Decarbonization: Energy Policy Planning in California and Its Implications for the Northeast S E P T E M B E R 1 3, 2 0 1 6 N O R T H E A S T G A S A S S O C I A T I O N 2 0 1 6 E X E C U T I V E C O N F E R E N C E
Electric Sector Trends and Macroeconomic Indicators Source: MJB&A
U.S. Generation by Fuel Type 2010 2014 Other 1% Other 1% Renewable 10% Renewable 13% Nuclear 20% Coal 45% Nuclear 19% Coal 39% Natural Gas 24% Natural Gas 28% Source: U.S. EIA 3
U.S. Power Plants by Fuel Type Source: MJB&A
Parallels Between California and the Northeast The Northeast and California are Leaders in Advancing Environmental and Energy Policies and Markets Zero Emission Vehicles Energy Efficiency Renewable Standards CO 2 Cap-and-Trade Economy-wide GHG Targets Competitive Power Markets 5
Shared GHG Ambitions State Midterm 2050 California -40% by 2030 (1990 baseline) -80% (1990 baseline) Connecticut -10% by 2020 (1990 baseline) -80% (2001 baseline) Maine -25% by 2020 (1990 baseline) -75% to -80% (2003 baseline) New England Massachusetts -25% by 2020 (1990 baseline) -80% (1990 baseline) New Hampshire -20% by 2025 (1990 baseline) -80% (long term) Rhode Island -45% by 2035 (1990 baseline) -80% (1990 baseline) Vermont -50% by 2028 (1990 baseline) -75% (1990 baseline) New Jersey -20% by 2020 (1990 baseline) -80% (2006 baseline) New York -40% by 2030 (1990 baseline) -80% (1990 baseline) 6
California GHG Goals and Historic Emissions California Greenhouse Gas Historic Emissions and Reduction Goals Million metric tons CO 2 e Agriculture & Forestry Electricity (including imports) Transportation Industrial Commercial Residential CO 2 Emissions by Fuel Type 2013, percent Historic Emissions GHG Targets Source: CARB 7
California has Increased its RPS Goals 2002 2011 2015 20% 33% By 2017 By 2020 By 2030 50% SB 1078 SBX1-2 SB 350 California Renewable Generation (In-State and Out-of-State) gigawatt hours Source: California Energy Commission Tracking Progress, Renewable Energy 2000 2002 2004 2006 2008 2010 2012 2014 Solar Wind Geothermal Small Hydro Biomass 8
California s Changing Power Mix (Total Supply) TWh 140 130 120 122 2010 2015 100 80 65 60 40 20 40 35 40 40 27 22 31 18 16 0 Natural Gas Renewables Unspecified Nuclear Coal Large Hydro Oil 0 0.1 Source: California Energy Almanac 9
PG&E s Joint Proposal for Diablo Canyon Power Plant PG&E, International Brotherhood of Electrical Workers Local 1245, Coalition of California Utility Employees, Friends of the Earth, Natural Resources Defense Council, Environment California, and Alliance for Nuclear Responsibility have developed a joint proposal to phase out PG&E s Diablo Canyon Power Plant (DCPP) by 2025 and replace it with energy efficiency, renewable energy and other GHG-free resources. The proposal includes: 1. Specific commitments to procure energy efficiency and renewables 2. Commitment to 55 percent renewable generation in 2031, compared to state target of 50 percent 3. Flexibility for procuring additional GHG-free resources as needed over the 2024-2045 period, in consultation with many parties and oversight of California authorities MJB&A was retained by the parties to the joint proposal to facilitate development of this report and related documents. 10
PG&E Proposal for Phasing Out Diablo Canyon The joint proposal commits PG&E to specific energy efficiency and renewable energy targets and to a 55 percent Renewables Portfolio Standard while setting a responsible and achievable transition for phasing out Diablo Canyon. PG&E Portfolio Outlook with Diablo Canyon Key Challenges for Diablo Canyon EE & PG&E Departing Load PG&E Electricity Supply Obligations Uncertain Electricity Supply Needs for PG&E Declining Need for Diablo Canyon Generation Challenges with Inflexible Baseload Generation Uncertain Rising Costs for Diablo Canyon Source: MJB&A analysis based on PG&E Joint Proposal Testimony 11
Challenges with Inflexible Baseload Generation A. California Today Actual Spring Day May 19, 2016 B. Illustration with High Solar Penetration Same Spring Load Profile Overgeneration (requiring curtailment) Load Other Renewables Solar 3 x Solar Conventional 12:00 3:00 6:00 9:00 12:00 3:00 6:00 9:00 12:00 3:00 6:00 9:00 12:00 3:00 6:00 9:00 am pm am pm Source: MJB&A. Plot of actual historic production and load data (GW) from CAISO (Renewables Watch website). Source: MJB&A. Illustrative example assuming 3x increase in May 19, 2016 solar production and minimum baseload. This level of PV is expected in early 2020s. 12
Decarbonization of California Transport Fuels (LCFS) Cap-and-trade allowances = $13/metric ton CO 2 LCFS Credits = $70 $120/metric ton CO 2 in 2016 Million metric tons 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 Biomethane Natural Gas Renewable Diesel Ethanol Electricity Biodiesel 0 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Source: California ARB, MJB&A analysis 13
Point of View from California Energy Commission Presentation by David Hochschild Commissioner, California Energy Commission Advanced Energy Economy, Pathway to 2050 Conference, August 11, 2016 Note: included with permission 14
Current California Policy Landscape (Select Programs) SB 32 codifies target to reduce GHG emissions to 40 percent below 1990 levels by 2030. AB 197 establishes legislative oversight committee for ARB and prioritizes direct emissions reductions from stationary and mobile sources. Electricity SB 350 50% RPS Doubling EE Cap and Trade Transportation Low Carbon Fuel Standard Advanced Clean Cars Program RNG SB 1383 ARB to finalize SLCP strategy Methane reduction targets for organic wastes Agencies to consider new policies for RNG use 15
Economy-Wide CO 2 Emissions: Northeast Region Northeast Region: New England New York Pennsylvania New Jersey 900 800 700 600 Economy-Wide CO 2 Emissions million short ton 834 249 722 195 500 400 300 200 100 0 268 271 125 87 76 63 115 105 1990 2013 Electric Power Transportation Industrial Commercial Residential Source: U.S. EIA 16
Generation Fuel Mix: Northeast Region Generation by Fuel Type Gigawatt hours 350,000 350,000 2010 2014 300,000 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000 0 CT ME MA NH NJ NY PA RI VT 0 CT ME MA NH NJ NY PA RI VT Coal Natural Gas Nuclear Hydro Renewable Other Source: U.S. EIA 17
Generation Fuel Mix: Northeast Region Generation From Non-Emitting Sources 2010 2014 Other 3% Other 2% Solar 0% Hydro 15% Wind 2% Wind 4% Solar 1% Hydro 15% Nuclear 80% Nuclear 78% Source: U.S. EIA 18
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Electric Demand Forecasts TWh 155 150 New England Gross Load TWh 176 172 New York Gross Load 145 140 135 130 PV, EE Savings Minus PV 168 164 160 EE Savings 125 120 Minus PV, EE 156 152 Minus EE Source: New England: ISO-NE CELT 2016; New York: NYISO Gold Book 2016 19
Zero Emission Vehicle MOU In October 2013, eight state Governors signed a MOU committing to coordinated action to implement their ZEV programs. Collectively, these states are committed to having at least 3.3 million ZEVs operating on their roadways by 2025. To reach this goal, annual electric vehicle sales over the next ten years would have to increase by 400% or more compared to 2014, approaching 15% of all new vehicle sales. ZEVs include pure battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and hydrogen fuel cell electric vehicles (FCEVs). Source: California Air Resources Board 20
Appendix 21
Generation Fuel Mix: Northeast Region Generation by Fuel Type 2010 2014 Renewable Hydro 2% 7% Other 1% Renewable 4% Other 1% Coal 26% Hydro 7% Coal 17% Nuclear 34% Natural Gas 30% Nuclear 36% Natural Gas 35% Source: U.S. EIA 22
Generation Fuel Mix: Northeast Region Generation From Non-Emitting Sources Gigawatt hours 90,000 2010 2014 90,000 80,000 80,000 70,000 70,000 60,000 60,000 50,000 50,000 40,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000 0 CT ME MA NH NJ NY PA RI VT 0 CT ME MA NH NJ NY PA RI VT Nuclear Wind Solar Hydro Other Source: U.S. EIA 23
State RPS Policies 24
State Renewable Portfolio Standards State RPS Goal Connecticut 27% by 2020 Massachusetts 15% by 2020, increasing by 1% annually thereafter (new resources) Maine 40% by 2017 New Hampshire 24.8% by 2025 New Jersey 24.39% by 2028 New York 50% by 2030 Pennsylvania 18% through 2021 Rhode Island 38.5% by 2035 Vermont 55% by 2017, increasing by 4% every three years until reaching 75% by 2032 In addition to RPS programs, Connecticut, Rhode Island, and Massachusetts are procuring significant quantities of hydroelectricity and renewable energy through a joint procurement. Massachusetts recently enacted legislation which requires utilities to enter into long-term contracts to procure 1,600 megawatts of offshore wind power by 2027 and 1,200 megawatts of hydropower or other renewable resources, such as landbased wind or solar, by 2022. 25
State Energy Efficiency Programs Many of the northeast states have leading energy efficiency goals and programs that rank in the top ten in the country. States prioritize energy efficiency for numerous reasons including CO 2 and criteria air pollutant emission reductions, reduced customer energy bills, increased demand for new products and services generating jobs, and broader economic benefits. Massachusetts' Energy Efficiency Resource Standard is one of the most ambitious fully-funded state savings targets in the country. Incremental electric savings targets ramp up from 2.6% in 2015 to 2.95% of annual sales in 2018. Incremental natural gas savings will increase from about 1.1% in 2015 to 1.25% of retail sales in 2018. State ACEEE State Ranking Connecticut #6 Massachusetts #1 Maine #14 New Hampshire #20 New Jersey #21 New York #9 Pennsylvania #17 Rhode Island #4 Vermont #3 26
Regional Greenhouse Gas Initiative RGGI is a regional market-based trading system to reduce carbon dioxide (CO 2 ) emissions from the electric sector in nine mid-atlantic and northeast states. The RGGI states have reduced CO 2 emissions of covered sources by 48% from 2001 levels due to a combination of factors including the recession, complementary energy and environmental programs, and fuel switching in response lower natural gas prices. The vast majority of CO 2 allowances are auctioned, generating more than $2.58 billion dollars cumulatively for reinvestment in energy efficiency, renewable energy, direct bill assistance, and GHG abatement programs. The RGGI states are actively negotiating the next phase of the program including further emissions reductions post 2020 of between 2.5-5% annually. RGGI CO 2 Emissions of Covered Sources million short ton 27