GREENING OF THE GRID: RICK BROWN, PHD, TERRAVERDE

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1 GREENING OF THE GRID: H O W C A N S C H O O L S P A R T I C I P A T E I N T H E N E W R E V E N U E S C O M I N G F R O M C A L I F O R N I A S G R I D T R A N S F O R M A T I O N? RICK BROWN, PHD, TERRAVERDE The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.

2 California is the Leader in Renewable Energy Current Situation Last year the Governor and Legislature set the ambitious goal of obtaining 50% of all electricity in California by In February, Senate Pro Tem, Kevin deleon introduced legislation to accelerate that goal: 50% by 2025, 100% by 2045 In fact, we are already at close to 33% in most utility territories in the State And this doesn t even include the growth of customer based solar, which has reached 5% in two of the three major utilities (PG&E and SDG&E) and is projected to hit that level in SoCal Edison later this year. K-12 schools have already done a lot to help the state move in that direction through implementation of solar, and more recently, battery storage. As of 2014, over 1000 schools in California had implemented solar, and many more have done so since then

3 Policy and Economics Golden Plains USD Fresno County ADA 1700 Title I: 95+% Four Schools 1.07 MW Savings: Year 1-$140,000; 25 Year- $9.2 Million Initially these aggressive goals were driven by environmental concerns; i.e., the need to rapidly replace fossil fuel based electricity, which results in the emission of greenhouse gases (and other pollutants) that are contributing to the negative impacts of climate change But more recently, the Department of Energy has reported that renewable sources of energy have become less expensive than traditional sources. As a result, in 2016, for the first time, renewable sources outpaced the growth of traditional sources across the United States.

4 It s now All About the Grid Up to now we have been discussing the production, i.e., the generation of electricity, and that economics, i.e., the lower cost of renewables, has become the key driver of their growth. However, as the percent of renewable sources of electricity grows, a emerging impediment is how the grid is organized to deliver electricity Grid definition: An electrical grid is an interconnected network for delivering electricity from suppliers to consumers. It consists of generating stations that produce electrical power, high-voltage transmission lines that carry power from distant sources to demand centers, and distribution lines that connect individual customers.

5 Location, Location, Location Historically, the grid was organized to move power form centrally located power plants to widely dispersed demand centers, places where power was needed. In California, hydro-electric power has produced as much as 20% of our electricity, and so geography (the location of dams) has influenced the grid s configuration, a much greater proportion of electricity has come from gas fired power plants, which can be located somewhat more flexibly. However, this is not the case with wind and solar plants, which like hydropower, are best located where the best source of energy exists. This locational reconfiguration of power sources is driving the reconfiguration of the transmission and distribution infrastructure; in particular, increasing the distance from sources of power to customers of power.

6 Intermittency and the Duck Curve 1. An even larger driver in the reconfiguration of the grid is the intermittent nature of renewable power 2. The good news is that Solar s production/supply profile closely matched the historical demand profile; i.e., Solar produced the most power when California s demand peaked during the mid-afternoon, i.e., when use of Air conditioning is highest 3. However, with the rapid growth in solar, the supply in electricity during this traditional peak period is so much greater than the demand, that on some days the State s grid operator (CAISO), has to curtail the production of solar power plants.

7 So What is This Going to Cost? The California Energy Commission has estimated that to reach the 50% renewable goal by 2030, will require at least $5 Billion in transmission grid infrastructure upgrades. This may be a conservative figure; the President and CEO of Edison International (SoCal Edison s parent company), was bullish on his company s future profitability, give the need for SoCal Edison to spend $2-4 Billion/year for the foreseeable future to support California s RPS goals (and the growth of electric transportation and accompanying demand for electricity). And these numbers only represent the cost of transmission upgrades; the distribution network will also require additional investment.

8 What s Driving This Cost? Time and space: Traditional transmission projects typically require five to seven years to build, have a very large footprint, and frequently have environmental impacts that require study and approval and/or significant right-of-way issues. That capacity must be built far ahead of demand, and development can take years. The longer projects are delayed, the more opportunities exist for capacity shortfalls and resulting line or equipment failure. Asset utilization: Given the time it takes to design and permit a new transmission line, this strategy frequently results in utilities building more capacity than needed. When building transmission, the forecasted peak demand determines the system size which in most regions only occurs in several hours out of the entire year. Cost: Building out capacity this way results in large expenditures, but a utilization factor of only 55 percent for the overall transmission grid. Utilization or load factors such as these would be unsustainable in other industries, like airlines and manufacturing.

9 Distributed Energy Resources/Non-Wire Alternatives: A Lower Cost Solution o o o The grid was originally designed to regulate the flow of electricity from large centralized power plants that produced a relatively predictable steady flow of power to local communities. With the explosion of smaller, more decentralized sources (solar, wind, small hydro), managing the grid efficiently can no longer be done on a totally centralized basis. One much lower cost alternative to this $5+ Billion price tag, which will hit every California rate payer, is the implementation of local battery storage and solar with advanced inverters, to provide non-wire grid support services. While right now the economic benefits of solar and storage come from the reduction in District s electricity bills, in the very near future, schools that implement solar and storage will be able to generate new sources of revenue for their districts by entering into arrangement to provide such grid support services to create the more efficient, decentralized green grid of the future. Or +

10 Example: Southern San Joaquin County California Energy Commission Report, July 2016: Sufficient amounts of firm DER in the right locations can serve as viable alternatives for meeting forecasted load growth and reliability needs in the San Joaquin Valley region. DER can potentially provide ratepayer benefits in comparison to traditional system infrastructure investments. In the San Joaquin Valley region, the primary benefit is transmission infrastructure deferrals with an estimated long-term ratepayer benefit over $300 million.

11 Example: MCE Clean Energy California Energy Commission: Local Government Challenge Grant Goal #1: Prove that CCAs are uniquely positioned as the ideal independent energy sector actors poised to remove the barriers currently preventing local Distributed Energy Resources (DER) from unlocking substantial unrealized GHG-reduction potential. Goal #2: Design and validate an innovative and replicable program solution such that CCAs can accelerate achievement of state and local climate action goals through broad deployment of optimized DER portfolios at targeted building locations within a service territory using market mechanisms to fund project deployment. MCE Clean Energy (MCE) proposes to develop, deploy, and disseminate a solution that leverages distributed energy resources (DER) as a targeted procurement resource, thus optimizing building efficiency and the deployment of DERs on a community-wide scale.

12 Breaking News: Time to Act CPUC opening the window for TOU Peak Period Grandfathering Solar Panel Trade Case: Beat likely panel price increase

13 Questions Contact Rick Brown, PhD, President TerraVerde Renewable Partners