California

1
Californias Efforts In Addressing New
Electricity MarketsAsia Pacific Economic
Cooperation (APEC)Expert Group on New and
Renewable Energy Technologies

• Terry Surles, Director
• Technology Systems Division
• California Energy Commission

2
GDP (2000)
3
California Energy Perspective

• Previous system wasnt broken
• Market power became concentrated
• profits up by selling more for less
• No price signal for end users
• Loss of momentum on demand side management
• 10 GWh saved by early 1990s
• Restructuring derails utility DSM
• 1.4 GW of renewable cancelled
• No need
• Price was above cost to utilities
• Results
• Demand up 0.7, price up 130
• Blackouts with 28 GW laid, with 50 GW capacity

4
Production of Electricity by Source - 1999
Wind/solar-0.1 Geothermal- 0.4 Imports- 1.2 Oil-
3.2
Imports NG-15.5 Hydro- 32.6 Coal- 51.9
Wind/solar- 1.6 Geothermal - 4.8 Biomass/waste-
2.0 Oil- 0.2
15
Nat Gas
Hydro
8.5
Imports
18
Nuclear
20
Natural Gas
31
15
Coal
Hydro
51
15
Nuclear
13
Coal
276 TWh
3,678 TWh
5
CA Energy Use by Sector (1999)
Transportation 49
6
Peak Demand is Increasing Faster than Newly
Installed Capacity
Megawatts
7
Contribution to ISO Peak DemandAugust 16, 2001
(MW)
Commercial AC
Commercial Lighting
Residential AC
Other
8
Rising Peak Demand Threatens Reliability and
Power Quality
California Stage 1-3 Alert Number of Statewide
Electricity Alerts by Year
9
Peak Demand Influenced by Economics and Weather
10
Summer 2001 Peak Demand Reductions
11
Factors Contributing to Demand Reduction

• - Electricity price increases
• - Public awareness of crisis and voluntary
  conservation
• - Demand reduction programs, 20/20 Program
• - State and regional economic recession
• - Increased supply

12
Next Steps

• Diffuse excess market power
• Address potential for supply overshoot
• Change buyers mentality
• Education - its more than flicking a switch
• Take control - its not a tax
• Develop alternatives
• Demand side
• Supply side
• Enabling technologies

13
Public Interest Energy Research (PIER)
14
California has Established a 62M/yr Public
Interest Energy Research Program (PIER)
Californias Energy Future
Quality Reliable and Available
Economy Affordable Solutions
Environment Protect and Enhance
15
Vision Statement
The future electrical system of California will
provide a clean, abundant and affordable supply
tailored to the needs of smart, efficient
customers and will be the best in the nation.
Tailored, clean, abundant, affordable supply
Smart, efficient customers
16
Our RD Program Must Address Future Market
Scenarios
Regulated
Status Quo

• New energy systems
• Same players

De-centralized
Centralized

• Same energy systems
• New players

Supermarket of Choices
De-regulated
17
Technology Development Continuum From Innovation
to Market
New Energy Idea
Proof of Concept
Demonstrations
Techn. Develop.
Self Sustaining Market
Certification
Internat. Market
Valley of Death
Renewable Energy Program
Export Program
PIER Program (RDD)
18
Funded Program Areas to December 2001 (in
millions)
Supply 82 Renewables, EPAG Demand 50 Building
s, Ind/Ag/Water 48 Strategic, Environmental
19
PIER Objectives Meeting Ratepayers Needs

• Tangible products reach market
• legislative justification
• Prepare for the next crisis
• end use energy efficiency
• Distributed energy sources
• supply alternatives
• demand side management
• enabling systems
• externalities (environment, resource, security),
  climate change

20
Berkeley Lamp

• Technical Success Validated energy savings

21
PIER Buildings Program HighlightsNight Breeze

• Provides ventilation and cooling at night,
  reducing or eliminating the need for air
  conditioning during the day

22
High Performance Fume Hood

• reduces airflow and energy requirements by
  30-50
• flow reduction from each hood cuts energy costs
  by 1000/yr
• maintains or enhances worker safety
• ASHRAE standard test achieved containment with
  70 flow reduction
• with 30,000 hoods in state, the new Hood could
  save about 360 million kWh/yr, totaling nearly
  30 million

23
PowerLight Corporation Building-Integrated PV
Roof System
24
The Wind Turbine Company

• Design, develop and demonstrate a utility-scale
  wind turbine
• Horizontal axis, two-blade, downwind design
• Prototype developed for PIER and tested at NREL
  rated at 250 kW
• Commercial prototype demonstration sited at the
  Fairmont Reservoir in LADWP territory for a 500
  kW - scaled up to 750 kW - wind turbine
  demonstration to begin in October 2001
• Goal is to produce electricity ? 0.035 cents per
  kWh per 100 unit wind farms with wind resources ?
  15 mph.

25
Technical Support for DG Interconnection
Standards

• Reduces average cost of interconnection fees to
  consumers by 37
• Supports Rule 21 by resolving technical safety
  issues
• Establishes technology size neutral review
  process
• Identified testing and certification requirements
• Enables insertion of new generation (e.g.
  renewables) into the grid

26
Real Time Transmission Line Monitoring/Rating

• tension monitoring increases transmission
  capabilities by 15-30
• highly accurate - measures line sagging to
  within 1-3 inches
• increased safety - provides the actual real time
  rating and provides alarms of impending clearance
  violations
• system 1-3 were built for utilities in Virginia,
  Colorado and Finland
• 200th system was sold on 8/4/00. The systems
  are in use on five continents by 70 utilities.

27
Alzeta Gas Turbine Semi-Radiant Burner
(GTSB)

• PIER is helping develop low- or no- emission
  electric production methods, including gas
  turbines for use in DG
• Alzetas GTSB combustors successfully
  demonstrated simultaneous readings ? 2 ppm
  emissions of NOx, CO and unburned hydrocarbon on
  gaseous fuels during prototype testing.
• Goal is to lower cost of emission reduction by
  100/kW for smaller facilities
• Alzeta has paid 24,464 to date in royalty
  repayment to the PIER Program based on direct
  sales and licensing of the product

28
CaliforniasRENEWABLE ENERGY PROGRAM
29
Renewable Generation Issues

• Developers of new renewable energy projects
  currently face a high degree of uncertainty
• The biggest impediment to further development of
  renewable projects is the lack of a stable market
  with buyers willing to provide adequate price
  certainty

30
Renewable Energy Program OBJECTIVES

• To facilitate the development of a
  self-sustaining, consumer-driven renewable energy
  market in California.
• To encourage market-based development of new and
  emerging renewable resources.
• To maintain the benefits and diversity of the
  renewable energy industry and move towards market
  competitiveness with the broader electricity
  industry.

31
Californias Renewable Energy ProgramAt a Glance

• 540 million in program funding (1998 - 2002)
• Market-based support for supply and demand sides
  of renewable energy market by providing
• Production incentives for existing and new
  renewable electricity generation
• Capital cost buydowns to install on-site
  distributed generation systems
• Rebates to customers who purchase renewable
  electricity
• Consumer education

32
Renewable Generation By Type
GEOTHERMAL
BIOMASS
WIND
SOLAR
33
Investment Plan Renewable Energy Consumption
Targets
34
Investment PlanRenewables Generation Goals
35
California Energy CommissionEnergy Technology
Export Program

• Role Promote California Energy Technology
  Exports
• Results Stimulated Over 400 Million in Export
  Sales

36
Energy Technology Export Program Focus

• Assist Small and Mid - Size Companies
• Develop International Energy Projects
  (lt100Million in Capital Costs/Project)
• Feature Clean Combustion Power Plants, Energy
  Efficiency, Industrial Cogeneration, Renewable
  Energy
• Asia and Latin America Concentration

37
Recent Projects

• Wind Power Projects (16.5 MW) - Greece
• Clean Coal (CFB) Power Plants - China
• Industrial Cogeneration (12 MW) - Thailand
• Hotel Energy Efficiency Retrofits - Mexico and
  Panama
• Geothermal Power Plant (5 MW) - Vanuatu
• Electric Bicycle Kits (2,000 Units) - China

38
Program Functions

• Identify/Evaluate Export Opportunities
• Target Markets
• Scouting Missions
• Identify Qualify Projects
• Energy Audits of C/I Sector Projects
• Matchmaking
• Conferences Trade Missions

• Project Feasibility Funding
• International Energy Fund
• Facilitate Project Development
• Company Directory
• Technical Advice
• Financing Advice
• Advice to Foreign Governments

39
Market Niches

• Utility-Scale, Grid-Connected Power Generation
• Commercial Building Energy Efficiency Retrofits
• Industrial Cogeneration/Onsite Power
• Off-Grid or Mini-Grid Power Systems

40
International Project Financing

• Pre-Investment CEC Intl Energy Fund
• Pre-Development ECo./Rockefeller
  Foundation/Venture Capital
• Project Financing/Project Development
• EXIM Bank gt10 Million
• IFC/REEEF 25 Debt/Equity
• Equity Investors/Equity Funds
• Multi-Lateral Banks World Bank, ADB
• Dresdner Bank

41
CO2 per Capita (1999)
42
CO2 / GDP (1999)
43
Factors Contributing to Demand Reduction

• Electricity price increases
• Public awareness of crisis and voluntary
  conservation
• Demand reduction program, 20/20 program
• State and regional economic recession
• Increased supply

44
Next Steps

• Diffuse excess market power
• Address potential for supply overshoot
• Change buyers mentality
• Education - its more than flicking a switch
• Take control - its not a tax
• Develop alternatives
• end-use energy efficiency
• distributed energy resources
• enabling technologies for DSM and real-time
  pricing