1. Implementing one of the most ambitious renewable energy standards in the country California’s Renewable Energy Programs Implementing one of the most ambitious renewable energy standards in the country Sara Kamins, Senior Policy Analyst California Public Utilities Commission September 16, 2010 for utility-scale projects

2. 2 Presentation Overview Renewables Portfolio Standard (RPS) program overview Progress toward RPS targets Project development barriers Solutions for achieving RPS in a cost-effective and timely manner

3. 3 Overview of 20% RPS Program All RPS-obligated retail sellers* must have procured an incremental 1% of retail sales (from baseline year) in renewable energy per year until 2010 20% obligation starts in 2010 and continues indefinitely California has a further goal of 33% by 2020 RPS satisfied by MWhs generated on system-side of meter and delivered to CA, when applicable Bundled contracts only now, but potentially tradable RECs soon *RPS-obligated entities include: Investor owned utilities, energy service providers, small and multi- jurisdictional utilities, and community choice aggregators. Municipal utilities (not regulated by the CPUC) have a voluntary RPS obligation. All California retail energy sellers must procure 20% renewable energy by 2010

4. 4 RPS Program Goals Statutory goals of the RPS include: –Diversifying California’s electricity supply for reliability, public health and environmental benefits –Promoting stable electricity prices by hedging against volatile natural gas prices –Stimulating sustainable economic development –Developing competitive procurement process to obtain least- cost, viable MWhs in a short time frame (“cost, risk, time”) RPS policy reflects statutory goals

5. 5 Status of RPS Procurement CPUC has approved ~166 contracts for over ~13,000 MW of new and existing eligible renewable energy capacity –~5,000 MW of long and short term contracts currently under review ~1080 MW of projects under long-term contracts have come online since 2003, 50% out-of-state ~1000 MW of projects under short-term contracts have come online since 2003; 99% out-of-state Participation in RPS solicitations is increasing: –Greater participation from larger and more experienced developers –Dramatic increase in number of solar PV bids –2009 RPS solicitation resulted in 100,000 GWh of bids –Shortlisted 2009 bids would meet half of IOUs’ 33% target Recent RPS solicitations have been robust

6. 6 RPS Procurement Process CPUC approves RPS procurement plans IOUs hold annual solicitation IOU rank bids pursuant to “least-cost, best- fit” methodology Independent evaluator oversees solicitation, bid evaluation, and negotiations Utilities can also sign bilateral contracts IOUs negotiate bids, execute contracts Once the IOU executes contract, must submit to the CPUC for approval

7. 7 Almost at 33% on a contract basis – but some face risk Utilities on Track for RPS Targets

8. 8 Project Development Barriers Of 140 approved contracts, 23 have been terminated and 10 are delayed (have missed commercial online date) CPUC identifies and tracks the development barriers for each approved RPS project Significant project development barriers: RPS solicitations attract larger projects, which face project development risk and take time to develop - Transmission - Permitting (CEC and County) - Site control (e.g., BLM application process) - Project financing - Developer experience - Technology maturity - Fuel supply - Equipment procurement - Military radar

9. 9 CPUC Working on Solutions Tradable Renewable Energy Credits (TRECs) –Increases procurement options and increases competition Renewable Energy Transmission Initiative (RETI) –Identifies most cost-effective renewable resource zones and transmission to access them 33% Implementation Analysis –Analyses costs and tradeoffs between various 33% RPS scenarios More robust long-term procurement planning methodology –Streamlining inputs and assumptions in utility procurement scenarios to understand their fossil needs in relation to all other demand and supply-side energy programs Programs aimed at smaller system-side DG projects –To hedge against risk and timing of larger-scale RPS projects, programs for smaller RPS- eligible projects emerging CPUC is working to create multi-agency solutions to known barriers

10. 10 Program Size (MW) Participating Buyers and Sellers Eligible RPS Technologies and Project Size CPUC StatusMarket Opportunity Feed-In Tariff (AB 1969) 500All IOUsAll technologies Up to 1.5 MW Fully Implemented (D.07-07-027) Contracts accepted until cap reached Senate Bill 32750 (incl. FIT) IOUs and municipal utilities All technologies Up to 3 MW CPUC working to implement for IOUs Contracts accepted until cap reached RAM10003 large IOUsAll technologies Up to 20 MW Proposed DecisionProposes 2 auctions per year SCE Solar PV Program (SPVP) 500250 MW UOG 250 MW IPP Solar PV Primarily rooftop 1-2 MW Fully Implemented (D.09-06-049) At least 1 auction per year, first in 4/2010 PG&E Solar Program 500250 MW UOG 250 MW IPP Solar PV Primarily ground- mount 1-20 MW Approved in D.10-04-052, Staff implementing At least 1 auction per year, first in Q1 2011 SDG&E Solar Program 10026 MW UOG 74 MW IPP Solar PV Primarily ground- mount 1-5 MW D.10-09-016 approved program, Staff to implement At least 1 auction per year, implementation SCE RSC Program 250IPPsAll technologies Up to 20 MW N/ASCE accepting bids in September 2010 System-Side DG Programs

11. 11 Renewable Auction Mechanism Key program design elements of RAM include: –Standard Contract oSimple contract based on the IOUs’ existing feed-in tariff contract. oTerms and conditions are set before the auction and cannot be negotiated. –Market-Based Pricing oSellers compete for a contract in a renewable auction mechanism. oBids are selected by least-cost price first until the auction capacity cap is reached. oPrice (and contract) is not negotiable and is paid as bid. –Project Viability oMinimum viability criteria to participate in the auction, e.g. 100% site control, developer experience constructing a project of similar technology and size. oProject development security, performance assurance (for >5 MW projects). oProject must be online within 18 months. CPUC may offer new simple, streamlined opportunity for system-side DG consistent with RPS goals

12. 12 Questions? Sara Kamins Senior Policy Analyst, RPS Team California Public Utilities Commission Phone: 415-703-1388 Email: smk@cpuc.ca.gov

13. 13 Solar participation has increasing most dramatically RPS Solicitation Bids by Fuel Type

14. 14 Breakdown of Solar Bids by Technology