California Energy Commission California’s Renewable Energy Program Kate Zocchetti Renewable Energy...

California Energy Commission

California’s Renewable Energy Program

Kate ZocchettiRenewable Energy Program

California Energy CommissionOctober 18, 2007

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California’s Energy Sources

in 2005/2006

PETROLEUM (2005)

NATURAL GAS (2005)

ELECTRICITY (2006)

Source: www.energy.ca.gov/html/energysources.htmlApril 2007

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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

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From the Energy Crisis to the Renewables Portfolio Standard

California’s 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

California’s 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

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California’s Renewable Energy Goals

-

20,000

40,000

60,000

80,000

100,000

120,000

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20% by 2017

20% by 2010

33% by 2020

2002 11.0% Renewables (RPS begins)

2006 10.9% Renewables

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California’s Energy Action PlanThe energy crisis further underscored California’s economic reliance on a stable energy market. Consequently...

California’s energy agencies adopted the Energy Action Plan I in 2003 and EAP II in 2005 to guide energy policy decisions and actions for CA’s growing energy demand.

Top priorities in California’s loading order policy for electricity are:

Increasing energy efficiency and demand response

Meeting new generation needs first with renewable and distributed generation resources.

Governor Schwarzenegger’s energy policy promotes adequate, affordable and reliable energy supplies and technologies that protect and improve economic and environmental conditions. He strongly supports the EAP’s loading order.

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Renewables Legislation

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.

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

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

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Renewables Legislation (cont’d.)

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 state’s global warming emissions be reduced to 1990 levels by 2020. Renewable energy plays a significant role.


Natural Gas41.5%

Nuclear12.9%

Renewables10.9%

Coal15.7%

Large Hydro19.0%

Wind1.8%

Biomass2.1%

Geothermal4.7%

Small Hydro2.1%

Solar0.2%

California’s Electricity Supply in 2006In-State Generation and Estimated Energy Imports by Fuel Type

Source: 2006 Net System Power Report, Energy Commission Publication, #CEC-300-2007-007. www.energy.ca.gov/2007publications/CEC-300-2007-007/CEC-300-2007-007.PDF

(Includes Energy Imports)

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Renewable Energy Program GoalsGoal: Achieve a self-sustaining renewable energy supply for California.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 California’s 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.

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Renewable Energy Program Goals (cont’d.)

Renewables Portfolio Standard GoalsRenewables Portfolio Standard Goals

New Renewable Facilities ProgramNew Renewable Facilities Program

Existing Renewable Facilities ProgramExisting Renewable Facilities Program

Emerging Renewables ProgramEmerging Renewables Program

Consumer Education ProgramConsumer Education Program

RPS goals inform the policies of the other elements in the Renewable Energy Program.

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Renewable Energy Program 2002–2006 Funding Allocations

$675 Million*

*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.

New Renewable Facilitiesand RPS

51.5%($348 M)

Emerging Renewables26.5%

($179 M)

Consumer Education 2%

($13 M)

Existing Renewable Facilities20%

($135 M)

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Renewable Energy Program 2007-2011 Funding Allocations

$750 Million*

*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.

New Renewable Facilitiesand RPS

51.5%($386 M)

Emerging Renewables37.5%

($281 M)Consumer Education

1%($8 M)

Existing Renewable Facilities10%

($75 M)

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New Renewable Facilities Program

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 California’s electricity grid. Under RPS, will provide supplemental energy payments

(SEPs) for above-market costs of procuring renewable energy.

Goal: Accelerate the addition of new renewable capacity to meet California’s growing demand for electricity.Goal: Accelerate the addition of new renewable capacity to meet California’s growing demand for electricity.

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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-Biomass Program to improve air quality in CA’s agricultural areas.

Existing Renewable Facilities Program

Goal: Encourage economic viability of existing renewable projects.Goal: Encourage economic viability of existing renewable projects.

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Emerging Renewables Program

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.

Goal: Reduce costs and accelerate market acceptance through high volume production of emerging renewable technologies.

Goal: Reduce costs and accelerate market acceptance through high volume production of emerging renewable technologies.

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California Solar InitiativeGOAL: Move California toward a cleaner energy future by creating a sustainable solar market in California.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 Schwarzenegger’s 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

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California Solar Initiative (cont’d.)

CPUC Program

Commercial, Industrial, Existing Residential

$2 Billion*

CEC Program

New Residential Construction

(NSHP)

$400 Million

Publicly-Owned Utility Programs

Eligibility Requirements

under Development

$784 Million

*Additional $100 Million for Solar Thermal and Solar Water Heaters plus

$50 Million for Solar R&D

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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

New Solar Homes PartnershipGOALS: 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

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

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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.

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

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

Consumer Education Program

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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!

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Source: Center for Resource Solutions, 2006

ERCOT

NEPOOL GISMRETS

PJM GATS

RRCNJ SRECS

WREGIS

Attribute Tracking Systems

NY GTS

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California’s Renewables Portfolio Standard (RPS)

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 Schwarzenegger’s expanded goal to 33% by 2020.

GOAL: Increase the diversity, reliability, public health and environmental benefits of California’s energy mix.GOAL: Increase the diversity, reliability, public health and environmental benefits of California’s energy mix.

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Renewables Portfolio StandardsDSIRE: www.dsireusa.org September 2007

State Goal

State RPS

Solar water heating eligible

☼ PA: 18%¹ by 2020

☼ NJ: 22.5% by 2021

CT: 23% by 2020

MA: 4% by 2009 + 1% annual increase

WI: requirement varies by utility; 10% by 2015 goal

IA: 105 MW

MN: 25% by 2025(Xcel: 30% by 2020)

TX: 5,880 MW by 2015

☼ AZ: 15% by 2025

CA: 20% by 2010

☼ *NV: 20% by 2015

ME: 30% by 200010% by 2017 - new RE

☼ Minimum solar or customer-sited RE requirement* Increased credit for solar or customer-sited RE

¹PA: 8% Tier I / 10% Tier II (includes non-renewables)

HI: 20% by 2020

RI: 16% by 2020

☼ CO: 20% by 2020 (IOUs)

*10% by 2020 (co-ops & large munis)

☼ DC: 11% by 2022

☼ NY: 24% by 2013

MT: 15% by 2015

IL: 25% by 2025

VT: RE meets load growth by 2012*WA: 15% by 2020

☼ MD: 9.5% in 2022

☼ NH: 23.8% in 2025

OR: 25% by 2025 (large utilities)5% - 10% by 2025 (smaller utilities)

*VA: 12% by 2022

MO: 11% by 2020

☼ *DE: 20% by 2019

☼ NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops)

☼ NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops & munis)

ND: 10% by 2015

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CEC-CPUC RPS CollaborationCEC-CPUC RPS Collaboration

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.

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.

CPUC ROLEOversight 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.”

CPUC ROLEOversight 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.”

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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

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Renewable Development Goals and Statewide Potential

Technical Potential20% by 2010

56,160 GWh/yr

*Estimated potential for other WECC states is 3.7 million GWh/yr

262,150 GWh/yr*

108,000 GWh/yr

33% by 2020

Source: Renewable Resources Development Report and Implementing California’s Loading Order for Electricity Resources

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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-300-2007-001/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/ELECTRICITY_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.

2001 2004 2005 2006PG&E 8.9% 11.6% 11.9% 11.9%

SCE 14.8% 18.2% 17.2% 16.0%

SDG&E 1.0% 4.3% 5.2% 5.3%

IOUsCombined 10.9% 13.9% 13.7% 13.1%Total Statewide 10.5% 10.1% 10.7% 10.9%

Percent Renewables

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16.0%14.8%

11.9%

8.9%

5.3%

1%0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2001 2003 2004 2005 2006

San Diego Gas & Electric

Pacific Gas & Electric

Southern California Edison

California IOU Renewable Progress

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IOU RPS Contracts by Technology (MW)

Source: California Energy Commission, Database of IOU Contracts for Renewable Generation, August 6, 2007 update, www.energy.ca.gov/portfolio/IOU_CONTRACT_DATABASE.XLS.

PG&E SCE SDG&E 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

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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.

Fue l # of Facilities M WBiogas 4 7

Biom ass 39 837

Conduit Hydro 8 16

Diges ter Gas 9 24

Geotherm al 43 2,210

Landfill Gas 45 247

MSW 2 27

PV 3 0.023

Sm all Hydro 254 1,246

Solar Therm al 9 379

Wind 118 2,460

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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

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Long-Term Strategies to Reach 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

California’s aggressive greenhouse gas reduction goals place added importance on achieving 33% by 2020.

California’s aggressive greenhouse gas reduction goals place added importance on achieving 33% by 2020.

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Additional Information

Web Sites: Renewable Energy Program

www.energy.ca.gov/renewables/index.html

New Solar Homes Partnership/California Solar Initiativewww.gosolarcalifornia.ca.gov

California’s Consumer Energy Centerwww.consumerenergycenter.org

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Thanks for visiting California!

Kate ZocchettiRenewable Energy Program

(916) 653-4710or e-mail:

[email protected]

California Energy Commission California’s Renewable Energy Program Kate Zocchetti Renewable Energy...

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