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Regulatory Round-up: A brief discussion on IRPs and policy goals

January 4, 2021 by Ayesha Ahmed

Integrated resource plans (IRPs) are electricity suppliers’ plans for a meeting intended customer demand over a 15-year horizon in an economical way. This document maintains resource needs, policy goals, operational constraints, and proposed resource choices (including customer resource preferences), all whilst considering environmental impact.

Public-Owned Utilities (POUs) update their IRP filings at least once every five years, and are required to submit them for approval to the California Energy Commission (CEC). Whereas Investor-Owned Utilities (IOUs) update their IRP filings at least once every three years, and are required to submit them for approval to California Public Utilities Commission (CPUC). An IRP is more directional than determinative, giving the utilities a context on how they plan to abide by the CEC guidelines (in collaboration with California Air Resources Board (CARB), and the California ISO).

The most recent IRPs were developed in response to the Clean Energy and Pollution Reduction Act of 2015 (California Senate Bill 350; herein SB 350), which established new clean energy, clean air, and greenhouse gas (GHG) reduction goals for 2030, and set several requirements for POUs.

SB 350: Senate Bill 350 or Governor’s 50-50 Plan – This bill originated in January 2015, when Governor Brown, convened for 50% of California’s electricity to come from renewable sources by 2030, up from a 33% goal by 2020. He also targeted doubling the energy efficiency of existing buildings, and reducing automobile dependence on oil and gas by 50%. SB 350 required POUs with an average load greater than 700 GWh (in the 2013-16 period) to develop updated IRPs by January 1, 2019, and submit them to the Energy Commission to review. POUs are also required to address transportation electrification in their IRPs.

By October 2015, Governor Brown signed SB 350 into a law, with its main objectives as follows:

  1. Increase the RPS to 50% by 2030;
  2. Direct the CEC to set annual statewide targets to double energy savings through energy efficiency by 2030;
  3. Initiate the process to create a multi-state regional governance structure for the CAISO;
  4. Create new integrated resource planning requirements for investor-owned utilities, many of the publicly owned electric utilities (including BWP), electric service providers, and community choice aggregators; and
  5. Direct the CARB to adopt regulations to remove disincentives for utility investment in transportation electrification.

SB 350: implementation examples across the sector

Several of the utilities responses to SB350 are listed below:  

  • Silicon Valley Power’s (SVP) IRP stated that the 2017 power mix consisted of 38% eligible renewable resources. When large hydroelectric resources were included, SVP’s power mix was 72% GHG  free. SVP expects to exceed the 50% mandate in 2030 and beyond, based on RECs, and projected load.
  • SMUD maintained a declaratory status by stating how SD-9’s GHG emission reduction target of 90% below 1990 levels by 2050 is consistent with the 2030 target carbon emissions range set under SB 350.
  • Burbank Water & Power (BWP) disclosed the retirement of a 1,800 MW IPP coal plant in 2025. Additionally, the IRP indicated that BWP would maintain share in the existing 2,400 MW Southern Transmission System (STS) high-voltage direct current transmission line from IPP to Southern California.

SB 100: Senate Bill 100 or the 100 Percent Clean Energy Act of 2017. This Bill was originally introduced in 2017 and was enacted in the 2018 legislative session on September 10, 2018. It took effect on January 1, 2019. The bill was designed to accelerate the RPS requirements of SB350, provide pre-2030 staging points, and confirm a time horizon for a true zero-carbon grid, see below:

  1. Further increase the RPS from 50% to 60% by December 31, 2030 and also speed up interim requirements. SB 100 accelerates the RPS obligations for retail sellers, including POUs as follows; From 40 % to 44 % by 2024, from 45 % to 52 % by 2027; and from 50 % to 60 % by 2030.
  2. Establishes a statewide target of 100% of total retail electricity sales to come from zero-carbon resources by December 31, 2045.
  3. Encourages conversion of energy end-uses now fueled by fossil fuels to electricity where such a change would reduce GHG emissions.

SB 100: Implementation examples across the sector

Several of the utilities updated responses to SB 100 are listed below:

  • Silicon Valley Power’s (SVP) IRP modelling included the addition of 670 MWs of solar and 500 MWs of wind in terms of installed capacity to the portfolio.
  • Burbank Water & Power (BWP) involved the same replacement portfolio options for IPP coal used in the SB350 analysis.
  • SMUD planned to engage with state agencies to ensure implementation of achieving 100% retail electric load being served by carbon-free resources by 2045. While SMUD indicated that more than 50% of their energy needs would be from RPS-eligible renewable resources, they were still struggling to fulfill a 60% RPS by 2030.

While most IRPs were designed to develop their renewable portfolio in line with SB 350, the later passing of SB 100 dictated that many IRPs must again realign their IRPs and Power Purchase Agreements (PPAs). For instance, public utility Silicon Valley Power (SVP) modelled a base case with 80% wind and 20% expansion plan, low load growth assumptions and a high carbon price forecast, in lieu of implementing SB 100.

Commentary on Battery Storage systems conforming SB 100 implementation:

In response to the regulations placed by the State, utilities drew up energy storage plans to ensure they could achieve the requirements set out in  SB 100. Recent IRP analysis across a few utilities indicated the following: 

  • Pacific Gas & Electric (PG&E) declared the installation of AB 2514 Energy Storage RFOs, AB 2868 Distributed Energy Storage Investments and Programs, OCEI and System Reliability RFOs in view of the emission reduction target.
  • Sacramento Municipal Utility District (SMUD) declared the deployment of 4-hour lithium-ion batteries, thermal energy storage within SMUD’s service territory; and
  • Burbank Water and Power is looking at a CAES pilot project in the incoming decade to meet the lower emissions targets stated by SB 100.

Compressed air energy storage (CAES)

CAES uses excess energy during low demand periods to compress air. It then injects the air into a depleted natural gas reservoir. Afterwards, the compressed air is used to power a generator during times when energy demand is highest. The plants use an underground catacomb created in a salt formation. However, underground porous rock formations serve as a suitable alternative to salt formations in case the former isn’t available in the close territory.

Clean Energy and Energy Efficiency (CEEE) Projects

Senate Bill 1018 allows CPUC to allocate up to 15 % of each IOU’s auction proceeds for clean energy or energy efficiency projects. CPUC developed the mechanism by which IOUs may seek approval to fund CEEE projects that are not otherwise funded using auction proceeds. In 2016, as per the requirements of Assembly Bill 693 (2015), Senate Bill 92 (2017), and a CPUC decision directing the implementation of AB 693, the IOUs began to designate auction proceeds towards solar projects on the Multifamily Affordable Housing program. In 2018, consistent with requirements set by the CPUC, IOUs designated more than $117 million in allocated allowance auction proceeds to fund this and other CEEE programs.

Policy Goals

Over the course of the last 20 years, California has passed a variety of regulations & laws that established base requirements for IOUs and POUs to plan for system reliability over the long haul, whilst also meeting numerous environmental goals. The most significant legislative bills addressing California’s environmental and energy policies in the last 10 years relevant to IRPs have been captured below;

Date Legislation Description
Sept. 10, 2018 Senate Bill 100 (DeLeon, Chapter 312, Statutes of 2018) SB 100 accelerated and increased California’s RPS to 60% by 2030. The bill also stated that renewable energy (RE) and zero-carbon resources supply 100% of retail sales of electricity to California end-use customers by December 31, 2045.
July 26, 2017 Assembly Bill 617 (Christina Garcia, Chapter 136, Statutes of 2017) Companion to Cap-and-Trade: Requires the Air Resources Board to work closely with local communities to establish   air quality monitoring networks and to develop and implement plans to reduce emissions.
July 25, 2017 Assembly Bill 398 (Eduardo Garcia, Chapter 135, Statutes of 2017) Cap-and-Trade Extension: Improves the Cap-and-Trade Program, which will enable the state to meet its 2030 emission reduction goals in the most cost-effective manner.
Sept. 19, 2016 Senate Bill 1383 (Lara, Chapter 395, Statutes of 2016) Short-lived Climate Pollutants: Establishes statewide reduction targets for short-lived climate pollutants.
Sept. 8, 2016 Senate Bill 32 (Pavley, Chapter 249, Statutes of 2016) Establishes a statewide GHG emission reduction target of 40% below 1990 levels by 2030.
Oct. 7, 2015 Senate Bill 350 (De León, Chapter 547, Statutes of 2015) Clean Energy and Pollution Reduction Act of 2015: Establishes targets to increase retail sales of RE to 50% by 2030 and double the energy efficiency savings in electricity and natural gas end uses by 2030.
Sept. 21, 2014 Senate Bill 1275 (De León, Chapter 530, Statutes of 2014) Charge Ahead California Initiative: Establishes a state goal of 1 million zero-emission and near-zero emission vehicles in service by 2020.
Sept. 28, 2013 Assembly Bill 8 (Perea, Chapter 401, Statutes of 2013) Alternative fuel and vehicle technologies: Extends until Jan. 1, 2024, funds the AB 118, Carl Moyer, and AB 923 programs that support the production, distribution, and sale of alternative fuels and vehicle technologies and air emissions reduction efforts.
Sept. 28, 2013 Assembly Bill 1092 (Levine, Chapter 410, Statutes of 2013) Building standards in EV charging infrastructure: Requires the Building Standards Commission to adopt mandatory standards for the installation of future EV charging infrastructure for residential and non-residential development.
April 12, 2011 Senate Bill X1-2 (Simitian, Chapter 1, Statutes of 2011) Senate Bill X1-2 increased California’s RPS requirement to 33% by 2020. The new goals applied to all electricity retailers in the state including POUs, IOUs, electricity service providers, and community choice aggregators.
Sept. 29, 2010 Senate Bill 2514 (Skinner, Chapter 469, Statutes of 2010) SB 2514 required the CPUC to determine and adopt storage targets, for each load-serving entity under its jurisdiction. The bill also required the governing board of a local POU to determine and adopt appropriate storage targets, if any. Storage target information must be provided to the CPUC, for a load-serving entity, or to the Energy Commission, for a local publicly owned electric utility.
Sept. 30, 2008 Senate Bill 375 (Steinberg, Chapter 728, Statutes of 2008) Sustainable Communities & Climate Protection Act of 2008 requires Air Resources Board to develop regional GHG emission reduction targets for passenger vehicles. ARB is to establish targets for 2020 and 2035 for each region covered by one of the State’s 18 metropolitan planning organizations. For more information on SB 375, see the ARB Sustainable Communities page.

Conclusion:

Following from the senate bills and CEC specifications, public and investor-owned utilities have diversified their renewable energy mix towards achieving the 2030 GHG emission targets. The two tables below outline the expected energy mixes for various utilities in 2025 and 2030 respectively. The utilities have all selected stable, sustainable growth rates of clean energy, the selection are dependent on local availability of natural resources. As a reference, BWP recognized concentrated salt formation right below their IPP Coal Plant, which led them to nine intensive years of trying to incorporate CAES. Unlike Battery Energy Storage Systems (BESS), CAES is solely operated on a very large-scale and provides not just minutes and hours, but dozens of hours, with better dispatchability and lower environmental risk than batteries.

Mix of Energy in 2025 (shown as %)

Utility Name Wind Solar Hydro Other renewables
Pacific Gas & Electric (PG&E)   15.19 66.54 8 1.87
Sacramento Municipal Utility District (SMUD)   13.46 7.69 50 15.38
Silicon Valley Power   62.10 6.84 13.46 17.58

Mix of Energy in 2030 (shown as %)

Utility Name Wind Solar Hydro Other renewables
Pacific Gas & Electric (PG&E)   11.53 57.72 57.74 1.81
Sacramento Municipal Utility District (SMUD)   12 8 52 14
Silicon Valley Power   59.82 17.64 13.46 12.12

Contact :

Ayesha Ahmed |aahmed@californiacarbon.info



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