California update

California update

August 09, 2018 | By James M. Berger in Los Angeles

Two bills have been proposed in the California legislature that could affect renewable energy companies in California: SB 100 in the state senate and AB 813 in the state assembly.

100% renewables

SB 100 would set a goal of 100% of retail sales of electricity in California to come from eligible renewable energy and other zero-carbon sources by the end of 2045. The bill is scheduled for floor votes in both houses of the California legislature as soon as August.

Current law requires each utility or other load-serving entity to deliver at least 50% of its energy from eligible types of renewable energy by 2030, with interim targets of 40% by 2024 and 45% by 2027. The investor-owned utilities in California are already on track to meet the 50% goal by 2020, 10 years ahead of schedule.

The proposed new law would make two important changes. First, it would increase the existing targets without changing the dates. The new targets would be 44% by 2024, 52% by 2027 and 60% by 2030. The proposed law does not establish subsequent targets other than the overall policy of 100% by 2045. However, it would direct the public utilities commission to establish appropriate three-year compliance periods for after 2030.

Because the renewable energy production has consistently outpaced California’s legal requirements in past years, this proposal to leave the setting of post-2030 targets until the future gives the public utility commission the ability to respond better to the facts on the ground.

Second, the proposed new law would allow the targets to be met not only from renewables, but also other “zero-carbon resources.” SB 100 does not define “eligible renewable energy resources,” but the category presumably would include everything that is eligible under current law: biodiesel, biomass, bio-methane, fuel cells using renewable fuels, geothermal, certain kinds of hydroelectricity, municipal solid waste, ocean wave, ocean thermal, solar, tidal current and wind. SB 100 also does not define “zero-carbon resources.” The category could presumably include nuclear energy, but it seems unlikely that it is intended to include nuclear since California is shutting down its last nuclear power plant by 2025.

Under existing law, municipal utilities are not required to deliver more than a specified minimum quantity of renewable energy under the program if more than 50% of their retail sales are from large hydroelectric facilities. Large existing hydroelectric facilities in California are not considered renewable energy for this purpose. Hydroelectric facilities are not eligible if they are larger than 30 or 40 megawatts, depending on the circumstances. The 50% threshold would be reduced to 40% under SB 100. The intention seems to be to shift slowly away from hydroelectricity.

The coming electrification of the transportation sector is expected to make the power industry a larger source of greenhouse gas emissions and to make the transportation sector a smaller contributor to greenhouse gas emissions. SB 100 would also encourage conversion of buildings and ports from natural gas to electricity.

Shifting the energy use from oil in the transportation sector and natural gas in the building and port sector to electricity will increase overall electricity consumption, making it more difficult for utilities to meet renewable energy targets. Advocates for the higher renewable energy percentages do not want them to prevent utilities from taking actions to reduce overall greenhouse gas emissions.

SB 100 requires that policies be adopted by the end of 2020 to remove any disincentives to tackle greenhouse gas emissions.

The proposed law suggests one policy to be considered is to provide an allocation of greenhouse gas emissions allowances to utilities and other retail electricity suppliers as a way of acknowledging that a shift is unavoidable in greenhouse gas emissions from transportation to power and from converting buildings and ports from natural gas to electricity end uses. The proposed law does not provide any more details.

SB 100 says it would require 100% renewable energy while “not increas[ing] carbon emissions elsewhere in the western grid.” This is important when considering another recent proposal, AB 813.

Reducing carbon

AB 813 is called “Multistate Regional Transmission System Organization: Membership.” It passed the California assembly in 2017, but did not reach a vote in California’s senate. It was carried over to the current session and approved by the senate energy committee in June. Governor Jerry Brown (D) has been pushing this as a signature issue in the last few months of his term in office.

AB 813 would transform the California Independent System Operator (CAISO) into a regional transmission organization.

The intention is to create a regional grid that includes more than just California as a way to reduce costs for consumers and increase the use of carbon-free energy. For example, when California is producing too much solar energy, it could be more easily shipped to neighboring states and vice versa.

Critics worry that this will allow dirty electricity, such as electricity from coal plants in Wyoming, to come into California. SB 100 is supposed to prevent this. AB 813 would also bar California entities from joining any regional transmission organization if the governing rules of that regional grid do not protect and preserve a state’s authority over matters regulated by the state, including energy procurement policy and resource planning.

AB 813 also includes other measures to promote California’s environmental and energy goals. For example, the proposed law would require the new state RTO to “maintain a transparent system for tracking emissions of greenhouse gases resulting from resources dispatched to serve the California load.”

It is difficult to pin down the net effects of AB 813. The bill should help some projects since any given project could have a larger pool of customers to which it can sell. Projects may also be able to get a better price from an out-of-state customer than an in-state customer. It might also reduce curtailment of power plants by making it easier to send excess power out of state at times when production would otherwise have to be curtailed. At the same time, in-state electricity generators could have more competition, which would mean lower prices.