California’s big utilities to reach 50% renewable energy in 2020

When California’s political leadership pushed its 50% renewable energy mandate in 2015, there was some skepticism about whether or not such a target was feasible.

And while much of this was propaganda from nuclear and fossil fuel proponents, California was indeed breaking new ground. Only two states had more ambitious renewable portfolio standard (RPS) policies at the time: Hawaii and Vermont.

However, in California’s 2017 RPS Annual Report issued yesterday it appears that the state will not only meet its 50% RPS target – it will pass that goal the way Usain Bolt used to pass competitors at the Olympics. According to the report California’s three large private utilities, which serve most of the state’s customers, will reach the 50% goal 10 years early.

Pacific Gas & Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E) and Southern California Edison (SCE) have already reached an average of 35% RPS-compliant renewable energy – which excludes large hydro – in their procurement as of 2016.

SDG&E is the farthest ahead, with wind, solar and a tiny bit of biomass power representing 43% of its procurement. SCE is only at 28%, even though it has been able to tap substantial geothermal power, and PG&E is in the middle at 33%, with the most diverse portfolio.

Regardless, all three are ahead of a 25% requirement by the end of 2016. But this is just the beginning. The utilities have already procured projects under development that will put them collectively at 50% of their RPS targets.

However, this ambitious achievement may have market consequences. The three utilities chose not to conduct annual RPS solicitations in 2016 or 2017, and do not plan to issue requests for new capacity in 2018.

By contrast California’s smaller utilities, including Bear Valley Electric Service, Liberty Utilities and PacifiCorp, are barely meeting the targets, with RPS-compliant renewables meeting only 27% of procurement in 2017. However five of the state’s large community choice aggregators (CCAs) including Marin Clean Energy and CleanPowerSF were already at 47% RPS-compliant renewables in 2017.

 

$29/MWh for large solar

The report also documents that California’s utilities are deploying renewable energy at extremely low prices, putting to lie the claims that such a move to high levels of renewable energy is necessarily expensive. In fact, the report finds that the average contract price for utility-scale solar projects in California was $29 per megawatt-hour (MWh) in 2016, with wind projects coming in at $51/MWh in 2015, the latest year reported.

Such low prices indicate that solar could be deployed cheaply at a massive scale, and at a pv magazine roundtable at the Solar Power International trade show in September Chief Technology Officer Raffi Garebedian argued that the falling cost of solar means that the even with relatively high rates of curtailment solar can remain cost-effective, thus enabling it to meet a much higher portion of demand even without deployment of energy storage.

California still faces challenges to making its grid flexible enough to optimally integrate high levels of wind and solar. While the recent solar eclipse showed that the system can accomplish even a steep ramp, inflexible contracts for hydroelectric delivery and the must-run Diablo Canyon nuclear power plant exacerbate the mid-day oversupply of power.

And while it has not solved these problems yet, California’s grid operator is greatly improving electricity trading with other regional grids, another key to integrating higher levels of renewable energy.