SMALL UTILITY-SCALE RESOURCES (DISTRIBUTED GENERATION) 1

Summary  Small-scale resources are often referred to as distributed generation (“DG”)  Substantial policy-driven interest in encouraging the procurement of DG in California  Specific procurement programs pay premium for the benefits and/or values provided by small-scale projects  Prior versions of the RPS Calculator have included “High DG” portfolio to study the impacts of such small-scale resources  Version 6.0 of the RPS Calculator:  Includes an updated DG resource data set for Solar PV, wind and biomass  Uses same methodology to value large and small-scale resources  Energy Division staff is seeking comment on potential modifications to Version 6.0 in Track 2

 Version 6.0 of the RPS Calculator uses same resource valuation methodology for both small-scale and large-scale resources, except transmission costs  Small-scale resources often connected to distribution and may avoid transmission costs  RPS Calculator does not assign transmission costs to small-scale resources (other than interconnection costs)  RPS Calculator thus calculates trade-off between small-scale and transmission-constrained renewables based solely on avoided transmission costs  May be additional benefits (or costs) for small-scale resources appropriate to include in RPS Calculator Valuation of Small-scale Resources in RPS Calculator 3

 Potential direct ratepayer benefits that small-scale projects located near loads may provide:  Reduced system losses  Avoided congestion costs  Avoided need for generation in capacity-constrained areas such as LCR areas  Deferral/avoidance of investments in transmission infrastructure  Deferral/avoidance of investments in distribution infrastructure  Applicability and magnitude varies considerably with location, local grid conditions, and its performance characteristics  Commission staff intends to identify and quantify additional benefits for Version 6.2 of calculator in track 2a Potential Benefits of Small Utility-Scale Resources 4

Small Utility-Scale Resource Assessment Black & Veatch completed an updated resource assessment for California for the RPS Calculator The resource assessment included large and small-scale resources Small utility-scale resources included: –Solar PV –Biomass –Wind Methodology and assumptions described in “California Renewable Energy Resource Potential and Cost Update” presentation Biomass and wind DG assessments performed in 2013 DG Solar PV dataset based on Black & Veatch large rooftop identification in 2009 and E3 Local Distributed PV study in

E3 Local Distributed PV (LDPV) Potential Study  Identified the total MW of PV on residential roofs, commercial roofs, and ground sites that could be interconnected at each substation  Defined LDPV such that its output would be consumed only by load on the feeder or substation to which it is connected: “no backflow”  Potentially less expensive/faster interconnection  May target higher value locations on the grid (where distribution avoided costs are high)  May achieve other policy goals such as reducing environmental impact, creating local jobs, enhancing energy awareness and promoting redevelopment  Study available at:  099E48B41160/0/LDPVPotentialReportMarch2012.pdf 099E48B41160/0/LDPVPotentialReportMarch2012.pdf

Results - Potential  Interconnection potential found by substation under different scenarios (least cost procurement scenario shown) 7

Refined DG PV Resource Assessment 8  In September 2013, Black & Veatch completed a “Southern California DG Potential Study” to identify PV potential around key SCE 230 kV substations affected by SONGS retirement  New analysis techniques to identify potential project size and cost of energy for all parcels tied to six substations  Included residential and commercial/industrial rooftops  First ever assessment of parking lots/structures  Study identified significant DG in urban areas, especially for high concentration DG (HCDG) potentially connected to subtransmission system  The Black & Veatch study further refined our understanding of the technical potential of wholesale DG resources and the importance of location in determining value to the grid, not arbitrary size caps (i.e. RAM)

Identified Large Roofs and Parking Lots 9 Technical Potential Capacity, MWdc 0.25 > 3

Area Near John Wayne Airport 10 Technical Potential Capacity, MWdc 0.25 > 3

 In addition to technical potential, LCOE calculated for rooftop and parking applications for each parcel. Only larger potential sites shown here Example Detail (1.1 MWdc Rooftop, 7 MWdc Parking Lot, Approx. $120/MWh) 11 Technical Potential Capacity, MWdc 0.25 > 3

 Potential estimates:  Theoretical: 11 GW  Technical: 8 GW  Near-term Developable: 800 MW  Parking lots represent about half the potential  Some sites / areas have “high concentration” DG: MW  Shopping malls, campuses, etc.  Top 11 areas are 450 MW combined  Economics potentially competitive with transmission-tied solar  New scenarios may be needed to cost effectively interconnect above distribution level (subtransmission) – very cursory assessment Preliminary Conclusions Of Southern California DG Assessment 12

 This was a preliminary study and the results have not yet been incorporated into RPS calculator Version 6.0.  The assessment found significantly more potential than previous studies – particularly by including potential for PV development on parking lots.  Version 6.0 of the calculator does not currently have functionality to distinguish the impacts of such resources may have in comparison to large-scale renewables through their value to ratepayers.  Energy Division staff intends to identify and quantify these attributes for Version 6.2 so that the RPS Calculator can be used to evaluate the degree to which small utility-scale renewable generation can displace transmission-constrained renewable resources. Preliminary Conclusions Of Southern California DG Assessment 13

RPS Calculator Guide The parameters that affect DG cost and potential can be found on the following tabs: –Resource_Char: cost and performance input assumptions for each major category of renewable technology (including distributed technologies) –Supply_Curve: renewable resource potential considered in model (including distributed technologies)