BILL ANALYSIS �
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SCR 108 - Evans and Hueso Hearing
Date: April 29, 2014 S
As Introduced: April 8, 2014 FISCAL C
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DESCRIPTION
Current law directs the California Air Resources Board (ARB) to
monitor and regulate sources of greenhouse gas (GHG) emissions
to achieve technologically feasible and cost-effective GHG
emission reductions, as specified. (Health and Safety Code ��
38510, 38590)
Current law requires investor-owned utilities (IOUs), community
choice aggregators (CCAs), and energy service providers (ESPs) -
known collectively as retail sellers - as well as publicly-owned
utilities (POUs) to increase purchases of renewable energy such
that at least 33% of total retail sales are procured from
renewable energy resources by December 31, 2020. In the interim,
each entity would be required to procure an average of 20%
renewable energy from January 1, 2011 to December 31, 2013, and
25% renewable energy by December 31, 2016. This schedule is
known as the Renewables Portfolio Standard (RPS). (Public
Utilities Code � 399.11 et. seq.)
Current law defines the following as RPS eligible: electric
generation resources from biomass, solar thermal, photovoltaic,
wind, geothermal, fuel cells using renewable fuels, small
hydroelectric generation of 30 megawatts (MWs) or less, digester
gas, landfill gas, ocean wave, ocean thermal, tidal current, and
municipal solid waste conversion that uses a non-combustion
thermal process to convert solid waste to a clean-burning fuel.
(Public Resources Code � 25741)
Current law establishes the Geothermal Resources Development
Account into which federal revenues are deposited to fund grants
to eligible local jurisdictions and private entities for
projects and activities that promote development geothermal
energy resources, mitigate any adverse impacts caused by
geothermal development, or help local jurisdictions offset the
costs of providing public services necessitated by geothermal
development. (Public Resources Code � 3800 et. seq.)
This bill would urge the ARB, the State Energy Resources
Conservation and Development Commission, and the California
Public Utilities Commission (CPUC) to immediately act to ensure
the viability of existing geothermal resources and to promote
the procurement of new geothermal generation.
This bill would require the Legislature to recognize May, 2014
as Geothermal Month and May 5, 2014 as Geothermal Day to raise
awareness of the role of geothermal energy in achieving the
state's GHG emissions reductions goals.
BACKGROUND
What Is Geothermal? - Geothermal means 'heat from the Earth'.
Geothermal energy is considered renewable because the heat
extracted in the process of energy production is miniscule
compared to the Earth's total heat<1>.
The Earth's heat flows outward from the core. Sites with geysers
and hot springs often are the first places geothermal resources
are identified<2>. Yet most geothermal heat never penetrates the
earth surface; instead, it remains trapped in cracks, porous
rock, and groundwater. A natural site of subsurface heated water
and steam is called a geothermal reservoir.
To develop electricity from geothermal resources, wells are
drilled into a geothermal reservoir. The wells bring the
geothermal water to the surface, where its heat energy is
converted into electricity at a geothermal power plant.
California is home to many dry steam power plants, where steam
is produced directly from the geothermal reservoir to run the
turbines that power a generator.
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<1> The earth's heat is generated from the radioactive decay of
minerals as well as ongoing heat loss from the formation of the
planet.
<2> The industry reports that it is learning to harness
geothermal heat from additional geological contexts.
Current and Pending Geothermal Capacity and Generation -
Geothermal is a mature industry in California, with more than 45
projects across the following five counties: Imperial, Inyo,
Lake, Mono and Sonoma. The world's largest geothermal field -
The Geysers, located 70 miles north of San Francisco - contains
a complex of 22 power plants that draw steam from more than 350
wells.
Currently, California has 2,782 MWs of installed physical
capacity, which corresponds to 4.4% of the California total
power mix and 25% of the renewable electricity supplied to
California retail customers.
Stages of geothermal development include resource procurement
and identification, resource exploration confirmation,
permitting and initial development, and resource production.
Eight projects to produce 618 MWs have received environmental
permits but are not yet on line. Another project to produce 159
MWs is currently on hold. At least one project is operating
below maximum capacity (10 of 55 MWs) due to steam supply
issues. There may be additional generation under contract with
the utilities the existence of which has yet to be made public.
Potential Geothermal Resources - The total geothermal resource
base that could potentially support power generation is
uncertain. Nonetheless, the most recent estimate by the U.S.
Geological survey suggests that the additional, readily
accessible resource in California is 800 - 4,600 MWs. Resources
that are likely to exist but have yet to be discovered could
provide an additional 3,000 - 25,000 MWs.
Environmental Dimensions of Geothermal - Existing geothermal
electric plants emit an average of 269 lbs. of carbon dioxide
(CO2) per megawatt-hour (MWh) of electricity, a small fraction
of the emission intensity of conventional fossil fuel plants.
Moreover, geothermal plants have minimal land and freshwater
requirements: they use 1.4 sq. mi. per gigawatt of electrical
production vs. 12 and 4.6 sq. mi. for coal facilities and wind
farms, respectively. In addition, geothermal plants use 5.3 gal
of freshwater per MWh vs. 260 gal per MWh for nuclear, coal, or
oil. Thus, geothermal resources may help the state achieve its
Assembly Bill 32 (AB 32) global warming goals without harmful
indirect environmental impacts.
Challenges to Geothermal Development - First, capital costs of
geothermal development are significant. Drilling accounts for
over half the costs, and exploration of deep resources entails
significant risks. A typical well doublet (extraction and
injection wells) that can support 4.5 MWs costs ~$10 million to
drill and has a ~20% failure rate. Second, geothermal
exploration is time-consuming because of the difficulty of
defining geothermal reservoir properties, volume, and geometry,
i.e., what, exactly, is below the earth's surface. Third,
geothermal steam resources can be depleted over time, leading to
a reduction in electricity generation. Next, 2010 saw a
scheduled expiration of federal production tax credits, which
discouraged investments in geothermal resources. Finally,
according to the author, the procurement of geothermal resources
will decrease 44% from 2012 levels following the implementation
of SB 2x (Simitian). It is unclear whether this forecast is
derived from the percent of contracts that will expire in the
next several years or from other factor(s).
COMMENTS
1. Author's Statement . The author's general purpose is to
raise awareness of geothermal energy, a baseload renewable
resource that is "unique and abundant" in California. The
author asserts that geothermal energy is "often overlooked
and overshadowed by other renewable technologies.
Geothermal power is a true California treasure, which has
been providing local and statewide economic and
environmental benefits for over 50 years."
2. Clear Legislative Intent ? The bill urges California
energy agencies to "take the necessary actions" to ensure
the continued viability of existing geothermal resources
and to promote the procurement of new geothermal
generation. This language is vague and could be interpreted
differently by different agencies; plausible actions
include extending current contracts, providing support for
additional exploration, and increasing transmission.
Therefore, the author and committee may wish to consider
amending page 4, line 24 to provide specific direction to
energy agencies.
3. Technical Amendments . The author and committee may wish
to consider clarifying or else striking "better" on page 4,
line 3; specifying whether the Legislature shall recognize
Geothermal Month and Geothermal Day in 2014 or annually;
and substituting "supporting public" for "public support"
on page 4, line 19.
4. Related Legislation .
SB 1139 (Hueso) would mandate the procurement of 500 MWs of
geothermal electric generation to be divided
proportionately between retail sellers and POUs serving
more than 75,000 customers. Status: Pending hearing of the
Senate Energy Committee on April 29th.
AB 2363 (Dahle) would require the CPUC to direct electrical
corporations to include in their proposed procurement plans
the use of any nonzero integration cost adders. It would
also require the CPUC to adopt by October 1, 2015 a nonzero
integration cost adder methodology and to consider this
methodology prior to approving any procurement of eligible
renewable energy resources pursuant to the RPS, as
specified. Status: Pending hearing of the Assembly
Utilities and Commerce Committee on April 28th.
POSITIONS
Sponsor:
Calpine Corporation
Support:
Climate Protection Campaign
Oppose:
None on file
Alexis Erwin
SCR 108 Analysis
Hearing Date: April 29, 2014