a total of $1.54 billion, are intended to meet anticipated load growth, including electric vehicle transportation loads and the evolving generation fleet.
The policy-driven transmission projects, valued at $4.59 billion, including a new 500 kV substation and major transmission lines to be in-service by 2035, are intended primarily to interconnect and deliver offshore wind output off the coast of Humbolt County. Offshore wind underlies most of the projections for the Plan's most significant projects. CAISO stated that "significant amounts of new offshore wind generating capacity and the associated transmission upgrades are required to cost-effectively bring reliable decarbonized power to California consumers and industry across all seasons of the year." CAISO's proposal follows similar efforts underway in some other regions, such as New York, aimed at planning transmission investment to integrate expected offshore wind output.
The projects recommended for approval in the draft Plan represent significant investments that CAISO estimates would translate to approximately 0.5 cents per kWh over the life of the projects. Two of the projects intended to integrate offshore wind would also be eligible for procurement through a competitive solicitation under a schedule to be released following Board approval of the Plan.
Next Steps
The draft Plan will undergo stakeholder review and CAISO is expected to seek Board approval in May. Notably, the Board is also expected to consider changes to CAISO's interconnection process at the May meeting. If approved, CAISO would, among other things, provide a schedule to proceed with a competitive solicitation for the two eligible projects.
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