California s Efforts In Addressing New Electricity Markets Asia

California’s Efforts In Addressing New Electricity Markets Asia Pacific Economic Cooperation (APEC) Expert Group on New and Renewable Energy Technologies Terry Surles, Director Technology Systems Division California Energy Commission CALIFORNIA ENERGY COMMISSION

GDP (2000) CALIFORNIA ENERGY COMMISSION

Production of Electricity by Source - 1999 Wind/solar- 1. 6 Geothermal - 4. 8 Biomass/waste- 2. 0 Oil- 0. 2 Imports 31 Natural Gas 15 13 Geothermal- 0. 4 NG-15. 5 Imports- 1. 2 Hydro- 32. 6 Oil- 3. 2 Coal- 51. 9 18 15 Wind/solar-0. 1 Imports Hydro 15 8. 5 Nat Gas 20 Nuclear 51 Coal Hydro Nuclear Coal 276 TWh 3, 678 TWh CALIFORNIA ENERGY COMMISSION

California Energy Perspective u u Previous system wasn’t broken Market power became concentrated w u u No price signal for end users Loss of momentum on demand side management w w u 10 GWh saved by early 1990’s Restructuring derails utility DSM 1. 4 GW of renewable cancelled w w u profits up by selling more for less “No need” Price was above cost to utilities Results w w Demand up 0. 7%, price up 130% Blackouts with 28 GW laid, with ~50 GW capacity CALIFORNIA ENERGY COMMISSION

California Energy Issues: Interdependencies u u u Relationship of natural gas to electricity use w storage down 87% from 11/99 to 11/00 w generators pass through spot gas prices w $3 to $69 MBtu from 12/12/99 to 12/12/00 1 -in-75 year drought will cause increased gas demand w 600 Bcf in west, 225 Bcf in So Cal SONGS outage reduces 1100 MW of generating capacity w u increase gas demand by 200 Mcfd First cold winter in US in three years w price up all over, higher in CA CALIFORNIA ENERGY COMMISSION

Megawatts Peak Demand is Increasing Faster than Newly Installed Capacity CALIFORNIA ENERGY COMMISSION

Contribution to ISO Peak Demand August 16, 2001 (MW) Commercial AC Commercial Lighting Residential AC Other CALIFORNIA ENERGY COMMISSION

ISO Daily Peak Loads January 2000 - August 31, 2001 Summer Peak is 50% higher than rest of year Yet blackouts occurred here CALIFORNIA ENERGY COMMISSION

Generation Outages Scheduled & Forced Average MW/Month Outages 2 -4 times greater in Fall/Winter/Spring 2000 -01 CALIFORNIA ENERGY COMMISSION

What Changed by Summer & Fall 2001? u u u CA peak demand > 40, 000 MW on only 9 days FERC ordered generators to offer power FERC threatened scrutiny of outages Conservation of ~8% from publicity campaign and higher prices Capacity additions 1/1/01 - 8/1/01 8/2/01 - 8/1/02 CA & N. Baja 3, 192 MW 7, 652 MW NW, Alberta, BC 2, 104 MW 4, 038 MW SW 2, 331 MW 3, 212 MW 7, 627 MW 14, 902 MW CALIFORNIA ENERGY COMMISSION

MWh person-year California: policy really does work CALIFORNIA ENERGY COMMISSION

Peak Demand Influenced by Economics and Weather CALIFORNIA ENERGY COMMISSION

Summer 2001 Peak Demand Reductions Adjusted for weather and Economic Growth Actual CALIFORNIA ENERGY COMMISSION

Stakeholder Consultation CALIFORNIA ENERGY COMMISSION

Climate Change Adaptation Problem: California is unprepared for the likely physical, economic and societal disruptions of climate change CALIFORNIA ENERGY COMMISSION

h Va lle yo f. D eat De ve De lop mo. ns tra Ce tio rti ns fic ati on Se lf S Ma us rk tain et ing In ter Ma na rk t. et t cep ch n. on Te fo f. C oo Pr Ne w En e rgy Id e a Technology Development Continuum From Innovation to Market PIER Program (RD&D) Renewable Export Energy Program CALIFORNIA ENERGY COMMISSION

PIER Objectives: Meeting Ratepayers Needs u Tangible products reach market w u Prepare for the next crisis w u end use energy efficiency Distributed energy sources w w w u legislative justification supply alternatives demand side management enabling systems externalities (environment, resource, security), climate change CALIFORNIA ENERGY COMMISSION

Power. Light Corporation Building. Integrated PV Roof System CALIFORNIA ENERGY COMMISSION

The Yolo County Success u Accomplishments w Is opening the way for landfill gas electricity systems to be more widely used in California • Accelerates gas production from over 30 years to less than 10 years, making landfill electricity more competitive • Reduces volume of landfill which can extend landfill life by 20 percent • Significantly reduces the chance for groundwater pollution from leachate release w u Control cell without bioreactor Has become the leading bioreactor project within EPA’s XL Program and will strongly influence landfill regulations across the country CEC’s Role w Through the CEC’s R&D programs, we’re bringing bioreactor technology from concept to reality Enhanced bioreactor cell CALIFORNIA ENERGY COMMISSION

Hoopa Valley Indian Tribe - PIER Small Modular Biopower (SMB) Demonstration • SMB Bio. Max-15 System commissioned 8/01 helps promote sustainable forestry • As pictured, forest clearing residue is a source of fuel as is urban wood waste (twigs, leaves, bark and other trimmings) • Fully-automated control system. Nominal rating is 12. 5 k. W but has run continuously at 15 k. W for six hours • NOx levels 0 -2 ppm at full power, equivalent to. 05 lb. NOx/MW-hr CALIFORNIA ENERGY COMMISSION

The Wind Turbine Company u u u Design, develop and demonstrate a utility-scale wind turbine Horizontal axis, two-blade, downwind design Prototype developed for PIER and tested at NREL rated at 250 k. W Commercial prototype demonstration sited at the Fairmont Reservoir in LADWP territory for a 500 k. W - scaled up to 750 k. W - wind turbine demonstration to begin in October 2001 Goal is to produce electricity $0. 035 cents per k. Wh per 100 unit wind farms with wind resources 15 mph. CALIFORNIA ENERGY COMMISSION

Technical Support for DG Interconnection Standards u u u Reduces average cost of interconnection fees to consumers by 37% Supports Rule 21 by resolving technical safety issues Establishes technology & size neutral review process Identified testing and certification requirements Enables insertion of new generation (e. g. renewables) into the grid CALIFORNIA ENERGY COMMISSION

Renewable Generation Issues u u Developers of new renewable energy projects currently face a high degree of uncertainty The biggest impediment to further development of renewable projects is the lack of a stable market with buyers willing to provide adequate price certainty CALIFORNIA ENERGY COMMISSION

California’s Renewable Energy Program At a Glance u u $540 million in program funding (1998 - 2002) Market-based support for supply and demand sides of renewable energy market by providing: w Production incentives for existing and new renewable electricity generation w Capital cost buydowns to install on-site distributed generation systems w Rebates to customers who purchase renewable electricity w Consumer education CALIFORNIA ENERGY COMMISSION

Investment Plan Renewable Energy Consumption Targets CALIFORNIA ENERGY COMMISSION

Renewable Generation By Type GEOTHERMAL BIOMASS WIND SOLAR CALIFORNIA ENERGY COMMISSION

Investment Plan Renewables Generation Goals CALIFORNIA ENERGY COMMISSION

Energy Technology Export Program Focus u u Assist Small and Mid - Size Companies Develop International Energy Projects (<$100 Million in Capital Costs/Project) Feature Clean Combustion Power Plants, Energy Efficiency, Industrial Cogeneration, Renewable Energy Asia and Latin America Concentration CALIFORNIA ENERGY COMMISSION

International Project Financing u u u Pre-Investment: Energy Commission International Energy Fund Pre-Development: E&Co. /Rockefeller Foundation/Venture Capital Project Financing/Project Development: w w w EXIM Bank: >$10 Million IFC/REEEF: 25% Debt/Equity Investors/Equity Funds Multi-Lateral Banks: World Bank, ADB Dresdner Bank CALIFORNIA ENERGY COMMISSION

Recent Projects u u u Wind Power Projects (16. 5 MW) - Greece Clean Coal (CFB) Power Plants - China Industrial Cogeneration (12 MW) - Thailand Hotel Energy Efficiency Retrofits - Mexico and Panama Geothermal Power Plant (5 MW) - Vanuatu Electric Bicycle Kits (2, 000 Units) - China CALIFORNIA ENERGY COMMISSION

Next Steps: u u u Diffuse excess market power Address potential for supply overshoot Change buyer’s mentality w w u Education - it’s more than flicking a switch Take control - it’s not a tax Develop alternatives w w w end-use energy efficiency distributed energy resources enabling technologies for DSM and real-time pricing CALIFORNIA ENERGY COMMISSION