Status Report on Electric Renewable Resource Procurement and - PowerPoint PPT Presentation

Status Report on Electric Renewable Resource Procurement and Renewable Portfolio Standard; Update on Senate Bill X1-2 Board of Public Utilities October 21, 2011

Background  2002: Senate Bill 1078 requiring 20% of retail sales from renewable energy by 2017.  2003: Riverside becomes first California municipal utility to adopt an RPS; 15% by 2010 and 20% by 2015.  2006: Senate Bill 107 accelerates date for reaching 20% to 2010.  2007: Riverside adopts revised RPS; 20% by 2010, 25% by 2015, and 33% by 2020.  2008: Governor Schwarzenegger issues Executive Order requiring IOUs to reach 33% by 2020.  2010: RPU serves 20.7% of its retail load with renewable energy (including large hydro from Hoover Dam).  2011: Senate Bill X1-2 passed, applying 33% by 2020 requirement to all utilities including POUs; disallows Hoover. 1

Existing Long-Term Renewable Resources

Salton Sea Geothermal Plant  46 MW base-load geothermal energy  20 megawatts (MW) in December 2004; increased to 46 MW in June 2009; contract ends 2020  Supplies about 18% of retail load  Supplies 90% of RPU’s long -term renewable energy  Base-load (24 x 7)  Current cost is $61 per megawatt-hour (MWh) 3

Hoover Dam  Began receiving energy in 1987; 30- year contract ends in 2017  Supplies about 1.6% of retail load  Generation limited due to low Lake Mead water levels  Helps meet RPU’s peaking needs  Currently about $25/MWh 4

Wintec Wind Farm  Wind energy near Palm Springs  Deliveries began 2003  Expires in 2018  Currently 1.3 MW  Supplies about 0.2% of retail load  Additional 1.3 MW may come on-line in 2013  Current cost is $52/MWh 5

Recent RPS Results

2010 2010 Energy Source GWh % of Retail Load Salton Sea 350.6 17.6 % Wintec Wind 4.5 0.2 % Hoover 31.8 1.6 % Firmed and Shaped (Wind) 26.6 1.3 % Total Renewable Energy 413.5 20.7 % Total Retail Load 1,996.2 7

2011 to Date 2011 Energy Source GWh % of Retail Load Salton Sea 351.3 17.3 % Wintec Wind 4.5 0.2 % Firmed and Shaped (Wind) 20.4 1.0 % Renewable Energy Credits 30.0 1.5 % Total Renewable Energy (State RPS) 406.2 20.0 % Hoover (City-Qualified) 32.0 1.6 % Total Renewable Energy (City RPS) 438.2 21.6 % Total Retail Load 2,034.9 8

California Renewable Energy Resources Act (SBX1-2) Procurement Requirements

SBX1-2 Procurement Requirements  Signed by the Governor April 2011  Defines qualified renewable energy resources:  Solar, geothermal, wind, biomass, landfill gas, small hydro (< 30 MW)  Does not include large hydro (> 30 MW)  Establishes minimum renewable energy requirements during three compliance periods:  Period 1: Average of 20 percent of retail load during 2011- 2013  Period 2: 25 percent by December 31, 2016  Period 3: 33 percent by December 31, 2020  State requirements now exceed City’s RPS 10

SBX1-2 Procurement Requirements  Three portfolio categories:  Category 1: First point of interconnection in California  Category 2: Firmed and shaped energy scheduled into California  Category 3: Unbundled renewable energy credits (RECs) and other eligible renewable energy products that do not qualify within Category 1 or 2 11

SBX1-2 Procurement Requirements  Sets renewable energy requirements for each compliance period:  Period 1: At least 50% from Category 1; no more than 25% from Category 3  Compliance Period 2: At least 65% from Category 1; no more than 15% from Category 3  Compliance Period 3: At least 75% from Category 1; no more than 10% from Category 3  Renewable resource contracts executed before June 1, 2010 count in full toward meeting the requirements 12

Renewable Energy Needs

RPU Renewable Energy Needs – Annual Mandates 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 State RPS 20% average in Compliance 25% by 12/31/2016, with 33% by 12/31/2020, with reasonable Period 1 (2011 – 2013) reasonable interim progress interim progress; annually thereafter Energy Forecasts (GWh) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Retail Load 2,052 2,072 2,088 2,115 2,154 2,200 2,237 2,281 2,325 2,376 Existing Renewables 409 377 382 397 397 397 397 397 397 397 Additional 2 37 36 26 109 120 162 173 185 352 Renewable Energy Needed 14

Renewable Energy Needs – Compliance Period Totals Additional Renewable Energy Needed as a % of 2011-2013 2014-2016 2017-2020 Retail Sales (% of retail load) (% of retail load) (% of retail load) Category 1 1.16 % 2.57 % 7.09 % Category 2 0.00 % 0.79 % 1.42 % Category 3 0.05 % 0.59 % 0.94 % Total 1.21 % 3.95 % 9.45 % 15

Current Activities to Procure New Renewable Resources

Long-Term Procurement Activities  Participate in renewables requests for proposals (RFPs) issued by the Southern California Public Power Authority (SCPPA).  SCPPA RFP for long-term renewable resources  Proposals were due January 31, 2011  Over 200 proposals were received  Included in-state and out-of-state renewables  First-year prices for best in-state resources $85/MWh – $117/MWh  Biogas proposals are subject to regulatory uncertainty  Three other proposals remain under consideration by several SCPPA members 17

Long-Term Procurement Activities  Meet directly with renewable resource developers  Allows RPU to consider opportunities that become available during intervals between SCPPA RFPs  Enables development of customized transactions  Creates possibility for opportunistic procurements  Provides access to market intelligence 18

Long-Term Procurement Activities  Preparing to issue RFQ/RFP for development of photovoltaic project at Tequesquite Landfill  8- 10 MW capacity would produce about 0.7% of RPU’s retail load  Meets content requirements for Category 1  Would come on-line by 2013, if competitive 19

Short-Term Procurement Activities  Resources conducted a short-term RFP in August 2011  Short-term purchases of renewable energy products to help meet RPS requirements during Compliance Period 1  Six responses; three chosen:  20 GWh firmed and shaped wind (Category 2) – Iberdrola  20 GWh firmed and shaped wind (Category 2) – Powerex  30 GWh renewable energy credits (Category 3) – Idaho Power  Incremental cost of ‘green’ attributes about $500,000 20

Market Challenges for Procuring Renewable Resources

Market Challenges for Renewable Resources  Governor’s plan calls for development of 12,000 MW of distributed renewable resources  Proposed in-state renewable interconnection requests at the ISO exceed 52,000 MW:  36,000 MW solar  16,000 MW wind  350 MW geothermal  90 MW biomass  “30% of long -term RPS contracts (10 years or more) approved by the CPUC have been cancelled.” – August CEC report 22

Renewables Market  Many renewable developers unable to obtain financing  Project development risks  Lack of capital sources  RPU renewable projects that have not materialized  Wintec Phase 2  Shoshone  La Paz  Other SCPPA utilities also subject to project failures/risks  Shoshone (Anaheim)  La Paz (Anaheim, Azusa, Burbank, Glendale, Pasadena)  Raser – developer bankruptcy (Anaheim, Burbank, Glendale, LADWP, Pasadena)  Biogas – regulatory uncertainty (Anaheim, Burbank, Glendale, LADWP, Pasadena) 23

Potential Cost Impacts to Meet RPS Requirements

Preliminary Estimate of Potential Cost Impacts Incremental Incremental Costs for Cost Renewable Attributes ($/MWh) Category 1 $52 Category 2 $8 Category 3 $5 25

Preliminary Estimate of Potential Cost Impacts Incremental Cost for Renewable Energy Needed 2011-2013 2014-2016 2017-2020 Category 1 $3.74 million $8.63 million $34.01 million Category 2 $0 $0.41 million $1.05 million Category 3 $0.01 million $0.19 million $0.44 million Total $3.75 million $9.23 million $35.50 million Rate Impact 2% 2% 10% 26

Regulatory Rulemaking for SBX1-2 Implementation

Regulatory Rulemaking Processes  California Public Utilities Commission (CPUC) Rulemaking  Rules for IOUs  May create significant precedents for publicly-owned utilities  Started in June; will continue into 2012  California Energy Commission (CEC) Rulemaking  Rules for publicly owned utilities  Started in June; will continue through June 2012  CEC issued concept paper August 22, 2011  Impacts local control  Addressing through CMUA 28

Compliance Requirements for Publicly Owned Utilities Under SBX1-2

Enforcement Program  SBX1-2 requires local governing board of each POU to adopt an enforcement program by January 1, 2012  Measures that the local governing board may adopt include:  Cost limitations for procurement expenditures  Conditions to allow delaying compliance (e.g., circumstances that delay development or delivery of renewables)  Rules to apply excess procurement from one compliance period to subsequent compliance periods  POU must take all necessary action to achieve compliance  Adoption of RPU’s enforcement program  Consideration by Utility Board: November 18, 2011  Consideration by City Council: December 6, 2011 30