SunZia Transmission names Pattern Development as new anchor customer

SunZia Transmission LLC on Nov. 18 asked the Federal Energy Regulatory Commission for approval a report on the company’s open solicitation and selection process for anchor customers for the first 1,500-MW transmission facility of the SunZia Southwest Transmission Project.

After a lengthy process that began in 2011, the company selected Pattern Energy Group LP (Pattern Development) as its preferred anchor customer for negotiation of a precedent agreement.

SunZia has four owners: ECP SunZia LLC, Shell WindEnergy Inc., SouthWestern Power Group II LLC and Tucson Electric Power. ECP SunZia and SW Power are wholly-owned by MMR Group Inc., a privately-owned construction services firm based in Baton Rouge, Louisiana.

The project consists of up to two 500-kV transmission lines of 515 miles and related substations in New Mexico and Arizona. Each line will extend to key interconnections with the underlying extra high voltage grid in New Mexico and Arizona. The project is expected to link up to 3,000 MW to 4,500 MW of primarily renewable, location-constrained generation resources in New Mexico and Arizona with markets and customers in the western United States.

Actual project capacity will depend on the final electrical configuration, which, in turn, will depend upon market demand. The project is being completed in phases, the first of which is a 500-kV transmission line and related facilities with an estimated capacity of 1,500 MW. The second phase could be either a 500-kV alternating current line, adding 1,500 MW of capacity (total 3,000 MW of Project Capacity), or a 500-kV direct current transmission line with approximately 3,000 MW of capacity (total 4,500 MW of Project Capacity).

Subject to regulatory approvals, the company expects to achieve financial close and start construction of the first phase during the first quarter of 2018. The company estimates a period of approximately thirty months or less to construct that phase, and expects to place the first 500-kV transmission line in service by the fourth quarter of 2020, in time to permit customer maximization of production tax credits.

The anchor customer open solicitation and selection process just completed and described in this heavily-redacted Nov. 18 report applies solely to this first phase of the project. The company plans to assess the feasibility and timing of the second phase after completing the financial closing for the first phase. SunZia initiated its anchor customer solicitation in 2011. Although these efforts yielded a letter of intent with an anchor customer, First Wind, but in April 2016 that customer’s acquisition successor, SunEdison, filed for bankruptcy protection. In May 2016, SunZia reinitiated its anchor customer selection process. The company has now selected Pattern Development in that process.

SunZia noted that Pattern Development has site control of over 50,000 acres of wind energy development terrain near Corona, New Mexico, that is proximate to the SunZia project’s planned SunZia East Substation. Pattern Development is developing 1,500 MW of wind projects in New Mexico with expected in-service dates by year-end 2020, which will meet the deadline to qualify for 100% of the federal production tax credit.

Pattern Development has two power projects in New Mexico, both with recent PPAs with California utilities, and is acquiring more land. Pattern Development demonstrated the strongest development experience in New Mexico, a striking level of success in achieving PPAs, and significant land control, SunZia said. It has significant independent transmission experience which could prove material in arranging transmission service into California from the project terminus at Pinal Central.

Upon completion of the evaluation and ranking, on Aug. 26 SunZia selected Pattern Development as the project’s anchor customer, subject to necessary regulatory approvals, for its planned wind energy development near the project’s planned SunZia East Substation.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.