1. 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

2. CALIFORNIA ENERGY COMMISSION GDP (2000)

3. CALIFORNIA ENERGY COMMISSION Production of Electricity by Source - 1999 Imports NG-15.5 Hydro- 32.6 Coal- 51.9 Wind/solar- 1.6 Geothermal - 4.8 Biomass/waste- 2.0 Oil- 0.2 Natural Gas Hydro 18 31 15 Nuclear Coal 15 13 276 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

4. 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

5. CALIFORNIA ENERGY COMMISSION California Energy Issues: Interdependencies  Relationship of natural gas to electricity use w storage down 87% from 11/99 to 11/00 w generators pass through spot gas prices w $3 to $69 MBtu from 12/12/99 to 12/12/00  1-in-75 year drought will cause increased gas demand w 600Bcf in west, 225 Bcf in So Cal  SONGS outage reduces 1100 MW of generating capacity w increase gas demand by 200 Mcfd  First cold winter in US in three years w price up all over, higher in CA

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

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

8. CALIFORNIA ENERGY COMMISSION ISO Daily Peak Loads January 2000 - August 31, 2001 Summer Peak is 50% higher than rest of year Yet blackouts occurred here

9. CALIFORNIA ENERGY COMMISSION Generation Outages Scheduled & Forced Outages 2-4 times greater in Fall/Winter/Spring 2000-01 Average MW/Month

10. CALIFORNIA ENERGY COMMISSION What Changed by Summer & Fall 2001?  CA peak demand > 40,000 MW on only 9 days  FERC ordered generators to offer power  FERC threatened scrutiny of outages  Conservation of ~8% from publicity campaign and higher prices  Capacity additions 1/1/01 - 8/1/01 8/2/01 - 8/1/02 CA & N. Baja 3,192 MW7,652 MW NW, Alberta, BC 2,104 MW4,038 MW SW 2,331 MW3,212 MW 7,627 MW 14,902 MW

11. CALIFORNIA ENERGY COMMISSION California: policy really does work MWh per person-year

12. CALIFORNIA ENERGY COMMISSION Peak Demand Influenced by Economics and Weather

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

14. CALIFORNIA ENERGY COMMISSION Stakeholder Consultation

15. CALIFORNIA ENERGY COMMISSION Climate Change Adaptation Problem: California is unprepared for the likely physical, economic and societal disruptions of climate change

16. 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

17. 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

18. CALIFORNIA ENERGY COMMISSION PowerLight Corporation Building- Integrated PV Roof System

19. CALIFORNIA ENERGY COMMISSION The Yolo County Success  Accomplishments w Is opening the way for landfill gas electricity systems to be more widely used in California Accelerates gas production from over 30 years to less than 10 years, making landfill electricity more competitive Reduces volume of landfill which can extend landfill life by 20 percent Significantly reduces the chance for groundwater pollution from leachate release w Has become the leading bioreactor project within EPA’s XL Program and will strongly influence landfill regulations across the country  CEC’s Role w Through the CEC’s R&D programs, we’re bringing bioreactor technology from concept to reality Control cell without bioreactor Enhanced bioreactor cell

20. CALIFORNIA ENERGY COMMISSION Hoopa Valley Indian Tribe - PIER Small Modular Biopower (SMB) Demonstration SMB BioMax-15 System commissioned 8/01helps promote sustainable forestry As pictured, forest clearing residue is a source of fuel as is urban wood waste (twigs, leaves, bark and other trimmings) Fully-automated control system. Nominal rating is 12.5 kW but has run continuously at 15 kW for six hours NOx levels 0-2 ppm at full power, equivalent to.05 lb. NOx/MW-hr

21. 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.

22. 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

23. 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

24. CALIFORNIA ENERGY COMMISSION  $540 million in program funding (1998 - 2002)  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 (1998 - 2002)  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

25. CALIFORNIA ENERGY COMMISSION Investment Plan Renewable Energy Consumption Targets

26. CALIFORNIA ENERGY COMMISSION Renewable Generation By Type SOLAR WIND BIOMASS GEOTHERMAL

27. CALIFORNIA ENERGY COMMISSION Investment Plan Renewables Generation Goals

28. 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

29. CALIFORNIA ENERGY COMMISSION  Pre-Investment: Energy Commission International 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

30. 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

31. 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