1 August 3, 2015 Environmental Considerations in RPS Calculator CEC IEPR Workshop

Purpose of the RPS Calculator The RPS Calculator is an Excel-based renewable resource planning tool that develops plausible portfolios of RPS resources that meet a specific RPS procurement target (e.g., 33% RPS) RPS Calculator portfolios are used in several planning activities: - CPUC: Long Term Procurement Plan (LTPP) scenario development - CAISO: Transmission Planning Process (TPP) and renewable integration studies - WECC: western U.S. transmission planning LTPP scenarios have included Trajectory (most likely to occur if our existing RPS policies continue), High DG, and Environmentally-Preferred - Environmentally-Preferred case was not used to inform CPUC procurement authorizations or ISO transmission planning 2

History of Enviro Considerations in Planning 2008 – 2010: RETI generation and transmission planning process - Utilized a mix of land use screens and environmental scoring of projects to develop an aggregate environmental score for individual CREZs statewide - Methodology was extensively vetted by a broad range of stakeholders : LTPP utilizes RPS calculator to develop an environmentally preferred portfolio - Utilized a modified version of the RETI environmental scoring methodology : LTPP changed environmental scoring methodology in RPS calculator because resource potential and cost had not been updated since 2010, which limited usefulness of RETI methodology - CEC provided replacement methodology that has significant granularity for DRECP but has limited granularity for rest of state 2014: RPS issued overhauled RPS calculator (ver 6.0) with updated resource and cost potential. Doesn’t include environmental methodology - Environmental methodology was deferred to version 7.0, which will be released in Q

Recent Resource Update Highlights Enviro Scoring Needs to be Revisited Updated economically-viable renewable potential is orders of magnitude larger than needed to achieve 50% renewables Good solar resources available throughout California - Northern and Southern California (vs. mostly Southern before) - Close to available transmission (vs. distant previously) - Much on private land including farmland (vs. largely on desert lands, many of which are under control of BLM) Increased availability and lower costs likely leads to: - Greater flexibility in siting (including environmentally degraded lands) - Potentially fewer transmission investments Given significant changes in renewable market and 50% renewables goal, RPS Calculator environmental scoring methodology needs to reassessed 4

Many Ways to Consider Environment in Resource and Transmission Planning RETI Phase 1B and 2B WGA - Western Renewable Energy Zones LTPP 2010 LTPP WECC - Environmental Data Task Force (EDTF) Unclear which approach is “Best” 5

Review of Past Environmental Screening Scoring Methods Different screening and scoring methods have different purposes and approaches There is not a single approach that has been widely accepted, is easy to apply, and works for both generation and transmission planning None of the methodologies have ever been benchmarked against actual environmental impact to see if one methodology is more predictive than another methodology 6

Guiding Principles for Revising Environmental Scoring Methodology Align with existing permitting guidelines, i.e., no additional permitting requirements Does not pre-judge permitting No additional market uncertainty (not unduly discounting, screening projects) Methodology needs to actually correlate with environmental permitting risk and/or environmental impact Methodology addresses the entire state and other likely resource areas in the WECC Incorporate DRECP and other ongoing processes Facilitate efficient siting of projects (generation and transmission) prior to permitting 7

8 ENVIRONMENTAL METHODOLOGY - SCOPING RULING

Enviro Scoping Exercise is Needed Oct 2014 the CPUC issued a ruling that outlined the elements of the overhauled RPS Calculator, which didn’t include an enviro methodology Ruling initiating enviro methodology proceeding track will not propose a methodology – will present an environmental scoping exercise that parties will use to inform the enviro proposals they will submit in comments Purpose of enviro scoping exercise: - Quantify how land use screens impact resource location and transmission solutions - Quantify how land use screens can impact portfolio costs - Quantify tradeoff between transmission and utility-scale renewables vs. DG - Quantify tradeoff between in-state and out-of-state resources - Quantify how Energy Only generation and transmission impact land use considerations - Guiding principles and above analysis will be used to evaluate stakeholder proposals 9

Land Use Scenarios 10 #ScenarioDescription 033% and 40% RPS Allow the RPS calculator to select optimal resource portfolio to meet 33% and hypothetical 40% RPS. Procure resources from WECC-wide locations. 150% RPS Base Case (WECC-Wide) Select optimal portfolio to meet hypothetical 50% RPS – incremental to 33% portfolio above. No additional land use restrictions beyond what is currently in the RPS calculator (RETI Category 1, EDTF Category 4). Procure resources from WECC- wide locations. 250% RPS - Environmental Baseline Exclude development on lands categorized as RETI Category 1 and Category 2 (“development limited”). No additional EDTF screens applied outside of CA. Procure resources from WECC-wide locations. 350% RPS - DRECP Development Focus Areas Only RETI Category 1 and 2 plus restricts development in the DRECP to only Development Focus Areas (DFAs). Procure resources from WECC-wide locations. Note: All scenarios assume that additional generation and transmission is Full Deliverable from a capacity perspective

Land Use Scenarios 11 #ScenarioDescription 4.50% RPS - In- State Only Same as 50% Base Case (i.e., RETI Category 1), but constrains renewable energy procurement to within California state boundary. 4a.50% RPS – Salt-Affected Farmland Also in-state only, identifies farmland that is marginally productive or physically impaired for potential priority solar PV development. Not a new restriction (no change to the supply curve relative to Case 4). 5.50% RPS - Most Enviro Constrained Same as Case 3 (DRECP DFAs), but procure resources from locations within California only. 6.50% RPS - High Wholesale DG Require selection of in-state wholesale DG first, up to 30 percent of distribution circuit loading (roughly 10 GW of new DG). No additional screens beyond base case; WECC-wide resources available to meet remainder of net short. Note: All scenarios assume that additional generation and transmission is Full Deliverable from a capacity perspective

Land Use Scenarios: Preliminary Results In-state only cases increase RPS compliance costs and drives wind development to other locations in CA that haven’t seen wind development (e.g., Sacramento River Valley) Allowing out-of-state resources lowers the cost of compliance and reduces the impact of CA land use restrictions High DG scenario currently has the highest cost (assuming WECC-wide resource availability) Significant amount of salt-affected farmland could be used for renewable development with little impact on net cost Energy Only procurement tends to decrease the amount of solar, increase the amount of wind, and reduce costs relative to the scenarios that assume additional generation and transmission is fully deliverable Preliminary results indicate that certain land use screens have a significant impact on where selected resources are located and transmission solution 12