GEM 6100 Project 2 GROUP 4

CALIFORNIA’S ENERGY
CHALLENGE IN 2015
FORWARD
California is leading the way for the rest of the nation in planning to remove
reliance from fossil fuels and instead rely upon clean renewable energy
sources in an all-out massive action that includes all agencies and utility
stakeholders.
Jon Shepard, John
Hoag, Michael
Hartnack; University
of Colorado Denver
March 2015

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California has recently sped up the transformation of its energy system. More change lies
immediately ahead. Intentional and planned methodological change in the velocity of change
and also in the quantity of changes within the energy field are expected. This is all due to a large
attempt to right ‘the ship’ in light of the past remarkable (lamentable?) several decades.
Going forward, for example, the state’s Renewable Portfolio Standard (RPS) now requires 33%
penetration by 2020, and 50% by 2050; the EPA’s CPP is just around the corner. Such major
changes require cultural, technical & system transformation on many complex levels with many
stakeholders in addition to generators and end users. Significant opportunities, savings &
windfalls will hopefully become available to the system & citizens via a fundamental
transformation of the system, of the grid functions & goals, and of the generation mix.
California can expect:
1) major energy system realignment to meet challenging emissions regulations & goals,
2) major behavior- & efficiency-driven changes in demand,
3) major technological innovation, leadership & involvement from California & Californians,
4) major health & environmental benefits.
To review California’s energy history recently endured 20 years of tumultuous challenge &
change to its energy economy & system (Consultants). Governor Wilson launched decoupling &
deregulation in the 1990’s and in 2000-2001 the state experienced its Deregulation Crisis. Gov.
Schwarzenegger brought more regulatory activism, with the California’s Global Warming
Solutions Act of 2006 (AB32) & Executive Order S-3-05. The 2007-2009 global Economic
Crisis slowed growth & demand with windfall years of reduced emissions. Gov. Brown is

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aggressively advancing his RPS goals. EPA launches the CPP, further spurring California’s
regulatory leadership, vision …& challenges.
Figure 1A, 1B & 1C: California Service Area, Transmission Grid & Generation Locations
(IEPA)
California's 3 largest IOUs collectively served 22.7% of their 2013 retail electricity sales with
renewable power: PG&E (23.8%), SDG&E (23.6%) and SCE (21.6%). (California Public
Utilities Commission (CPUC) ) Between 2005 & 2012, California enjoyed a 16% reduction in
CO2 from all in-state or imported electricity (EPA). Singular progressive efforts, such as
SMUD’s 2050 90% RPS Goal - are remarkable (Tiangco, 2011).

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Figure 2A & 2B:
Fig. 2A is the CO2 Goals compared to current CO2. (CCST, 2011) Fig. 2B is a Consumer
Energy Pie and Sources. (Cook, 2013). In 2020 (33% RPS) & 2050 (50% Executive Order RPS)
Caps will be in place. In Fig. 3A, Items 1 & 2 are Demand strategies, Items 3 & 4 are Supply.
In Fig. 3B, strategic squeezing for emissions reductions is illustrated. (CCST, 2011):
Figure 3A & 3B:

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The System Grid, Transmission & Generation look at the “duck curve” (solar PV–driven noon
demand dip with steep return to high peak in later afternoon (Sullivan, Michael (NEXTANT),
2014) Fig.s 6A & 6B require lots of (new) ramping generators and peak storage capacity. A
“prosumer” bi-directional grid – a major type of new issue in electric utilities & grid authorities –
is also expected. Severe Spring/Autumn afternoon ramping & flexibility requirements make the
“smart grid” an essential early lead priority for follow-on renewable generation contributions that
contribute to electricity quality delivered and produced. California is the largest member of the
Western Electricity Coordinating Council (WECC), which also manages the GHG/RPS registry
for its members. Balancing Authorities like California Independent System Operator (CAISO)
manage California’s electricity. Municipals, Coops, Industrial & smaller generators or users may
have trans-mission constraints larger players do not - affecting generation options &
optimizations.
Figure 4A, 4B & 4C: California Service Area, Transmission Grid & 2050 Generation
Mix/Locations; (IEPA) and (CAISO, n.d.)

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For the next 5 years, major rapid storage capacity will be added throughout the system, to reduce
congestion and gain flexibility. (Charles, 2014) (CAISO, CEC, CPUC, 2014)
1,325 MW Storage – 1% Peak Served - Integrated Increments:
Figure 5A & 5B: (Charles, 2014)
Total System Power: (See 2003, 2012 & 2013 Tables) New Project Phases or Developers have
been adding or replacing generation – now increasingly, due to GHG C&T & RPS opportunities
& upcoming CPP potential. Fig.s 7A and 7B Break-Out Fuel and Source; Note Coal, Natural
Gas, Oil, Solar, Wind Δs – 2003 & 2013
Figure 7A & 7B: (CPUC, 2012) (CPUC, 2013)
%MIX Δ
COAL↑
+0.32%
OIL↑
+0.01%
SOLAR↑
+0.92%
WIND↓
-3.91%

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Generation Mix & Opportunities (Capacity; Fuels, Technologies & Vintages; and Companies) –
California currently imports 30% of its electricity. - California already is cleaner-generating than
most states; fuel share totals are: 60% Natural Gas, 13% Hydropower, 9% Nuclear, 17%
Renewables (geothermal, wind, biomass, solar) and 1% coal. Only 1% of power generated in
California currently is from (growing) solar. Much of the plant is fairly new – especially in
natural gas, and renewables. Fuels for the 30% imports are largely coal & natural gas from the
south, hydropower from the north. Fig. 8A&B show generation by fuel.
RPS) Caps:
‘p
Figure 8A & 8B: (Cook, 2013) (Wei, 2012)
The state map 1A) shows the number of services areas, and 1C) shows all the generators,
including three major IOUs (Independent Operators of Utilities) PG&E – 5.2 M Households &
Businesses; SCE – 5.0 M Households & Businesses; SDG&E - 5.2 M Households &
Businesses. Ther also are IPPs – Independent Power Producers (Marketers) or Energy Facility
developers & operators – biomass, geothermal, small hydro, solar, wind, cogeneration and gas-
fired merchant facilities. The IEP Association (est. 1982) (IEPA) represents one-third of
California’s installed generation capacity.

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And the Municipalities, COOPs & Public Entities, that are not PUC-regulated: – LAWP, SMUD
(600 K) & Palo Alto, Santa Monica, Rural Coops, etc., along with smaller Industrial & Self-
Generators. The Generation Mix, Opportunities and Evolution of the system already includes
Alternative & Renewable Generation Components (IPPs began as small low-tech generators or
co-generators). Emissions Issues, Policies & Mechanisms are in part guided by CARB’s
Scoping Plan 2008 and Climate Change & Adaptation research, Citizen & Business Survey
results, etc. (Hanak, 2015)
Figure 10A & 10B: Generation Mix and Grid Congestions from Renewables:
California Energy & Emissions Policies (Wei, 2012) attempt to facilitate foreseeable Utility &
System Evolution and Changes – see the 4 Qs & Action (Fig. 3A) and the Technology
Availability & Policy (Fig.13).

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California’s mammoth economy (including energy, experienced 20 years of extraordinary
challenges & opportunities. This section looks back & ahead:
California’s general economic performance characteristics are such that: “The California
economy generally keeps pace with the U.S. Economy. Higher unemployment and the higher
costs of doing business in California are explained or offset by strengths. And they are likely to
remain permanent features of the state’s economy…. California’s economic performance closely
tracks that of the nation…. Unemployment is persistently higher in California…. California is a
high-cost high-benefit state…. The “business climate” debate understates California’s strengths.”
(Bohm, 2015)
California’s Electricity & Energy Economy & System is of an historic size & complexity.
Market Conditions for the System have been in turmoil for 30 years, with grid congestion
increasingly curtailing (Kahn, Debra, 2015) variable or spikey renewable generation
contributions – just when they are needed most.
Supply has always been robust, especially until the nuclear plants were stranded. Now, the grid
and emissions are the pertinent factors in the electricity industry that will most likely change and
their economic impact on California and the industry. (Roth, Bill, 2014). Demand is the hidden
emerging variable – smart meters exist in most of CA and the state is developing behavior
approaches to demand. (Cook, 2013) (Dietz, 2009)
California generates 70% of its electricity in state, (Kahn, Debra, 2015) and needs to use
exporting to sell excess power in the near future. Major Storage (Charles, 2014) - 2015-2020 of
1% peak usage in Integrated Increments across is being rolled out now. This drives spiked prices
and bottlenecks down - the state needs major upgrading and complementary system redundancy.

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California is using cost-effectiveness extensively across its entire planning & financing
approach. The new extensive reconfigured system will be expensive – and paid by system cost
savings and efficiency gains, as well as by consumers. Regarding Electricity Prices (Cook,
2013), California can expect modest annual electricity price increases, forecasted as ranges of
1.9-3.4% (2013-2040 (Kahn, Debra, 2015)) & 3.5-6.3% (2008 to 2020) – with the greatest rises
in the LADWP service territory. A new California Climate Credit helps reduce residential bills
through “Decoupling.” (Cook, 2013).
The Fundamental Regulatory Focus now is Climate Change, GHG T&D, RPS and the CPP.
Everything else seems to be driven by these pressing concerns (Luers, 2008) (Bedsworth) (Vine,
2008). Fig.s 11 A&B show savings by sector and home bills vs. the nation.
Figure 11A & 11B: (NRDC, 2013)

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Interactions between California’s Energy Economy and General Economy are enormous. The
energy investments use multi-criteria and CBA, to address Fundamental interlocked
Environmental & Energy Issues & Interactions in CA including: a) Water (Hanak, Water and the
California Economy), b) Integrated Climate Policy (Bedsworth) California Institute for Climate
Solutions (CICS) (Vine, 2008) and c) Ecological Systems. (Vine, 2008)
SMUD boldly went ahead, setting 90% 2050 goal. SMUD – Leading Early w/ High Goals vs
System-wide Integrated Policy/Planning Efficiency – for 35 years - has always kept prices
relatively low, and goals very high (Plumer, 2013). Comments, Recommendations & Studies are
being made by various critics, (Clemente, 2014) (Driessen, 2014) personalities or groups,
including 1) Stanford’s Hoover Institute as well as the WWS Jacobson, et al, groups, 2) UC
Berkeley - Energy & Resources Group1
(Wei, 2012) and 3) smaller advocate groups c.f. EDF,
NRDC (Wang, 2013) (NRDC, 2013) and the Sierra Club.
Business groups, such as “California 2030 Low Carbon Grid Study” (Olsen, 2015) are lobbying
for lofty goals: “Using conservative assumptions and proven technology, the study identifies the
grid’s ability to achieve these reductions with minimal rate impact, minimal curtailment of
renewable energy, and without compromising reliability.” (Grid) Public Education,
Participation & Surveys address behavioral Assumptions, ..and Modelling & Wedge (Dietz,
2009)
In analyzing pertinent factors in affecting the electricity industry in California besides the EPA’s
Clean Power Plan rule (which will come shortly), there are many stakeholders, which would bear
mention here. Each entity including the end user/consumer would have a play in shaping the
next 20 years of California’s energy economy. California State energy and environmental

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agencies join efforts with the California Independent System Operator Corporation (ISO)
(California's Clean Energy Future, 2015). Backed by the governor’s office, Public Utilities
Commission, the Energy Commission, the Air Resources Board and the EPA, this new team of
stakeholders would focus upon specific plans of attack for change in energy production, use, and
management.
According to the California Clean Energy Future Implementation Plan, the stakeholders would
focus upon key areas of interest to evoke changes:
1. Planning Incremental Efficiency Scenarios
2. Integrated Energy Policies and Efficient Strategic Planning
3. Market Transformation Support Programs and Utility Efficiency with Codes and
Standards
4. Demand Response with improved mechanisms like Investor Owned Demand Response
5. Dynamic Pricing and Research with increased metering at all levels
6. Incentivizing more Solar, Combined Heat and Power, and Emerging Renewable
Programs
7. Generation Supply Planning with emphasis on Renewable generation
8. Smart Metering, Cap and Trade
9. Alternative Fuel Autos new rules
10. Conventional generation GHG compliance and out-phasing
Keeping cooperation and tracking changes and correction points as all agencies and entities learn
from their mistakes is a complex task. Long manuscripts exist that would explain complex
nomenclature and tracking mechanisms. Fig. 12 is an example of just such an intersection

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showing initiatives, plans, reports, with lettered, numbered, and color coded tracking
mechanisms.
Figure 12.
This new team of stakeholder portends a huge task nothing short of fixing what went wrong with
policy, generation, distribution and end use – coupled together simultaneously with paving a new
road to the future focusing mostly on clean energy technology. One such iota of the immense
plan under the area of Emerging Technologies and Research is the concept of a Zero Net Energy
Building (ZNE).
What is impressive to note is that all these areas of focus with their respective sub groups have
metrics in place for measurement of status and improvement while simultaneously evaluating
risks associated with those ventures… even including the identification of potential inter-agency
risks against success so that the optimum path for success in all goals may more clearly be
achieved.

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The battlefield is complex. Just one such sophisticated example might be how residential solar
PV is taking off. However most companies that install run into bureaucratic nightmares in
paperwork along the way getting permits to install from cities, getting permission to connect to
the grid from utilities, and then once installed, actually getting online with the grid. Kristen
Ardani of the National Renewable Energy Laboratory has data from 87 utilities in 16 states and
says the average turnaround from application to connection is approximately 53 days.
Installation of roof panels takes 3-4 days of that time, the rest is permitting and utility approval
time. Some California utilities are taking serious measures in line with cooperation with the
governors massive initiative. San Diego Gas and Electric has a streamlined online system that
now takes only 4 days. The utilities Customer generation manager Ken Parks says: ‘ the growth
is double yearly and we have to keep up’. San Diego had 5,200 panel arrays installed in 2012.
This year they are expecting more than 22,000 applications (Post, 2015).
Additional areas of focus for California are definitely cap and trade regulations.
Contingencies for climate change are important as was discussed here previously. California is
currently is a terrible drought which affects water supplies and also snow-melt reservoirs count
on to generate clean Hydroelectricity. When water supplies are down, electricity must be
generated by non-preferred ‘dirty’ sources like coal (Knickmeyer, 2015). According to the
Denver Post and the Chairman of the California Energy Commission Robert Weisenmiller, the
current California snow pack is at 12 percent of normal average in the Sierra Nevada. This
means there is less water to feed streams and rivers going to damned reservoirs which produce
clean hydropower. Yet they must “keep the lights on”, and thus must go to ‘dirty’ sources as
back up.

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Economically, based on the last 3 years of drought, California has paid for 1.4$ Billion in extra
NG power generation from waning hydro plants deficiency. Also with regard to externalities
and health, due to needed extra coal and some Natural Gas generation air emissions of CO2 have
also increased 8% in the last 3 years.
“In the United States, electric power plants emit about 2.2 billion tons of carbon dioxide (CO2)
each year, or roughly 40 percent of the nation's total emissions” (NRDC, 2014).
The lack of national limits on carbon pollution levels has created a scenario where we have
begun to compromise public health as the emissions continue to grow. The Clean Power Plan,
while not a strict limit on carbon emissions in the short-term, will help us reduce the negative
health effects of current power generation.
The most apparent and significant aspect of health that is impacted by power generation and
emission is air quality. As pollutants release into the air, citizens inhale them, and negative
health effects often emerge as a result. “Air monitoring shows that over 90 percent of
Californians breathe unhealthy levels of one or more air pollutants during some part of the year”
(CA.gov, 2009). It’s important to note that many airborne pollutants have; “no known safe
levels (CA.gov, 2009)”. So any amount of those pollutants is considered to be unsafe for
humans to breath. Table 1 from the California EPA Air Resources Board lists common air
pollutants and the health effects that they cause (CA.gov, 2009).
The negative health effects caused by the high levels of pollution due to electricity generation
can be broken down into two main impact categories. The first is the impact of the toxic fumes
on the human body as we inhale the polluted air. Table 1 lists the different pollutants present in
the atmosphere, from all sources, but the most common pollutant produced by power generation
is carbon dioxide (EPA.gov, 2014). Carbon dioxide is critically important to the human body,

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and “at normal levels, its presence has no measurably adverse effects on you” (Callahan, 2013).
The health impacts of CO2, then, should be discussed as they pertain to the increase of CO2 in the
atmosphere.
Table 1. Common Air Pollutants and Their Health Effects
The EPA highlights that global “average temperatures of risen in most states with 1901, with
seven of the top ten warmest years on record occurring since 1998” (EPA.gov, 2014). This rise
in global temperature is often linked with increase in global climate, and with it, several major

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alleged consequences. Climate and weather disasters have increased in number and severity, and
an increase in global temperature is a product of the increase in carbon emissions. Natural
disasters cost the economy more than $100 billion dollars in 2012 (EPA.gov, Fact Sheet - Clean
Power Plan Benefits, 2014), and the number may continue to grow if carbon emissions continue
on the path they are on.
More direct and significant health effects result from the emission of toxic gasses, particularly
ozone, from the generation of electricity (WHO, 2014). Often referred to as smog, ozone “is a
major factors in asthma morbidity and mortality […and can] cause breathing problems, […]
reduce lung function and cause lung disease” (WHO, 2014).
The American Lung Association collects data on the numbers of unhealthy ozone days, and Fig.
13 is of California Metropolitan areas, and how they rank in “most ozone polluted” metropolitan
areas across the entire United States (American Lung Association, 2014).
Figure 13. California Ozone Pollution

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Fig. 13 illustrates that the six cities with the word ozone pollution, and 10 in the top 14
(2012) or 25 (2013) reside in California. However, although numbers are extremely high for the
top few cities, Fig. 14 highlights the improvements being made in the top three most ozone
polluted cities in the country (American Lung Association, 2014).
Figure 14. Unhealthy Ozone Days

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Fig. 14 highlights the improvements that have been made in ozone pollution levels from around
the years 2002-2004 through today. The clean power plan will continue to make progress in
these cities, and particularly in conjunction with California’s Clean Air Act.
The goal of the Clean Power Plan is to cut pollution from the power sector, among them Ozone
and Carbon Dioxide. By aiming to cut pollution by up to 30% from 2005 levels, the hope is that
the act will save Americans billions in health and climate benefits as well. Nationwide, the
Clean Power Plan’s goals include the (financial benefits of) leading “climate and health benefits
worth an estimated $55 billion to $93 billion in 2030, and avoiding 2,700 to 6,600 premature
deaths, and finally preventing 140,000 to 150,000 asthma attacks in children” (EPA.gov, Fact
Sheet - Clean Power Plan Benefits, 2014). Table 1. highlights the effects associated with
pollution, including Ozone, and all can hope to see a significant reduction of all health effects as
a result of the Clean Power Plan.
A key part of the Clean Power Plan is the adaptation of a flexible proposal. This allows states to
have a level of freedom to regulate their own power plants and propose their own solutions.
Although each state is tasked with proposing their own specific regulations on existing power
plants and limitations for new ones, the EPA lists four core “reduction opportunities” for
pollution, and specifically Carbon Dioxide. They are Energy Efficiency, Energy Conservation,
Fuel Switching, and Carbon Capture and Sequestration (CCS) (EPA.gov, Overview of
Greenhouse Gases, 2014). With significant efforts in each of these categories, California will be
successful in meeting its goals by 2030 and beyond.
We, as consumers, can work to make improvements in Energy Efficiency and Energy
Conservation through our everyday actions, but opportunities in Fuel Switching and CCS lie
with the power generators. Technological advances in power storage will usher in the increased

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adoption of renewables, and CCS technology will enable power plants to become more efficient
by recycling the carbon they produce.
As part of their discussion on the Clean Power Plan, and specifically the Clean Air Act, the
California Air Resources Board laid out four “building blocks” for meeting the emissions goals
by 2030 and beyond. They are below (ARB.CA.gov, 2014).
1) Increased energy efficiency at coal-fired plants: U.S. EPA assumed coal plants could
increase efficiency and obtain a 6 percent heat rate improvement.
2) More effective use of existing natural gas-fired plants: U.S. EPA assumed that natural
gas-fired combined cycle plants could operate up to 70 percent of capacity.
3) Increased renewable generation and retention of “at risk” nuclear generation: U.S. EPA
assumed that renewable generation could be increased. For California, U.S. EPA used a
WECC wide renewable energy average of 21 percent and a growth rate of approximately
6 percent per year. In addition, U.S. EPA assumed that six percent of a States’ nuclear
capacity, operating as of May 2014, could be factored into the state performance goal.
4) Expand energy efficiency programs: U.S. EPA assumed that energy efficiency could
ramp up to a 1.5 percent annual savings rate.
Success in each of these four areas will provide significant savings in energy costs and reduction
in emissions. However, they all have costs, and these costs will impact the price of energy
generation for both the producer and the consumer.
An increase in energy efficiency at both coal-fired and natural gas plants will reduce the cost of
energy to both the producers and consumers. Efficiency improvements at the plant level will

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allow the plants to produce more electricity with less fuel emissions. The decreased emissions
further lead to reduced negative impacts on air, environment, human, plant and animal health in
the state (and neighboring states/countries). Another goal is the increase in use of renewables
and retention of nuclear generation plants. By increasing renewable energy portions by six
percent per year, emissions will decrease as coal-fire and natural gas power plants are relied on
less and less. Nuclear is a very low-emissions generation process, very expensive to build, but
not overwhelmingly expensive to operate and maintain. An increase of six percent would help to
reduce emissions and increase efficiency, driving prices down further.
There are two overarching goals that inspired the proposal and adoption of the Clean Power
Plan; Decreased emissions and decreased energy cost. Actions such as those suggested above
will help California attain both goals, and make significant progress on each of them. Alongside
improvements to current power plants and regulations for new ones, the Clean Power Plan will
help us reach an estimated savings of about 8% off our current electric bills.
In California, the average price of residential electricity in 2012 was 13.5 cents/kWh. In 2012, a
total of 256.5 GWh of electricity was sold. This calculates to over $35 billion in electricity sold
to consumers in 2012 (EIA.com, 2014). If Californians take an 8% savings from that, based on
the estimated savings goal of the Clean Power Plan, they would save approximately $2.8 billion
per year in energy costs. By 2030, the EPA estimates that Americans will save about $8 per
month on electricity. This savings, combined with an estimated $70 billion per year in
healthcare savings, highlights the importance of meeting the goals set forth by the Clean Power
Plan (EPA.gov, Fact Sheet - Clean Power Plan Benefits, 2014).
How do we proceed? Fig. 15 illustrates metrics by which to choose paths.

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Figure 15: Technology Availability and Policy decision resource & process; (Wei, 2012)

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