Presentation on theme: "Energy and Electricity Markets 101"— Presentation transcript:
1 Energy and Electricity Markets 101 Community Choice Energy Advisory CommitteeJune 25th,2015
2 About Pacific Energy Advisors 50+ Years of collective experience w/in California’s electric utility industryLeading advisors for all technical matters related to the Community Choice Aggregation service modelCCA feasibility assessments for over 40 municipalities since 2003Exclusive professional focus on “non-IOU” service modelsCurrent Clientele (sample):Marin Clean Energy (CCA)Lancaster Choice Energy (CCA)City and County of San Francisco (CCA)City of Moreno Valley, Electric Utility Division (POU)School Project for Utility Rate Reduction (Direct Access)Primary service offerings: resource planning and procurement, financial and economic analysis, contract negotiation and administration, legislative and regulatory analysis/compliance, rate-setting, utility operations supportFormed in 2013; based in Folsom, CA (PEA principals engaged in CCA since 2003)
3 PEA’s CCA EXPERIENCEUnique, unparalleled experience with CCA evaluation, implementation and operationPEA has provided key technical consulting services in support of ALL California CCA’s, which have filed certified Implementation Plans with the CPUCCCAKey Activities/ResponsibilitiesAnalytical HighlightsSample of Work ProductsMarin Clean EnergyExamined costs/benefits of CCA formationProposed program structure and governanceDeveloped retail product options/ratesCreated Implementation Plan and Joint Powers Agreement (“JPA”)Drafted supply agreements/contracts and assisted in supplier negotiationsCost-benefit analysisRisk scenario analysisLoad study analysisRate analysisSupply portfolio evaluationMarin Clean Energy Implementation Plan(s)Rate and Load StudiesCustomized Confirmation Agreements and ExhibitsSonoma Clean PowerDeveloped procurement strategiesSonoma County CCA Feasibility StudySCP Implementation PlanLancaster Choice EnergyRecommended retail product options and developed related rate structureDeveloped Net-Energy Metering ProgramImplementation advisory servicesNet-Energy Metering Tariff
5 How “The Grid” Works (continued) How does power get to CCA/PG&E customers?California residents and businesses receive their power from a networked grid: Western U.S. + parts of Canada and Mexico.Physically, all electricity is the same – the energy received by customers is determined by power flows rather than contract rights.A utility’s power mix is determined by the amount of electricity injected into the grid from generation resources it owns or controls (under contract).
6 Who Manages the Grid?Various “Balancing Authorities” (BAs) are responsible for real-time balancing of supply (generating resources) and demand (load)BAs are responsible for ensuring grid reliability.There are five BAs in California, with the largest being the California Independent System Operator (CAISO). A CCA serving San Mateo County and surrounding areas would be operating within the CAISO BA.
7 Hourly CAISO Electricity Pricing Within CA, prices are established for over 5,000 “nodes” every 5-minutes.The difference in price between two nodes is referred to as “congestion”.
8 California’s Generating Fleet More than 1,000 electric generating units over 1 MW in CA.A typical 1 MW generator will serve the annual energy needs of approximately 1,000 homes.79,000 MW of generating capacity.≈58% of capacity is natural gas.70% of CA’s energy is produced in-state.≈20% of CA’s generating capacity uses renewable fuel sources.2,400 MW of distributed solar has been installed in CA.
9 Energy Products & Services for CCAs Scheduling Coordinator Services (“SC” services)Electric EnergyRenewable EnergyResource Adequacy CapacityOther Specified Energy Products
11 Renewable Energy Procurement Mandatory renewable energy (RE) procurement:California’s Renewables Portfolio Standard (RPS) ProgramSpecified renewable energy (RE) procurement mandates through 2020RPS mandates apply to all Load Serving Entities (LSEs), including CCAsOnly California Energy Commission-certified generators are RPS-eligibleVarious RE products are procured to demonstrate complianceCompliance is demonstrated via retirement of RECsCompliance measured over multi-year periods
12 Renewable Energy Procurement (cont.) Voluntary RE procurement:Responsive to local goals and objectivesAccommodates green pricing programsNot subject to RPS rulesGeneral Information:ALL renewable energy production is substantiated via REC ownershipRECs are created, tracked, transferred and retired through WREGIS
13 Renewable Energy Products Various RE contracting mechanisms/products under RPS:Bucket 1 – In-state or dynamically scheduled into CA (RECs delivered contemporaneously with electric energy)Bucket 2 – Firmed/shaped imports into CA (delivered REC and energy quantities are balanced annually)Bucket 3 – Unbundled RECs (RECs are sold separately from energy)Increasing interest in maximizing Bucket 1 product useVariety of contracting options are availableVoluntary RE products (example: Green-e)
14 Resource Adequacy Capacity Reserve capacity promotes grid reliabilityLSEs must secure/procure capacity at 115% of peak demandReserve capacity is referred to as “Resource Adequacy” or “RA”Additional RA requirements: generator location and operational flexibilityRA capacity is transacted bilaterally (i.e., no organized market)
15 Sources of Power Generation – Hydro In California, < 35MW = RPS-eligible; > 35 MW = “large hydro”Drought conditions have reduced hydropower production (and increased natural gas generation):During the first half of 2014 ~ 10% of CA’s total electricity generationAverage 2004 – 2013 ~ 20%
16 Sources of Power Generation – Wind In CA, highest installed capacity amongst all renewable resource typesIntermittent power supplyRelatively low cost resource
17 Sources of Power Generation – Biogas Power produced through the anaerobic digestion of biodegradable materialsUses material that is already part of the carbon-cyclePower production process results in overall decrease in emissions
18 Sources of Power Generation – Solar Rapidly growing and “preferred” renewable resourceDifferent technologies: photovoltaic, thermalPower supply is intermittent with predictable near-term delivery profile
19 Sources of Power Generation – Geothermal Very low-carbon emitting generating processElectricity generated using heat from the earth’s coreGenerating potential is regionally isolatedTypically requires considerable water use
20 California CCA Overview CCA provides for:Local control/accountabilityCompetitive rates (based on current market conditions)Customized power supplyLocally focused energy programsEconomic development benefitsOpt-out modelCCA’s are self-regulating entitiesThree operating CCA’s in California:Marin Clean Energy (2010)Sonoma Clean Power (2014)Lancaster Choice Energy (2015)
21 Pertinent California Regulatory Agencies California Public Utilities Commission (CPUC): Regulates the investor owned utilities (i.e., PG&E, SCE, and SDG&E), but also regulates capacity reserve requirements of CCA’sCalifornia Energy Commission (CEC): Primary energy policy and planning agency in California – long-term forecasting, planning for energy emergencies, generator permitting and certification as well as promoting energy efficiency and renewable technologiesCalifornia Air Resources Board (ARB): Objectives are to maintain healthy air quality and to promote approaches for compliance with air pollution rules/regs