BILL ANALYSIS Ó SB 1074 Page 1 Date of Hearing: June 29, 2016 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Mike Gatto, Chair SB 1074 (Hueso) - As Amended June 20, 2016 SENATE VOTE: 29-9 SUBJECT: Energy: Federal Trust Fund: geothermal projects SUMMARY: Appropriates $13 million to the California Energy Commission (CEC) from the American Recovery and Reinvestment Act of 2009 (ARRA) in the Federal Trust Fund, and allocates $2.5 million, for the 2016-17 fiscal year and annually thereafter, to be expended towards specified projects, including geothermal brine treatment projects. Specifically, this bill: 1)Appropriates $13 million, for the 2016-17 fiscal year, to the CEC from the ARRA in the Federal Trust Fund for specified purposes. 2)Allocates $2.5 million of the $13 million appropriated to the CEC for the 2016-17 fiscal year, from the ARRA in the Federal Trust Fund, to be expended towards specified projects. 3)Allocates $2.5 million annually for the 2017-18 fiscal year and each fiscal year thereafter, until all moneys in the SB 1074 Page 2 Federal Trust Fund derived from the ARRA has been encumbered or expend to be continuously appropriated to the CEC for specified purposes. 4)Authorizes projects to recover lithium, metals, agricultural products, and other beneficial minerals from highly mineralized geothermal brines at an existing geothermal facility that is in a disadvantaged community and provides local employment opportunities to receive specified funds. 5)Requires the CEC to issue a competitive solicitation for specified projects no later than February 1, 2017. EXISTING LAW: 1)Authorizes specified federal funds available to the CEC to be used to augment funding for any specified programs or measures unless prohibited by the ARRA. (Public Resources Code Section 25463) 2)Establishes the Geothermal Resource Development Account to promote the development of new or existing geothermal resources and technologies. (Public Resources Code Section 3820 et seq.) 3)Requires revenues from the Geothermal Resource Development Account, disbursed to specified counties of origin and grants or specified loans made to local jurisdictions or private entities to be expended by recipients for the following purposes: a) Undertaking research and development projects relating SB 1074 Page 3 to geothermal resource assessment and exploration, and direct-use and electric generation technology. b) Local and regional planning and policy development and implementation necessary for compliance with programs required by local, state, or federal laws and regulations. c) Identification of feasible measures that will mitigate the adverse impacts of the development of geothermal resources and the adoption of ordinances, regulations, and guidelines to implement those measures. d) Collecting baseline data and conducting environmental monitoring. e) Preparation or revision of geothermal resource elements, or geothermal components of energy elements, for inclusion in the local general plan, zoning and other ordinances, and related planning and environmental documents. f) Administrative costs incurred by the local jurisdiction that are attributable to the development or production of geothermal resources. g) Monitoring and inspecting geothermal facilities and related activities to assure compliance with applicable laws, regulations, and ordinances. h) Identifying, researching, and implementing feasible measures that will mitigate the adverse impacts of that development or production. SB 1074 Page 4 i) Planning, constructing, providing, operating, and maintaining those public services and facilities that are necessitated by and result from the development or production. j) Undertaking projects demonstrating the technical and economic feasibility of geothermal direct heat and electrical generation applications. aa) Undertaking projects for the enhancement, restoration, or preservation of natural resources, including, but not limited to, water development, water quality improvement, fisheries enhancement, and park and recreation facilities and areas. (Public Resources Code Section 3823) FISCAL EFFECT: Unknown. COMMENTS: 1)Author's Statement: "It is in the state's interest to fund select projects for mineral extraction from geothermal brines. Such activity can make geothermal energy production more cost effective, and near-zero carbon-free electricity, such as geothermal energy production, is needed to reduce greenhouse gas emissions [?] The geothermal brine produced by Salton Sea geothermal resources is highly mineralized and corrosive. Extraction of these minerals from the brine is one of the most significant cost of geothermal development in the Salton Sea. The state has the potential to help commercialize domestic mineral mining from geothermal brine, which will produce lithium and manganese dioxide necessary for electric battery manufacturing, thereby transforming an economic cost into an economic benefit." SB 1074 Page 5 2)Background: In February 2009, the United States Congress passed the ARRA which contained extensive funding for science, engineering, research, and infrastructure development. States were given discretionary funding through the ARRA to development and fund projects to promote economic growth. Through the ARRA, the CEC administered over $314 million in energy efficiency and renewable energy programs. When the ARRA ended in 2013, there remained over $30 million throughout various programs. As part of its evaluation of the remaining programs established through ARRA funds, the CEC determined that certain programs were underperforming and is seeking to reevaluate how the remaining funds should be utilized. 3)California's Geothermal Industry: Geothermal energy is a form of renewable energy that is generated by drilling into underground hot water reservoirs, such as geysers and hot springs, releasing the hot water as steam to the surface in order to produce electricity. Unlike solar and wind energy, which are considered intermittent renewables because they are dependent upon the weather to generate energy, geothermal power plants are considered base load facilities because they are able to operate 24 hours per day, 7 days per week, regardless of weather conditions. In 2015, geothermal energy produced 11,994 gigawatt-hours (GWh) of electricity in California. Combined with another 700 GWh of geothermal power imported from outside the state, and geothermal energy accounted for 6.14% of the states' total system power. In addition, there are 44 operating geothermal power plants in California with an installed capacity of 2,716 megawatts, including the world's largest geothermal field, the Geysers, contains 22 power plants that draw steam from more than 350 wells. An estimate by the United States Geological Survey suggests that California's geothermal resources could provide 800 to 4,600 MWs, with an additional 3,000 to 25,000 SB 1074 Page 6 MWs of geothermal resources yet to be discovered but likely to exist. This bill appropriates $13 million to the CEC from the ARRA in the Federal Trust Fund, and allocates $2.5 million, for the 2016-17 fiscal year and annually thereafter, to be expended towards specified projects, including geothermal brine treatment projects. 4)Arguments in Support: According to EnergySource LLC, "SB 1074 would direct $2.5 million in unused federal ARRA funds as grants to further develop technology to capture valuable minerals from the geothermal process. Advancement of this technology will help develop a domestic source of lithium to meet California's growing demand for electric vehicles; currently the majority of lithium used in California manufacturing comes from overseas. Further, advancement in mineral extraction technology in California will result in significant economic activity and job creation in disadvantaged communities such as those around the Salton Sea." REGISTERED SUPPORT / OPPOSITION: Support EnergySource LLC Imperial County SB 1074 Page 7 Opposition None on file. Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083