Various Policy Options Improving Renewable Portfolio Standards RPS

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Various Policy Options Improving Renewable
Portfolio Standards (RPS)
Policy Considerations around Renewable Portfolio
Standards (RPS)

• Frank Teng
• Silicon Valley Leadership Group
• July 2nd, 2007

Frank TengAssoc. Director, Energy
EnvironmentSilicon Valley Leadership GroupJuly
2, 2007 San Jose State University
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Topics

• Who we are (Silicon Valley Leadership Group)
• How does RPS fit into Energy Policy?
• What is RPS?
• What is the Current Situation?
• What SVLG is doing about it

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Topics

• Who we are (Silicon Valley Leadership Group)
• How does RPS fit into Energy Policy?
• What is RPS?
• What is the Current Situation?
• What SVLG is doing about it

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Silicon Valley Leadership Group

• The Silicon Valley Leadership Group, founded in
  1978 by David Packard of Hewlett-Packard,
  represents 210 of Silicon Valley's most respected
  employers on issues, programs and campaigns that
  affect the economic health and quality of life in
  Silicon Valley, including energy, transportation,
  education, housing, health care, tax policies,
  economic vitality and the environment.
• Leadership Group members collectively provide
  nearly 250,000 local jobs, or one of every four
  private sector jobs in Silicon Valley.

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Clean and Green Energy Action Plan

• 12 point plan to
• Reduce operations energy use through efficiency
  improvements and annual reporting toward goals
• Reduce transportation fuel use through vehicle
  innovation, improved transit and better
  practices
• Spur innovation and new technologies through
  demonstration projects, a solar center of
  excellence and a regional green building
  initiative.

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Energy Watch Partnership

• Part of CPUC 3-year investment 2.50 in benefits
  for every 1 invested
• A partnership between Sustainable Silicon Valley,
  the Leadership Group and Pacific Gas and Electric
  Co.
• Members save 3.5 Million per year
• Equivalent to
• The output of 2 large wind turbines, 1.5 million
  gallons of gasoline, or powering 1,677 homes for
  a year

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Partners with SSV Successes

• Some examples of SSV Partners work
• LifeScan, Inc. Has reduced its CO2 emissions by
  37 by improving efficiency.
• The Town of Los Altos Hills Generates 41 of
  the energy needs for its Town Hall building from
  rooftop solar panels.
• Cisco Systems Saved 5.6 Million dollars
  through energy efficiency measures.

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California Emission Reductions Strategies
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Californias Success with Energy Efficiency

• Kyoto

Chart courtesy of Art Rosenfeld, California
Energy Commission
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Road Map

• Who we are (SVLG)
• How does RPS fit into Energy Policy?
• What is RPS?
• What is the Current Situation?
• What SVLG is doing about it

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RPS role in Energy Policy

• Problem Global Warming AB32
• Dependence on fossil fuels
• Geopolitics
• Price Volatility
• A Solution Renewable energy
• Faces economic and institutional barriers.
  Policy-making provides a critical foundation.
• California has several policies that encourage
  renewable energy
• Renewable Portfolio Standard
• California Solar Initiative
• Self-generation Incentive Program
• Greenhouse gas Performance Standard

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U.S. Electric Industry Residential Average Retail
Price of Electricity by State, 2003 (Cents per
kWh)
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Road Map

• Who we are (SVLG)
• How does RPS fit into Energy Policy?
• What is RPS?
• What is the Current Situation?
• What SVLG is doing about it

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What is RPS?

• Government regulatory policy
• Market pull Market development
• Requires states utilities to provide 20 of
  their power from renewable resources by 2010
• No national policy

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Why the Public Policy Approach?

• Governments should be involved in renewable
  energy dissemination because
• 1. Energy prices do not account for significant
  negative environmental and social impacts, both
  globally and locally (UNDP)
• Air, water, ecosystems, climate

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Why the Public Policy Approach?

• Governments should be involved in renewable
  energy dissemination because
• 2. Competition is diminished with natural
  monopolies within the energy system (UNDP) and
  with widespread government subsidies that distort
  energy prices
• Energy as commodity and utility

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Why the Public Policy Approach?

• Governments should be involved in renewable
  energy dissemination because
• 3. Renewable energy development will not happen
  quickly enough to mitigate the negative effects
  of climate change
• Impacts of Industrialisation

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Why the Public Policy Approach?

• Governments should be involved in renewable
  energy dissemination because
• 4. Markets fail to value public benefits of
  renewables, causing little incentive for
  companies to invest in RD
• What will drive innovation?

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Road Map

• Who we are (SVLG)
• What is RPS?
• Why is RPS important?
• What is the Current Situation?
• World
• California
• United States
• What SVLG is doing about it

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Current Situation World Policy
Global Energy Network Institute
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Policy options on a World Scale

• United Nations Development Program (UNDP)
• Fossil fuels (coal, oil and gas) account for 80
  of global energy consumption
• Total energy sales worldwide amount to about 1
  trillion per year (3 global GDP)
• Fossil fuel subsidies are about 150 billion per
  year
• 'New renewables' sales are about 20 billion per
  year
• Solar and wind power are growing at 20 and 30
  percent respectively
• Costs are decreasing exponentially
• BUT their market share is minuscule compared to
  the scale of oil and gas production.

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Road Map

• Who we are (SVLG)
• What is RPS?
• Why is RPS important?
• What is the Current Situation?
• World
• United States
• California
• What SVLG is doing about it

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Current Situation U.S.Policy Tools the U.S. is
using

• Targets Timetables
• European Union's indicative targets
• United States Renewable Portfolio Standards
• Powerful technology performance standards
• United States Vehicle pollution standards,
  energy star
• Taxes fees to increase market competition
• Netherlands small consumers pay high tax on
  consumption of dirtier energy sources
• Denmark tax programs for wind energy
• United States Production tax credit, Energy
  Efficiency Tax credit, Solar and Fuel Cell tax
  credits

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Current Situation

• Whos doing it
• 20 states plus the District of Columbia that have
  RPS policies in place.
• Together these states account for more than 42
  of the electricity sales in the United States.
• Four states, Illinois, Missouri, Virginia, and
  Vermont
• Voluntary goals for adopting renewable energy
  instead of portfolio standards with binding
  targets.
• Example Texas RPS Law
• Texas second to California in wind generation and
  causing more wind power to be installed in Texas
  (912 MW) than in the rest of the U.S. combined
  (775 MW) in 2001.
• Texas produced 2,451,484 MWh in 2002, exceeding
  sales of all Green-e certified new, clean
  renewable power sold nation-wide in 2002 by 2.7
  times!
• Why is there no Federal RPS?
• Challenges and Opposition

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Summary of Renewable Portfolio Standards in the
U.S.
Pew Center on Global Climate Change
For more info http//www.eere.energy.gov/states/m
aps/renewable_portfolio_states.cfm U.S.
department of Energy. Energy Efficiency and
Renewable Energy
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Road Map

• Who we are (SVLG)
• What is RPS?
• Why is RPS important?
• What is the Current Situation?
• World
• United States
• California
• What SVLG is doing about it

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Current Situation CA RPS policy

• Considerations
• Reliability Planning
• Pricing
• Social Acceptance
• Efficiency
• Potential

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How to get there?
Dora Yen-Nakafuji and Kevin Porter, CEC
Intermittency Analysis Project presentation,
8/2006
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Gary DeShazo, California ISO, Intermittency
Analysis Project
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Impacts on Operation
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PGEs 2006 Electric Delivery Mix
Carbon Free Supply
Delivery Mix
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58
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1.4
4.2
Carbon Free
2.4
4
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Considerations (cont)

• Hydro still gives us the most flexibility
• Planning around load demand vs schedule
  flexibility
• Intermittent resource forecasts
• Costs of Ancillary services and integration costs

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Global Investment In Clean Energy
Global Investment In Clean Energy 2004-2006
An Impressive 157 3 Years
Source New Energy Finance, March 7, 2007
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Global Investment In Clean Energy
"The World Energy Outlook 2000 shows there is
potential to achieve a greater share for
renewables, if more vigorous policies are
implemented". - 2002 International Energy
Agency Report
Quantity of energy we consume from renewables
will increase by 50 in the next 20 years, but
renewables will remain at about 8 of global
energy consumption.
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Capital Formation Interdependency
Global Investment In Clean Energy 2006 Actual vs.
2007 Pro Forma
10 Year Cumm 6.7 Trillion
50 Year Cumm 51.6 Trillion
According to Stern Report, global warming impacts
could cause decrease in GDP by 2-3 in the future
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Current Situation CA RPS policy

• Considerations summarized
• Reliability Planning Transmission planning,
  160 projects, regional issues
• Pricing 90 of new projects still under MPR,
  50 from wind, half havent been built
• Social Acceptance EIRs and BANANAs
• Efficiency Technology track record
• Potential Any Promises?

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Road Map

• Who we are (SVLG)
• How does RPS fit into Energy Policy?
• What is RPS?
• What is the Current Situation?
• Looking to the Future
• What SVLG is doing about it

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Looking to the future

• California
• Governor Schwarzenegger and the CEC have
  recommended increasing this target to 33 by 2020
• Utilities are currently barely able to meet 20
  by 2010 Flexible compliance,
• Market Price Referent and Supplementary payments
• CSI vs. RPS vs. DG

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Road Map

• Who we are (SVLG)
• How does RPS fit into Energy Policy?
• What is RPS?
• What is the Current Situation?
• Looking to the Future
• What SVLG is doing about it

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What the Leadership Group is doing about RPS

• Both a Market-based and Public Policy Approach
• Educate members about market incentives
• Facilitates and networks member companies with
  energy organizations and opportunities
• Urging better understanding of potential future
  costs to RPS expansion

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There are only winners

• Leadership Group members are
• Engaging and inspiring their employees
• Enabling new technologies and spurring
  innovation
• Managing their energy costs of their operations
• Growing their own Clean tech/Green Energy
  businesses to serve an energy-hungry world
• Planting the seeds for Silicon Valleys next
  incarnation The Valley of__________.

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Why?

• Our job is not to sit on the sidelines to
  either cheer or jeer. Our job is to get in the
  game, and move the ball forward.
• - David Packard

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Resources

• Frank Teng, fteng_at_svlg.net, www.svlg.net
• A Golden Opportunity Californias Solutions for
  Global Warming http//www.svlg.net/issues/enviro/
  resources/ca_opp_nrdc2007.pdf