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Under intense political pressure not to backslide on the state's
nation-leading greenhouse gas reduction goals, the <span/><span/>California Public Utilities Commission
voted unanimously Thursday, March 26 to direct utilities and other
load-serving entities around the state to submit resource
procurement plans through 2030 based on significantly lower
emission targets than had been envisioned in a previously proposed
decision.
The CPUC's vote to significantly change the decision proposed by
an administrative law judge in the state-wide integrated resource
planning (IRP) proceeding came a week after influential
environmental groups and clean-energy advocates implored Gov. Gavin
Newsom (D) to intervene on the matter. They warned him that the
CPUC was "poised to reverse course on state climate policy" by
adopting the proposed ALJ decision, which they said would establish
a resource mix over the next decade that would result in
unacceptable greenhouse gas increases.
<span/>The CPUC voted 5-0
to adopt a revised decision that kept the ALJ's same proposed GHG
emission target of 46 million metric tons (MMT) from the power
sector that load-serving entities (LSE)—such as investor-owned
utilities and community choice aggregators—are required to use
as they build their procurement plans for each year through
2030.
However, the revised decision also directs each LSE to submit by
this summer an alternative planned resource mix based on a
significantly lower GHG target of 38 MMT—a level that Southern
California Edison and some clean energy groups said was necessary
to keep the state on track to meet its legally mandated target of
reaching carbon-free power generation by 2045.
The CPUC will then use both of the proposed resource mixes at
the two different GHG target levels as it determines an optimal
portfolio for the years through 2030 and approves each LSE's
procurement plans.
Most of the commissioners said at Thursday's public meeting that
they are inclined to push for a portfolio based on the new, more
aggressive climate targets.
"I very much support the change that will allow the LSEs to
lower their targets," said Commissioner Clifford Rechtschaffen,
adding that he hoped "we'll have the ability to adopt the lower
target" once the CPUC receives the two different procurement plans
from each LSE.
CPUC President Marybel Batjer appeared exuberant as she cast her
vote to adopt what she called "a very, very good decision" growing
out of what she recognized as the hugely important and complex IRP
proceeding.
"I believe this will keep us on track to meet our 2045 goals.
And that's no small feat, for the people of California and for the
world," she said.
While many clean energy advocates supported the CPUC's inclusion
of the 38 MMT emissions target, most of them were pushing for an
even-lower 30 MMT target that they say is more in line with the
state's long-term goal of reaching zero emissions by 2045.
But even at the higher GHG target of 46 MMT, the proposed
resource mix includes state-wide procurement of 25,000 megawatts of
new renewable resources and energy storage through 2030. That
includes a whopping 8,000 MW of new solar by 2023 and 8,900 MW of
battery storage by 2030.
Commissioner Liane Randolph, who is leading the IRP proceeding,
noted that solar procurement in the state would double by 2030 and
the massive deployment of batteries would represent eight times
more than the total amount of battery capacity in the nation as of
last year. The decision noted that renewable and storage
procurements at that level—even under the higher GHG target
scenario—would push California into uncharted waters as it
seeks to maintain reliability at a reasonable cost while also
trying to reach the 2045 zero-carbon target.
CPUC staff estimated the procurement of the new generation
portfolio at the higher 46 MMT target will cost more than $45
billion annually through 2030, with procurements necessary to hit
the 38 MMT target estimated to cost an additional $1 billion.
Nevertheless, even with the massive renewable procurements,
emissions from the sector are expected to rise slightly from 38 MMT
in 2022 to 41 MMT in 2030 as electricity demand continues to rise
and nearly all of the state's natural gas-fired generation remains
in service to support reliability, according to the IRP
decision.
Further, the decision notes that it will become increasingly
challenging to hit further GHG reduction targets in the years after
2030 as electricity demand grows with wider electric vehicle
adoption and electrification of buildings.
Given the huge costs and operational risks of procuring such
massive amounts of renewables and storage through 2030, the revised
decision said it was appropriate to keep the 46 MMT target but to
use the lower 38 MMT target to compare the two scenarios and allow
LSEs to shoot for a lower-carbon resource mix.
"We affirm that the selection of a 46 MMT GHG target for 2030
does not preclude the commission from adopting a lower target in
the 2019-2020 preferred system portfolio (PSP) after consideration
of individual LSE IRPs," the decision adopted Thursday states.
"In response to continuing concerns of numerous parties that the
46 MMT target is still too high, given uncertainties, we will also
require all LSEs, when filing their individual IRPs, to submit at
least two portfolios: one conforming to the 46 MMT planning target
for the sector, and a second conforming to a 38 MMT target in
2030," the CPUC wrote.
"Rather than spending time doing further modeling and analysis
now, having LSEs submit their plans toward a 38 MMT will allow the
commission to conduct a more practical (and less theoretical)
analysis of what actual 38 MMT portfolios might look like, from the
perspective of the LSEs doing the planning and procuring," the CPUC
continued.
Analysis of the LSEs' specific procurement plans also will help
address concerns raised by the California Independent System
Operator that the CPUC's 46 MMT resource mix may not support
reliability. The grid operator also said that resource plan could
not be used in CAISO's transmission planning process because it did
not show the particular locations or characteristics of new
generation or battery resources.
Along with the huge procurements of solar and battery storage,
the IRP also calls for purchases of increasing amounts of wind
generation and about 1,000 MW of long-duration storage such as
pumped storage hydropower, hydrogen or next-generation flow
batteries.
In addition, it calls for further study of offshore wind and
increasing amounts of out-of-state wind resources, along with the
possible procurement of more long-duration storage.
Reprinted from The Energy Daily. For more comprehensive
daily coverage of US energy policy, regulatory, and business trends
from IHS Markit, visit
The Energy Daily website.
Jim Day is a Senior Journalist for Energy at IHS
Markit.