Staff Report Item 20
Staff Report Item 20
TO: East Bay Community Energy Board of Directors
FROM: Izzy Carson, Power Resources Manager
SUBJECT: Emissions Overview (Information Item)
DATE: June 21, 2023
Recommendation
Receive a presentation showing the history of the Bright Choice plan’s emission factor and future emission reduction targets.
Background and Discussion
Staff is presenting an overview of the Bright Choice plan’s emission factor to the Board. This presentation is in response to requests for additional information on Bright Choice emissions and the history and methodology of how this is calculated.
Bright Choice History
In October 2018, the Board adopted a 2018 calendar year emission factor of 142 pounds of carbon-dioxide equivalent per mega-watt hour (lb-CO2
e/MWh) for the Bright Choice energy
product, a product approved in 2018 that was established to provide a choice for customers for electricity at a lower price than PG&E as a comparable renewable product. 2020 Changes Impacting Procurement and Emissions Reporting Carbon Free Allocation
In 2019 Pacific Gas and Electric (PG&E) initiated a formal large hydro and nuclear electricity allocation process determined by load share, with deliveries starting in 2020. The acceptance of this allocation did not have incremental cost to Community Choice Aggregators (CCAs) due to the Power Charge Indifference Adjustment (PCIA), a non-by passible charge set annually, under which all customers pay.
Staff Report Item 20
The fundamental question of whether to accept nuclear electricity form the allocation came down to a trade-off between having nuclear electricity as part of East Bay Community Energy’s (EBCE) portfolio and lower greenhouse gas (GHG) emissions, or not having nuclear and accepting higher GHG emissions. Ultimately the Board elected to accept the large hydro allocation and reject the nuclear allocation.
With the introduction of the Carbon-Free Allocation, EBCE’s large hydro portfolio was expected to be more in line with PG&E, and therefore renewable energy was a more appropriate focus.
Bright Choice Procurement Floor
In 2020 the Bright Choice renewable target was amended to establish a clean energy procurement floor that was intended to be higher than PG&E. The procurement floor was derived based on PG&E’s prior year renewable energy power content forecast, plus an additional 5% renewables.
While the 5% buffer was included as to mitigate uncertainty in PG&E’s provided forecast, it was noted at the April 2020 Board meeting that there was a possibility that in a given year EBCE’s renewable percentage may be less than PG&E’s. This approach did have increasing forecasting challenges due to a lack of visibility into PG&E’s annual renewable target Furthermore, the reporting lag on power content means that actual values are not fully validated until their Power Content Label is produced, which occurs in the Fall of the year after the power is procured.
Assembly Bill (AB) 1110
In 2016, AB 1110 was passed which modified the Power Source Disclosure Report (PSDR) methodology and impacted the information shared with customers on the Power Content Label (PCL). The new methodology required electricity suppliers, EBCE included, to disclose the GHG emissions intensity associated with its electricity sources. The California Energy Commission (CEC) updated the PSDR regulations implementing AB 1110 effective May 2020.
AB 1110 required replacing that emission factors can only be marketed using the newly adopted PSDR regulations methodology and that other methods for calculating emissions factors like The Climate Registry (TCR), a national emissions accounting methodology that was widely used by load serving entities, including CA utilities, CCAs and cities could not be used for calculating and disclosing emission factors to customers. The global emissions perspective of TCR was replaced with a California specific methodology, with the most significant change being in the application of the associated GHG emissions from firm and shaped Renewable Energy Credit (REC) purchases, also known as Portfolio Content Category (PCC) 2 RECs. PCC2 RECs are a California Renewable Portfolio Standard (RPS) renewable product that are by in large solar, wind and hydro resources, generated outside of California.
Under the new CA specific methodology, these PCC2 RECs, regardless of source, are given an equivalent emissions factor equal to unspecified power, resulting in a material increase in reported emissions.
Path to Zero Emissions 2030
Staff Report Item 20
In December of 2020, the Board adopted a clean energy goal for all electricity within EBCE’s portfolio to have zero net emissions by 2030. In April of 2022, a path to reach that zero emissions goal was approved by the Board, which included annual targets for renewables and large hydro (as a percentage of sales) to reach that goal. Two months later in June of 2022, the renewable targets were increased by an additional 5%.
The path to zero emissions also removed the use of Pacific Gas and Electric’s (PG&E) prior year renewable content forecast as the basis for the annual procurement floor for Bright Choice. This step de-coupled the renewable content of Bright Choice from PG&E renewable content forecasts and established the annual steps that would lead to zero emission electricity in 2030.
Bright Choice Annual Renewable and Carbon Free Electricity Targets The table below shows renewable and carbon free content targets through 2030 for Bright Choice, including estimates for unspecified power based on those targets, as well as estimates for emission factors in future years, and the CA RPS percentages for comparison.
Table 1: Bright Choice: Renewable, Carbon Free Percentages by Year, Unspecified Power estimates and PCL Emissions Factor for Bright Choice
There are two primary factors influencing Bright Choice emissions. The largest source of emissions in EBCE’s portfolio is power content from emitting generation sources and for Bright Choice this is unspecified power which is the balance of carbon free electricity purchases (which includes renewable) and total sales. Unspecified electricity is not purchased for Bright Choice for content purposes but is reflective of the total sales net of carbon free content.
The second factor influencing the Bright Choice emissions is renewable content from PCC2 Staff Report Item 20
RECs since the PSDR emissions reporting regulations require EBCE to report emissions for these renewable purchases when the source of the energy is not specified. Annual increases in the renewable and carbon free content result in annual reductions in the emission factor and unspecified power for Bright Choice.
Not shown in the above table but reflected in the estimates for emission factors is an annual reduction in the purchase of PCC2 RECs for the Bright Choice plan whereby 2030 all of the renewable electricity for Bright Choice would come from PCC1 RECs.
Fiscal Impact
There are no fiscal impacts as this item provides information only on Bright Choice product emissions.
Attachments
A. Presentation
Bright Choice Emissions
Overview
JUNE 21, 2023
Attachment Staff Report Item 20A
Overview
• What is Power Content
• EBCE Product Overview
• Renewable Energy Credits and Portfolio Content Category Classifications • EBCE Bright Choice Target History
• PG&E Carbon Free Allocation
• Bright Choice Amendment to Power Content
• Emissions Accounting Methodology
• Where we are now
• CCA Comparison
• 2022 Snapshot
Attachment Staff Report Item 20A
What is the Power Content Label (PCL)?
3 PCL
• Published annually, based on prior
calendar year generation from
owned or contracted-for resources
• Detailed breakdown on sources of
energy used to provide electricity
• Resembles a nutrition label for
electricity
• The PCL submission requires a
formal 3rd party audit and is
reviewed and approved by the CEC
Attachment Staff Report Item 20A
EBCE’s Customer Products
Attachment Staff Report Item 20A
Renewable Energy Credits and Portfolio Content
Category Classifications
5 Renewable Energy Credits (RECs):
• Represent clean energy attributes of renewable electricity • Each REC is equivalent to one MWh of renewable electricity generated • Limitations to the amount that each group can count towards RPS requirements • Classified into three distinct categories Portfolio Content Categories (PCC) PCC 1 Energy and REC are from same source and delivered into a California Balancing Authority (CBA) without any substitution
PCC 2 Substitute Energy not from the same source as REC PCC 3 Electricity Products Not Qualified as PCC 1 or PCC 2, Including Unbundled RECs Attachment Staff Report Item 20A
Bright Choice History
Bright Choice plan was created to provide electricity to customers at a lower price than PG&E as a comparable product.
2018 – Bright Choice was a Board approved product, with an approved power content set at 85% carbon free
• October 2018 – Board approved use of The Climate Registry (TCR) carbon accounting methodology and 2018 calendar year emissions factor target of 142 lb-CO2e/MWh (Actual 2018 emissions was 101 lb-CCO2e/MWh) • TCR is a national emissions accounting methodology that was widely used by load serving entities, including CA IOUs and CCAs, and cities Attachment Staff Report Item 20A
2019 PG&E Carbon Free Allocation
• PG&E initiated a formal large hydro and nuclear allocation process determined by load share, with deliveries starting in 2020. The acceptance of this allocation had zero incremental cost to CCAs due to PCIA
• EBCE initiated discussions in the November 2019 ExComm meeting followed by extensive discussions on risks, benefits, and costs with the Board and CAC at the December 2019 and January 2020 Board meetings
• Fundamental question for accepting nuclear or not
came down to a trade-off between having nuclear and
lower greenhouse gas emissions, or not having nuclear
and accepting higher greenhouse gas emissions
• EBCE board elected to accept the large hydro
allocation
Attachment Staff Report Item 20A
2020 Amendment to Bright Choice Power Content Guidelines • With the introduction of the carbon free allocation, EBCE’s large hydro portfolio content was expected to be generally in line with PG&E, and therefore Renewable Energy was a much more appropriate focus
• Renewables target was amended to reflect a clean energy procurement floor based on PG&E’s prior year renewable energy power content forecast + 5% buffer for uncertainty
• Challenges existed under this approach due to lack of visibility into PG&E’s annual renewable target and a changing RPS banking strategy. Furthermore, the reporting lag means that actual values are not fully validated until the fall of the year after the power is procured
2020 Bright Choice Renewable % = [2019 PG&E Renewable Forecast] + 5% = 39.5% Attachment Staff Report Item 20A
Assembly Bill (AB) 1110
• Regulations modifying power content reporting methodology and emissions accounting methodology were initially implemented in 2020. • AB 1110 fundamentally required replacing the previously accepted TCR emissions methodology, which took a global emissions perspective, with a California-centric emissions methodology
• Requires retail sellers to:
o Include emissions from PCC 2 RECs resulting in a material increase in reported emissions
o Resources, regardless of source (solar, wind, hydro) are given an equivalent emissions factor based on imported energy into CAISO, typically unspecified system power.
Attachment Staff Report Item 20A
Where are we now?
• In December 2020, the Board adopted a clean energy goal for all electricity within EBCE’s portfolio to have zero net emissions by 2030
• In April 2022, a path to reach that zero emissions goal in 2030 was approved, which included annual targets for renewable and large hydro (as a percentage of sales) 2022 and 2023 Targets were increased by an additional 5% in June 2022 2022: Renewables 45% 50%; Carbon Free 63% 68%
2023: Renewables 49% 54%; Carbon Free 66% 71%
Note: 2019 renewables
procurement increased
significantly to address
scarcity in large hydro
generation due to drought
conditions
Attachment Staff Report Item 20A
Total Emissions Inclusive of Renewable 100 Product
Attachment Staff Report Item 20A
CCA Comparison
*2021 Power Content Labels data
*PG&E residential rates as of 1/1/2023
Contributing factors to
higher/lower emissions
• Acceptance or
rejection of nuclear
allocation
• Rates compared to
PG&E
• Renewable and Hydro
content
• Unspecified Power
Attachment Staff Report Item 20A
2022 Snapshot
Note that these are draft power content forecast positions for 2022 and subject to change following formal audit. Formal PCL and emissions data to be released on October 1st.
* https://www.pgecurrents.com/articles/3689-pg-e-customers-electricity-96-greenhouse-gas-free-2022 Attachment Staff Report Item 20A
Questions?
Thank You
Izzy Carson
Power Resources Manager
Attachment Staff Report Item 20A