28
California’s SB 100 Law: Opportunities and Challenges of Moving to 100% Clean Energy Learn more bv.com/consulting
California’s SB 100 Law: Opportunities and Challenges of Moving to 100% Clean Energy
Learn more bv.com/consulting
2
Steve RuppManaging Director Email: [email protected] & Veatch Management Consulting, LLC
Today’s Speakers
Dr. Hua FangDirectorEmail: [email protected] & Veatch Management Consulting, LLC
Denny YeungPrincipalEmail: [email protected] & Veatch Management Consulting, LLC
Today’s Discussion
• Current Renewable Energy in California
• Market Opportunities and Challenges Introduced By the SB 100
• Potential Regulatory Hurdles created by SB 100
33
Current Renewable Energy in California
4
California’s Renewables Journey
5
SB 100 targets:
• 50% Renewable Energy by 2026
• 60% Renewable Energy by 2030
• 100% Zero Carbon Electricity by 2045
0%
20%
40%
60%
80%
100%
120%
2002 2006 2010 2014 2018 2022 2026 2030 2034 2038 2042
% o
f Ret
ail S
ales
Historical RPS 2018 SB100 - Current RPS Trajectory2002 Senate Bill 1078 2011 Senate Bill X 1-22006 Senate Bill 107 2015 Senate Bill 350
Source: Black & Veatch Analysis
California – Renewables’ Share of Electric GenerationAggressive policy actions have accelerated California’s journey to renewables
California Generation Increase
66Source: CAISO
Solar PV14%
Wind8%
Biomass2%
Geothermal5%
Hydro19%
Thermal42%
Nuclear10%
2017
Solar PV2%
Wind10%
Biomass3%
Geothermal5%
Hydro10%
Thermal60%
Nuclear10%
2013
Wind and solar generation has doubled in last 5 years, and now serve over 22% of California’s total electric load
18,000
20,000
22,000
24,000
26,000
28,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
MW
Hour
Historical CAISO Average March Hourly Load Data 2014 2018
CAISO Duck Curve
7Source: CAISO
Growing Ramping Needs due to Solar
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
MM
Btu/
Hour
Hours
May 2013 Gas Consumption May 2017 Hourly Gas Consumption
Increased solar generation makes duck curve in CAISO more pronounced, because late afternoon ramping needs become more prevalent
CAISO Monthly Economic Curtailment by Resource Type
8Source: CAISO
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 2018
% o
f Tot
al W
ind
and
Sola
r Gen
erat
ion
MW
Wind Solar % of Wind and Solar Total Generation
Renewable energy curtailment continues to rise, as solar generation has exceeded regional market demand needs
SoCalGas Available Capacity vs. Sendout
9
Needles Topock Area Zone Maintenance
Al iso Canyon Leak Discovery and Forced Withdrawal
Line 3000 Line 4000 & 235Southern Zone
Restrictions
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
SoCal City Gate -SoCal Border Price Differential (US$)
BCF/
d
Total Supply Available excluding Storage Withdrawal SoCal Sendout SoCal City Gate - SoCal Border Price Differential
Regional gas prices volatility has increased due to pipeline outages on the SoCal System and the limited deliverability of Aliso Canyon
Recent Rising Electric Rates for All California IOUs
10
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
$/kW
h
Bundled System Average RateSCE PG&E SDG&E
Source: California Public Utility Commission – Historical Electric Cost Data
2018 SCE General Rate Case Increase:
• 2019: 3.84%
• 2020: 5.16%
“Renewable Energy in California Today” Key TakeawaysCA has been ahead of current milestones to meet renewable generation mandate, however, there are notable issues that could be exacerbated by the 100% renewable objective of SB100
• Renewable energy has shifted the hourly profile for gas fired generation, making the late-afternoon ramp needs most critical to California
• Economic curtailment of renewable generation, especially for wind has steadily increased over time
• Electric rates paid by California consumers have continued to rise, largely driven by decline total load and CCA. If electric rates continue to rise, customers will be more likely to leave the grid, creating a death spiral
• Gas constraints has impacted wholesale electric prices which could trigger a quicker movement to renewables in the short term
11
Market Opportunities and Challenges Introduced By the SB 100
12
Distributed Energy Resources & Behind the Meter PV Impact
13
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-
10,000
20,000
30,000
40,000
50,000
60,000
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029
% o
f Gro
ss G
ener
atio
n Lo
ad
GWh
Non-PV Self Generation PV Percentage of Gross Generation Load
Distributed Energy Resources and Behind the Meter PV will impact the need for long-haul transmission and thermal generation assets
Meeting SB 100 Goals
14
Solar41%
CA Wind20%
Out of State Wind21%
Hydro7%
Imports5%
Geothermal3%
Biomass1%
Biogas1% Small Hydro
1%
2045 Generation Composition by Renewable Type
Capacity 2018 2045
Wind 6.5 GW 40-50 GW
Solar 11.8 GW 50-60 GW
Source: CAISO, Black & Veatch Analysis
Meet SB 100 goals will require significant Wind and Solar Capacity additions
In-State Solar PV Resource Exceeds Estimated SB 100 Scenario Needs
15
Raw solar potential is abundant in the state (over 2,180 GW, discounted 95% still ~106 GW)
GW
Capacity Factor
Wind Resource
16
WY and NM have the most economic wind resources. Out-of-state likely to require new transmission
0
5
10
15
20
25
30
35
40
WY NM ID BC OR UT WA AZ BJ NV
Out of State Wind, Total = 147 GW
>35%
30-35%
25-30%
<25%
GW
0
5
10
15
20
25
30
35
40
In-State Wind, Total = 17.1 GW
>35%
30-35%
25-30%
<25%
Capacity Factor
Capacity Factor
GW
In-State Wind Resource is Limited, but Out of State Resource Potential are Sufficient
Regional Transmission
17
Source: WECC, CAISO
Regional transmission investments could exceed $35 Billion to bring on wind and solar generation capacity
Declining Renewables and Energy Storage Costs Sustainable?Potential to displace natural gas and reduce total emissions
18
Account for 48% of Installed Capacity and 34% of Global Electric Generation
by 2040Wind & Solar
Reaches 740GW
by 2022Global Solar PV Capacity
PV could become competitive with Gas Generation in some countries
By 2023
Will Become a $20 Billion Per Year Market globally
By 2040Energy Storage
Source: Bloomberg New Energy Finance
17% decrease in solar/wind energy, offsets from increases in transmission costsSource: NREL, CAISO, Black & Veatch Analysis
$0 $20 $40 $60 $80 $100 $120 $140 $160 $180
Land Based Wind ($/MWh)
2018
2045
Solar Utility PV ($/MWh)
2018
2045
NREL 2017 Data – Levelized Cost of Energy
Seasonal Imbalance in CA between Load & Renewable Energy Monthly overages and shortfalls require longer term storage solutions
19
Renewable Energy output is greatest in the spring months (March through June) while load peaks in the summer months (July through September).
Source: Black & Veatch Analysis
Projected 2045 Total Renewable Generation by Month
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Tota
l Mon
thly
Gen
erat
ion
(GW
h)
Load
Solar PV
Wind
Hydro
Other RE
Imports
Potential Challenges
20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Disp
atch
(GW
)
Hour
Short 50.2 GW of Generation at 7 PM
Generation & Load Profile: September 2045
Great amount of energy storage discharge capability is needed during periods of higher electric load and renewable generation
Curtailed Renewable Energy
21
Curtailed Renewable Energy Provide Opportunities for Electric Vehicles, Hydrogen Gas, and New Time-of-Use Tariffs
Lowest Curtailment Week (Late Aug – Early Sept 4)• Electric curtailment highest during April – June primarily due to solar generation
• On a weekly basis, curtailed energy could power up to 10 Million electric vehicles
• Day-time peak hour prices will become lower than off-peak night time due to solar generation output
Investment Costs
22
Transmission, Distribution and Battery Investment Costs to meet SB 100 objectives will increase the electric rates in California
SB 100 will require• Renewable generation capacity
development• Transmission improvement to
transmit renewable energy to load centers
• Improvement in distribution infrastructure, including battery storage
0
5
10
15
20
25
30
35
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rate
Bas
e ($
Bill
ions
)
Generation Distribution Transmission
Challenges and Strategies to CA’s 100% Zero Carbon GoalUp to 30,000 GWh of storage capacity could be required
23
Energy Storage
• Longer term storage solutions
• Power to Gas, Flow batteries
Transmission Build
• Facilitate exports to WECC and beyond
• Significant costs & environmental impacts
Renewables Overbuild
• Renewables curtailment
• Export capabilities
• Land access and environmental costs
Broaden RE Definition
• Include gas & Renewable Energy Credits
• Flexible resources become key
Potential Regulatory Challenges/Hurdles Created by SB 100
24
Roles
25
CAISO
CPUC
CEC CARB
California ISO
California Public Utilities Commission
California Air Resources Board
State of California Energy
Commission
Evolving Roles of CAISO, CARB, CPUC to determine SB 100 Rules
Today’s Key Takeaways• Electric load growth and electric vehicles can help
alleviate renewable energy curtailment and meet GHG reduction targets
• Economic incentives to build wind and solar generation must exist in order to meet SB 100 goals
• Inter and Intra-regional transmission upgrades needed to move solar and out of state wind generation to electric loads in California
• Trajectory of battery and energy storage cost declines will determine the rate of procurement and utilization
26
27
Questions?Learn more at bv.com/consulting
Denny Yeung| Principal+1 [email protected]
Steve Rupp | Managing Director+1 (916) [email protected]
Dr. Hua Fang | Director+1 [email protected]
