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Implementing one of the most ambitious renewable energy standards in the country California’s Renewable Energy Programs Implementing one of the most ambitious renewable energy standards in the country Sara Kamins, Senior Policy Analyst California Public Utilities Commission for utility-scale projects

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Page 1: Implementing one of the most ambitious renewable energy standards in the country California’s Renewable Energy Programs Implementing one of the most ambitious

Implementing one of the most ambitious renewable energy standards in the country

California’s Renewable Energy Programs

Implementing one of the most ambitious renewable energy standards in the country

Sara Kamins, Senior Policy AnalystCalifornia Public Utilities CommissionSeptember 16, 2010

for utility-scale projects

Page 2: Implementing one of the most ambitious renewable energy standards in the country California’s Renewable Energy Programs Implementing one of the most ambitious

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Presentation Overview

• Renewables Portfolio Standard (RPS) program overview

• Progress toward RPS targets

• Project development barriers

• Solutions for achieving RPS in a cost-effective and timely manner

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Overview of 20% RPS Program

• All RPS-obligated retail sellers* must have procured an incremental 1% of retail sales (from baseline year) in renewable energy per year until 2010

• 20% obligation starts in 2010 and continues indefinitely

• California has a further goal of 33% by 2020

• RPS satisfied by MWhs generated on system-side of meter and delivered to CA, when applicable

• Bundled contracts only now, but potentially tradable RECs soon

*RPS-obligated entities include: Investor owned utilities, energy service providers, small and multi-jurisdictional utilities, and community choice aggregators. Municipal utilities (not regulated by the CPUC) have a voluntary RPS obligation.

All California retail energy sellers must procure 20% renewable energy by 2010

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RPS Program Goals

• Statutory goals of the RPS include:– Diversifying California’s electricity supply for reliability, public

health and environmental benefits– Promoting stable electricity prices by hedging against volatile

natural gas prices– Stimulating sustainable economic development– Developing competitive procurement process to obtain least-

cost, viable MWhs in a short time frame (“cost, risk, time”)

RPS policy reflects statutory goals

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Status of RPS Procurement

• CPUC has approved ~166 contracts for over ~13,000 MW of new and existing eligible renewable energy capacity

– ~5,000 MW of long and short term contracts currently under review

• ~1080 MW of projects under long-term contracts have come online since 2003, 50% out-of-state

• ~1000 MW of projects under short-term contracts have come online since 2003; 99% out-of-state

• Participation in RPS solicitations is increasing: – Greater participation from larger and more experienced developers

– Dramatic increase in number of solar PV bids

– 2009 RPS solicitation resulted in 100,000 GWh of bids

– Shortlisted 2009 bids would meet half of IOUs’ 33% target

Recent RPS solicitations have been robust

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RPS Procurement Process

CPUC approves RPS procurement

plans

IOUs hold annual

solicitation

IOU rank bids pursuant to “least-cost,

best-fit” methodology

• Independent evaluator oversees solicitation, bid evaluation, and negotiations• Utilities can also sign bilateral contracts

IOUs negotiate bids, execute

contracts

Once the IOU executes contract, must submit to the CPUC for approval

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0

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

En

erg

y (

MW

h)

/ ye

ar

Online Generation Expiring Generation Contracted Generation

Pending Approval Under Negotiation Annual RPS Target

2020 33% RPS Target

2010 20% RPS Target

Almost at 33% on a contract basis – but some face risk

Utilities on Track for RPS Targets

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Project Development Barriers

• Of 140 approved contracts, 23 have been terminated and 10 are

delayed (have missed commercial online date)

• CPUC identifies and tracks the development barriers for each

approved RPS project

• Significant project development barriers:

RPS solicitations attract larger projects, which face project development risk and take time to develop

- Transmission

- Permitting (CEC and County)

- Site control (e.g., BLM application process)

- Project financing

- Developer experience

- Technology maturity

- Fuel supply

- Equipment procurement

- Military radar

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CPUC Working on Solutions

• Tradable Renewable Energy Credits (TRECs)– Increases procurement options and increases competition

• Renewable Energy Transmission Initiative (RETI)– Identifies most cost-effective renewable resource zones and transmission to access them

• 33% Implementation Analysis– Analyses costs and tradeoffs between various 33% RPS scenarios

• More robust long-term procurement planning methodology– Streamlining inputs and assumptions in utility procurement scenarios to understand their

fossil needs in relation to all other demand and supply-side energy programs

• Programs aimed at smaller system-side DG projects

– To hedge against risk and timing of larger-scale RPS projects, programs for smaller RPS-eligible projects emerging

CPUC is working to create multi-agency solutions to known barriers

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Program Size (MW)

Participating Buyers and Sellers

Eligible RPS Technologies and Project Size

CPUC Status Market Opportunity

Feed-In Tariff (AB 1969)

500 All IOUs All technologies

Up to 1.5 MW

Fully Implemented (D.07-07-027)

Contracts accepted until cap reached

Senate Bill 32 750 (incl. FIT)

IOUs and municipal utilities

All technologies

Up to 3 MW

CPUC working to implement for IOUs

Contracts accepted until cap reached

RAM 1000 3 large IOUs All technologies

Up to 20 MW

Proposed Decision Proposes 2 auctions per year

SCE Solar PV Program (SPVP)

500 250 MW UOG

250 MW IPP

Solar PV Primarily rooftop 1-2 MW

Fully Implemented (D.09-06-049)

At least 1 auction per year, first in 4/2010

PG&E Solar Program

500 250 MW UOG

250 MW IPP

Solar PV Primarily ground-mount 1-20 MW

Approved in D.10-04-052, Staff implementing

At least 1 auction per year, first in Q1 2011

SDG&E Solar Program

100 26 MW UOG

74 MW IPP

Solar PVPrimarily ground-mount 1-5 MW

D.10-09-016 approved program, Staff to implement

At least 1 auction per year, implementation

SCE RSC Program

250 IPPs All technologies

Up to 20 MW

N/A SCE accepting bids in September 2010

System-Side DG Programs

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Renewable Auction Mechanism

• Key program design elements of RAM include:– Standard Contract

o Simple contract based on the IOUs’ existing feed-in tariff contract.

o Terms and conditions are set before the auction and cannot be negotiated.

– Market-Based Pricing

o Sellers compete for a contract in a renewable auction mechanism.

o Bids are selected by least-cost price first until the auction capacity cap is reached.

o Price (and contract) is not negotiable and is paid as bid.

– Project Viability

o Minimum viability criteria to participate in the auction, e.g. 100% site control, developer experience constructing a project of similar technology and size.

o Project development security, performance assurance (for >5 MW projects).

o Project must be online within 18 months.

CPUC may offer new simple, streamlined opportunity for system-side DG consistent with RPS goals

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Questions?

Sara KaminsSenior Policy Analyst, RPS TeamCalifornia Public Utilities CommissionPhone: 415-703-1388Email: [email protected]

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0

20

40

60

80

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2003 2004 2005 2006 2007 2008 2009

Solicitation Year

En

erg

y (

TW

h)

/ ye

ar

Wind Solar Small Hydro Geothermal Biogas Biomass

Source: California Public Utilities Commission, 1st Quarter 2010

Solar participation has increasing most dramatically

RPS Solicitation Bids by Fuel Type

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Breakdown of Solar Bids by Technology

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50

60

2007 2008 2009

Solicitation Year

En

erg

y (T

Wh

) /

year

Solar PV Solar Thermal

Source: California Public Utilities Commission, 1st Quarter 2010

63%

58%

35%

65%

42%37%