1. Renewables Portfolio Standard: Progress and Perspectives Aaron J. Johnson Director, Renewable Energy Policy & Strategy February 1, 2011

2. 2 PG&E Power Mix For comparative purposes, California’s 2008 Power Mix was: Eligible Renewables – 2% Coal – 34% Large Hydroelectric – 18% Natural Gas – 42% Nuclear – 5% Other – 0%

3. 3 Renewables Deliveries have Increased Significantly Since the RPS Program Was Implemented

4. 4 PG&E RPS Contracts In total, well more than 20% currently under contract PG&E has signed 109* RPS contracts totaling over 8,800 MW since 2002 * Does not include small renewable generator PPAs ** Map does not include failed contracts # MWs Geothermal 9 661 Wind342,777 Bioenergy24 277 Solar PV222,336 Solar Thermal132,735 Small Hydro 6 51 Wave 1 2 Total1098,838

5. 5 PG&E RPS Projects: Energy Delivery Statistics - 109 Executed Contracts - 54 contracts to build new facilities 9 have achieved commercial operation – 4 in-state and 5 out-of-state 34 active contracts with Guaranteed Commercial Operation Date in 2011 – 2013 11 active contracts with Guaranteed Commercial Operation in post-2013 period - 42 contracts with existing and repowered facilities - 13 contracts failed, not approved, or expired

6. 6 PG&E’s Contracted Mix of Renewables Will Shift Significantly Over This Decade Reflects RPS contracts executed as of December 2010, including contracts pending CPUC approval. Assumes all contracts perform as expected per the contract. 2010 Mix 2015 Mix 2020 Mix

7. 7 Most of PG&E’s Renewable Deliveries are Expected to Come from In-state Facilities Based on current RPS contracts and assumes all contracts perform as expected per the contract.

8. 8 Distributed Generation PV ProgramFeed-In Tariffs (FIT) California Solar Initiative (CSI) 5-Year program Starting Q4 of 2010 1-20 MW projects located in northern and central California Contributes 1.3% to RPS deliveries by 2014 250 MW of Utility-Owned Generation 50 MW per year Built on PG&E-owned land or near substations 250 MW from contracts Competitively bid via solicitations for 50 MW per year RFO to be issued 2/2/11 1.5 MW Small Renewable Generators and Public Water/Waste Water (AB 1969, Yee, 2006) PG&E Program Cap ~210MW Price at Market Price Referent (MPR) 36 contracts to date; 11 in operation Renewables Auction Mechanism PG&E Program Cap ~425MW Up to 20 MW-sized projects Price-only competitive solicitation SB 32 Implementation (Negrete McLeod, 2008) 1.5 MW FIT expands to 3MW Price at MPR, including all known and anticipated environmental compliance costs Statewide Goal = 3,000 MW by 2016 $950 million in PG&E solar incentives over a decade Over 45,000 PV systems installed in PG&E’s territory, about 30% of US installations Incentive budget for non- residential CSI exhausted; wait list being developed CSI and Net Metering installations do not contribute to RPS goals

9. 9 The Market Price Referent (MPR) provides a benchmark to assess the cost of renewables

10. 10 Challenges Host of well-recognized challenges: permitting, interconnection, transmission, financing, grid reliability, etc.  However, emphasis should be on two key ideas: Execute on the program and projects in progress – Focus on approving contracts and permitting projects & transmission, not designing new programs – Ensure agency staff have the resources to implement the program Design a program that can succeed going forward – Planning for 33% RPS is well underway and rules are still unclear – Set realistic and achievable goals that demonstrate CA’s RPS program works – Provide utilities with broad procurement tools to manage customer costs