Next Steps for California
Achieving California’s 2050 greenhouse gas reduction goal will almost certainly be impossible without significantly decarbonizing the electricity system. Experts estimate that the 2050 goals will require a 90 percent reduction from business-as-usual emission levels. With energy demand in California projected to double by 2050 due to increasing population and economic growth, meeting the 2050 target will require a significant overhaul of the state’s energy systems. Specifically, state leaders will need to focus on increasing low-carbon electricity generation through the deployment of renewable energy.
California’s electricity sector is one of the largest sources of greenhouse gas emissions, contributing almost 20 percent of statewide emissions. As a result, the state’s climate change goals necessitate reductions from this sector through energy efficiency measures to reduce demand and by switching to from fossil fuel-based energy to renewable sources.
Achieving California’s 2050 greenhouse gas reduction goal (80% below 1990 levels) will almost certainly be impossible without significantly decarbonizing the electricity system. Experts estimate that the 2050 goals will require a 90 percent reduction from business-as-usual emission levels.
California is on course to meet both its intermediate and 2020 renewables targets. Between 2003 and 2012, state leaders deployed 4,498 megawatts of new renewable energy in commercial operation, including 1,957 megawatts during 2012 alone.
Develop 2030 RPS benchmarks to ensure compliance at regular intervals.
The new 2030 RPS should include detailed benchmarks for utilities to meet at regular intervals, such as every two or three years. The benchmarks will ensure that progress bringing renewables on-line will be linear and steady, that utilities are complying with the mandate, and that policy makers can adjust the standards as needed to reflect changing market and technology conditions.
Develop RPS co-benefit benchmarks.
Co-benefit benchmarks could include improved localized air quality from reduced fossil fuel-based power plants replaced by renewable energy sources, economic development in disadvantaged communities from the installation of distributed renewable generation facilities, and hedging against natural gas price increases and future electricity infrastructure needs that could negatively impact ratepayers without alternative, renewable energy supplies.
Develop criteria for new renewable resources that improve their ability to support grid reliability through greater operational flexibility.
Requirements and/or incentives can be developed for renewable generators to operate their facilities in ways that support, or even improve, grid reliability. These operational characteristics could include curtailment, providing ancillary services for the grid from the renewable energy generation, or integrating technologies like energy storage that allow for improved dispatchability.
Develop meaningful incentives for utilities to meet benchmarks.
Incentives could include rules that ensure certainty of cost recovery for investments made to achieve the standards, including necessary distribution upgrades with incentives for cost-effective spending. Officials can also consider proven incentives such as additional credit for dispatchable renewable energy and renewable energy that displaces the dirtiest energy sources or otherwise can guarantee a reduction in greenhouse gases.
Include distributed generation goals in the 2030 RPS, including accounting for “behind the meter” generation.
“Behind the meter” generation could be accounted for in meeting a 2030 RPS. The net metering program could help utilities meet their renewable obligations, although the energy produced under the program currently does not count toward a utility’s RPS obligation. Policy makers could also set a separate target or goal for renewable energy from net energy metering resources as part of the distributed generation targets.
Consider allowing greater reliance on unbundled Renewable Energy Credits (RECs) to stimulate lower-cost renewable energy.
Current policy restricts reliance on unbundled RECs, which represent the environmental attributes of renewable energy generation, in an expanded RPS. “Unbundled” RECs can be freely traded in a market, and policy makers should explore options for allowing greater use of them. Unbundled RECs can help finance renewable projects outside of utility jurisdiction and may allow for more cost-effective renewable procurement.
Convene an expert group to assess utility regulations and future business models that will implement renewable energy goals.
Policymakers may need to create new business incentives for utilities to offer customers more choices for managing their electricity usage and selecting preferred resources. This effort may require a legislative process to determine which incentives or changes in regulation would be necessary to encourage utilities to adopt and integrate greater levels of renewables and greenhouse gas-free energy sources.
Engage in a comprehensive cost-benefit analysis of long-term renewables and greenhouse gas scenarios.
Improved planning and coordination for renewables deployment and integration will require an assessment or analysis of the costs and benefits of various options and technologies. An “all-in” resource valuation in a single state regulatory proceeding at the CPUC would undertake cost-benefit analysis to determine the amount of renewable resources needed to meet future RPS and greenhouse gas reduction targets and the total likely cost of these investments.
Ensure that electric utilities, and grid operators compile and share data on grid infrastructure, resource needs, and consumer preferences.
A coordinated energy planning process will require greater data transparency from utilities and grid planners regarding current electricity and infrastructure needs at the distribution and transmission levels in order to determine the most optimal and cost-effective locations and technologies to deploy.
Update California’s “Energy Action Plan” to incorporate plans for a future low-carbon grid.
The current energy action plan is over 10 years old, having been adopted in 2003 by the state’s major energy agencies to prioritize electricity resources through a “loading order,” starting with energy efficiency and conservation. As a result, the plan generally does not reflect the most current thinking and priorities of a rapidly changing policy and technology environment.
Promote the use of smaller planning areas for distributed and utility-scale renewables.
Proper planning will be critical to locating distributed resources in the most cost-effective manner. Planners will need to assess the renewable energy potential in key areas within each region of the state, as well as the integration needs, and determine the most efficient locations.
Consider more granular scheduling of power delivery to provide improved and lower-carbon options for renewables integration.
A move to more granular (i.e. shorter time periods and for specific resources) scheduling of generating resources could provide grid operators with better insight into the available options to balance intermittent renewables.
Provide improved renewable forecasting to assist grid integration efforts.
If policymakers require renewable energy developers and operators to provide shorter-term forecasting of resource availability, that information could help grid operators better plan for and accommodate intermittent renewables without relying on fossil fuel generation to provide excess backup power as security.
Develop policies and design rates to boost demand response financing, tariffs, and compatible appliances.
Government incentives and loan guarantees for “smart appliances” can spur better demand response control to delay usage of of dishwashers, refrigerators, or industrial equipment. In addition, effective pricing schemes such as “time-of-use” rates could encourage shifting electricity usage to cheaper, off-peak hours.
Continue to ensure more energy storage deployment.
Energy storage technologies hold the promise of balancing intermittent renewable energy by storing surplus renewable energy for dispatch at a later time. Policymakers should encourage cost-effective deployment of energy storage technologies by developing parameters for long-term contracts for energy storage by utilities and promoting vehicle-to-grid distributed energy storage from electric vehicles connected to the grid.
Promote fast-ramping generation products to help balance intermittent renewables.
Currently, grid operators plan to compensate for changes in renewable supply mostly with natural gas-fired power plants, which emit greenhouse gases. Policy makers should instead define a set of fast-ramping products that do not emit greenhouse gases and have specific ramp time, duration, and availability requirements to provide operators with greater flexibility to cover intermittent resources.
Promote fast-ramping generation products to help balance intermittent renewables.
Currently, grid operators plan to compensate for changes in renewable supply mostly with natural gas-fired power plants, which emit greenhouse gases. Policy makers should instead define a set of fast-ramping products that do not emit greenhouse gases and have specific ramp time, duration, and availability requirements to provide operators with greater flexibility to cover intermittent resources.
Develop “forward procurement mechanisms” to balance renewables without increasing greenhouse gas emissions.
“Forward procurement mechanisms” could include an assessment of existing generating capacity and tools to ensure that grid operators prioritize carbon-free resources. The tools could use physical characteristics to determine the best resources to form and shape supply without increasing greenhouse gases.
Develop an “energy imbalance market” across Western North America to integrate variable renewable energy without using fossil fuel resources.
Grid operators can compensate for intermittent renewable energy from specific locations within their territories by broadening access to renewable energy supplies across the western North America region. The Western Electricity Coordinating Council (WECC) has been exploring the possibility of creating a region-wide energy imbalance market (EIM) to allow states like California to import renewable energy from neighboring states when local resources dwindle.
“Companies have reduced their costs, yet the Renewable Portfolio Standard is already full. The technology curve is all dressed up with nowhere to go."
Nancy Pfund, DBL Investors