California’s Renewable EnergyTransmission Initiative

Anne GilletteRenewable Energy Policy Analyst

California Public Utilities Commission

August 12, 2008

• California’s clean energy goals and “The Transmission Problem”

• Transmission permitting at the CPUC

• The Renewable Energy Transmission Initiative (RETI)

• Lessons Learned from RETI

Presentation Outline

• California’s clean energy goals and “The Transmission Problem”

• Transmission permitting at the CPUC

• The Renewable Energy Transmission Initiative (RETI)

• Lessons Learned from RETI

Presentation Outline

California’s Clean Energy Future

• Renewables Portfolio Standard:

– Retail energy sellers must procure an additional 1% of their retail sales from renewables each year until they reach 20% by 2010

– California is considering a further renewable energy goal of 33% by 2020

• California Global Warming Solutions Act of 2006 (AB 32)

– 2020: Emissions at 1990 levels

– 2050: Emissions at 80% below 1990 levels

– Draft Scoping Plan lists a 33% by 2020 RPS as one of 5 “key elements” needed in order to realize the 2020 emissions goal

Risk Factors for 2010 RPS Generation

0%10%

20%30%

40%50%

60%70%

80%90%

100%

PTC/ITC

Transm

issi

on

Develo

per

Finan

cing

Site C

ontrol

Perm

ittin

g

Price

Reopen

er

Mili

tary

Rad

ar

Technolo

gy

Fuel S

upply

Equipm

ent P

rocu

rment

% o

f 20

10

Ge

ne

ratio

n A

ffect

ed

Note: California has little control over this barrier

Transmission is a major barrierto RPS project development in California

Why is transmission a barrier?

• Many of California’s most valuable renewable resources are far from load centers

• Existing transmission lines are often congested

• Significant transmission expansion is required to bring more renewable resources to market

• Chicken-and-egg problem: utilities don’t want to build transmission until generation development is confirmed; developers don’t want to commit to generation projects unless transmission access is confirmed

• Permitting a transmission lines is a rigorous and often contentious process

CPUC Work to Address “The Transmission Problem”

• Streamlining the application process

• Implementing Backstop Cost Recovery

• Working with California Independent System Operator (CAISO) on interconnection queue reform

• Addressing outstanding issues through CPUC RPS Transmission Investigation/ Rulemaking

• Anticipating needs in the permitting process – the Renewable Energy Transmission Initiative (RETI)

• California’s clean energy goals and “The Transmission Problem”

• Transmission permitting at the CPUC

• The Renewable Energy Transmission Initiative (RETI)

• Lessons Learned from RETI

Presentation Outline

The CPCN Process

• CPUC must issue a Certificate of Public Convenience and Necessity (CPCN) for major transmission projects proposed by California Investor-Owned Utilities (IOUs)

– Note: municipal utilities have their own permitting processes, but joint muni-IOU lines might be cost-effective

• CPCN review has two components:

– Determination of need

– Environmental review

CPCN: Determination of Need

• A transmission project can be justified by the CPUC on the basis of:

– Economics: CPUC has given the CAISO a “rebuttable presumption” on the economic analysis of a line, provided certain criteria are met

– Reliability

OR

– Renewable energy goals

CPCN: Environmental Review

• CPUC must analyze impacts of proposed line pursuant to the California Environmental Quality Act (CEQA); must consider alternatives that meet project objectives

• A project crossing federal land will also require federal environmental review

– CPUC prepares joint environmental documents with federal agencies to address both CEQA and the National Environmental Policy Act (NEPA)

– Federal agency involvement often means delay

Permitting takes time

• CPCN review takes ~18 months if all goes well

• CEQA review alone generally requires over a year because of biological surveys, etc.

• Public can comment on scope of environmental review, propose alternatives to the project

• NIMBY issues and environmental concerns can create public opposition and result in project delay

RPS goals have dramatically changedthe transmission game

• Pre-2002 (prior to RPS legislation) – transmission planning and permitting focused on addressing system reliability.

• Post-2002 – Devers-Palo Verde 2 approved based on economics; Tehachapi approved based on need to interconnect renewables – and more to come.

• Today – Given aggressive RPS goals, CA needs to proactively identify and evaluate multiple renewable transmission projects.

Which “renewable lines” are the best?

• What counts as a “renewable” line? Should some sort of economic test also be applied?

• CPUC must ensure development of cost-effective renewable transmission and generation

– CPUC both oversees IOU renewable procurement and permits IOU transmission lines.

– Pursuant to statute, IOUs must procure the most cost-effective renewable resources, accounting for transmission and other costs.

• CPUC needs to consider system reliability, economic benefits and renewables when permitting multiple transmission projects

• California’s clean energy goals and “The Transmission Problem”

• Transmission permitting at the CPUC

• The Renewable Energy Transmission Initiative (RETI)

• Lessons Learned from RETI

Presentation Outline

Renewable Energy Transmission Initiative

• Statewide collaborative study effort to identify the transmission needed to access and deliver the most cost-effective renewable resources in CA and neighboring states

• Participants: CPUC, California Energy Commission, CAISO, IOUs, munis, developers, environmental advocates, other interested parties

• Commitment to open, inclusive, transparent process on an expedited schedule

• Goals:

– Answer the question, Which lines are best?

– Facilitate the planning and permitting of the “best” lines

RETI Objectives

• Provide a common forum for permitting agencies, utilities, and developers, and stakeholders to examine the location and timing of new generation/transmission projects;

• Develop common information, tools and analytical methodologies to objectively evaluate renewable development potential; and

• Support existing transmission planning institutions.

RETI is an inclusive, transparent process

• CPUC needs an effective way to compare relative benefits of renewable development in various regions of CA, neighboring areas

• Stakeholder participation critical to ensuring accurate representation of a project’s economic and environmental implications

• RETI will provide objective, consistent, publicly-vetted resource and cost information to supplement the record in CPUC transmission proceedings

• Transparency needed if used in CPCN proceeding

Three-Phased Process

• Phase 1 – Identification and ranking of Competitive Renewable Energy Zones (CREZs)

• Phase 2 – Refinement of CREZ analysis for priority zones and development of statewide conceptual transmission plan

• Phase 3 – Detailed transmission planning for CREZs identified to be developed

Phase 1 – Scope of Work

• Identify developable renewable resources in California and neighboring areas through engineering review (slope, road access, land use constraints, etc.)

• Analyze the economics of development in each area, including:

– Costs: Generation and Transmission

– Value: Energy and Capacity

• Identify and rank high-value CREZs based on geography, development timeframe, shared transmission constraints, additive economics of specific resources

• Evaluate environmental impact of development in each CREZ

• Final Phase 1 Report due in October 2008

Phase 1 – Environmental Working Group

• Significant and very positive development

• For first time, environmental organizations and developers representing all renewable technologies working on project siting in a systematic, collaborative, proactive manner

• EWG has:

– Identified and mapped “black-out areas” where generation development precluded by law or policy

– Identified and mapped “yellow areas” where generation development is restricted or will be environmentally difficult

– Developed a methodology for rating CREZs according to their environmental impact and combining that rating with the economic CREZ ranking to develop RETI’s final CREZ “short-list”

Phase 1 – Important Points

• Not reinventing the wheel – pulling together and building on pre-existing work, relevant regulatory decisions and agency priorities

• Focusing on actual commercial potential

• Applying consistent assumptions across the region

• Stakeholders drive process by validating the work of an independent consultant (Black & Veatch) through consensus input

• Goal is to rank CREZs through stakeholder consensus to reflect commercial potential, economics, and hard to quantify environmental and other concerns

Phases 2 and 3 – Scope of Work

• Phase 2

– Transmission owners and other interested parties develop conceptual transmission plans for the highest ranking CREZs in collaboration with existing transmission planning organizations/institutions

– Draft planned for December, 2008; may be iterative

• Phase 3

– Existing transmission planning organizations collaboratively design transmission plans of service that result in applications to construct new transmission infrastructure to meet RPS goals

– ~ 8 month-long process; may be iterative

RETI Organization / Roles

• Coordinating Committee– Oversees the overall RETI

process– Ensures development of

needed information – Keeps the process on

schedule

• Stakeholder Steering Committee– Primary working group– Key stakeholder

representatives– ~30 members

• Plenary Stakeholder Group– Reviews Steering Committee

work– Provides feedback, “ground-

truthing”– All stakeholders and the

public

• California’s clean energy goals and “The Transmission Problem”

• Transmission permitting at the CPUC

• The Renewable Energy Transmission Initiative (RETI)

• Lessons Learned from RETI

Presentation Outline

Lessons Learned…

• Don’t reinvent the wheel

• Make transparency a priority

• Maintain a website to facilitate transparency – post all presentations, minutes of work-group meetings, etc.

• Use technology to facilitate participation in meetings

• Recognize that all stakeholders are very busy; make participation easy; have consultant develop straw proposals, etc.

• Provide schedule, process at beginning

…and More Lessons Learned

• Try for agreement from key stakeholders on guiding principles at start

• Ensure that stakeholder representatives understand and agree to their obligations

• Active facilitation of work groups and stakeholder meetings is key

• RETI has benefited from a Coordinating Committee responsible for keeping the process on track and coordinating with other processes

• Decision-making agencies must be clear about what they want/need from process

• Put processes and understandings in writing

More Information

• RETI Mission Statement, Frequently Asked Questions, meeting minutes and presentations, etc. available at: www.energy.ca.gov/reti/

• Questions:Anne Gillette

aeg@cpuc.ca.gov415-703-5219