Renewable Energy in California

1
Renewable Energy in California

• Rasa Keanini and Heather Raitt
• Renewable Energy Program
• Efficiency, Renewables Demand Analysis Division
• November 16, 2005

2
Renewables Legislation
GOAL Pursue investments in renewable resources
to achieve self-sustaining renewable energy
supply for California.

• AB 1890 and SB 90 created the Renewable Energy
  Program and directed the large investor-owned
  utilities to collect 540 million from 1998
  2002.
• SB 1038 authorizes Renewable Energy Program to
  allocate and distribute 675 million collected
  from IOU ratepayers 2002 - 2006.
• SB 1078 established Renewables Portfolio
  Standard, requires IOUs to increase renewable
  purchases by 1 per year until total reaches 20
  of their purchases by 2017, within certain cost
  restraints.
• SB 67 and SB 183 clarified RPS eligibility
  requirements.
• AB 200 addresses RPS requirements for Sierra
  Pacific and PacifiCorp.

3
CA Renewables Portfolio Standard
Goal To increase diversity, reliability, public
health and environmental benefits of Californias
energy mix.

• RPS signed into law in 2002
• Legislative goal of 20 of retail sales from
  renewables by 2017, with increase by at least 1
  per year
• In 2003, state energy agencies set goal of 20 by
  2010
• 20 in 2010 is estimated to be about 56,000 GWh
• Californias technical potential is more than
  260,000 GWh/yr
• Technical potential for western-region is 3.7
  million GWh/yr
• Energy Commissions Integrated Energy Policy
  Report recommends more ambitious goal for
  post-2010
• Governor Schwarzeneggers goal is 33 by 2020

4
CEC-CPUC RPS Collaboration

• CPUC ROLE
• Set RPS baseline procurement targets
• Approve/ deny IOU procurement plans
• Develop methodology for MPR, calculate
• Develop least-cost-best-fit process IOUs use to
  evaluate bids
• Develop and implement rules for flexible
  compliance
• Set standard contract terms conditions
• Ensure that RPS solicitations are competitive
• Approve or reject proposed contracts
• Define rules for ESPs Community Choice
  Aggregators

• CEC ROLE
• Certify eligible facilities
• Establish criteria for incremental output from
  existing geothermal facilities
• Award and distribute supplemental energy payments
• Develop accounting system to track and verify RPS
  compliance

5
Californias RPS Process

• CPUC calculates utilities annual procurement
  target
• Utilities develop RPS procurement plans for CPUC
  approval
• Generator applies to Energy Commission for
  certification as eligible for the RPS
• Utilities hold RPS solicitations for long-term
  delivery from RPS eligible generators (10, 15, 20
  years)
• Each utility uses least-cost, best-fit evaluation
  process to rank bids and selects short list of
  bidders
• After utilities select short lists, CPUC
  calculates and announces Market Price Referent
  (the estimated cost for a similar long-term
  natural gas electricity product)
• Winning bids priced higher than MPR may be
  eligible for supplemental energy payments
• Contracts priced at or below MPR are considered
  reasonable

6
Californias RPS Process, cont.

• Utilities negotiate contracts with short-listed
  bidders and sign contracts using standard terms
  and conditions.
• If contract is priced above MPR, generator
  applies for supplemental energy payments from the
  Energy Commission
• Energy Commission evaluates public goods charge
  funds availability for supplemental energy
  payments , subject to caps
• Energy Commission awards supplemental energy
  payments to eligible RPS generators (new or
  repowered)
• Utilities request contract approval from CPUC
• CPUC approves or rejects contracts
• Generator begins providing electricity per RPS
  contract
• Energy Commission makes monthly supplemental
  energy payments for generation

7
Renewable Energy Certificate CA RPS

• Allows the use of RECs for accounting purposes
  only
• CPUC Decision www.cpuc.ca.gov/word_pdf/FINAL_DECIS
  ION/27360.doc
• we will need a clear showing that a REC
  trading system would be consistent with the
  specific goals of CAs RPS including providing
  public health, economic development, job
  creation, and environmental benefits to
  California, would not create or exacerbate
  environmental justice problems, and would not
  dilute the environmental benefits provided by
  renewable generation.
• Various bills introduced this year proposed
  allowing unbundled RECs for RPS compliance, but
  such provisions were struck out
• CA RPS Standard Contract Terms and Conditions
  define Environmental Attributes
  www.cpuc.ca.gov/Published/Final_decision/37401.htm
  (June 9, 2004)

8
Delivery Requirement

• RECs and electricity must be sold together as a
  bundled product to satisfy CA RPS compliance
• www.cpuc.ca.gov/word_pdf/FINAL_DECISION/27360.doc
  (June 19, 2003)
• Adopts the general presumption that all
  environmental and renewable attributes associated
  with the production of electricity be transferred
  to the utility and retired
• The transfer of environmental attributes for RPS
  compliance need not include fuel related
  subsidies or local subsidies received by the
  generator for the destruction of particular
  pollutants
• CPUC requires the IOUs to allow bids for delivery
  anywhere in CA ISO and IOUs may accept delivery
  to non-CA ISO points in-state
• www.cpuc.ca.gov/WORD_PDF/FINAL_DECISION/48266.DOC
  (July21, 2005)
• Delivery requirement applies to in-state and
  out-of-state facilities
• Out-of-state facilities annually report to Energy
  Commission their compliance with RPS delivery
  requirements by submitting NERC tags as described
  in RPS Guidebook

9
Progress in Meeting the Renewables Portfolio
Standard

• Includes all contracts for new renewable energy
  capacity submitted to or approved by the CPUC
  since 2002. Table updated through October 28,
  2005. Capacity additions do not include four
  contracts that SCE signed under its 2002 interim
  RFO, as at least one of those contracts has
  subsequently been terminated (TrueSolar), and
  information on the resource type and/or project
  size of the other three is not publicly
  available. Total incremental renewable energy
  capacity and supply derives from data submitted
  to the CPUC (Advice Letter filings and RPS
  compliance reports), and from other data (for
  SDGE, new renewable energy contract information
  from before its 2004 RFO came from SDGEs
  website assumed capacity factors were used to
  convert MW to GWh - 35 for wind, 23.9for solar
  thermal electric same as SCEs solar thermal
  contract, and 85 for biomass).
• RPS contracts executed to date are priced at or
  below the MPR and will not need supplemental
  energy payments.

10
Barriers to Renewable Resource Development

• Addressed through current RPS
• Lack of long term purchase agreements for
  electricity
• Needs further work
• Need new/upgraded transmission to access remote
  renewables
• Ensure electricity grid reliability with
  integration of large amounts of intermittent
  renewables
• Repower aging wind facilities and reduce the
  number of bird deaths associated with the
  operation of wind turbines
• Avoid under-procurement due to contract failure,
  establish a contract-risk reserve margin (e.g.
  delays due to difficulty getting land easements,
  unanticipated increase in project costs)
• Apply RPS targets consistently for all retail
  sellers (public utilities are self regulated, no
  rules established yet for electric service
  providers, community choice aggregators)
• Reduce administrative complexity, increase
  transparency

11
Western Renewable Energy Generation Information
System (WREGIS)

• WREGIS is a tracking system for implementing CA's
  RPS
• Developed by the Energy Commission and the
  Western Governors' Association with input from
  stakeholders
• This voluntary independent accounting system for
  the region covered by the Western Electricity
  Coordinating Council will
• create renewable energy certificates (WREGIS
  Certificates) based on verifiable, reliable
  meter-read data
• support market participants in their transactions
  involving WREGIS Certificates
• support regulators and voluntary program
  administrators by providing information to assist
  in verification
• The Energy Commission estimates WREGIS will be
  operational early 2007

12
Attribute Tracking Systems
WREGIS
13
Why is WREGIS Important?

• Establishes a Western regional system to register
  electricity generating units, and issue and track
  renewable energy certificates.
• Provides a tool to support verification of
  compliance with regulatory and voluntary
  programs.
• Develops standard definitions and operating
  guidelines for WREGIS participants.

14
Renewables Portfolio Standard Additional
Information

• Renewables Portfolio Standard Eligibility
  Guidebook describes the criteria and process for
  certifying renewables as eligible for
  Californias RPS SEPs (Publication
  500-04-001F)
• New Renewable Facilities Program Guidebook
  describes the requirements applicants must
  satisfy to receive SEPs (Publication 500-04-026)
• Overall Program Guidebook for the Renewable
  Energy Program describes how the Renewable Energy
  Program will be administered (Publication
  500-04-026)
• Documents available at www.energy.ca.gov/portfoli
  o -click documents page