CALIFORNIA ENERGY COMMISSION California’s Efforts In Addressing New Electricity Markets Asia Pacific Economic Cooperation (APEC) Expert Group on New and Renewable Energy Technologies Terry Surles, Director Technology Systems Division California Energy Commission

CALIFORNIA ENERGY COMMISSION GDP (2000)

CALIFORNIA ENERGY COMMISSION California Energy Perspective  Previous system wasn’t broken  Market power became concentrated w profits up by selling more for less  No price signal for end users  Loss of momentum on demand side management w 10 GWh saved by early 1990’s w Restructuring derails utility DSM  1.4 GW of renewable cancelled w “No need” w Price was above cost to utilities  Results w Demand up 0.7%, price up 130% w Blackouts with 28 GW laid, with ~50 GW capacity

CALIFORNIA ENERGY COMMISSION Production of Electricity by Source Imports NG-15.5 Hydro Coal Wind/solar- 1.6 Geothermal Biomass/waste- 2.0 Oil- 0.2 Natural Gas Hydro Nuclear Coal TWh3,678 TWh Coal 51 Nuclear 20 Hydro8.5 Nat Gas 15 Wind/solar-0.1 Geothermal- 0.4 Imports- 1.2 Oil- 3.2

CALIFORNIA ENERGY COMMISSION CA Energy Use by Sector (1999) Transportation 49%

CALIFORNIA ENERGY COMMISSION Peak Demand is Increasing Faster than Newly Installed Capacity Megawatts

CALIFORNIA ENERGY COMMISSION Contribution to ISO Peak Demand August 16, 2001 (MW) Commercial AC Commercial Lighting Residential AC Other

CALIFORNIA ENERGY COMMISSION California Stage 1-3 Alert Number of Statewide Electricity Alerts by Year Rising Peak Demand Threatens Reliability and Power Quality

CALIFORNIA ENERGY COMMISSION Peak Demand Influenced by Economics and Weather

CALIFORNIA ENERGY COMMISSION Summer 2001 Peak Demand Reductions Adjusted for weather and Economic Growth Actual

CALIFORNIA ENERGY COMMISSION Factors Contributing to Demand Reduction - Electricity price increases - Public awareness of crisis and voluntary conservation - Demand reduction programs, 20/20 Program - State and regional economic recession - Increased supply

CALIFORNIA ENERGY COMMISSION Next Steps  Diffuse excess market power  Address potential for supply overshoot  Change buyer’s mentality w Education - it’s more than flicking a switch w Take control - it’s not a tax  Develop alternatives w Demand side w Supply side w Enabling technologies

CALIFORNIA ENERGY COMMISSION Public Interest Energy Research (PIER)

CALIFORNIA ENERGY COMMISSION California has Established a $62M/yr Public Interest Energy Research Program (PIER) California’s Energy Future Economy: Affordable Solutions Quality: Reliable and Available Environment: Protect and Enhance

CALIFORNIA ENERGY COMMISSION Vision Statement The future electrical system of California will provide a clean, abundant and affordable supply tailored to the needs of “smart”, efficient customers and will be the best in the nation. Tailored, clean, abundant, affordable supply Smart, efficient customers

CALIFORNIA ENERGY COMMISSION Our R&D Program Must Address Future Market Scenarios Regulated De-regulated De-centralizedCentralized Status Quo New energy systems Same players Supermarket of Choices Same energy systems New players

CALIFORNIA ENERGY COMMISSION Proof of Concept Techn. Develop. Demonstrations Self Sustaining Market Valley of Death PIER Program (RD&D) Renewable Energy Program Internat. Market Export Program Technology Development Continuum From Innovation to Market Certification New Energy Idea

CALIFORNIA ENERGY COMMISSION Funded Program Areas to December 2001 (in millions) Supply$82 Renewables, EPAG Demand$50 Buildings, Ind/Ag/Water $48 Strategic, Environmental

CALIFORNIA ENERGY COMMISSION PIER Objectives: Meeting Ratepayers Needs  Tangible products reach market w legislative justification  Prepare for the next crisis w end use energy efficiency  Distributed energy sources w supply alternatives w demand side management w enabling systems  externalities (environment, resource, security), climate change

CALIFORNIA ENERGY COMMISSION Berkeley Lamp  Technical Success: Validated energy savings

CALIFORNIA ENERGY COMMISSION PIER Buildings Program Highlights Night Breeze  Provides ventilation and cooling at night, reducing or eliminating the need for air conditioning during the day

CALIFORNIA ENERGY COMMISSION High Performance Fume Hood reduces airflow and energy requirements by 30-50% flow reduction from each hood cuts energy costs by $1000/yr maintains or enhances worker safety ASHRAE standard test achieved containment with 70% flow reduction with 30,000 hoods in state, the new Hood could save about 360 million kWh/yr, totaling nearly $30 million

CALIFORNIA ENERGY COMMISSION PowerLight Corporation Building- Integrated PV Roof System

CALIFORNIA ENERGY COMMISSION The Wind Turbine Company  Design, develop and demonstrate a utility-scale wind turbine  Horizontal axis, two-blade, downwind design  Prototype developed for PIER and tested at NREL rated at 250 kW  Commercial prototype demonstration sited at the Fairmont Reservoir in LADWP territory for a 500 kW - scaled up to 750 kW - wind turbine demonstration to begin in October 2001  Goal is to produce electricity  $0.035 cents per kWh per 100 unit wind farms with wind resources  15 mph.

CALIFORNIA ENERGY COMMISSION Technical Support for DG Interconnection Standards  Reduces average cost of interconnection fees to consumers by 37%  Supports Rule 21 by resolving technical safety issues  Establishes technology & size neutral review process  Identified testing and certification requirements  Enables insertion of new generation (e.g. renewables) into the grid

CALIFORNIA ENERGY COMMISSION Real Time Transmission Line Monitoring/Rating tension monitoring increases transmission capabilities by 15-30% highly accurate - measures line sagging to within 1-3 inches increased safety - provides the actual real time rating and provides alarms of impending clearance violations system 1-3 were built for utilities in Virginia, Colorado and Finland 200th system was sold on 8/4/00. The systems are in use on five continents by 70 utilities.

CALIFORNIA ENERGY COMMISSION Alzeta Gas Turbine Semi-Radiant Burner (GTSB) PIER is helping develop low- or no- emission electric production methods, including gas turbines for use in DG Alzeta’s GTSB combustors successfully demonstrated simultaneous readings  2 ppm emissions of NOx, CO and unburned hydrocarbon on gaseous fuels during prototype testing. Goal is to lower cost of emission reduction by $100/kW for smaller facilities Alzeta has paid $24,464 to date in royalty repayment to the PIER Program based on direct sales and licensing of the product

CALIFORNIA ENERGY COMMISSION California’s RENEWABLE ENERGY PROGRAM

CALIFORNIA ENERGY COMMISSION Renewable Generation Issues Developers of new renewable energy projects currently face a high degree of uncertainty The biggest impediment to further development of renewable projects is the lack of a stable market with buyers willing to provide adequate price certainty

CALIFORNIA ENERGY COMMISSION Renewable Energy Program OBJECTIVES  To facilitate the development of a self-sustaining, consumer-driven renewable energy market in California.  To encourage market-based development of new and emerging renewable resources.  To maintain the benefits and diversity of the renewable energy industry and move towards market competitiveness with the broader electricity industry.

CALIFORNIA ENERGY COMMISSION  $540 million in program funding ( )  Market-based support for supply and demand sides of renewable energy market by providing: w Production incentives for existing and new renewable electricity generation w Capital cost buydowns to install on-site distributed generation systems w Rebates to customers who purchase renewable electricity w Consumer education  $540 million in program funding ( )  Market-based support for supply and demand sides of renewable energy market by providing: w Production incentives for existing and new renewable electricity generation w Capital cost buydowns to install on-site distributed generation systems w Rebates to customers who purchase renewable electricity w Consumer education California’s Renewable Energy Program At a Glance

CALIFORNIA ENERGY COMMISSION Renewable Generation By Type SOLAR WIND BIOMASS GEOTHERMAL

CALIFORNIA ENERGY COMMISSION Investment Plan Renewable Energy Consumption Targets

CALIFORNIA ENERGY COMMISSION Investment Plan Renewables Generation Goals

CALIFORNIA ENERGY COMMISSION California Energy Commission Energy Technology Export Program  Role: Promote California Energy Technology Exports  Results: Stimulated Over $400 Million in Export Sales

CALIFORNIA ENERGY COMMISSION Energy Technology Export Program Focus  Assist Small and Mid - Size Companies  Develop International Energy Projects (<$100Million in Capital Costs/Project)  Feature Clean Combustion Power Plants, Energy Efficiency, Industrial Cogeneration, Renewable Energy  Asia and Latin America Concentration

CALIFORNIA ENERGY COMMISSION Recent Projects  Wind Power Projects (16.5 MW) - Greece  Clean Coal (CFB) Power Plants - China  Industrial Cogeneration (12 MW) - Thailand  Hotel Energy Efficiency Retrofits - Mexico and Panama  Geothermal Power Plant (5 MW) - Vanuatu  Electric Bicycle Kits (2,000 Units) - China

CALIFORNIA ENERGY COMMISSION Program Functions  Identify/Evaluate Export Opportunities w Target Markets w Scouting Missions  Identify & Qualify Projects w Energy Audits of C/I Sector Projects  Matchmaking w Conferences & Trade Missions  Project Feasibility Funding w International Energy Fund  Facilitate Project Development w Company Directory w Technical Advice w Financing Advice  Advice to Foreign Governments

CALIFORNIA ENERGY COMMISSION Market Niches  Utility-Scale, Grid-Connected Power Generation  Commercial Building Energy Efficiency Retrofits  Industrial Cogeneration/Onsite Power  Off-Grid or Mini-Grid Power Systems

CALIFORNIA ENERGY COMMISSION  Pre-Investment: CEC Intl Energy Fund  Pre-Development: E&Co./Rockefeller Foundation/Venture Capital  Project Financing/Project Development : w EXIM Bank: >$10 Million w IFC/REEEF: 25% Debt/Equity w Equity Investors/Equity Funds w Multi-Lateral Banks: World Bank, ADB w Dresdner Bank International Project Financing

CALIFORNIA ENERGY COMMISSION CO 2 per Capita (1999)

CALIFORNIA ENERGY COMMISSION CO 2 / GDP (1999)

CALIFORNIA ENERGY COMMISSION Factors Contributing to Demand Reduction  Electricity price increases  Public awareness of crisis and voluntary conservation  Demand reduction program, 20/20 program  State and regional economic recession  Increased supply

CALIFORNIA ENERGY COMMISSION Next Steps:  Diffuse excess market power  Address potential for supply overshoot  Change buyer’s mentality w Education - it’s more than flicking a switch w Take control - it’s not a tax  Develop alternatives w end-use energy efficiency w distributed energy resources w enabling technologies for DSM and real-time pricing