Valley Clean Energy Board Meeting – September 14, 2023
Item 16 – Energy Markets update and Procurement Direction 1 yvonnehunterphotography.com
PUBLIC COMMENTS
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CALIFORNIA RPS PORTFOLIO CONTENT
CATEGORIES & COMPLIANCE
SEPTEMBER 2023
1. Receive presentation and provide feedback on Compliance Period 4 (CP4) short term Renewable Energy Credit (RECs) procurement.
2. Based on current market conditions, maximize the 10% allowance of Portfolio Content Category (PCC) 3 RECs.
CONFIDENTIAL & PROPRIETARY 9/12/2023 4
RECOMMENDATION
o California requires entities that serve retail electric load to procure a minimum percentage of eligible renewable energy
o There are multiple bills that have shaped this program, but most recently SB 100 increased the RPS target to 60% by 2030
o There are multiple types of fuel types that can be eligible renewable: wind, solar, biomass, small hydro, etc
o An instrument called a REC is used to capture this eligibility, and is “retired” to show compliance o A REC contains the “Green Attributes” of a unit of energy, and represents that the energy was generated with an eligible renewable fuel type
o VCE’s power purchase agreements are all with eligible renewable resources CONFIDENTIAL & PROPRIETARY 9/12/2023 5
WHAT IS THE RENEWABLE PORTFOLIO STANDARD?
o RPS compliance happens over multi-year
periods- “Compliance Period X”
o Right now, it is still Compliance Period 4,
which goes from 2021-2024
o VCE’s total RPS requirement during CP4 is
about 40% of its retail load
o Targets increase over time, and
compliance periods shorten to three
years starting in 2025 (CP5)
CONFIDENTIAL & PROPRIETARY 9/12/2023 6
WHAT ARE THE TARGETS?
o VCE can acquire RECs through:
o Long-term power purchase agreements that also include RECs o Example: Aquamarine Solar
o Long-term REC purchase agreements
o Example: VCE could buy a fixed volume of RECs per year from a supplier, for 10 years via contract o Short-term REC purchase agreements
o Example: VCE could buy a fixed volume of RECs, once, from a supplier CONFIDENTIAL & PROPRIETARY 9/12/2023 7
HOW DOES VCE ACQUIRE RENEWABLE ENERGY CREDITS?
o Each state with an RPS program writes the rules a little different from each other o California has “Portfolio Content Categories” (PCC) of RECs defined in state law:
o PCC 1: Eligible renewable resources directly connected to California’s grid o PCC 2: Out of state eligible renewable resources imported into California’s grid o PCC 3: Eligible renewable resources not brought to California’s grid (REC Only) o There are nuances to the definitions above, but those are the basic distinctions CONFIDENTIAL & PROPRIETARY 9/12/2023 8
ARE ALL RECs EXACTLY THE SAME?
o VCE must retire RECs equivalent to ~40% of its load over 2021-2024 o VCE does this annually based on the amount of RECs it has acquired each year o Almost all of VCE’s RECs come from its long-term power purchase agreements, which all qualify as PCC1 because they are located in the state of California o VCE has purchased some short-term PCC1 RECs earlier in the Compliance Period o California has requirements within the RPS program regarding how much of each Portfolio Content Category shall be used
CONFIDENTIAL & PROPRIETARY 9/12/2023 9
HOW DOES VCE COMPLY WITH THE RPS?
o Beginning in Compliance Period 4, as a percentage of VCE’s RPS requirement:
o 75% of RECs used must be from PCC1
o 65% of RECs used must be from contracts of at least 10 years in duration (Long-Term) o No more than 10% of RECs used can be from PCC3
o VCE has not used any PCC3 thus far in CP4, and has its entire 10% limit available o 10% of 40% is 4%, so VCE can essentially use 4% of its load’s worth of PCC3 CONFIDENTIAL & PROPRIETARY 9/12/2023 10
PCC & CONTRACTING REQUIREMENTS IN THE RPS
Product
Content
Category
2018 Average
Price
2023 Average
Price
2024 Forward
Price
PCC 1 $16.50/REC $50.00/REC $45.00/REC
PCC 2 $6.50/REC $31.00/REC $34.00/REC
PCC 3 $1.50/REC $7.00/REC $7.50/REC
CONFIDENTIAL & PROPRIETARY 9/12/2023 11
DIFFERENT TYPES OF RECs HAVE DIFFERENT PRICES
• REC prices have risen dramatically since VCE’s launch • All types have increased, but PCC 1 and 2 have risen the most • The penalty for any shortfall is $50 for each “missing” REC • PCC 1 has traded as high as $65/REC this year
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CA RPS REC Prices by Product Content Category
PCC1 PCC2 PCC3
Long Term PPAs Actual or Expected COD Capacity*
Resurgence Solar I 8/3/2023 90 MW PV, 75 MW BESS (250,000 MWhs) Aquamarine Solar 9/22/2021 50 MW PV (130,000 MWhs)
Putah Creek Energy Farm 10/15/2022 3 MW PV, 3 MW BESS (7,600 MWhs) Willy 9 Chap 2** 12/31/2023 72 MW PV, 36 MW BESS (210,000 MWhs) * All BESS are 4-hour duration, except the Gibson Solar project is a 5-hour battery system. Approx annual MWhs shown. ** Formerly Willow Springs Solar 3. Name changed at the request of the CAISO.
CONFIDENTIAL & PROPRIETARY 9/12/2023 12
VCE’s CP4 LONG-TERM RENEWABLE CONTRACTS
VCE’s has signed seven renewable PPAs consisting of photovoltaic (PV), hybrid (PV + storage) and geothermal of which four of the PPAs will impact CP4
o Example: Assume VCE needs 100,000 Short-Term RECs in 2024 to meet the CP4 target o Option A – Purchase all PCC1s: 100,000 RECs * $45.00/REC = $4.5 million in expenses o Option B – Purchase all PCC3s: 100,000 RECs * $7.50/REC = $750 thousand in expenses o Option C – Purchase 50/50 PCC1s and PCC3s: $2.625 million in expenses CONFIDENTIAL & PROPRIETARY 9/12/2023 13
VCE HAS MULTIPLE ROUTES TO COMPLIANCE
Note: Based on load variations and PPA performance, it is anticipated that VCE will need to procure 100,000-150,000 RECS
o Example: 100,000 MWh of load, 80,000
MWh of a Solar PPA (PCC1), 10,000 MWh
of Short-Term Solar PCC1
o Example: 100,000 MWh of load, 80,000
MWh of a Solar PPA (PCC1), 10,000 MWh
of Short-Term Solar PCC3
CONFIDENTIAL & PROPRIETARY 9/12/2023 14
WHAT ABOUT THE POWER CONTENT LABEL?
Adjusted Net
Procured (MWh)
Percent of Total
Retail Sales
Renewable Procurements 90,000 90.0%
Biomass & Biowaste - 0.0%
Geothermal - 0.0%
Eligible Hydroelectric - 0.0%
Solar 90,000 90.0%
Wind - 0.0%
Coal - 0.0%
Large Hydroelectric - 0.0%
Natural gas - 0.0%
Nuclear - 0.0%
Other - 0.0%
Unspecified Power 10,000 10.0%
Total 100,000 100.0%
Total Retail Sales (MWh) 100,000
GHG Emissions Intensity (converted to lbs CO2e/MWh) 94
Percentage of Retail Sales Covered by Retired
Unbundled RECs 0.0%
Adjusted Net
Procured (MWh)
Percent of Total
Retail Sales
Renewable Procurements 80,000 80.0%
Biomass & Biowaste - 0.0%
Geothermal - 0.0%
Eligible Hydroelectric - 0.0%
Solar 80,000 80.0%
Wind - 0.0%
Coal - 0.0%
Large Hydroelectric - 0.0%
Natural gas - 0.0%
Nuclear - 0.0%
Other - 0.0%
Unspecified Power 20,000 20.0%
Total 100,000 100.0%
Total Retail Sales (MWh) 100,000
GHG Emissions Intensity (converted to lbs CO2e/MWh) 189 Percentage of Retail Sales Covered by Retired
Unbundled RECs 10.0%
Option A Option B
o RECs are meant to capture the “Green Attributes” of a unit of power generation o In theory, a unit of power generated by a renewable resource is one less unit of power generated by an emitting resource
o In practice, that sort of depends on the timing, but it has some truth to it, regardless of whether it is generated in the state of California or not o The Power Content Label only considers PCC 1 to be emission-free as a baseline, even though PCC 2 and 3 are eligible renewable energy credit types under state law CONFIDENTIAL & PROPRIETARY 9/12/2023 15
EMISSIONS AND RECs
o Staff believes it is prudent to utilize PCC1 as well as the maximum permissible amount of PCC3 in order to meet CP4 target. o For two reasons staff believes all options should be used to satisfy the CP4 requirement:
o 1) the costs are material dollars and need to be a factor in the decision, o 2) staff recognizes that there are perceived emission intensity differences that are identified on a PCL, but also realizes these are product of the tool that has been created and not a reflection on what truly is occurring in the broader environment CONFIDENTIAL & PROPRIETARY 9/12/2023 16
CONCLUSION
Valley Clean Energy Board Meeting – September 14, 2023
Item 17 - VCE Strategic Plan Minor Update and Extension through 2025 17 Public Comments
18 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
If in person, complete a COMMENT CARD
OR
Join the Public Comment Queue by
➢ “Raising Hand” on Zoom Meeting
OR
➢ Press *9 if joining by phone
Emailed comments received before the item has concluded will be read into the record.
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Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 19 Item 17 - 2021-23 Strategic Plan Minor Update : Overview Overview
Present the minor update of the 2021-2023 Strategic Plan and extended current end of the planning period to the end of 2025.
This presentation will provide:
• Strategic Plan Guidelines (Recap)
• Strategic Plan Minor Update and Extension through 2025 • Summary and Recommendation
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 20 Item 17 - 2021-23 Strategic Plan Minor Update : Guidelines Recap 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Minor
Update
Major
Update
Minor
Update
Major
Update
Minor
Update
Major
Update
IRP WORK IRP WORK IRP WORK IRP WORK IRP WORK
Extension of 2021-2023 Plan Strategic Plan Strategic Plan 2021-2023 Minor Update
The minor update is a relatively high-level review/update to existing goals and objectives performed by Staff to incorporate plan adjustments associated with changing legislative, regulatory, customer, and economic requirements, as well as plan milestones achieved.
VCE’s Strategic plan guidelines set out the process and timeline for Plan updates. The Guidelines included a proposed timeline for extending the 2021-23 plan through 2025 with a minor update as part of that process.
Strategic Plan Guidelines
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 21 Item 17 - 2021-23 Strategic Plan Minor Update : Update & Extension 2021-2023 Strategic Plan Draft Minor Update & Extension through 2025 • General update replacing “VCEA” with “VCE”
• Investment Grade Credit Rating (Objective 1.2) – From 2024 to 2028 (COVID-19 pandemic) • Manage Customer Rates (Objective 1.4) – Lowering customer costs. • Long Range Financial Model (Objective 1.5) – Long-Range Financial Model focused on VCE’s financial health (Reserves) and rate stability.
• Renewables Update (Goal 2 / Objective 2.1) – Increase the renewable goal to 100% and procurement of local storage resources.
• Customers and Community (Goal 3) –Updated to include implementation during the extension period.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 22 Item 17 - 2021-23 Strategic Plan Minor Update : Recommendation Community Advisory Committee Recommendation
The CAC recommended approval of the strategic plan minor update extension with no recommended changes.
Summary
Staff believes the recommended 2021-2023 strategic plan minor update represent a balanced approach for extending the 2021-23 plan through 2025. As outlined in the strategic plan guidelines, Staff will continue to review and update the Plan on an annual basis to ensure that VCE remains on track and course corrects if necessary.
Recommendation
Staff is seeking Board approval of the 2021-2023 strategic plan minor update and extension of the plan through 2025.
VCE Board of Directors Meeting – September 14, 2023
Item 18 – Phase 2 of VCE’s Electric Vehicle (EV) Rebate Pilot Program 23 yvonnehunterphotography.com
Public Comments
24 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
➢ “Raising Hand” on Zoom Meeting
OR
➢ Press *9 if joining by phone
Emailed comments received before the item has concluded will be read into the record.
Emailed comments received after the item has concluded but before the end of the meeting will not be read but will be included in the meeting record.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] EV Rebate Program Phase 2 Development Current Status
Big Program Changes to California Vehicle Rebate
Program (CVRP) Announced
• VCE currently uses CVRP eligibility as proxy for eligibility for EV Rebate Pilot Program (Phase 1, planned Phase 2)
• Effective immediately: apps after 9/6/23 are on a
waitlist; funding nearly exhausted and will not be
renewed.
• Program changes for 2024: only low-income residents
receive incentives up to $12,000
• Upper income limits: $43,740 for an individual/$90,000 for a family of four
25 Item 18 – Electric Vehicle Rebate Pilot Program Phase 2 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] EV Rebate Program Phase 2 Development Current Status
VCE Developed Phase 2 Concept, Received CAC Recommendation • To address strong demand, staff recommended lowering rebate amounts in order to provide more customers with rebates
• Low Income (BEV or PHEV) $3000, Standard BEV $2000, Standard PHEV $1500 • Staff and CAC recommended additional incentives including:
• Home charging equipment up to $500
• Residential panel upgrades up to $500
• Multi-family housing charging $3000/charger, up to $21,000/property • Phase 3 could address bidirectional charging if other grants do not 26 Item 18 – Electric Vehicle Rebate Pilot Program Phase 2 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Next Steps:
• Communicate with customers on EV Rebate
Waitlist
• Develop full list of eligibility criteria with terms
and conditions
• Research methods and cost of new eligibility
criteria verification process
• Adjust proposed budget as necessary
• Outline and establish new proposed customer
application process
• Discuss new direction with POTG and/or CAC
• Return to Board for approval
27 Item 18 – Electric Vehicle Rebate Pilot Program Phase 2