REPORT TO COUNCIL
SUBJECT
Title
Action on a Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program for the Silicon Valley Power Kifer Battery Energy Storage System Project and Action to Delegate Authority to the City Manager to Negotiate and Execute an Interconnection Agreement with Kifer Energy Storage, LLC
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
On February 7, 2023, the City Council authorized the City Manager to complete negotiations, approve and execute an Energy Storage Agreement (ESA) and Lease Agreement (Lease) with Kifer Energy Storage, LLC, for the Kifer Battery Energy Storage System Project (BESS Project). The BESS Project is an up to 50-megawatt battery energy storage system (BESS) to increase the Silicon Valley Power’s (SVP) system reliability. The BESS Project will occupy approximately 53,000 square feet within a larger parcel located at 3025 Raymond Street (Project Site) which is owned by the City of Santa Clara and is adjacent to the existing Kifer Receiving Station. The scope of the BESS Project also includes SVP designing and constructing the transmission line extension from the existing 60 KV Ken-Oaks Line to a new Space Park Junction Substation.
DISCUSSION
At the time of its approval of the ESA and Lease, the City Council did not complete the environmental review as those approvals did not constitute an approval of a “Project” under the California Environmental Quality Act (CEQA). First, the City Council did not approve the Interconnection Agreement for Generating or Storage Facilities (Interconnection Agreement) with Kifer Energy Storage, LLC. A current draft of the Interconnection Agreement is attached; however, its terms have not been finalized as additional technical provisions must still be included within the agreement. Without the Interconnection Agreement, the BESS Project cannot provide energy storage services to the City. Further, the City has no obligation to purchase energy storage services under the Energy Storage Agreement until all of the following have occurred: (a) any applicable review under CEQA has been completed; and (b) the applicable period for any legal challenges under CEQA relating to the BESS Project has expired without any such challenge having been filed; or (c) in the event of any such challenge, the challenge has been determined adversely to the challenger by final judgment or settlement. The City may terminate this Energy Storage Agreement and Lease Agreement if it is determined based on the CEQA review the BESS Project causes significant adverse environmental effects that are not adequately mitigated or for which there are no overriding considerations.
An Initial Study/Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Program (MMRP) were prepared for the BESS Project in accordance with the requirements of CEQA. Based on these documents, it has been determined that the BESS Project will not have any significant effects on the environment with implementation of the mitigation measures contained in the MMRP. Activities related to the BESS Project will adhere to the MND and MMRP.
Since the BESS Project will be constructed and operated within SVP’s service territory, Kifer Energy Storage, LLC will also have to enter into the Interconnection Agreement with SVP. The Interconnection Agreement will dictate the terms and conditions for the technical requirements needed to connect the BESS to SVP’s electric grid to ensure, among other things, compliance with SVP’s Rules and Regulations. Without the Interconnection Agreement, the BESS will not be able to provide energy storage services to the City, so it is a critical agreement as part of the overall BESS project.
ENVIRONMENTAL REVIEW
The MND and MMRP were prepared for the BESS Project in accordance with CEQA. These documents and Notice of Intent to Adopt a MND were posted on the City of Santa Clara’s website at <<https://www.santaclaraca.gov/ceqa>> on April 27, 2023, and circulated for a 20-day public comment period that closed on May 17, 2023, in accordance with CEQA requirements. SVP received agency comments in response to the MND from the Santa Clara Valley Water District. Responses to comments received on the MND during the 20-day review period were prepared and are provided in Section 8 of the Final Initial Study/Mitigated Negative Declaration as Attachment 1.
The MND examined environmental impacts associated with the BESS Project and identified potentially significant impacts to air quality, biological resources, cultural resources, geology and soils, hazards and hazardous materials, hydrology and water quality, traffic/transportation, and tribal cultural resources that with incorporation of mitigation measures identified in the MND and MMRP would reduce the potentially significant impacts to less-than-significant. A detailed discussion of the potential impacts and mitigation measures to be applied to the BESS Project are specified in the MND and would be implemented through project conditions of approval and the MMRP for the project. The MND, responses to comments received on the MND, and the MMRP are the City’s website at <<https://www.santaclaraca.gov/ceqa>>.
Staff recommends adopting the MND and MMRP for the BESS Project.
FISCAL IMPACT
There is no fiscal impact to the City for adopting the MND and MMRP or entering into an Interconnection Agreement other than administrative staff time and processing.
COORDINATION
This report has been coordinated with the Finance Department, City Attorney’s Office and the Electric Utilities Department.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Adopt a Resolution adopting the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program for the Kifer Battery Energy Storage System Project;
2. Authorize City Manager to negotiate, approve, and execute an Interconnection Agreement for Generating or Storage Facilities with Kifer Energy Storage, LLC, based on the draft attached hereto and any necessary or advisable amendments, subject to the review and approval as to form by the City Attorney; and
3. Authorize City Manager, or designee, to take any necessary or advisable actions to implement and administer the Interconnection Agreement with Kifer Energy Storage, LLC.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jōvan D. Grogan, City Manager
ATTACHMENTS
1. Final Mitigated Negative Declaration, including Response to Comments
2. Mitigation, Monitoring and Reporting Program
3. Resolution
4. DRAFT Interconnection Agreement