California

1
Californias Renewable Energy Program

• Kate Zocchetti
• Renewable Energy Program
• California Energy Commission
• October 18, 2007

2
Californias Energy Sources in 2005/2006
PETROLEUM (2005) NATURAL GAS (2005) ELECTRICITY
(2006)
Source www.energy.ca.gov/html/energysources.html
April 2007
3
Renewable Energy in California

• For decades, California led the country and the
  world in renewable energy procurement
• From its peak in early 1990s, renewable
  generation declined amid market uncertainties
• In 1996, AB 1890 placed surcharge on electricity
  sold by IOUs to be used to fund public interest
  programs, including renewable energy
• Energy Commission designed Renewable Energy
  Program, a subsidy mechanism to support renewable
  development in a market environment
• This method for supporting renewables, however,
  was impacted by the energy crisis of 2000 and
  2001

4
From the Energy Crisis to the Renewables
Portfolio Standard

• Californias move to a restructured electricity
  market and resultant energy crisis prompted
  policymakers to pursue a new method to encourage
  development of renewable power
• Renewables Portfolio Standard

5
Californias Renewable Energy Goals
120,000
33 by
2020
100,000
80,000
20 by 2010
Estimated Statewide Renewables GWh/year
(Excluding Large Hydro)
60,000
20 by 2017
40,000
2006 10.9
Renewables
20,000
2002 11.0 Renewables (RPS begins)
-
1983
1988
1993
1998
2003
2008
2013
2018
Year
6
Californias Energy Action Plan
The energy crisis further underscored
Californias economic reliance on a stable energy
market. Consequently...

• Californias energy agencies adopted the Energy
  Action Plan I in 2003 and EAP II in 2005 to guide
  energy policy decisions and actions for CAs
  growing energy demand.
• Top priorities in Californias loading order
  policy for electricity are
• Increasing energy efficiency and demand
  response
• Meeting new generation needs first with
  renewable and distributed generation
  resources.
• Governor Schwarzeneggers energy policy promotes
  adequate, affordable and reliable energy supplies
  and technologies that protect and improve
  economic and environmental conditions. He
  strongly supports the EAPs loading order.

7
Renewables Legislation
GOAL Pursue investments in renewable resources
to achieve self-sustaining renewable energy
supply for California.

• 1998 - 2006
• AB 1890 and SB 90 created the Renewable Energy
  Program and directed the large investor-owned
  utilities to collect 540 million from 1998
  2001.
• AB 995 and SB 1194 extended collection of 135
  million per year through 2011.
• SB 1038 authorized the Renewable Energy Program
  to use funds collected from IOU ratepayers from
  2002 - 2006.
• SB 1078 established the Renewables Portfolio
  Standard that requires IOUs to increase renewable
  purchases by at least 1 per year to serve 20 of
  their retail sales by 2017.
• SB 704 required the Energy Commission to allocate
  6 million to electricity-generating facilities
  that increased their use of qualified
  agricultural biomass during fiscal year
  2003-2004.

8
Renewables Legislation (contd.)

• SB 67, AB 200, and AB 2189 modified RPS
  eligibility requirements.
• AB 135 authorized the use of an additional 60
  million of future Renewable Energy Program funds
  for the Emerging Renewables Program.
• SB 1 statutorily authorizes and establishes
  guidelines for the 3.35 billion California Solar
  Initiative (CSI), a solar installation incentive
  program.
• SB 107 requires retail sellers of electricity to
  increase renewable energy purchases by at least 1
  percent per year with a target of 20 renewables
  by 2010.
• SB 1250 authorizes the Renewable Energy Program
  to use funds collected from IOU ratepayers from
  2007 2012.
• AB 32 requires that the states global warming
  emissions be reduced to 1990 levels by 2020.
  Renewable energy plays a significant role.

9
Californias Electricity Supply in 2006
In-State Generation and Estimated Energy Imports
by Fuel Type
(Includes Energy Imports)
Source 2006 Net System Power Report, Energy
Commission Publication, CEC-300-2007-007.
www.energy.ca.gov/2007publications/CEC-300-2007-00
7/CEC-300-2007-007.PDF
10
Renewable Energy Program Goals
Goal Achieve a self-sustaining renewable energy
supply for California.

• Optimize public investment and ensure that the
  most cost-effective and efficient investments in
  renewable resources are vigorously pursued.
• Increase the quantity of Californias electricity
  generated by renewable resources, while
  protecting system reliability, fostering
  diversity, and obtaining the greatest
  environmental benefits to the state.
• Identify and support emerging renewable energy
  technologies with the greatest near-term
  commercial promise that merit targeted
  assistance.

11
Renewable Energy Program Goals (contd.)
RPS goals inform the policies of the other
elements in the Renewable Energy Program.
12
Renewable Energy Program 20022006 Funding
Allocations675 Million
New Renewable Facilities and RPS 51.5 (348 M)
Existing Renewable Facilities 20 (135 M)
Emerging Renewables 26.5 (179 M)
Consumer Education 2 (13 M)
Dollars collected are estimated at an average of
135 million per year for five years. The total
amount collected each year is adjusted annually
at a rate equal to the lesser of the annual
growth in electric commodity sales or inflation,
as defined by the gross domestic product
deflator.
13
Renewable Energy Program 2007-2011 Funding
Allocations750 Million
New Renewable Facilities and RPS 51.5 (386 M)
Existing Renewable Facilities 10 (75 M)
Emerging Renewables 37.5 (281 M)
Consumer Education 1 (8 M)
Dollars collected are estimated at an average of
150 million per year for five years. The total
amount collected each year is adjusted annually
at a rate equal to the lesser of the annual
growth in electric commodity sales or inflation,
as defined by the gross domestic product deflator.
14
New Renewable Facilities Program
Goal Accelerate the addition of new renewable
capacity to meet Californias growing demand for
electricity.

• Currently provides production incentives to 59
  new in-state renewable generating facilities.
• Incentives capped at 1.5 cents per kilowatt-hour.
  
• Of the 59 active projects, 47 have been completed
  and are producing electricity representing 489 MW
  of capacity.
• More than 69 million in incentive payments has
  supported about 7,545 gigawatt-hours of
  generation.
• When completed, all 59 facilities will bring 809
  MW of new renewables capacity to Californias
  electricity grid.
• Under RPS, will provide supplemental energy
  payments (SEPs) for above-market costs of
  procuring renewable energy.

15
Existing Renewable Facilities Program
Goal Encourage economic viability of existing
renewable projects.

• Provides production incentives to existing
  renewable generation facilities.
• Payments tied to market prices.
• Eligible technologies solid-fuel biomass, solar
  thermal, wind.
• Has helped 273 existing renewable facilities
  remain competitive or return to service by paying
  more than 249 million for 4,400 MW of renewable
  energy capacity.
• Provided 6 million for 2004 Agriculture-to-Biomas
  s Program to improve air quality in CAs
  agricultural areas.

16
Emerging Renewables Program
Goal Reduce costs and accelerate market
acceptance through high volume production of
emerging renewable technologies.

• Provides rebates for purchasing and installing
  eligible renewable energy systems to offset
  electricity needs at homes or businesses.
• Reduces up-front costs for customers.
• Through 2006, eligible technologies were solar
  photovoltaic, small wind, fuel cells using
  renewable fuels, solar thermal electric.
  Effective 1/1/07, only small wind and fuel cells
  are eligible.
• Provided 374 million for distributed PV and wind
  energy systems installed on 25,680 homes and
  businesses, providing 113 MW of capacity.
• Encumbered 49 million for 3,493 additional
  systems under construction, to provide 18.2 MW.

17
California Solar Initiative
GOAL Move California toward a cleaner energy
future by creating a sustainable solar market in
California.

• Beginning 2007
• California Solar Initiative, largest solar
  program of its kind in the country, part of
  Governor Schwarzeneggers Million Solar Roofs
  Initiative
• 3.35 billion effort by CPUC, CEC and POUs
• Residential and nonresidential customers
• 3,000 MW combined POU/IOU goal
• Solar industry self-sufficiency in 10 years
• Emphasis on energy efficiency
• High performance installations

18
California Solar Initiative (contd.)
CPUC Program Commercial, Industrial, Existing
Residential 2 Billion
Publicly-Owned Utility Programs Eligibility
Requirements under Development 784 Million
CEC Program New Residential Construction
(NSHP) 400 Million
Additional 100 Million for Solar Thermal and
Solar Water Heaters plus 50 Million for Solar
RD
19
New Solar Homes Partnership

• GOALS
• 400 MW installed capacity by end of 2016
• All solar systems must be highly energy efficient
  and high performing
• Solar on 50 of new homes

• Incentive of 2.50/watt or more based on
  expected performance
• Provides assistance to builders
• Requires 15 higher energy efficiency than state
  building standard (Title 24)
• New residential construction only new
  homes/developments, Affordable Housing

20
Consumer Education Program

• GOALS
• Raise consumer awareness about renewables and
  their benefits
• Increase purchases of emerging technologies
• Develop renewable energy education partnerships
• Track and verify renewable energy procurement

• Provides information to California consumers to
  help build a market for renewable energy.
• Supports market development of emerging
  renewables technologies.
• Provided over 7 million for market research, 21
  outreach and demonstration grant projects, and 3
  public awareness campaign contracts.

21
What is WREGIS?

• Western Renewable Energy Generation
• Information System
• A voluntary, independent renewable energy
  registry and tracking system for the Western
  Interconnect region that
• Uses verifiable renewable energy generation data
• Creates renewable energy certificates (WREGIS
  certificates)
• Accounts for transactions involving certificates
• Supports voluntary and regulatory markets for
  certificates
• WREGIS launched June 2007
• Retail sellers and renewable facilities
  participating in the California RPS will be
  REQUIRED to register with and use the WREGIS by
  January 1, 2008.
• WREGIS fees are being waived for 2007!

22
Attribute Tracking Systems
NEPOOL GIS
MRETS
NY GTS
NJ SRECS
RRC
WREGIS
PJM GATS
ERCOT
Source Center for Resource Solutions, 2006
23
Californias Renewables Portfolio Standard (RPS)
GOAL Increase the diversity, reliability, public
health and environmental benefits of Californias
energy mix.

• RPS signed into law in 2002 assigning roles to
  Energy Commission, CPUC, and POUs.
• Current legislative goal of 20 of retail sales
  from renewables by 2010, with increase by at
  least 1 per year.
• Governor Schwarzeneggers expanded goal to 33 by
  2020.

24
DSIRE www.dsireusa.org


September 2007
Renewables Portfolio Standards
25
CEC-CPUC RPS Collaboration

• CPUC ROLE
• Oversight of IOU procurement
• Approve procurement plans.
• Set baselines and targets.
• Develop market price referent.
• Develop least-cost-best-fit process to evaluate
  bids.
• Set rules for flexible compliance.
• Standardize contract terms.
• Approve/ reject contracts.
• Ensure RPS competitiveness.
• Oversight for other retail sellers.

• CEC ROLE
• Certify renewable facilities as eligible for the
  RPS.
• Design and implement accounting system to track
  and verify RPS compliance.
• Distribute Supplemental Energy Payments.

26
RPS Eligible Technologies

• Biomass
• Biodiesel
• Conduit hydro
• Fuel cells using renewable fuel
• Digester gas
• Geothermal
• Landfill gas

• Municipal solid waste conversion
• Ocean wave, ocean thermal, tidal current
• Photovoltaic
• Small hydro
• Solar thermal electric
• Wind

27
Renewable Development Goals and Statewide
Potential
262,150 GWh/yr
108,000 GWh/yr
56,160 GWh/yr
20 by 2010
Technical Potential
33 by 2020
Estimated potential for other WECC states is
3.7 million GWh/yr
Source Renewable Resources Development Report
and Implementing Californias Loading Order for
Electricity Resources
28
IOU Progress toward 20 Percent Renewables by 2010
Note IOU percentages based on retail sales
Statewide percentages based on generation.
Sources for 2001, 2004 and 2005 data
California Energy Commission, August 7, 2007,
Renewables Portfolio Standard Procurement
Verification Report (Tables 7, 15, and 20),
CEC-300-2007-001-CMF, located at
www.energy.ca.gov/2007publications/CEC-300-2007-00
1/CEC-300-2007-001-CMF.PDF. 2006 data was
submitted by the IOUs in RPS Track Forms, to be
verified in the forthcoming 2006 RPS Procurement
Verification Report. Total statewide percentages
include generation data from the three large
IOUs, electric service providers, small and
multi-jurisdictional utilities, and local
publicly-owned utilities. The data source for the
total statewide percentages is the 1983-2005
California Electricity Generation database
located at www.energy.ca.gov/electricity/ELECTRICI
TY_GEN_1983-2005.XLS. Although the total
statewide data is incomplete because some
entities have failed to report, it represents
data from entities serving approximately 95
percent of total state retail sales.
29
California IOU Renewable Progress
30
IOU RPS Contracts by Technology (MW)

  PGE SCE SDGE Total
Wind 331 1,939-2,301 338 2,609-2,971
Biogas 50 55 8 9 16 74 - 80
Biomass 45 65 44 69 20 109 - 154
Geothermal 242 370 80 220 20 342 - 610
Small Hydropower 1 0 5 6
Solar Thermal 554 500 850 399 999 1,452 2,402
Solar Photovoltaic 7 1 0 8
TOTAL  1,228 1,381 2,572 3,451 798-1,398 4,598-6,230
Source California Energy Commission, Database
of IOU Contracts for Renewable Generation, August
6, 2007 update, www.energy.ca.gov/portfolio/IOU_CO
NTRACT_DATABASE.XLS.
31
RPS Certification

• 534 facilities are certified as RPS eligible
  representing 7,453 MW of capacity
• 71 facilities are pre-certified
  representing 7,654 MW of proposed new capacity.

32
Barriers to Achieving RPS Goals

• Inadequate transmission infrastructure to connect
  remotely-located renewable resources
• Binding 33 goal needed for all retail sellers
• Uncertainty regarding whether projects with SEPs
  awards will be able to obtain project financing
• Complexity and lack of transparency in RPS
  process
• Insufficient attention to the possibility for
  contract failure and delay
• Lack of progress in repowering aging wind
  facilities
• Unclear requirements for POUs

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Recommendations to Reach20 by 2010

• Provide transmission access
• Improve financeability of SEPs
• Enforce penalties for noncompliance
• Increase transparency
• Incorporate risk of contract failures and delays
• Require bilateral contracts at or below MPR
• Use financial incentives
• Use consistent natural gas price forecasts
• Encourage repowering of aging wind facilities

34
Long-Term Strategies to Reach 33 by 2020
Californias aggressive greenhouse gas reduction
goals place added importance on achieving 33 by
2020.

• Transmission streamline process, improve CAISO
  queue, cost allocation
• Integration of nondispatchable intermittent
  renewables
• Capture full benefits of renewables in MPR and/or
  joint CPUC-CEC process to consider feed-in
  tariffs
• Establish market-based mechanisms to value
  renewable energy benefits e.g., GHG adder
• Evaluate potential structural changes to SEP
  process

35
Additional Information

• Web Sites
• Renewable Energy Program
• www.energy.ca.gov/renewables/index.html
• New Solar Homes Partnership/California Solar
  Initiative
• www.gosolarcalifornia.ca.gov
• Californias Consumer Energy Center
• www.consumerenergycenter.org

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• Thanks for visiting California!
• Kate Zocchetti
• Renewable Energy Program
• [phone]
• or e-mail
• kzocchet_at_energy.state.ca.us