California Proposes Strategy to Meet GHG Goals

The California Public Utilities Commission has introduced a new statewide electric resource planning process through which to guide load-serving entities (LSEs) as they work toward meeting the state’s ambitious greenhouse gas (GHG) emission reduction objectives. Noting that California’s most recent energy policy directives, as set forth in Senate Bill (SB) 350 and SB 338, contemplate significant decreases in GHGs by 2030, the commission adopted as a planning target an electric sector reduction in GHG emissions of 42 million metric tons by 2030. That recommended target will be forwarded to the California Air Resources Board for its consideration. The commission stated that its proposed goal represents a 50% reduction in electric sector GHG emissions from 2015 levels and a 61% reduction from 1990 levels.

To facilitate general planning by LSEs in the electric industry, the commission approved a portfolio of energy resources which the commission had determined would be helpful in reaching the 2030 GHG reduction target. Among the elements identified by the commission were the addition of approximately 10,200 megawatts (MW) of new renewable energy resources and 2,000 MW of new battery storage resources.

To further guide the LSEs in developing their individual resource plans, the commission endorsed a “reference system portfolio” that had been crafted by its staff. The commission said that each LSE now will be expected to adhere to the reference system portfolio, with deviations allowed only when specific justification has been provided.

In expounding on the reference system portfolio, the commission cited certain specific baseline resources listed therein, calling attention to the percentage contribution to the total portfolio by each resource type, for capacity and energy. The commission produced two tables showing both baseline and incremental energy resources, with the tables also indicating total resources anticipated to be on the system in 2030, including distributed energy resources:

Proportion of Gross Energy Generation in the Reference System Portfolio in 2030

1. Renewables 44.9%
2. Natural Gas 23.4%
3. Energy Efficiency 11.7%
4. Hydro 9.0%
5. Combined Heat & Power 5.3%
6. Net Imports 3.9%
7. Nuclear 1.8%

Proportion of New Capacity Resources in the Reference System Portfolio in 2030

1. Customer Solar 34.3%
2. Solar 29.3%
3. Energy Efficiency 22.9%
4. Battery Storage 9.1%
5. Wind 3.8%
6. Geothermal 0.7%

While some parties had urged the commission to require near-term procurement of additional renewable resources in conjunction with the GHG reduction program, it declined to do so at this point in time, even though the commission acknowledged the potential for associated cost savings for ratepayers as had been reported by commission staff. In explaining its decision, the commission observed that any cost savings flowing from related renewable resource federal tax credits were highly uncertain. Moreover, the commission pointed out that renewable costs have been declining for many years, and likely will continue to do so, regardless of federal tax benefits.

In addition, the commission raised the prospect that prices for renewable resources could actually increase inasmuch as an early purchase requirement could create an artificial scarcity. It elaborated that such a scarcity could occur if the commission were to require a set amount of early renewable procurement outside of resources currently needed to address near-term reliability concerns or to comply with renewable resource portfolio or GHG emission reduction standards.

The commission stated that, for purposes of either reliability or GHG mitigation, it had found no clear or pressing “need” to augment renewably resourced generation procurement requirements. The commission said that a staff analysis indicated that a true need for such would not arise before 2026. Re Electricity Integrated Resource Planning Framework, Decision 18-02-018, Rulemaking 16-02-007, Feb. 8, 2018 (Cal.P.U.C.).