Comment Log Display

COMMENTS OF THE 
CENTER FOR ENERGY EFFICIENCY AND RENEWABLE TECHNOLGIES
August 7, 2015

I.  INTRODUCTION

The Energy + Environmental Economics Pathways modeling  done as the
analytical framework for California’s greenhouse gas reduction
planning is a cautionary tale for policy to achieve the State’s
long term emission reduction goals. The principal findings of that
modeling can be summarized as follows:

- A policy of a 50% RPS coupled with aggressive electrification of
both transportation and building sectors achieves a 26-38% GHG
reduction below 1990 levels by 2030. 
- Essentially complete decarbonization of electricity production is
required to achieve the 2050 GHG goal of 80% below 1990 levels. 
- Electric load kicks up sharply after 2030 due to electrification
of transportation and space conditioning. Essentially all of this
incremental load must be carbon free to hit 2050 greenhouse gas
goals. 

Clearly, as articulated by the exchange between E3’s Dr. Ryan and
CPUC President Picker at the Symposium: “Given the long term
climate goals, 50% renewables by 2030 must be considered a floor
and not a ceiling.” Indeed, the key takeaway from the Pathways
study is that we should prepare for success of a 50% by 2030
target; and that, just as 20% by 2020 quickly became 33% by 2020,
50% by 2030 could and should become 66% by 2030. 

As we begin to put the challenges and successes of generating
one-third of our electrical energy from renewable resources in the
rear view mirror, California must now focus on the challenges and
projected costs of moving from one-third to two-thirds of its
electricity being renewable. The principal issue identified is
“over-generation” resulting in curtailment and high costs.  Among
the analytic studies that can inform how best to address these
issues, and build upon and inform E3’s Pathways modeling is the
2030 Low Carbon Grid Study. The study’s preliminary results, and
CEERT’s conclusions and policy recommendations, are summarized in
the following section.  

II.    LOW CARBON GRID STUDY (LCGS)

A.  LCGS Overview and CEERT Recommendations

The Low Carbon Grid Study (LCGS) was commissioned by thirty-seven
energy development companies (mostly but not exclusively
renewable), two foundations and the Energy Information Agency to
study precisely these questions. Phase I results are posted on the
study webpage www.LowCarbonGrid2030.org .  Phase II results are
undergoing peer review and will be posted shortly. 
The study looks at a range of scenarios for the electric sector in
2030.

In summary, the principal lessons learned from the Low Carbon Grid
Study which are relevant to setting a 2030 GHG/RPS target for the
electric sector are: 

- Explicitly consider long term GHG emissions in planning,
procurement and operations, across all State agencies, and the
California Independent System Operator.  Simply specifying an RPS
mandate and relying on spot cap and trade allowance prices is not
sufficient to reach either the long-term targets or a least cost
position.

- California’s renewable portfolio must be diverse. There is a
place for all commercially proven types of renewable resources in
procurement going forward, both in California and from out of
state, whether baseload or variable,  in a “least cost/best fit”
procurement.

- Details matter. There are a number of seemingly minor and obscure
planning criteria, procurement practices, grid operation business
practices, and tariff provisions that collectively make a great
difference. Literally hundreds of millions of dollars per year, and
millions of tons of carbon emissions are at stake. Resolving these
issues, not simply raising the RPS percentage, will determine our
progress and ability to meet our goals. 

- The goal should not be to eliminate “over-generation” or
“curtailment,” but to manage them economically.

- Renewable resource penetrations roughly double today’s
contribution can be achieved without compromising reliability in
any way, but these results will not be automatic and require
conscious, sustained, advance planning.

Finally, the LCGS includes a comprehensive analysis of the rate
impacts of actions to achieve a 50% GHG reduction in the electric
sector by 2030 on a “Pathway” to achieve the 2050 long term climate
policy goal of 80% reduction in GHG emissions below 1990 levels.
Detailed results are currently in peer review, but the rate impact
is plus/minus a few percent depending principally on future natural
gas prices, cap and trade allowance prices, interest rates, and
success of efforts to reduce costs and improve performance of
renewable resources all of which are already commercially proven
and operating on California’s grid.  No new technology needs to be
invented. 

B.  Analysis and Findings

The following Figure 1 shows the range of carbon emissions for four
scenarios ranging from 33% renewables (Baseline Case) to 66%
renewables (Accelerated Case). The two intermediate cases, as
discussed in more detail below, employ 55% renewables and bookend
the range of results at that penetration level.

Note that in the Baseline Case electric sector emissions do
continue to decline. In addition to holding procurement at 33%
renewables, the final phase-out of imported coal, the continued
explosive growth of behind the meter rooftop solar, the
continuation of aggressive energy efficiency programs, and
modernization of the gas fleet as a result of the long overdue
retirement of the Korean War era coastal steam plants all work to
continue to drive down carbon emissions. However, it is simply not
enough to achieve the State’s policy goals.     

In the context of the Pathways work, these results simply amplify
the necessity of achieving an aggressive 2030 carbon target for the
electric sector through further renewable energy procurement to
have any realistic hope of hitting the long term climate goals. 

On the other hand, doubling the renewable content of the grid to
66% not only results in over 50MMT of emission reductions vs. the
Baseline Case but significantly lowers the carbon intensity of
electricity production. This allows significantly faster reduction
of carbon emissions due to the electrification of the other
sectors, putting the State on a trajectory to achieve the critical
long term target. This matches the “Early Deployment” scenario in
the Pathways study.

The two 55% Cases are of most interest for setting 2030 targets. 
For the study, 55% was chosen rather than 50% for renewable
penetration to reflect the assumption that the license for Diablo
Canyon nuclear plant would not be extended due to excessive costs
vs. other zero carbon energy options. In the discussion about grid
operations at this level of renewable penetration, the issue that
is paramount in people’s minds for assessing cost and operability
is “over-generation.” This results in “curtailment” of renewable
energy during low load hours when gas is no longer “on the margin”
and available to be “dispatched down.” 

It must be noted that these terms have taken on the aura of doom in
the public discussion, but are really nothing new or frightening.
“Over-generation” is simply another word for potential exports –
the coal exporting States of Wyoming and Montana are in
“over-generation” 8760 hours per year without any reliability or
cost problems. “Curtailment” is simply another word for “dispatch”
– operation of a plant that has been “committed” (synchronized to
the grid and supplying energy to serve load) at less than its
maximum output to balance supply and demand. Given the inherent
seasonal and diurnal variation in electric loads, “curtailment” has
always been present as committed units are “dispatched” in real
time. The only reason we make the distinction between curtailment
and dispatch is that renewables (at least most of them, including
wind and solar) are perfectly “dispatchable” but this inherent
capability has not been historically used, and the cost of
dispatching renewables is significantly higher than the cost of
dispatching fossil plants since there are no savings in fuel costs
when dispatching renewables. 

The following Figure 2 is a curtailment duration curve for two of
the several “55% scenarios” in the Low Carbon Grid Study that
demonstrate the range of outcomes at this penetration level,
dependent both on portfolio diversity and grid operational
policies. 

The “High Solar BAU” Case (a) assumes current trends will continue
to overwhelmingly procure PV rather than a “balanced portfolio,”
(b) enforces the current statutory “Bucket Rule” for RPS
eligibility, (c) obtains the supply of Essential Reliability
Services (aka “ancillary services” or “ERS”) principally from
natural gas, and (d) enforces the “25% Regional Generation Rule” as
currently proposed by the CAISO. It is also worthy of note that the
“BAU” designation does not mean that this case is frozen at today’s
practices – only that no new initiatives are undertaken. 

The “GHG Target Case” is one that (a) assumes the same quantity of
renewable procurement to serve the same load, but (b) procures a
“balanced portfolio” including more out-of-state wind as well as
in-state baseload geothermal and biomass plus some new
concentrating solar power with storage (“CSP”) rather than simply
all PV, (c) enforces the Bucket Rule (10% maximum unbundled RECs)
on a portfolio basis rather than a project by project basis, (d)
maximizes the supply and use of ERS from non-combustion sources
rather than natural gas, (e) deals with the very real reliability
constraints that underlie the 25% Rule using mainly zero carbon
resources rather than natural gas,  and (f) assumes that roughly
double the AB 2514- CPUC mandated storage requirement is procured
by 2030. 

As shown in Figure 2, it is important to note the dramatic
difference in “curtailment” (10.6% vs. 0.2%) and cost (~$500M/yr)
between the two cases with exactly the same quantity of renewable
energy. This demonstrates the importance of focusing not just on a
specific RPS percentage, but also on adapting the rest of the
system to maximize the efficiency of fossil fuel use and ease
integration of the new renewables. Implementation of policies that
incorporate balanced renewable integration, reliance on zero carbon
reliability services, and regional integration are key to
economically meeting the statewide GHG reduction targets.

Implementation of the 66% “Accelerated Case” was not considered in
detail in the study, but yields roughly similar results to the 55%
cases IF there is new storage procurement of four times the CPUC
mandate rather than twice the amount as in the Target Case.

III.  CONCLUSION

CEERT believes the Pathways modeling summarized at the Symposium
demonstrates the absolute necessity, and feasibility, of complete
de-carbonization of electricity production in order to achieve
California’s long-term climate goals.  E3’s work, along with
independent analyses such as the Low Carbon Grid Study and other
important modeling work by the Union of Concerned Scientists,
strongly suggests California follow the “Early Adoption” path with
aggressive 2030 interim targets. 

Success in achieving these interim targets reliably and cost
effectively will require a concerted and coordinated effort by all
State agencies and CAISO,   focused on the sustained pursuit of
every avenue available to adapt historic practices in planning and
grid operations towards this goal, with the full engagement and
creativity of the private sector, to improve performance and drive
down costs. Little new technology needs to be invented. Success can
be achieved by doing the best we can with what we already have. 
Reliability of the electric supply is paramount and cannot be
compromised, but the details of how that reliability is ensured
must be part and parcel of the work ahead. The process will be one
of adaptive management that learns by doing while focusing on the
twin metrics of cost and GHG reductions.