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Executive Summary - IRE Policy California

Executive Summary - IRE Policy California

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Published by: gauravjoshi.d9403 on May 28, 2009
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06/15/2009

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Executive Summary
Senate Bill 1389 (Bowen, Chapter 568, Statutes of 2002) requires the CaliforniaEnergy Commission (Energy Commission) to "conduct assessments and forecastsof all aspects of energy industry supply, production, transportation, delivery anddistribution, demand, and prices." The Energy Commission uses theseassessments and forecasts to develop energy policies that conserve resources,protect the environment, ensure energy reliability, enhance the state's economy,and protect public health and safety. The Energy Commission prepares theseassessments and associated policy recommendations every two years in theIntegrated Energy Policy Report, with updates in alternate years. The
2008 Integrated Energy Policy Report Update
assesses progress on theenergy programs and policy recommendations that are critical to meetingCalifornia's energy and related environmental goals. The Energy Commission'sIntegrated Energy Policy Report Committee identified critical topics for the
2008Integrated Energy Policy Report Update
at a public scoping hearing on April 28,2008. After considering stakeholder feedback, the Committee focused on thefollowing five areas:1.Physical, operational, and market changes necessary for California's electricsystem to support a minimum of 33 percent renewables by 2020.2.Evaluation of the interaction between the state's energy efficiency goalsand programs with the Energy Commission's demand forecasting methods.3.Status of recommended changes to electricity procurement practices tostandardize assumptions, extend the period of analysis, and moreadequately incorporate risk in the portfolio of projected resources.4.Assessment of the Diablo Canyon Power Plant and San Onofre NuclearGenerating Station nuclear power plants, as required by Assembly Bill 1632(Blakeslee, Chapter 722, Statutes of 2006), to determine potentialvulnerabilities to a major disruption from a major seismic event or plantaging.5.Evaluation of the California Public Utilities Commission's Self-GenerationIncentive Program to determine the costs and benefits of providingratepayer subsidies for renewable and fossil fuel "ultraclean and low-emission distributed generation" as required by Assembly Bill 2778 (Lieber,Statutes of 2006, Chapter 617). The
2008 Integrated Energy Policy Report Update
also reports on the state'sprogress in implementing policy recommendations from past Integrated EnergyPolicy Reports. This review is intended to ensure that California is on track inmeeting the state's energy policy goals while meeting California's need foraffordable, safe, and environmentally acceptable energy choices.
 
California's Renewable Future
Since 2002, California has had a mandate to increase the use of renewablegeneration to 20 percent of retail electricity sales by 2010. On November 17,2008, Governor Schwarzenegger signed Executive Order S-14-08, which raisesCalifornia's renewable energy goals to 33 percent by 2020. This enhanced targetwill help California meet the aggressive greenhouse gas emission reduction targetof 1990 levels by 2020. The Energy Commission believes the state can reach the 33 percent renewablestarget by 2020. There are, however, major barriers to achieving this goal,including: the need for transmission additions and upgrades to access renewableresource areas; the challenges associated with integrating large amounts of renewable resources into the state's electricity system; the impacts of renewablecontract delays or cancellations; potential cost and rate impacts of addingrenewables to the system; and permitting issues for renewable generationfacilities in environmentally sensitive areas. The Renewable Energy Transmission Initiative was established to help addresstransmission barriers by identifying and ranking renewable resource zones andbroadly identifying the transmission needed to access those zones. Becauseenvironmental and land use issues can delay the development of transmissionprojects, the Energy Commission will continue to work closely with stakeholders inthe Renewable Energy Transmission Initiative process to ensure that these issuesare evaluated and considered.The Energy Commission also recognizes theimportance and benefits of joint transmission projects between investor-ownedand publicly owned utilities and will use the 2009 Integrated Energy Policy Reportforum to identify strategies to reduce barriers to these joint projects. In addition,the Energy Commission believes that transmission-related research, development,and demonstration efforts and funding should be significantly increased to identifytechnologies and strategies that can help integrate renewable resources.Integrating large amounts of variable and intermittent resources like wind intoCalifornia's electricity system is challenging. The state should focus on identifyingenergy storage technologies with the most promise of providing grid stability andimproved operations, reducing the costs of those technologies, and acceleratingtheir commercialization. Improved forecasting techniques are also needed to givegrid operators information to make real-time decisions about electricityscheduling and dispatch. The state also needs to expand efforts to includerenewable generation at the distribution level, such as community-scalephotovoltaics or small wind, to reduce electricity loads and the need for upgradesto the transmission system. Similarly, increased use of renewable technologies forheating and cooling, like solar thermal water heating and geothermal ground-source heat pumps, could reduce electricity loads while also decreasing the use of fossil fuels and emissions of greenhouse gases.Contract delays or cancellations for renewable projects continue to be a barrier tomeeting California's renewable goals. Thirty five percent of the contracts signed
 
under the Renewables Portfolio Standard have been either delayed (25 percent) orcancelled (10 percent). There also continues to be a need for greatertransparency in the evaluation and selection of electricity providers. Independentparties, such as the California Public Utilities Commission or independentevaluators and not utilities, should review, select, and rank renewableprocurement proposals. The investor-owned utilities should also be required toprovide aggregated information on Renewables Portfolio Standard contract pricesto assure policy makers that these contracts are meeting state energy policygoals and providing economic value to the state. In addition, theCalifornia PublicUtilities Commissionshould make public the aggregate amount of above-marketfunds that are being allocated to Renewables Portfolio Standard contracts. To helpencourage renewable development and provide price certainty to renewabledevelopers, the California Public Utilities Commission should immediatelyimplement a program to provide standardized contracts and prices for renewableprojects smaller than 20 megawatts while continuing to evaluate expanding sucha program to renewable projects larger than 20 megawatts. The Energy Commission will evaluate impacts of a 33 percent renewable target onnatural gas demand and prices, as well as the impacts of regional changes innatural gas supply and demand on California's natural gas market, to betterunderstand the cost and price impacts of higher renewable targets. The EnergyCommission will also continue to work on the Cost of Generation Model toregularly update changing technology costs over time. Finally, the EnergyCommission will work with the California Public Utilities Commission to estimatepotential price impacts of the 33 percent renewable target. The number and size of proposed large-scale renewable power plants makesenvironmental permitting an increasing concern. Many of these new facilities areproposed in ecologically sensitive areas that could require habitat mitigation andrestoration, which must be factored into the costs of the projects. Environmentalmitigation issues can also affect project development schedules and projectsuccess. To help address these issues, Governor Schwarzenegger's ExecutiveOrder S-14-08 establishes the Renewable Energy Action Team to create a "one-stop" process for permitting renewable energy facilities. Also, the EnergyCommission will continue participating in efforts with the Department of Energyand the Bureau of Land Management to evaluate environmental impactsassociated with permitting solar thermal facilities in California. In addition, theCalifornia Public Utilities Commission should direct investor-owned utilities toconsider the effect of the environmental permitting process on project schedules,milestones, and costs.
Energy Efficiency and Demand Forecasting
In the
2007 Integrated Energy Policy Report 
, the Energy Commission identifiedthe need to clarify and refine its California Energy Demand forecast. Accordingly,

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