BILL ANALYSIS �
AB 1935
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Date of Hearing: April 21, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1935 (Campos) - As Amended: March 28, 2014
SUBJECT : Electricity: clean distributed energy resources
SUMMARY : Revises the scope of an existing biennial report on
the electricity grid impacts of distributed generation (DG) to
focus instead on "clean distributed energy resources" and
defines this term for purposes of the bill.
EXISTING LAW , AB 578 (Blakeslee), Chapter 627, Statutes of 2008,
requires the Public Utilities Commission (PUC) to study and
report to the Legislature and Governor on the impacts of DG on
the state's distribution and transmission grid. AB 578 requires
the study to evaluate specified issues related to
interconnection and operation of DG.
THIS BILL :
1)Requires future AB 578 reports to focus on "clean distributed
energy resources" rather than DG generally.
2)Defines "clean distributed energy resources" as any of the
following:
a) A clean energy generating technology that meets all
of the following criteria:
i. Produces electricity, or electricity and
useful heat.
ii. Has a greenhouse gas (GHG) emissions
factor, including, when applicable, credit for waste
heat recovery and savings on transmission and
distribution losses, that is less than or equal to
the emission factor for electricity developed by the
Air Resources Board (ARB) in the AB 32 scoping plan.
iii. Has an oxide of nitrogen (NOx) emissions
rate, including, when applicable, credit for waste
heat recovery, that is less than or equal to the NOx
emission limit set by ARB in its DG certification
regulation.
iv. Has a nameplate rated generation capacity
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of 20 or less megawatts (MW).
b) An eligible renewable energy resource, as defined in
Section 399.12, that uses organic waste or biogas as its
fuel and has a nameplate generation capacity of 20 or
less MW.
c) A "demandside" reduction resource.
d) An energy storage technology that stores energy from
a technology or resource specified above.
FISCAL EFFECT : Unknown (According to the PUC, the existing AB
578 reports cost $34,000 and $100,000, but it's not clear how
changing the scope of the reports may affect their cost).
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COMMENTS :
1)Background . The PUC has hired consulting firms to prepare two
"DG impacts" reports since AB 578 was enacted. The most
recent report, "Biennial Report on Impacts of Distributed
Generation," prepared by Black & Veatch, was published by the
PUC in May 2013. According to the report:
Governor Brown has established a highlevel goal for
California to achieve 12,000 MW of renewable DG by 2020.
California has had a history of encouraging the development
of smaller generation facilities that connected directly at
the distribution level of the electricity system. DG
growth has been spurred by several governmentsponsored
incentive programs. The California Energy Commissions
Emerging Renewables Program (ERP) was funded as a result of
AB 1890, and provided support to emerging renewable
projects on the customerside of the meter. The CPUCs
SelfGeneration Incentive Program (SGIP), which was started
in response to the energy crisis in 2001, offered
incentives for DG projects located at utility customer
sites. The SGIP program supported a variety of distributed
generation technologies including solar photovoltaic (PV),
wind, fuel cells, and other conventional technologies.
When the California Solar Initiative (CSI) program and
several related programs began in 2007 as a result of SB 1
(Murray, 2006), with a goal of promoting 3,000 MW of
distributed solar in the state, support for solar PV
technologies was shifted from the SGIP program to the CSI
program.
The (DG impacts) 2010 Report addressed the installed DG in
California under the SGIP and CSI programs as well as net
energy metering (NEM) and nonNEM projects interconnected to
the three investorowned utilities (IOUs) through September
of 2009. Since then, new programs have been launched to
promote more DG in the state; both on the customer side of
the meter and on the wholesale side, and installations have
increased dramatically under existing programs. Black &
Veatch reviewed program data to determine the total amount
of DG that has been installed. The eight customerside
programs include:
California Solar Initiative (CSI)
o General Market (GM)
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o Multifamily Affordable Solar Housing
(MASH)
o Singlefamily Affordable Solar Housing
(SASH)
SB 1 PubliclyOwned Utility (POU) Programs
New Solar Homes Partnership (NSHP)
SelfGeneration Incentive Program (SGIP)
Emerging Renewables Program (ERP) no longer active
as of June 2012
Renewable Energy SelfGeneration Bill Credit Transfer
(RESBCT) Program
The impacts of DG on the distribution and transmission
system today are not adequately quantified, but are
believed to be relatively low. The lack of observed
impacts can be attributed to several reasons:
Currently about 90 percent of connected DG capacity
is on the customerside of the meter.
Customerside DG systems are typically small.
The current penetration level of DG is low.
At the given penetration levels, the interconnection
process and requirements have successfully mitigated
impacts before they occur.
There is a general lack of monitoring DG system
output and of the effects of DG systems on the grid (that
is, utilities do not have the appropriate tools to
systematically collect and evaluate data on problems or
benefits attributable to DG).
For these reasons, it is difficult to quantify the impacts
of customerside DG on the grid. It is expected by many
that impacts will increase as DG penetration increases.
However, to be able to quantify the impacts, the utilities
will need to begin systematically monitoring, evaluating,
and associating such impacts with DG systems.
The expected impacts would first occur on the distribution
system because of the direct connection of DG to the
distribution system. However, as the penetration of DG
increases, the impacts will roll up to the transmission
system. What many industry observers agree on is "DG that
is at the 'right place at the right time' will create the
greatest value, while additional electricity supply in the
wrong place at the wrong time could result in added costs
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to the system," as stated in a report published by Rocky
Mountain Institute and PG&E in March 2012. ("Net Energy
Metering, Zero Net Energy, and the Distributed Energy
Resource Future: Adapting Electric Utility Business Models
for the 21st Century," Rocky Mountain Institute, Snowmass,
CO, March 2012.) However, it is difficult to develop
quantitative measuring and monitoring protocols to
systematically gauge whether DG is being deployed at the
right place at the right time, and there has been no effort
yet in California to do so.
1)Author's statement :
Policymakers and regulators generally agree that clean
distributed resources are beneficial. This is evidenced by
multiple state programs, policies, goals, and reports aimed
at promoting them. Clean DERs (distributed energy
resources) help reduce GHGs, NOx, and criteria air
pollutants in addition to increasing grid reliability and
integrating with renewables. These technologies help
achieve the GHG reduction goals in AB 32, the Renewables
Portfolio Standard, and regional air quality targets.
However, clean distributed energy resources have never been
defined in a technology neutral fashion, which makes these
technologies susceptible to being left out of important
reports and planning processes. Because these reports
often inform policy discussions on the future of
California's electrical system, it is important that
information on all clean distributed energy resources is
included.
Many innovative clean DERs are being invented,
manufactured, and deployed in California with the state's
policy goals in mind. In addition to renewables like solar
and wind, clean DER technologies being deployed in
California include fuel cells, combined heat and power
systems, advanced energy storage technologies, demand-side
resources, dairy digesters, and landfill gas capture
technologies.
The PUC, in consultation with the Independent System
Operator and Energy Commission, issues a biennial report on
the impacts of distributed resources in California.
Currently, this report uses existing incentive programs to
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determine which distributed resources are included and
focuses primarily on solar PV. Because there are so many
types of new clean distributed resources being developed
and deployed in California today, it makes sense for this
report to use a technology-neutral definition to guide the
report's findings.
To solve this problem, a technology-neutral,
attribute-based definition of "clean distributed energy
resources" is needed. By creating a definition for this
term, which sets strict limits on GHG emissions, NOx
emissions, and size, the state can properly report on the
development and deployment of new clean distributed
technologies with environmental and reliability attributes
that drive California toward its GHG, air quality, and
energy goals.
2)How clean is "clean" ? Essentially, this bill is about
defining the rate at which natural gas DG can emit GHGs and
NOx and still be considered "clean." For GHG, the bill
references an emission factor for existing in-state natural
gas electricity generation that was included in a supplement
to the 2008 AB 32 Scoping Plan. The emissions factor is 963
pounds per megawatt-hour (lbs/MWh). For NOx, the bill
references a regulation adopted by ARB in 2001 for
certification of small DG units. The emissions standard is
0.07 lbs/MWh. Incorporating these ARB publications by
reference may not result in coherent standards because the
referenced report and regulations may change. For example,
the Scoping Plan Update proposed by ARB for adoption in May
does not include a GHG emissions factor for electricity, so
once the update is adopted, the GHG standard in the bill would
be meaningless. The author and committee may wish to consider
directly incorporating maximum emission rates in the bill.
To help understand whether a GHG emissions rate of 963 lbs/MWh
is a fair definition of "clean" for new natural gas
generation, the committee obtained the following GHG emissions
rates for comparison:
PG&E grid mix (2009) - 575 lbs/MWh
PG&E grid mix (2010) - 445 lbs/MWh
SCE delivered electricity (2011) - 517 lbs/MWh
SCE delivered electricity (2012) - 705 lbs/MWh
SDG&E delivered electricity (2010) - 736 lbs/MWh
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SDG&E delivered electricity (2011) - 648 lbs/MWh
Bloom Energy fuel cell - 773 lbs/MWh
Recent combined-cycle power plants:
o Inland Empire (2009/10) - 801-817 lbs/MWh
o Otay Mesa (2009) - 815 lbs/MWh
o PG&E Gateway (2009) - 829 lbs/MWh
o Palomar (2012) - 840 lbs/MWh
These numbers suggest that, while 963 may be on par with the
existing fleet of in-state gas generation (which is skewed up
by older, less-efficient units), it is significantly less
"clean" than the grid average of the state's two largest
utilities and does not compare favorably to recent additions
to the grid. If 963 is the standard, "clean" may not be the
right adjective. It appears that a standard closer to 800
lbs/MWh would reflect an environmental improvement going
forward.
1)Reason for excluding non-biogas renewables is unclear . The
bill also includes resources eligible for the Renewables
Portfolio Standard (RPS) in the "clean" category, but only
those renewables that use organic waste or biogas. The author
and the committee may wish to consider amending the bill to
include all RPS-eligible renewables.
2)Much ado about a report . Though the exercise of deciding
which natural gas technologies should be considered "clean"
may have some independent value, it's not clear what purpose
will be served by distinguishing "clean" DG in a report that's
about grid impacts rather than environmental impacts.
3)Double referral . This bill is double-referred to the Assembly
Utilities and Commerce Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Bloom Energy
EnerNOC
EtaGen
Sonoma County Water Agency
TechNet
Opposition
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None on file
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092