The California Public Utilities Commission has unanimously approved a 1,325 MW energy storage procurement target for the state’s largest utilities in Decision 13-10-040. PG&E, SDG&E, and SCE must collectively procure 1,325 MW of energy storage resources by 2020, for installation no later than 2024. The first of at least four competitive solicitations for energy storage projects will take place on December 1, 2014. While the press has hailed the 1.3 GW procurement target as the first of its kind in the nation, the Commission actually first authorized energy storage procurement in California last February, ordering SCE to procure at least 50 MW of energy storage in Decision 13-02-015. The amount of capacity up for grabs in the biennial RFOs is set by Decision 13-10-040, but storage projects already in the pipeline and contracts for storage approved by the Commission in other proceedings will likely eat into the capacity available. There is also a potential off-ramp, if proposed projects are not reasonable in cost or the utilities do not receive enough bids for operationally viable projects, each can defer up to 80% of its procurement target. As the utilities’ cost and fit evaluation methodologies will be developed over the coming year, what would constitute unreasonable cost has yet to be determined.
This week the California Air Resources Board (ARB) released a draft of its AB 32 Climate Change Scoping Plan Update. The original Scoping Plan was adopted in 2008 and must be updated every five years. The Scoping Plan serves as a blueprint for achieving AB 32’s goal of reducing greenhouse gas (GHG) emissions to 1990 levels by 2020.
The draft Update summarizes programs implemented over the last five years under AB 32 and outlines actions necessary to continue California’s progress toward the 2020 emissions reduction goal. The draft Update shows that California is on track to meet the 2020 emissions reduction goal and inventories the progress made across different economic sectors and programs like cap and trade. With the Update, ARB continues its strategy of achieving AB 32 goals through a mix of emissions reduction measures, including regulatory programs, incentives, and market-based approaches.Continue Reading...
A tentative ruling was issued yesterday in the related cases California Chamber of Commerce v. California Air Resources Board (ARB) and Morning Star Packing Co. v. ARB, pending before the Sacramento County Superior Court. The cases challenge the legality of ARB's cap and trade auctions under two theories: (1) the cap and trade auctions exceed ARB's authority under AB 32, and (2) the auctions amount to an illegal tax adopted without the requisite two-thirds approval of the California Legislature. The Court tentatively ruled in ARB's favor that the agency's implementation of a cap and trade auction system is within the scope of AB 32, which delegated ARB authority to design the distribution of emissions allowances. The Court did not rule on whether the allowance auctions constitute an illegal tax. The tentative ruling outlined questions on this topic for oral argument, which was heard yesterday. A ruling on the tax challenge is expected in the next 90 days.
ARB held its most recent quarterly auction on August 4, 2013. 2013 vintage allowances sold for $12.22. In the advance auction of 2016 vintage allowances, held concurrently, allowances sold for $11.10.
Today President Obama released his Climate Action Plan and highlighted the key components of the Plan at a speech at Georgetown University. The Plan has three primary goals: (i) cutting greenhouse gas (GHG) emissions in the U.S., (ii) preparing the United States for the effects of climate change, and (iii) leading international efforts to mitigate climate change. During his speech, President Obama listed three measures to address the first two goals: use more clean energy, waste less energy, and cut carbon emissions. The Plan includes some important new directives from the President, it incorporates some initiatives that are already underway and outlines some of the Administration’s intentions, without providing hard timelines or goals.
The Climate Action Plan is limited to initiatives that the President can implement without Congressional approval. Nevertheless, it has the potential to significantly affect a broad range of energy sector interests. A summary of the Plan's key components follows.
Using more clean energy:
- The Interior Department is directed to support deployment of 10,000 MW of renewable energy on public lands by 2020.
- The Department of Defense (DoD) is directed to build 3,000 MW of renewable energy at military installations by 2025.
- Federal agencies will aim to install 100 MW of rooftop solar on federally-subsidized housing by 2020.
- The federal government commits to obtain 20% of its electricity from renewable sources by 2020.
- The Red Rock Hydroelectric Plant, on the Des Moines River in Iowa, will be placed on the federal Infrastructure "Permitting Dashboard" for high-priority projects.
- Federal agencies will streamline the siting, permitting, and review process for transmission projects.
- The U.S. will seek a global agreement in the World Trade Organization modeled after the 2011 agreement among 21 Asia-Pacific Economic Cooperation economies to reduce tariffs to 5% or less by 2015 on 54 environmental goods, including solar panels and wind turbines.
- The FY2014 budget will include $7.9 billion for clean energy research and development.
- The Department of Agriculture’s Rural Energy for America program will provide renewable energy and energy efficiency grants and loan guarantees directly to agricultural producers and rural small business.
- Natural gas will continue to be relied upon as a “transition fuel” while America works to develop an “even cleaner” energy economy.
See my colleague Wayne Rosenbaum's recent post on the question of how failed solar panels could be treated under federal and California waste laws:
Recently the New York Times published an article highlighting the high rate of solar panel failures well before their expected life times. While the article focused on the question of product liability, it raises another question. How does the law, particularly waste laws, define a solar panel that is no longer fit for its original intended use or purpose?
Under current federal and California law, the manufacturer of a non-functioning solar panel does not have an obligation to take back panels at the end of life as it does under the EU WEEE Directive. However, it is likely that this will change as the US PV market matures and more arrays approach end of life or fail. Panel manufactures are encouraged to monitor this issue and potentially to participate in contingency planning or rulemaking.
Regarding the disposal of defective panels, once an entity takes title to the panel it becomes the owner of that panel. This includes lenders who take title through foreclosure. As such, the owner becomes responsible for the panel's proper handling and disposal. This requirement raises the question: Once the owner takes possession what will it do with the panel or its components at the end of their useful life?
The California Public Utilities Commission has adopted Decision 13-05-034, approving PG&E, SCE, and SDG&E’s joint standard contract for California’s expanded feed-in tariff (FiT) program. D.13-05-034 also revises several provisions of the FiT tariff and addresses two petitions to modify D.12-05-035, the Commission’s previous decision implementing the expanded FiT. The most recent legislation affecting the FiT, SB 1122 (2012), directing the utilities to procure 250 MW from bioenergy projects, is not addressed in D.13-05-034, but will be implemented in a later decision.
Barring any delays in finalizing the contract and tariff revisions ordered in D.13-05-034, the utilities will begin accepting Program Participation Requests for the new FiT on October 1, 2013 and the first bi-monthly FiT program period will commence November 1, 2013.
For details on changes to the FiT approved in D.13-05-034, and requests for modification rejected by the Commission, read on.Continue Reading...
The results are in for the third California cap and trade auction. A metric ton of CO2e went for $14 in the third auction, which took place on May 16, 2013. The top bid at the auction was $50.01, with a mean bid of $16.67 submitted. All of the 14.5 million 2013 vintage allowances available at the auction were sold, with 1.78 bids submitted for each available allowance. Demand was down compared with the second auction, that took place in February 2013, where roughly 2.5 bids were received for every available 2013 vintage allowance. In the third auction, just over 90% of the allowances were purchased by entities that have compliance obligations under the cap and trade program. Allowance prices have continued to slowly rise, with a settlement price of $10.09 per metric ton CO2e in November 2012, $13.62 in February 2013, and $14 in this most recent auction. See my earlier blog post for some details on auction rules.
CARB also held an advance auction of 2016 vintage allowances on May 16. 7.5 million of roughly 9.6 million allowances available were purchased at this advance auction. The settlement price was the same as the minimum bid price allowed, $10.71 per metric ton CO2e. Though all of the 2016 vintage allowances offered were not sold in the third advance auction, demand rose over the second advance auction held in February 2013. In the third advance auction, CARB received about eight bids for every ten 2016 vintage allowances available; in the second advance auction, there were about five bids for every ten 2016 vintage allowances.
An Allowance Price Containment Reserve sale will take place June 27, 2013. The next allowance auction will be held August 16, 2013.
California Public Utilities Commission Sets Fourth and Fifth Solicitations for the Renewable Auction Mechanism Program
On May 9, 2013, the California Public Utilities Commission adopted Resolution E-4582, scheduling the fourth Renewable Auction Mechanism (RAM) auction to close on June 28, 2013 and setting a fifth RAM auction for no later than June 27, 2014. The RAM program allows renewable energy developers to bid their 3 MW to 20 MW projects to California’s three largest utilities – PG&E, SCE, and SDG&E – for a standard contract. The final Resolution did not differ substantively from the Commission’s draft Resolution, issued in early April 2013 and detailed in a previous blog post. Advice letters filed today with the CPUC provide the utilities' procurement targets for the fourth RAM auction. SCE will solicit projects totaling 181 MW, PG&E is seeking a total of 82 MW, and SDG&E is looking to procure 47 MW in total. The advice letters also breakdown the utilities' total procurement goals into the capacity sought in each of the three RAM product categories - baseload, peaking as-available, and non-peaking as-available.
Various parties commented on draft Resolution E-4582, attempting to influence the Commission's direction with the RAM program. Commenting on the draft Resolution, the Division of Ratepayer Advocates requested that the fourth and fifth auctions be delayed so that RAM projects from these auctions would come online during the utilities’ third RPS compliance period (2017-2020). In their comments, Recurrent Energy, the Solar Energy Industries Association, and the Large Scale Solar Association proposed that the Commission hold the fifth RAM auction within six months of the fourth auction, rather than up to a year after the fourth auction, and hold three subsequent auctions on an annual basis thereafter. They did not propose an increase in the total capacity of the RAM program; the three additional auctions would solicit capacity to replace any previously executed contracts that fail or are terminated. The Commission did not amend the draft Resolution to incorporate these recommendations.
On April 19, 2013, the California Air Resources Board (CARB) voted to link the California cap and trade program to Québec’s cap and trade system. CARB approved changes to the California cap and trade regulation on Friday to allow for the linkage, which is effective January 1, 2014. In practical terms, the linkage opens a new market for greenhouse gas allowances and offsets for California’s regulated entities and offset generators. As Québec’s cap and trade participants enter the California market, regulated entities in California could face tighter competition in bidding for allowances at CARB’s quarterly auctions.
CARB is also planning for additional amendments to the California cap and trade regulation this year. Many of the potential changes were teed up for consideration in CARB Resolutions 12-33, 12-51, and 11-32. Topics up for potential amendment include:
- Refining the definition of resource shuffling and clarifying how CARB will deal with the problem. CARB will base proposed amendments to resource shuffling provisions on the recommended actions presented by staff in October 2012.
- Providing transition assistance to electrical generating facilities with legacy power purchase agreements that do not provide for recovery of the cost of compliance with the cap and trade program.
- Exemption for steam and waste heat emissions from combined heat and power.
- Exemption for emissions from waste-to-energy facilities during the first compliance period (2013-2014).
Draft California PUC Resolution Would Set Fourth RAM Auction for June 28, 2013, Authorize Fifth RAM Auction in 2014
The California Public Utilities Commission has issued a Draft Resolution to schedule the fourth Renewable Auction Mechanism (RAM) solicitation and authorize a fifth RAM auction to take place in 2014. Draft Resolution E-4582, issued April 9, 2013, would close bidding for the fourth RAM auction on June 28, 2013. The fifth RAM auction authorized by the Resolution would close no later than June 27, 2014. Under the Draft Resolution, Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) are directed to solicit two-thirds of their remaining RAM capacity allocation in the fourth auction. The remaining one-third of capacity, plus any unsubscribed capacity from previous auctions, would be solicited in the fifth auction. The Draft Resolution does not alter the total RAM procurement targets of the three utilities or other components of the program. However, the addition of the fifth auction provides RAM participants with an additional opportunity to bid their renewable energy projects to the utilities.
PG&E, SCE, and SDG&E are required under the current RAM Program to procure a combined 1,299 MW of renewable energy from 3 to 20 MW projects through four auctions taking place from 2011 to 2013. The third RAM solicitation closed December 21, 2012. The utilities will submit advice letters to the Commission in May 2013 with the results of the third auction. In previous submissions to the Commission, SCE stated that it sought to procure 186 MW in the fourth auction and SDG&E stated it planned to procure 44 MW in the fourth auction. Depending upon the success of its third auction, PG&E may have approximately 100 MW of remaining procurement capacity. Under the Draft Resolution, this remaining capacity will be solicited across the fourth and fifth auctions.
Comments on the Draft Resolution are due to the CPUC April 29, 2013. The Commission currently plans to vote on the Draft Resolution at its May 9, 2013 meeting.