RPS Costs Increased Last Year, CPUC Says

5 May 2021

The average cost of non-fossil resources bought by private utilities, community energy and other providers pursuant to California’s Renewable Portfolio Standard rose last year compared to 2019. But they still remain low. That’s according to a new California Public Utilities Commission report. It attributes the cost increase to an expansion of renewable purchases beyond solar photovoltaics.

The average price of renewable contracts in 2020 was 3.5 ¢/kWh compared to 2.8 ¢/kWh in 2019. “This increase is due to a more diversified procurement of renewable generation,” according to the CPUC Padilla Report released May 4. That includes from wind, bioenergy, small hydropower, and existing geothermal plants.

“The cost of a resource does not determine the value to the grid or benefit to ratepayers,” V. John White, Center for Energy Efficiency and Renewable Technologies executive director, said. He considers the RPS’ mandate narrow and called for “procurement of diverse resources that include new geothermal that don’t simply provide renewable kilowatt hours but also provide grid reliability and meet evening ramps with less gas.”

Expenditures by Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric for Renewable Portfolio Standard-qualifying resources was $5.4 billion in 2019. It was $5.5 billion in 2020. The capacity increased from 51,599 GWh to 53,366 GWh, resulting in RPS resources meeting 43% of last year’s retail load.

Community choice aggregators spent $385 million in 2019 compared to $491 million in 2020. Renewables increased from 19,593 GWh in 2019 to 23,928 GWh in 2020, resulting in these resources making up 41% of their retail load.

The report highlights the high costs of private utility legacy contracts, which community energy partly pays for, the California Community Choice Association said. “[I]t also shows that CCAs are executing the majority of the new lower-priced contracts with RPS projects in California and helping to drive down the cost of renewable energy for all ratepayers.”

The RPS law requires that energy providers portfolios be half renewables, including solar, wind, geothermal and small hydro by 2025. The mandate rises to 60% in 2030.

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