Report Calls for Liberalized Delivery for Renewables

California?s best chance of making 20 percent of its electricity renewable is to liberalize conditions that require delivery of green electrons directly to load centers, according to a report submitted to the California Energy Commission earlier this month. Before the ink had dried on the study by Sustainable Energy Advantage, policy makers appeared to be acting on some of the report?s recommendations. ?Issues associated with transmission and deliverability are the key issues,? said Ryan Wiser, one of the report?s authors. ?We heard pretty loud and clear that transmission will be the biggest hurdle in achieving the 20 percent goal by 2010.? Sustainable Energy Advantage prepared the report?Preliminary Stakeholder Evaluation of the California Renewable Portfolio Standard?to support the CEC?s Integrated Energy Policy Report update, said Claudia Chandler, commission spokesperson. The agency will discuss it at upcoming workshops on renewable energy and transmission. Two of the state?s utilities have a long way to go to reach the 20 percent renewables portfolio standard (RPS) goal by 2010, the report noted. In 2004, San Diego Gas & Electric had achieved a 4.5 percent RPS and Pacific Gas & Electric an 11.7 percent RPS. Southern California Edison, on the other hand, had achieved a renewables portfolio of 18.2 percent. To assess accelerating the renewables requirement by seven years, the report?s authors interviewed utilities, renewable power developers, and others involved in the state?s electricity market. From those discussions, they concluded that the quickest way to meet the goal would be to broaden allowable delivery points for renewable power. Under existing state policies and recent utility requests for offers from renewables producers, electricity from wind farms, solar facilities, and other renewable technology projects must be delivered directly to utility load centers. This is an insurmountable hurdle for many operators because they often have no available transmission path to those locations because of congestion and other factors. To broaden allowable receipt points for green power, the report first recommends that utilities enter renewables contracts that can deliver electricity to any point in the state?s grid, instead of solely to their service territories. Second, the report recommends that regulators at the California Public Utilities Commission and the CEC allow utilities to contract for renewable power produced out of state if it can be delivered to a nearby hub and if the purchaser arranges to transmit electricity from that hub to California. Third, the report recommends that the two agencies allow renewables producers to offer ?shaped? products, that is, renewable energy credits, which are ?unbundled from their underlying electricity and rebundled with system power at another time.? Producers would sell electricity into the real-time market and sell the green tags to California utilities, Wiser explained. This would be a boon to wind power, which is intermittent, but likely attractive to producers only if California?s spot market became more active, Wiser said. The report also suggested that the CPUC consider setting new policies for utility requests for offers that ease contract requirements. Some recommendations appear to be gaining acceptance. A draft CPUC decision issued June 21 by administrative law judge Anne Simon, for instance, recommends that the commission require utilities in their 2005 requests for offers ?to allow bids? from developers that can deliver green power anywhere within the California Independent System Operator?s control area. ?By casting a wider net for projects that may not have their ideal delivery points or deliverability attributes, the utilities may be able to bolster their RPS procurement starting this year, rather than waiting for transmission improvements that may not come to fruition for years,? wrote Simon in her draft opinion to approve procurement plans for the upcoming 2005 renewables solicitations (04-04-026). She noted that while PG&E likes the idea of such flexibility, the other two investor-owned utilities see it as potentially increasing their costs by adding transmission or remarketing expenses. Meanwhile, there are two bills that would advance the 20 percent renewable power goal from 2017 to 2010 ( Circuit , June 10, 2005). On the Assembly side is AB 1362 by Lloyd Levine (D-Van Nuys), which would authorize the use of renewable energy credits to satisfy the RPS goal. It is expected to come before the Senate Energy, Utilities, and Communications Committee as early as next week. SB 107, introduced by Senator Joe Simitian (D-Palo Alto), would have authorized a renewables credit program, but those provisions were stripped out. The CPUC supports both bills in concept, said Delaney Hunter, CPUC legislative director. The CEC, which is participating in a Westwide effort to create a renewable energy credit market, supports credits but wants a method in place that inventories renewable energy production accurately to avoid the potential for double-counting or overpaying for green power, Chandler said. The CEC plans to issue a request for proposals next month to hire a consultant to develop an inventory method. Levine?s bill would require such a methodology before credits could be used to satisfy the state?s renewables requirement. However, Wiser said, other states already are using renewable energy credits, including the Bonneville Power Administration, which runs much of the electrical transmission system in the Pacific Northwest. Ed Mosey, BPA spokesperson, said many of those credits are traded through the Bonneville Environmental Foundation in Portland. Credits are a much more efficient way to finance green power, said Tom Starrs, foundation chief operating officer. Until credits were used, utilities purchasing renewable power had to arrange for transmission potentially through several entities. Other states with recently adopted renewables portfolio standards generally have incorporated credit programs, Starrs added. As a result, he said, wind power has been installed within months of RPS laws being enacted. ?California is behind the curve,? he said.

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Report Calls for Liberalized Delivery for Renewables

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