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California Energy Markets / Bottom Lines

[September 7, 2018 / No. 1504]

A Groundbreaking Session, Despite No Final Vote on Grid Regionalization

Despite the failure of the Legislature to move a bill on grid regionalization to a final vote, the passage of SB 100 was the topper of a high-reaching session that approved measures on advanced transportation, electrification, efficiency, microgrids, direct access, energy storage and wildfire mitigation.

The number of energy bills passed during Gov. Jerry Brown's final year in office gives California momentum heading into the Global Climate Action Summit, which kicks off with a series of affiliate events leading up to plenary sessions Sept. 13-14.

"This legislative session was probably one of the most notable and ambitious sessions that we've had to date," Amisha Rai, Advanced Energy Economy's senior director, said. AEE, a national association of businesses focusing on secure, clean and affordable energy, took an active position on more than 15 bills.

The Legislature hit a milestone with SB 100, which created a goal of 100 percent carbon-free energy by 2045, and sets California apart in terms of its ability to lead on a global level, Rai said. While the bill accelerates the state's renewables portfolio standard to 60 percent by 2030, "the beauty of the concept [is] it allows for flexibility," she said. Transforming the electricity system will take a multitude of technologies, and the bill would enable the inclusion of some that are in early stages of development or yet to be proven.

Brown is expected to sign the bill. But it comes during a time of dramatic change in the electricity sector, with a large percentage of load expected to depart investor-owned utilities in coming years for community choice aggregators. That means CCAs will be responsible for much of the energy procurement going forward.

The next governor will face a number of challenges related to the electrical system, including the question of whether to support grid regionalization. But the new governor will also have to deal with the implementation of SB 100, if signed into law by Brown, while ensuring it does not impact reliability and affordability.

According to Lawrence Berkeley National Laboratory, roughly half of the renewable-energy growth between 2000 and 2016 was driven by state-level RPS policies. That, in turn, has helped drive down the cost of renewables. As Bloomberg New Energy Finance points out in its 2018 New Energy Outlook, cheap renewables and batteries are reshaping the electricity system. For nearly the past 50 years, fossil fuels' share of the global power-generation mix hovered around 60 percent to 70 percent, but BNEF asserts this 50-year balance is coming to an end.

Growth in Non-Hydro Renewable Generation, 2000-2016
Total non-hydro renewable generation in the U.S. grew by 283 TWh from 2000 to 2016; RPS policies were among the major drivers for about half of that growth. Source: Lawrence Berkeley National Laboratory; data as of mid-2017

Bloomberg forecasts that by 2050, wind and solar will provide nearly 50 percent of total global electricity, with other zero-carbon resources, including hydro, nuclear and other renewables, accounting for another 21 percent.

Bloomberg expects the cost of an average solar-photovoltaic plant to drop 71 percent by 2050, and the cost of wind to drop 58 percent by 2050. "PV and wind are already cheaper than building new large-scale coal and gas plants," BNEF said in the outlook, noting that batteries are also dropping dramatically in cost.

Those trends bode well for renewables growth in California over the long term.

But there is less need for large amounts of procurement in the short term. Another measure that failed to make it to a vote in the final days of the session, AB 893, called for procurement of more than 4,000 MW of wind, solar and geothermal resources, including more than 2,000 MW by 2022 to capture federal tax credits. AEE has supported the concept of advanced procurement, Rai said, but often proposals introduced very late in a session are difficult to get over the finish line.

Rai expects that SB 100, if enacted, could also help drive near-term procurement, as well as jobs and local economic development.

Electrification a Big Winner

The Legislature passed a number of bills to help drive clean transportation and electric vehicles, including:

  • AB 2127, from Assm. Phil Ting (D-San Francisco), which would direct state energy agencies to assess electric-vehicle charging infrastructure statewide in transportation and buildings.
  • AB 1796, from Assm. Al Muratsuchi (D-Torrance), which eliminates an exemption related to EV charging infrastructure at rent-controlled properties, and is seen as a way to help expand charging access at these properties. Brown signed AB 1796 Aug. 20.
  • AB 2145, from Assm. Eloise Gómez Reyes (D-San Bernardino), which expands the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program to include projects that support grid integration and integrated storage solutions.
  • AB 1014, from Sen. Nancy Skinner (D-Oakland), which would establish the "California Clean Miles Standard and Incentive Program," to encourage ride-sharing platforms such as Uber and Lyft to in the coming years switch to electric vehicles. The bill calls for the companies to develop their own plans for reducing greenhouse gas emissions.

Other energy-related bills include:

  • SB 700, from Sen. Scott Wiener (D-San Francisco), which extends ratepayer funding of the state's Self-Generation Incentive Program through 2024, and administration of the program through 2026. SB 700 requires the California Public Utilities Commission to develop specific requirements for energy storage to contribute to GHG reductions. It also specifies that generation technologies utilizing nonrenewable fuels cannot qualify for incentives under the SGIP.
  • SB 237, from Sen. Bob Hertzberg (D-Van Nuys), which would expand direct access in California by directing the CPUC by June 1 of next year to issue an order increasing the maximum allowable DA limit by 4,000 GWh, apportioning the increase among utility service territories. It also would require the commission to recommend to the Legislature a schedule to continue DA going forward.
  • SB 819, from Sen. Jerry Hill (D-San Mateo), which would prohibit electrical and gas corporations from rate recovery of costs or expenses for damages caused by utility infrastructure if the CPUC determines the utility or a contractor or agent of the utility did not act reasonably. The bill would authorize the CPUC to authorize recovery in rates only of the costs it determines are just and reasonable.

On the efficiency front, SB 1131, from Hertzberg, focuses on efficiency incentives for agriculture and industry, two of the largest energy-consuming sectors in the state. SB 1131 would require the CPUC to authorize electrical and gas companies to provide rebates, technical assistance and incentives for efficiency projects to industrial, agricultural, commercial, residential and public-sector customers.

The bill includes provisions requiring the CPUC to develop and maintain rules for customer efficiency projects, including eligibility criteria and other metrics to determine project eligibility, and states that these metrics must be applied uniformly and consistently. These provisions improve the project-evaluation process, which to date has been applied inconsistently, according to AEE. –Mavis Scanlon

Bottom Lines is excerpted from NewsData's California Energy Markets publication. If you aren't a current subscriber, see for yourself how NewsData reporters put events in an accurate and meaningful context—request a sample of California Energy Markets.

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