California is home to some of the most progressive clean energy policies in the country. The state’s Renewables Portfolio Standard (RPS) established a statewide goal to source 20 percent of retail electricity sales from clean, renewable resources such as the wind and sun by 2010, and requires each utility to reach 33 percent by 2020. The 33 percent RPS is one of the nation’s most ambitious renewable energy programs in the amount of clean electricity it will generate and the breadth of utilities that must comply. However, the degree to which the RPS promotes the development of new clean energy...
The state’s original RPS, enacted in 2002, required retail electricity sellers²—IOUs,³ electric service providers,⁴ and community-choice aggregators⁵—to obtain 20 percent of their retail electricity sales from renewables by 2017.⁶ In 2006, the legislature accelerated this requirement to 2010.⁷
The RPS law required POUs—municipal utilities, irrigation districts, and ports—to create their own programs for investing in renewable energy. The law directed POUs to adopt RPS targets that mirrored the obligations of retail electricity sellers, while taking into account the effects of those investments on rates, system reliability, and their own financial resources. Some POUs adopted the 20...
Since 2003, California’s 10 largest POUs have made notable progress in investing in renewable energy resources. Collectively, they increased their RPS-eligible investments from 4.1 percent of retail electricity sales in 2003 to 18.8 percent in 2010. These investments replaced portions of the electricity the POUs purchased from coal, large hydropower, and nuclear facilities.
However, in 2010 the POUs still relied on fossil fuels to supply nearly two-thirds of their electricity sales (Figure 3). One-third of their retail sales came from natural gas and 31 percent from coal, including purchases from specific plants and “unspecified” market purchases. RPS renewables supplied 18.8...
Utilities base decisions about investing in renewable energy on a variety of factors including the cost of the electricity, a facility’s proximity to transmission lines, and the utility’s overall portfolio of electricity generation resources.
In 2010, the 10 largest POUs obtained 43 percent of their RPS-eligible electricity from in-state sources (Figure 4). Small hydropower facilities—all built before the state’s first RPS law was enacted in 2002—contributed the largest share of in-state RPS electricity: 45 percent.
Wind facilities in California, most built after 2002, accounted for 24 percent of in-state RPS-eligible purchases by these utilities. In-state geothermal facilities, most...
One of the primary goals of the RPS is to promote the development of new renewable energy resources. How utilities invest in renewable energy affects the amount of new resources actually developed under the RPS.
When a POU makes a long-term commitment to purchase clean electricity from a prospective facility, or decides to build a clean energy facility outright, it provides the secure revenue source a developer needs to obtain financing for such facilities.39 These long-term investments are the most direct way to promote the development of new clean energy resources.
Long-term commitments for renewable energy also lock in electricity...
Of the 10 POUs we analyzed, we found that four met California’s 20 percent RPS goal in 2010: Silicon Valley Power, Turlock Irrigation District, SMUD, and LADWP.
The utilities’ strategies for acquiring renewables, and the quality of those investments, varied greatly. Some—most notably Silicon Valley Power—invested in renewables long before the first RPS law was enacted. Such early investments provided a foundation on which utilities could build their RPS programs. Turlock and Modesto irrigation districts both started with negligible amounts of renewables in 2003, but exceeded 20 percent by the end of 2010 by making long-term investments in...
The 2010 RPS investment strategies of the 10 largest POUs varied considerably, so the impact of those strategies on the development of new clean energy resources also varied. Two-thirds of the electricity from renewables procured by California’s 10 largest POUs in 2010 came from long-term investments, providing a foundation for meeting future RPS requirements while also supporting the development of new renewables. And 60 percent of these long-term investments were for new facilities built after the RPS was enacted in 2002. In fact, this newly created clean electricity slightly exceeded the amount of energy the IOUs obtained through this type...
