The California Public Utilities Commission on Nov. 2 said that its annual Renewables Portfolio Standard (RPS) report shows that investor-owned utilities (IOUs) and small and multi-jurisdictional utilities (SMJUs) are well-positioned to meet RPS requirements, including the 65% long-term contracting requirement that begins in Compliance Period 2021-2024.
As noted in the report, the commission, in compliance with Senate Bill (SB) 1222, reports to the state Legislature each year on the progress of the RPS program.
The state’s RPS, as noted in the commission’s statement, requires IOUs, SMJUs, electric service providers (ESPs), and community choice aggregators (CCAs) to procure 33% of retail sales per year from eligible renewable sources by 2020, and 60% by 2030. The commission also noted that in 2018, then-Gov. Edmund Brown Jr., signed SB 100, setting a target goal of a 100% carbon-free electric grid by 2045. The commission said that it began implementing SB 100 in June 2019, accelerating and increasing the RPS procurement quantity requirements to 60% by 2030.
According to the report, that RPS prices reached a historic low of $28/MWh in 2019 for RPS eligible energy contracts across all technology types and have dropped an average of 13% per year between 2007 and 2019. Additionally, the report noted that about 73% of the IOU, SMJU, and CCA renewable portfolios were comprised of solar and wind resources in 2019. The report further noted that of the 4,257 MW of renewables in development contracted by CCAs and ESPs, 90% are solar photovoltaic (PV) facilities, and 914 MW are paired with 330 MW of energy storage.
The report also noted most of the retail sellers procured at or above the 29% RPS annual target for 2019; the large IOUs and SMJUs have executed renewable electricity contracts necessary to extend the 2020 RPS requirement of 33%; and most CCAs and ESPs are on track to meet or exceed the 2020 RPS requirement.
The large IOUs serving electric load in California are Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E), the report said.
Various market factors have contributed to the IOUs being procured beyond their minimum RPS requirements, the report said, adding that those market factors include the initial need to hedge against early program experience with project failure, the current paradigm of increasing departing load to CCAs, and the increase in behind-the-meter solar generation.
The SMJUs serving electric load in California are Bear Valley Electric Service (BVES), Liberty Utilities, and PacifiCorp. The report added that CCAs are local government entities that are certified by the commission to procure electricity on behalf of their communities instead of being served by the IOUs, while ESPs serve commercial and industrial customers in the “Direct Access” program. The report noted that Direct Access service is retail electric service where industrial and commercial customers have the choice to purchase electricity from an ESP, instead of from a regulated electric utility.
The report also noted that RPS prices reached a historic low of $28/MWh in 2019 for RPS eligible energy contracts across all technology types and have dropped an average of 13% per year between 2007 and 2019. Additionally, the report noted that about 73% of the IOU, SMJU, and CCA renewable portfolios were comprised of solar and wind resources in 2019. The report further noted that of the 4,257 MW of renewables in development contracted by CCAs and ESPs, 90% are solar PV facilities, and 914 MW are paired with 330 MW of energy storage.
The IOUs, for instance, have procured a mix of renewable energy resources, including wind, solar thermal, solar PV, geothermal, bioenergy, and small hydroelectric facilities to meet the requirements of the RPS program. For instance, the portfolio percentages of the 2019 RPS mix for large IOUs, showed that SDG&E procured 53% wind, SCE followed with 38% wind, and PG&E procured 32% wind, the report added.
RPS contract prices, in real dollars, consistently dropped between 2007 and 2019 for the “all technologies” group, with the annual contract price for all technologies decreasing an average of 13% during that time. The downward trend in contract prices can be attributed to falling prices for wind and solar technologies, which together make up 87% of the large IOUs’ collective RPS generating capacity, the report added.
Among other things, the report noted that for solar and hybrid solar plus storage projects, a signifiant amount of global battery and solar panel supplies are imported to California from other countries. Equipment delivery delays that have resulted from COVID-19 could have impacts to construction of new renewable facilities in the near term, the report said, adding that retail sellers have not cited disruption in supply chains as an existing issue, but have considered it as an issue that could arise in the future. Retail sellers report that they are communicating with developers to assess potential delays in the pre-construction development phases related to interconnection, permitting, financing, and site control, the report said.