California update

California update

April 05, 2020 | By James M. Berger in Los Angeles

California residents are under a statewide stay-at-home order that is in effect until further notice.

The order makes exceptions for essential businesses. It does not explicitly allow installation of rooftop solar systems and construction of utility-scale power plants, transmission lines and similar projects because it puts in the essential category workers who “maintain” the generation, transmission and distribution of electric power.

However, at least one California industry trade association concluded that these projects could continue, relying partly on federal guidelines that are worded more broadly.

Electricity demand was down approximately 3% to 5% as of March 26, according to the California Independent System Operator, which operates the state electricity grid. Mild weather may be masking larger reductions in demand.

Resource Plan

The state is still moving aggressively to ramp up renewable energy as a percentage of total electricity supply and to reduce greenhouse gas emissions.

California would double its clean energy and storage capacity by 2030 under a model integrated resource plan the California Public Utilities Commission adopted in late March.

The plan is built around a “reference system portfolio”, which is an optimal portfolio that the commission expects all retail electricity suppliers in the state to use when filing individual integrated resource plans later this year. The retail electricity suppliers affected are the three big investor-owned utilities, county-level community choice aggregators, electric service providers and electric cooperatives.

The reference system portfolio uses a greenhouse gas emissions target for the electric sector in 2030 of 46 million metric tons and keeps the utilities, CCAs and other retail electricity suppliers on a trajectory to meet California’s goal to supply 100% of electricity with zero-carbon resources by 2045.

The plans submitted by retail suppliers must also show how the state could reduce its annual greenhouse gas emissions for the electric sector to 38 million metric tons by 2030 if it decides to adopt the more aggressive goal.

Greenhouse gas emissions in the state were 424 million metric tons in 2017. The 2020 goal of generating 33% of electricity from renewables was reached in 2018.

The California Public Utilities Commission (CPUC) issued the blueprint portfolio in late March as the first step in a two-year review of its goals and how to reach them.

California has a two-year cycle for integrated resource planning. In the first year, the CPUC develops an optimal electric resource portfolio. The portfolio balances many objectives, including achieving the greenhouse gas emissions target for the sector, maintaining reasonable electricity prices for businesses and consumers and ensuring system reliability. In the second year of the two-year cycle, each retail electricity supplier must submit an individual integrated resource plan that the CPUC then considers individually and in the aggregate with other plans.

The 46-million-ton target for greenhouse gas emissions is a major reduction. It is 26% below the actual emissions for the electric sector in 2017 and 56% below the emissions in 2000.

To achieve these targets, the new resource buildout will require the following additional construction by 2030: nearly 2,800 megawatts of new wind projects in the state, transmission capacity to import another 600 megawatts of wind electricity from nearby states, 11,000 megawatts of new utility-scale solar projects and nearly 8,900 megawatts of battery storage.

This would be an approximately 30% increase in wind capacity, a more than doubling of solar capacity and a tripling of battery storage capacity.

If the CPUC ultimately chooses to reduce annual greenhouse gas emissions to 38 million metric tons by 2030, the buildout will require moderately more solar and battery storage and significantly more wind: nearly 5,300 megawatts of new wind projects in the state, transmission capacity to import another 3,000 megawatts of wind electricity from nearby states, nearly 12,000 megawatts of new utility-scale solar projects and around 9,7000 megawatts of battery storage.

The utility, CCA and other retail supplier integrated resource plans are due by September 1, 2020. From there, the CPUC will combine the individual plans and adopt a preferred system portfolio based on either the 46-million-ton target or the 38-million-ton target for greenhouse gas emissions.

Either way, significant new renewable energy and storage capacity will have to be built. While the utilities have generally been ahead of their renewable portfolio standard targets, the greenhouse gas emissions goals will drive additional construction.

The individual integrated resource plans submitted will be a roadmap for project developers about where to build. The CPUC’s order sets out a year-by-year accounting of the new capacity additions it expects for each type of resource: wind, solar and storage.

New transmission development remains an area of significant uncertainty. The CPUC said, “[T]he locations of too much capacity are too uncertain to jump directly to transmission investments at this stage with either of these portfolios.”

Another part of the energy industry that was mostly absent from the projections is offshore wind. The CPUC decision treats it as a novelty. The CPUC said it is “keenly interested in the development of offshore wind,” but it decided that development was too speculative to include in the model portfolio. It said that it can “incorporate new resources and information as they become available.”

Community Solar

California has been requiring solar panels on all new homes since January 1 this year.

The California Energy Commission decided in February that participation in a community solar program initiated by the Sacramento Municipal Utility District is another way to satisfy the requirement for new houses to have solar panels. (For more details about the California rules, see “California Update” in the June 2018 NewsWire).

When the original requirement to install solar panels was published, it contemplated that the solar requirements could be met with a shared power system serving multiple homes.

The California Energy Commission is expected to approve additional community solar programs.

To be approved, a community solar program must satisfy six requirements. They include that the performance of the solar arrays must be the same or better than rooftop solar, the arrays must be dedicated directly to buildings that would otherwise have been required to have rooftop panels, there must be good recordkeeping, and the company running the community solar program must be accountable to everyone who relies on the system for compliance with the solar requirements.

The SMUD program — and other similar programs that are approved in the future — may open the California residential solar market to a new set of developers and investors. The companies who currently install solar systems on houses are generally not the same companies that build community solar projects.