Southern California Edison, Lotus Infrastructure Partners Chosen by CAISO to Build Major Transmission Project Between San Diego, Orange Counties

Rhea-AI Summary

Southern California Edison (SCE) and Lotus Infrastructure Partners have been selected by the California Independent System Operator (CAISO) to develop, permit, own, operate, and maintain a new transmission infrastructure project in Southern California. The project involves constructing a high-voltage transmission line from the Serrano Substation in Orange County to near the retired San Onofre Nuclear Generating Station (SONGS). This line will deliver energy from renewable sources like solar, wind, and battery installations. Lotus will lead the project’s development, while SCE will purchase the project upon completion and regulatory approval, leasing 25% of the transmission capacity back to Lotus. The project will support California's clean energy goals and address the increasing demand for reliable electricity.

Positive

• Selected by CAISO for a critical infrastructure project, recognizing SCE and Lotus's capabilities.
• Supports California’s 2045 climate goals by facilitating renewable energy transmission.
• SCE will acquire the completed project, ensuring control over its operations and revenue generation.
• Utilizes existing rights of way, potentially reducing environmental impact and project costs.
• Lotus’s experience in high-voltage transmission projects should contribute to successful project execution.

Negative

• Potential regulatory approval delays could impact project timelines.
• High costs associated with developing and maintaining new high-voltage transmission infrastructure.
• The partnership structure requires SCE to lease back 25% of transmission capacity, possibly affecting long-term revenue.

Insights

Energy Market Analyst

The partnership between Southern California Edison (SCE) and Lotus Infrastructure Partners for developing a key transmission project highlights the potential for significant strides in California's transition to renewable energy. This project aligns with the state's ambitious clean energy goals and addresses the demand surge driven by electric vehicles, heat pumps and data centers.

Key Insights:

Firstly, the use of existing rights of way for the new transmission line is a strategic decision that minimizes environmental impact and project costs. This is critical given the increasing scrutiny and regulatory hurdles in infrastructure projects today.

Secondly, the project's focus on renewable sources like utility-scale solar, wind and battery installations positions it as a substantial contributor to California's 2045 climate goals. Evidently, this will bolster SCE's and Lotus's profiles as leaders in the clean energy sector.

In the short term, this project may attract investor interest due to its alignment with environmental, social and governance (ESG) criteria, increasingly prioritized by institutional investors. In the long term, the project's success will be measured by its ability to meet demand reliably and cost-effectively, which is important for maintaining investor confidence.

Financial Analyst

From a financial perspective, the collaboration between SCE and Lotus presents a robust opportunity for both companies. The structure of the deal, with Lotus leading the development and SCE purchasing the project upon completion, ensures risk mitigation and capital efficiency.

Financial Implications:

This joint venture allows SCE to leverage Lotus's expertise and experience in transmission projects, potentially reducing development risks and ensuring timely completion. For Lotus, the agreement to lease 25% of the transmission capability provides a steady revenue stream, enhancing its financial stability.

The cost considerations evaluated by CAISO indicate a well-thought-out approach to project budgeting and execution. However, investors should monitor any potential delays or cost overruns, which are common in large infrastructure projects and can impact financial performance.

Overall, the project is expected to improve SCE's capacity to deliver clean energy, potentially leading to greater customer satisfaction and regulatory support, which are vital for long-term financial health.

Environmental Policy Expert

This project marks a pivotal step towards California's aggressive clean energy targets. By integrating renewable energy into the grid, the SCE-Lotus project directly supports environmental policy objectives aimed at reducing greenhouse gas emissions.

Environmental Considerations:

Utilizing existing rights of way helps mitigate environmental disruption, a key concern in infrastructure expansion. This strategic approach aligns with sustainable development principles and may expedite regulatory approvals.

Moreover, the project's focus on renewable energy sources and high-voltage transmission lines underscores a commitment to reducing reliance on fossil fuels. This is critical for meeting California's 2045 climate goals and enhancing the state's resilience to climate change.

Investors should note that successful implementation can serve as a benchmark for future renewable energy projects, potentially influencing environmental policy and market trends favorably towards green investments.

ROSEMEAD, Calif. & GREENWICH, Conn.--(BUSINESS WIRE)-- Southern California Edison and Lotus Infrastructure Partners today announced they were chosen by the California Independent System Operator (CAISO) to develop, permit, own, operate and maintain new transmission infrastructure that will deliver energy from renewable sources, such as utility-scale solar, wind and battery installations, to Southern California. The companies will build a high-voltage transmission line from Serrano Substation in north-central Orange County to a substation in the vicinity of the retired San Onofre Nuclear Generating Station (SONGS), largely utilizing existing rights of way for the line.

“New transmission in California needs to be built at up to four times historical rates to meet unprecedented new demand for electricity, driven by growth in EVs, heat pumps, data centers and electrification across the economy,” said Steve Powell, president and CEO of SCE. “Adding transmission capacity is necessary to ensure the electric system is reliable, resilient and ready to deliver more clean energy when and where it’s needed.”

“Lotus has been developing transmission assets for almost 20 years, including our most recent high-voltage transmission project in the Desert Southwest region, Ten West Link. It is clear that there can be no energy transition without energy transmission,” said Himanshu Saxena, chairman and CEO of Lotus. “Lotus is proud to partner with the CAISO, SCE and the local communities to move this very important project forward and enable more renewable projects to be built to meet California’s clean energy goals.”

The SCE-Lotus partnership calls for Lotus to lead the project’s development. Upon completion and regulatory approval, SCE will buy the entire project and lease 25% of the transmission capability to Lotus. The selection of SCE and Lotus recognizes SCE’s ability to deliver clean energy to its customers and Lotus’s strengths and experience as a transmission owner and developer.

The North of SONGS to Serrano project is a 30-mile, 500-kilovolt overhead transmission line that will transport renewable energy, helping meet California’s clean air and 2045 climate goals while increasing reliability to the southern Orange County area.

The CAISO conducted a rigorous competitive selection process pursuant to the Federal Energy Regulatory Commission’s Order No. 1000 and selected SCE-Lotus’s proposal from four applications. The CAISO’s comparative analysis included considerations for cost and design, project implementation, operations and maintenance.

About Southern California Edison

An Edison International (NYSE: EIX) company, Southern California Edison is one of the nation’s largest electric utilities, serving a population of approximately 15 million via 5 million customer accounts in a 50,000-square-mile service area within Central, Coastal and Southern California.

About Lotus Infrastructure Partners

Lotus Infrastructure specializes in infrastructure investments along the entire value chain of energy and related sectors as well as other industries that benefit from sustainability and energy transition trends. Our main focus areas include renewable power generation, battery storage, renewable and low-carbon fuels, electric transmission, thermal power, and midstream and downstream assets. Our longstanding focus on renewable energy solutions provides us unique perspectives on recent developments in the energy transition space including sustainability, electrification and decarbonization of the global economy. Lotus Infrastructure has raised in excess of $3 billion of equity capital and has executed transactions totaling more than $8 billion in enterprise value, inclusive of approximately $2.8 billion in enterprise value related to the development and construction of renewable assets such as wind farms, solar farms, renewable natural gas (RNG) projects, energy storage and biomass power plants. The Lotus Infrastructure team brings extensive multi-functional expertise to all of its investments including development, construction, operations, acquisition and financing. For more information, please visit www.lotusinfrastructure.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240520755161/en/

Edison International Investor Relations, Sam Ramraj, (626) 302-2540

Lotus Media Relations, Tom Johnson, (212) 371-5999

SCE Media Relations, (626) 302-2255

News@sce.com

Source: Southern California Edison

FAQ

What is the new transmission project announced by Southern California Edison (SCE) and Lotus Infrastructure Partners?

The project involves constructing a high-voltage transmission line from the Serrano Substation in Orange County to near the retired San Onofre Nuclear Generating Station (SONGS).

When was the SCE and Lotus Infrastructure Partners project selected by CAISO?

The project was recently selected by CAISO, as announced in the latest press release.

What is the purpose of the SCE and Lotus transmission project?

The project aims to deliver energy from renewable sources to Southern California, supporting California’s 2045 climate goals and meeting the increasing demand for reliable electricity.

How will the SCE and Lotus project support California's clean energy goals?

The transmission line will transport renewable energy, helping to meet California’s clean air and 2045 climate targets.

What are the financial arrangements between SCE and Lotus for the transmission project?

Lotus will lead the project’s development. Upon completion, SCE will purchase the entire project and lease 25% of the transmission capacity back to Lotus.