BILL ANALYSIS �
SCR 108
Page A
Date of Hearing: June 9, 2014
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SCR 108 (Evans) - As Amended: May 19, 2014
SENATE VOTE : 34-0
SUBJECT : Geothermal Month and Geothermal Day.
SUMMARY : This measure would recognize the month of May 2014 as
Geothermal Awareness Month and May 5, 2014 as Geothermal
Awareness Day.
EXISTING LAW
a)Establishes procurement requirements which electrical
corporations and public utilities must meet in order to attain
a target of 33% renewable generation in their electricity
supply portfolios by 2020. (Public Utilities Code 399.11)
b)Defines renewable electrical generation facilities as those
that use biomass, solar thermal, photovoltaic, wind,
geothermal, fuel cells using renewable fuels, small
hydroelectric generation of 30 megawatts 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)
c)Authorizes the PUC to require each electrical corporation to
annually prepare a renewable energy procurement plan.
d)Directs the California Air Resources Board to monitor and
regulate sources of greenhouse gas (GHG) emissions to achieve
GHG emission reductions. (Health and Safety Code 38510)
e)Establishes the Geothermal Resources Development Account to
distribute federal funds to eligible local jurisdictions and
private entities for projects and activities that promote
development of geothermal energy resources, mitigate 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.)
SCR 108
Page B
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's statement: "California possesses more geothermal
generating capacity than anywhere else in the world in various
areas, including The Geysers and the Salton Sea. The Geysers,
in my district, is a unique treasure that has been a
significant contributor to the state's ability to meet its 33%
renewable energy goals and its 2020 carbon reduction goals.
As we, the Legislature, focus on setting climate and renewable
goals post-2020, geothermal energy can and must play a
critical role."
2)Geothermal energy. Geothermal energy is energy stored as heat
under the solid surface of the earth. Approximately 30% of
this energy is residual heat from the formation of the earth,
while 70% is produced by radioactive decay of the potassium
40, uranium 235, uranium 238 and thorium 232 isotopes.<1>
Although geothermal energy is technically a finite resource,
it is considered renewable energy because the supply is
ensured for the next millions of years (i.e., geothermal can
be considered renewable on a human timescale).
Geothermal energy is typically harnessed at sites with geysers
and hot springs. Most geothermal energy does not reach the
earth's surface; instead, it remains trapped in cracks, porous
rock, and groundwater. A site of subsurface heated water and
steam is called a geothermal reservoir.
Wells are drilled into a geothermal reservoir to develop
electricity from geothermal resources, but drilling and
exploration entail various costs and risks. For example, a
typical well doublet (extraction and injection wells)
supporting 4.5 MWs costs ~$10 million to drill and has a ~20%
failure rate. These wells, if successful, bring the geothermal
water to the surface, and its thermal 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.
The operating characteristics and costs of geothermal energy
--------------------------
<1> http://www.geothermie-zentrum.de/en/geothermal-energy.html
SCR 108
Page C
differ from those of other renewable energy resources such as
solar and wind. Geothermal power plants are classified as base
load facilities - they are able operate 24 hours per day. In
contrast, solar and wind energy are classified as intermittent
renewables - they are dependent upon the sun shining or wind
blowing. As such, to ensure a reliable and steady flow of
energy to customers, solar and wind require additional
generation or energy storage to be available as a backup,
whereas geothermal facilities do not require additional backup
generation or energy storage. The costs of backup generation
or energy storage are sometimes referred to as "integration
costs" and are a necessary element of maintaining customer
electric reliability when larger quantities of intermittent
renewable resources are placed on the electricity grid. As a
result, geothermal facilities may have favorable
characteristics that can complement increased use of
intermittent resources. However, it is important to note that
geothermal steam resources can be depleted over time, which
leads to a reduction in electricity generation.
3)California's geothermal industry. More than 45 geothermal
projects are located across Imperial, Inyo, Lake, Mono, and
Sonoma counties. The world's largest geothermal field - The
Geysers, located 70 miles north of San Francisco - contains 22
power plants that draw steam from more than 350 wells.
California currently has 2,782 MWs of installed physical
capacity, corresponding to 4.4% of the total power mix and 25%
of the renewable electricity supplied to retail customers.
2010 saw a scheduled expiration of federal production tax
credits, which may have discouraged investments in geothermal
resources.
4)The future of geothermal in California. Eight projects (with a
capacity of 618 MWs) have received environmental permits but
are not yet online and another project (for 159 MWs) is
currently on hold.
The most recent estimate by the U.S. Geological Survey
suggests that accessible geothermal resources in California
could provide another 800 - 4,600 MWs. Resources not yet
discovered but likely to exist could provide an additional
3,000 - 25,000 MWs.
SCR 108
Page D
Procurement of geothermal energy by the major IOUs (Pacific
Gas & Electric, San Diego Gas & Electric, and Southern
California Edison) is forecasted to decrease substantially by
2020, as seen in the table below:
--------------------------------------------------
| Geothermal RPS Procurement (from August 1, 2013 |
| Compliance Reports) |
--------------------------------------------------
|-----+----------------+---------------+----------|
|IOU | 2011 | 2012 | 2020 |
|-----+----------------+---------------+----------|
|PG&E | 25.0% | 26.0% | 10.2% |
|-----+----------------+---------------+----------|
|SDG&E| 23.2% | 28.1% | 0.0% |
| | | | |
|-----+----------------+---------------+----------|
|SCE | 46.8% | 43.4% |20.0% |
-------------------------------------------------
5)Geothermal costs. According to the February 2014 report to the
Legislature on RPS costs<2>: the weighted average
time-of-delivery (TOD) adjusted contract price was
approximately 7.5 cents/kilowatt hour (kWh) for all contracts
approved in 2013 (including renewable energy credit only, or
REC only, transactions), and approximately 8.4 cents/kWh for
bundled energy product (excluding REC only transactions). This
2013 average RPS contract price is lower than the RPS
contracts approved in 2012, which were 9.7 cents/kWh on
average, because of price declines in the renewable market.
Table A-1 in this report also reports that the average TOD RPS
procurement from geothermal projects ranged from 6.5 to 7.19
cents/kWh - numbers relatively similar to those in 2012.
Photovoltaic projects ranged from 10 to 15.18 cents/kWh, a
decrease from the 2012 range of 15.33 to 23 cents/kWh.
6)Related legislation. AB 2363 (Dahle) would require the PUC to
direct electrical corporations to include in their proposed
procurement plans the use of any nonzero integration cost
adders. It would also require the PUC to adopt a nonzero
---------------------------
<2> PUC. Padilla Report to Legislature. February 2014.
http://www.cpuc.ca.gov/NR/rdonlyres/775640F8-38D7-4895-9252-7E172
61776FE/0/PadillaReport2014FINAL.pdf
SCR 108
Page E
integration cost adder methodology by October 1, 2015. Status:
Referred to Senate Rules Committee.
SB 1139 (Hueso) requires retail sellers to procure a statewide
total of 500 megawatts of electricity generated by new
geothermal powerplants by December 31, 2024, as specified.
Status: Assembly, held at desk.
REGISTERED SUPPORT / OPPOSITION :
Support
Calpine Corporation
Climate Protection Campaign
Geothermal Energy Association (GEA)
Geothermal Resources Council (GRC)
Individual Letters (22)
Lake County Board of Supervisors
Lake County Chamber of Commerce
Opposition
None on file.
Analysis Prepared by : Brandon Gaytan / U. & C. / (916)
319-2083