Contract analysis

I. Executive Summary This memorandum analyzes the Electric Reliability Council of Texas ("ERCOT") interconnection process, network upgrade cost allocation framework, and the applicable regulatory landscape for battery energy storage systems ("BESS") under Texas law, as each relates to the Lone Star Battery Storage Project (the "Project"). The memorandum has been prepared at the request of Calloway-Briggs Renewables I

II. Background and Project Description A. Project Overview The Project is being developed by CBR, a Texas corporation headquartered at 2200 West Commerce Street, Suite 1400, Houston, TX 77002. CBR was founded in 2014 by Raymond T. Calloway (Chairman & CEO) and Sandra M. Briggs (President & COO). Since its founding, CBR has focused on the development, ownership, and operation of utility-scale renewable energy and ener

III. ERCOT Interconnection Process for BESS Projects A. Overview of ERCOT Interconnection Framework The Electric Reliability Council of Texas operates as the independent system operator for the Texas Interconnection, the electric grid serving approximately 90% of the state's electric load. Unlike other major independent system operators ("ISOs") and regional transmission organizations ("RTOs") in the United States —

1. Screening Study. The Screening Study is a preliminary assessment of the available transmission capacity at the requested POI. This study provides a high-level identification of potential constraints on the transmission system that could affect the feasibility of the proposed interconnection. The Screening Study typically involves simplified powerflow analysis and may identify obvious thermal overloads, voltage vio

2. Full Interconnection Study (FIS). The FIS is a comprehensive technical evaluation of the proposed interconnection. The FIS involves detailed powerflow modeling, short circuit analysis, and transient stability analysis of the transmission system with the proposed resource modeled at its full requested injection capacity. The FIS evaluates the transmission system under a range of operating conditions and contingency

3. Facilities Study. The Facilities Study is a detailed engineering study that provides refined cost estimates and construction specifications for the network upgrades identified in the FIS. The Facilities Study is typically performed by the transmission service provider responsible for constructing the upgrades (in this case, Oncor) and provides the interconnecting resource with a more precise estimate of the total

IV. Network Upgrade Cost Allocation A. ERCOT Cost Allocation Framework Under the ERCOT Protocols and applicable PUCT rules, interconnecting generation resources are generally responsible for the cost of network upgrades required to accommodate their interconnection to the ERCOT transmission system. This cost allocation methodology places the financial burden of grid reinforcement on the developer seeking to interconn

V. Regulatory Treatment of BESS Under Texas Law A. PUCT Jurisdiction Over Energy Storage The Public Utility Commission of Texas exercises jurisdiction over electric utilities, retail electric providers, and power generation companies operating within the ERCOT market, as established under the Texas Public Utility Regulatory Act ("PURA"), codified at Texas Utilities Code, Title 2, Subtitle B. The PUCT's regulatory aut

VI. Timeline Analysis: FIS Completion to Energization A. Critical Path Summary The critical path for the Lone Star Project from FIS completion to COD encompasses the following key milestones: The overall duration from FIS completion (August 2022) to expected COD (August 2023) is approximately twelve months. The duration from targeted Interconnection Agreement execution (December 1, 2022) to expected energization (Jul