Attachment 1 - Clean Energy Community Advisory Commission 2021-2022 Annual Report Clean Energy Community Advisory Commission
Annual Report FY 2021-2022
Objective of FY 2021-22 Timeframe Status & Accomplishments Future Target/Goals 1 Ad-Hoc Committee September 2021 –
May 2022
At the September 16, 2021 meeting, the
Commission voted to create an Ad-Hoc
committee of four Commissioners. The Ad-Hoc
Committee will evaluate the SJCE mission and
the goals of SJCE and develop
recommendation/advice of SJCE’s clean energy
goals, long duration dispatchable storage, and
market risk.
At the November 18, 2021 meeting,
Commission voted to add an Ad-Hoc
Committee report to the December 9, 2021
meeting.
At the December 9, 2021 meeting,
Commissioners agreed to send the Ad-Hoc
Committee Memo and Commission comments
to Community Energy Department staff for
review and comment on the Memo’s Executive
Summary only. See attached CECAC Ad Hoc
Memo and Exec Summ Not Accepted by CECAC.
At the January 20, 2021 meeting,
Commissioners received staff memorandum
providing feedback on Ad Hoc Committee
Executive Summary. See the attachment SJCE
Staff Memo to CECAC – Responses to Ad Hoc
Draft Exec Summary staff dated January 20,
2022.
At the May 19, 2022 meeting, Commissioners
did not approve a motion to accept the Ad-Hoc
Committee Memo and Executive Summary by a
vote of 2-3-1.
Reference information in the AdHoc Committee report in implementation of Strategic
Framework Plan and Integrated
Resource Plan.
Attachment 1 - Clean Energy Community Advisory Commission 2021-2022 Annual Report Clean Energy Community Advisory Commission
Annual Report FY 2021 2022
Objective of FY 2020-21 Timeframe Status & Accomplishments Future Target/Goals At the May 19, 2022 meeting, Commissioners
approved attaching the Ad-Hoc Committee
Memo, Executive Summary, and Memo from
Staff dated January 20, 2022 to the CECAC
Annual report for fiscal year 2021-2022 by vote
4-1-1.
2 SJCE Strategic Direction Framework November 18,
2021
Commissioners received a briefing and gave
comment on staff recommendations in the
Strategic Framework Plan presented to the City
Council on December 6, 2021.
Specifically, the following input was provided
and included in the staff memo:
COMMISSION RECOMMENDATION/INPUT
The Clean Energy Community Advisory
Commission (CECAC) provided the following
comments at their November 18, 2021 meeting.
The CECAC appreciated the consultant’s report
and the staff update on recent business results
and outlook. The CECAC commended staff for
the emissions reductions achieved, and they
also acknowledged the significant challenges
and uncertainty that SJCE faces in the coming
years.
The CECAC would also like to see specific steps,
timing, and plan for SJCE to deliver on the
goal of being 100% carbon-neutral by 2030.
Implementation of the
recommendations in the
Strategic Framework Plan will
be executed including
increasing financial resiliency
through accumulation of
operating reserves. Support
development of Climate Smart
plans to reach carbon neutral
goal by 2030.
3 2022 Power Mix and Rates November 18,
2021
Commissioners received a briefing and gave
comment on staff recommendations for the
2022 Power Mix and Rates presented to the
Work to enable stable and
competitive rates and higher
renewable energy content.
Attachment 1 - Clean Energy Community Advisory Commission 2021-2022 Annual Report Clean Energy Community Advisory Commission
Annual Report FY 2021-2022
Objective of FY 2020-21 Timeframe Status & Accomplishments Future Target/Goals City Council on December 14, 2021.
Specifically, the following input was provided
and included in the staff memo:
COMMISSION RECOMMENDATION/INPUT
During the November 18, 2021, meeting, the
Clean Energy Community Advisory
Commission (CECAC) agreed with staff
recommendations on the 2022 power mix and
rate setting. This includes the recommendation to
set the 2022 renewable energy power content for
GreenValue at 40%, GreenSource at 60%, and SJ
Cares at 60%. However, the CECAC urged staff to
continue to increase the renewable and carbonfree content of the power mix in following years.
The CECAC also recommends that San José Clean
Energy seek to provide a lower cost
option than PG&E in the future. The CECAC was
also supportive of the importance of
accumulating financial reserves to provide
financial resiliency and providing a discount of 5%
to customers participating in the SJ Cares
program. Lastly, the CECAC recommends staff
illustrate the total bill impact for customers.
4 SJCE Programs Roadmap Update March 24, 2022 Commissioners received a briefing and gave comment on staff recommendations on SJCE
Programs Roadmap Update presented to the
Transportation and Environment Committee on
April 4, 2022.
Specifically, the following input was provided
and included in the staff memo:
Sustain Solar Access
participation levels at or near
100% and implement the
CPUC funded Energy Efficiency
programs. Work to leverage
external funding and develop
near term programs.
Attachment 1 - Clean Energy Community Advisory Commission 2021-2022 Annual Report Clean Energy Community Advisory Commission
Annual Report FY 2021-2022
Objective of FY 2020-21 Timeframe Status & Accomplishments Future Target/Goals
COMMISSION RECOMMENDATION/INPUT
During the March 24, 2022 meeting, the Clean
Energy Community Advisory Commission
(CECAC) agreed with staff recommendations on
the 2022 programs roadmap update. The CECAC
agrees that SJCE should build resiliency by
accumulating sufficient operating reserves to be
able to use SJCE net revenues to fund customer
programs. The CECAC further agrees with the
recommendation that in the near term, SJCE will
sustain its existing programs and continue to
focus on other programs leveraging external
funding, provide education and outreach to
make significant progress towards a clean
energy future, and continue to set the
groundwork for future program success.
Attachment 2 - Clean Energy Community Advisory Commission 2022-2023 Work Plan Clean Energy Community Advisory Commission
Work Plan for FY 22/23
Items for Briefing and Possible Action in FY 2022-23 Actions Timeframe Adopt annual Commission Work Plan for FY 22/23 and
Annual Report for FY 21/22
Equity Series – Helping to Prevent Service
Disconnections**
Adopt commission annual work plan of objectives for FY 22/23 and the annual report of Commission actions on objectives for FY 21/22 Receive briefing and give comment on SJCE advocacy and strategies to help customers manage payments and prevent electric service disconnections July 2022
No meeting August 2022
Integrated Resource Plan (IRP)** Receive briefing and give comment on 2022 IRP process September 2022 No Meeting October
2023 Power Source Mix and Rates** Receive briefing on 2023 power mix and rates, and potentially vote on power mix and rates recommendation to City Council
November 2022
No Meeting December 2022
Briefing on Programs Roadmap update**
Receive briefing and give comment on Programs Roadmap Update, and potentially vote on Programs Roadmap Update recommendation to T&E Committee
January 2022
No Meeting February 2023
Outreach and Advocacy Strategy**
Discuss regulatory and legislative plans to support SJCE and other CCAs**
Elect CECAC Chair and Vice Chair **
Receive briefing and give comment on SJCE outreach and advocacy strategies
Discussion on regulatory and legislative initiatives, challenges, and positions to support SJCE and other CCA’s.
Election of Chair and Vice Chair of the Commission for one year term commencing in March 2023.
March 2023
No Meeting April 2023
Review SJCE Financial Plan, financial update, expected
reserve, and value metrics**
Receive briefing on budget, margin/surplus/reserves that are expected for SJCE as part of the 2022/2023 fiscal year
May 2023
No Meeting June 2023
**Denotes items where commission action/recommendation to City Council and/or Staff is expected or applicable AND/OR may be authorized for advocacy and outreach.
TO: CLEAN ENERGY COMMUNITY FROM: Joe Flores
ADVISORY COMMISION Deputy Director
SUBJECT: Responses to Commission DATE: January 20, 2022 Recommendations for San José
Clean Energy
PURPOSE
The purpose of this memorandum is to reply to the Clean Energy Community Advisory Commission’s (CECAC) request to review the Ad Hoc Committee Memo and Commissioner comments for review and provide staff comment on the memo’s executive summary only.
RECOMMENDATIONS AND RESPONSES
The recommendations from the executive summary are listed below followed by the staff response.
CECAC Recommendation 1. Clarify and/or revise SJCE mission. Much has changed in the few years since establishing SJCE. The mission, priorities, and goals of SJCE should be reviewed and revised as needed to meet the City’s needs and expectations. Progress toward these goals should be easily accessible for residents to review.
Staff Response
Since its launch, SJCE has been guided by the City’s climate goals while offering competitive rates and community benefits.
Last fall, SJCE staff worked with Deloitte to develop a Strategic Framework Plan for 2023 to 2025 that identifies actions to accelerate clean energy goals as well as ensure SJCE’s financial stability and improve organizational effectiveness.
The Strategic Framework Plan addresses three primary Tasks:
• Task 1: SJCE Business Plan Review, including a high-level discussion as to the conditions that may have changed, actual results and performance as compared to the original projections of the Business Plan developed in February 2017.
Attachment 3 - SJCE Staff Memo to CECAC - Responses Ad Hoc Comm Draft Exec Summary 2022-01 Responses to Commission Recommendations for SJCE
January 20, 2022
• Task 2: Industry Trends and Market Analysis that assesses certain energy industry trends and the Community Energy Department’s (CED) market analysis. • Task 3: Strategic Planning that lays out an initial Strategic Plan Framework to help meet the CED objectives.
In the near term, Deloitte recommended that SJCE should align with the City’s goal of being carbon neutral by 2030 as other potential strategies are evaluated. Through Climate Smart San José, SJCE has a goal of offering 100% renewable energy by 2045. SJCE’s current trajectory of renewable energy purchases and investments puts it ahead of schedule on both goals.
The City’s climate goals and SJCE’s value proposition and benefits are listed on the SJCE website and regularly incorporated into public communications including emails, letters, newsletters, collateral, social media posts, press releases, and speeches. The public can also view progress towards SJCE's Climate Smart goals on the Climate Smart Data Dashboard.
CECAC Recommendation 2. Establish carbon-free goals. In light of the recent 2021 IPCC report and escalating climate crises, we encourage San José and SJCE to pursue reduction of greenhouse gas (GHG) emissions as aggressively as practical and affordable. SJCE has set higher goals for renewable energy than is mandated by the State. Consistent with San José’s resolution Nov. 8, 2021 to be carbon neutral by 2030, SJCE should now be provided with achievable goals and methods specifically for greenhouse gas reduction.
Staff Response
In November 2021, the San José City Council voted to pledge that the City of San José will go carbon neutral by the end of the decade, the latest in a series of major initiatives by city leaders to address the worsening climate crisis. San José became the largest city in the United States to have set the ambitious goal of carbon neutrality by 2030.
The City continues to be a national leader for climate action:
• SJCE’s Green Source product is 60% renewable and 95 % carbon-free. SJCE continues to offer one of the highest renewable content of any Community Choice Aggregator (CCA) or utility.
• SJCE has invested nearly $1 billion in new renewable energy and battery storage resources. Two projects became operational this year:
A long-term agreement with Pattern Energy will provide 225 megawatts (MW) of wind energy, developed in New Mexico, that produces enough renewable electricity to power nearly 186,000 San José homes. SJCE partnered with developer Terra-Gen on an innovative 12-year power purchase agreement to provide 62 MW of renewable energy generated from Responses to Commission Recommendations for SJCE
January 20, 2022
solar. New battery storage allows the unique format of this agreement to guarantee the delivery of 62 MW of renewable energy between 6:00 a.m. and 10:00 p.m. every day.
CECAC Recommendation 3. Re-evaluate energy programs. A cost/benefit analysis that measures programs based upon carbon-dioxide (CO2) removed per program dollar is suggested.
Energy efficiency and decarbonization programs can require significant funds and human resources. These programs are relatively new and have so far affected a modest number of residents. If it would significantly help SJCE efficiency and effectiveness in the near term, consider minimizing or temporarily suspending SJCE’s goals for these programs pending improvement of its financial situation.
Staff Response
At the Tuesday, March 9, 2021, San José City Council Meeting, the Council adopted a resolution to accept a report on San José Clean Energy Programs Roadmap. The Programs Roadmap provides a program selection framework including a list of guiding principles and program scoring. During the program scoring step, SJCE quantitatively evaluates a program based on a list of metrics including GHG cost effectiveness and program cost effectiveness. GHG cost effectiveness is determined by the lifetime amount spent per metric ton (MT) of carbon dioxide equivalent (CO2e) reduced. Program cost effectiveness is determined by the program net present value (NPV). A Programs Roadmap update is listed on the CECAC workplan and the cost/benefit analysis and scoring based on CO2 can be further discussed.
SJCE’s near-term strategy for programs is to leverage external funding. Consequently, two fully funded programs will launch in 2022.
• The Solar Access program will provide a 20% discount to participating customers in Disadvantaged Communities receiving CARE or FERA state assistance and is funded by the California Public Utilities Commission (CPUC).
• The Residential and Commercial Efficiency programs will provide efficiency products and services to low-income residents and small businesses and is fully funded, including staff time, by CPUC and federal stimulus funds.
Federal funding will likely become available from recently passed legislation and SJCÉ is working collaboratively with other City departments to capture these funding opportunities to provide further customer program offerings. In addition, SJCÉ will continue to provide programmatic opportunities to customers by providing education, awareness, and referrals to existing programs offered by various local, state, and federal agencies.
Responses to Commission Recommendations for SJCE
January 20, 2022
It is the intent of staff that any new program offerings by SJCÉ will comply with the Programs Roadmap and be presented to the CECAC for discussion and potential recommendation to the City Council.
CECAC Recommendation 4. Consider expanding beyond current plans for electrical storage. It is understood that given the variability of solar and wind, and our current heavy reliance on natural gas, future emissions improvement will likely require dramatic increases in grid storage. Given the importance of this grid transformation, we suggest Li-Ion batteries, other pure storage technologies, and also hybrid systems. Assessments should include benefits, risks, costs, scalability, practicality, and timing. Investment is strongly encouraged here to stimulate the storage market, achieve pragmatic progress, and advance toward our clean energy goals.
Staff Response
The assessment of electrical storage in California is presented in the Strategic Plan Framework in Task 2, Section 2.3 Power Market Trends, starting on page 35. In Section 2.6 New Renewables and Storage Technologies, an assessment of new renewable and storage technologies both in front and behind the meter that SJCE should prepare for is listed. Lithium-Ion batteries is assessed and describes that SJCE may expect short and medium duration lithium-ion prices to fall over the next few years and the growth in this market is expected to surge over the next five years.
CCAs and SJCE are actively moving to incorporate these technologies into their portfolios and long-term resource planning.
• In Oct 2020, California Community Power (CC Power), a joint powers authority with ten CCAs, including SJCE, (more on CC Power is presented to address CECAC Recommendation 5) issued a request for offers (RFO) for long duration storage technologies. SJCE is planning to bring to City Council in the first half of 2022, an opportunity to invest in long duration storage.
• As described above in response to Recommendation 2, SJCE partnered with developer Terra-Gen on an innovative power purchase agreement that includes new battery storage that allows the unique format of this agreement to guarantee the delivery of 62 MW of renewable energy between 6:00 a.m. and 10:00 p.m. every day.
Looking into the future, the Strategic Plan Framework report concurs with the CECAC recommendation that the application of lithium-ion and other storage technologies can facilitate renewable energy integration. The CECAC will have opportunities to further discuss the role of storage during the upcoming discussions of the Integrated Resource Plan (IRP) listed in the CECAC workplan. There are two IRP presentations remaining in the CECAC workplan before the IRP may be due to the City Council and the CPUC in July 2022.
CECAC Recommendation 5. Investigate the feasibility of a joint powers agreement, effectively combining with other Community Choice Aggregators (CCAs) to achieve scale and Responses to Commission Recommendations for SJCE
January 20, 2022
efficiency. This may offer an attractive alternative to the need, risk, and cost of maintaining a separate City department when compared to near or long term tangible benefits to the citizens and rate payers.
Staff Response
In Task 1, Section 1.1 Governance Operational Structure of the Strategic Framework Plan, a review of the decision by the City to elect to operate as a single jurisdiction model versus a Joint Powers Authority (JPA) is provided.
Staff agrees that by combining with other CCAs, power purchases can be made at scale and efficiency that provide benefit to customers. At the Tuesday, January 5, 2021 San José City Council Meeting, authorization was given for SJCÉ to join California Community Power (CC Power), a new Joint Powers Authority. CC Power allows its member CCAs to combine their buying power to procure new, cost-effective clean energy and reliability resources to continue advancing local and state climate goals. CC Power members represent over 3 million customers across more than 145 municipalities spanning from Humboldt County to Santa Barbara County.
The informational CC Power Fact Sheet and CC Power video helps to illustrate how a JPA works and the benefits of joint procurement. Membership in CC Power provides the opportunity to realize the benefits and opportunities described by the CECAC recommendation.
SJCE is also evaluating the potential benefits of joining California Community Choice Financing Authority (CCCFA), which recently completed its initial two transactions for its members MCE Clean Energy, Silicon Valley Clean Energy, and East Bay Community Energy and thereby reducing the members’ power procurement costs through prepayment structures.
CECAC Recommendation 6. Market/financial risks associated with the purchase of solar energy are an area of concern and should be investigated further. CCAs that go long on solar photovoltaic (PV) contracts to achieve carbon neutrality take on both buy-side and sell-side market risks. Excess solar that cannot be stored must be sold in the market, often at a loss, because most CCAs and municipal utilities are using the same carbon-neutral strategy.
Staff Response
The sourcing of energy is complex and integrates aspects that manages risk and ensures a load serving entity can provide reliable service. The Integrated Resource Plan (IRP) process integrates components of sourcing energy, such as solar, including:
• GHG emissions
• Cost and Rate Analysis
• System Reliability
• Reliability related to procurement activities
• Curtailment
• Transmission development
• Identification of generation resources such as solar
Responses to Commission Recommendations for SJCE
January 20, 2022
• Potential Barriers
• Equity
• Capacity, Resource adequacy, and system reliability
Careful planning and analysis are performed to manage risk utilizing industry standard best practices and oversight including:
• On May 1, 2018, the City Council approved the Energy Risk Management Policy and associated Energy Risk Management Regulations.
• The Energy Risk Management Policy created a Risk Oversight Committee (ROC) composed of representatives from the City Manager’s Office, Finance, Budget Office, as well as Community Energy and is responsible for overseeing compliance with the policy including oversight on power purchases.
• A risk management audit was completed as part of the Strategic Framework Plan.
The CECAC plays an important role in providing community input to the San José City Council regarding SJCE matters. The Committee is the community’s liaison to SJCE. The CECAC workplan for FY2021-22 includes a presentation on the Strategic Framework Plan and three IRP presentations to review and provide input to the San José City Council such as any concerns with risk management and sourcing energy from solar.
CONCLUSION
Staff appreciates the dedication and work put into developing the recommendations provided by the CECAC ad-hoc committee. Each of the recommendations touches upon critical issues that are squarely in the planning of staff to ensure that SJCE fulfills its responsibility to provide clean energy to the San José community. The work of the ad-hoc committee well positions the Commissioners of CECAC to provide important input for City Council as staff brings forward work done to the Strategic Framework Plan, the Integrated Resource Plan, and the Programs Roadmap.
JOE FLORES
Deputy Director, Community Energy
Clean Energy Community
Advisory Commission
TO: HONORABLE MAYOR, FROM:
CITY COUNCIL AND CITY MANAGER Commission Chairman
SUBJECT: CECAC Recommendations concerning DATE: **DRAFT ** SJCE mission and goals
RECOMMENDATION
APPOINT COUNCIL MEMBERS, STAFF, AND OUTSIDE RESOURCES AS NEEDED TO: EVALUATE AND UPDATE SAN JOSE CLEAN ENERGY S GOALS;
INVESTIGATE WAYS TO GREATLY EXPAND ENERGY STORAGE; FURTHER
INVESTIGATE FINANCIAL RISKS OF POWER PURCHASE CONTRACTS AND
OTHER RELATED AREAS OF CONCERN
OUTCOME
Clarifying and/or revising the mission and goals as recommended will help align San Jose Clean Energy (SJCE) with changes in San Jose’s needs, the industry and the environment, including the imperatives of climate change, while remaining consistent with the direction of Climate Smart and the State of California. It will help SJCE operations become more efficient and effective.
EXECUTIVE SUMMARY
According to its responsibilities as outlined in San Jose Municipal Code 2.08 which include advising the City Council and City Manager on matters of SJCE operating principles, opportunities for reducing carbon emissions, prioritization of energy program strategy, and best practices, the Clean Energy Community Advisory Commission (CECAC) recommends a thorough review of the purpose, mission and goals of the SJCE, including the following:
1. Clarify and/or revise SJCE mission. Much has changed in the few years since establishing SJCE. The mission, priorities, and goals of SJCE should be reviewed and revised as needed to meet the City’s needs and expectations. Progress toward these goals should be easily accessible for residents to review.
2. Establish carbon-free goals. In light of the recent 2021 IPCC report and escalating climate crisis, we encourage San Jose and SJCE to pursue reduction of greenhouse gas (GHG) emissions as aggressively as practical and affordable. SJCE has set higher goals Attachment 4 – CECAC Ad Hoc Memo and Exec Summary Not Accepted by CECAC Clean Energy Community Advisory Commission Page 2
Draft
for renewable energy than is mandated by the State. Consistent with San Jose’s resolution Nov. 8, 2021 to be carbon neutral by 2030, SJCE should now be provided with achievable goals and methods specifically for greenhouse gas reduction.
3. Re-evaluate energy programs. A cost/benefit analysis that measures programs based upon carbon-dioxide (CO2) removed per program dollar is suggested. Energy efficiency and decarbonization programs can require significant funds and human resources. These programs are relatively new and have so far affected a modest number of residents. If it would significantly help SJCE efficiency and effectiveness in the near term, consider minimizing or temporarily suspending SJCE’s goals for these programs pending improvement of its financial situation.
4. Consider expanding beyond current plans for electrical storage. It is understood that given the variability of solar and wind, and our current heavy reliance on natural gas, future emissions improvement will likely require dramatic increases in grid storage. Given the importance of this grid transformation, we suggest considering Li-Ion batteries, other pure storage technologies, and also hybrid systems. Assessments should include benefits, risks, costs, scalability, practicality, and timing. Investment is strongly encouraged here to stimulate the storage market, achieve pragmatic progress, and advance toward our clean energy goals.
5. Investigate the feasibility of a joint powers agreement, effectively combining with other Community Choice Aggregators (CCAs) to achieve scale and efficiency. This may offer an attractive alternative to the need, risk, and cost of maintaining a separate City department when compared to near or long term tangible benefits to the citizens and rate payers.
6. Market/financial risks associated with the purchase of solar energy are an area of concern and should be investigated further. CCAs that go long on solar photovoltaic (PV) contracts to achieve carbon neutrality take on both buy-side and sell-side market risk. Excess solar that cannot be stored must be sold in the market, often at a loss, because most CCAs and municipal utilities are using the same carbon-neutral strategy The purpose of this memo is highlight certain issues for City Council’s consideration. Further investigation and analysis are required to fully develop these, and other, issues, as well as possible solutions.
These recommendations were approved by the CECAC with a vote of __ayes, __nays, and __abstentions.
Key points of discussion:
Viewpoints of the Commissioners vary, and include the following:
Clean Energy Community Advisory Commission Page 3
Draft
SJCE mission should be clarified and simplified. Hard choices may need to be made to optimize between the race to clean, renewable energy and the desire for low cost energy.
Achieving more aggressive clean energy goals may require additional investment in SJCE.
San Jose can make a critical difference in the environment for our community and our children, as well as gain more control over its energy. To do so may require a bold move, such as expanding SJCE to a municipal utility, or effectively combining with another CCA to form a joint powers authority (JPA) to gain scale and ideally reduce the City’s financial risk.
Is the original value proposition for SJCE still valid? Is there a significant enough benefit when compared to PG&E to justify the risk?
SJCE is providing cleaner energy at competitive costs. They, and the CCA movement in general, are very important to our goals of decreasing carbon emissions and fighting climate change
While outside of SJCE’s current scope, we need to prioritize development of programs and actions that allow us to adapt to (inevitable) climate change and transition to new electric power sources through market-based incentives. The Federal and State governments are better suited to this goal with greater resources and policy directives. San Jose should not bear any additional costs in the effort to reduce emissions.
California’s current clean energy aspirations may not be practical or achievable.
Excluding nuclear power, for example, ignores an important technology that is carbonfree, and could be low-cost while adding needed, 24-hour system reliability. San Jose should work toward the lowest power rates for reliable, low-carbon power.
BACKGROUND Things have changed since the establishment of SJCE in 2019:
The recent IPCC report, as well as environmental changes, including extreme weather and related incidents, are causing elevated concern about an increasing rate of climate change Financial stability of SJCE is being questioned by the Council due to its 2021 operating losses and possible impact on the City’s general fund
SJCE’s 100% CO2-free goal for 2021 for a base product has not been met (GreenSource is currently at 90%)
SJCE may be unable to provide lower pricing: current SJCE service options cost the same or more than PG&E (this is significantly affected by PCIA charges, and in 2019 and 2020 SJCE rates were less than PG&E’s)
What impact should this have on the mission and goals of SJCE? The CECAC authorized an ad hoc committee consisting of Commissioners Glen Garfunkel, Gerald Gottheil, Desiree Grahn, and Richard Zahner, to review and provide analysis. They considered the following five areas:
Clean Energy Community Advisory Commission Page 4
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1. What were the original clean energy goals of SJCE and what are they now?
2. Is SJCE meeting these expectations?
3. What should the goals be going forward?
4. Are the plans and technologies for storage adequate to meet our needs?
5. Should market risk due to current and planned purchases of solar be more fully investigated?
The CECAC ad hoc committee focused on energy, reduction of greenhouse gas emissions, and energy programs.
ANALYSIS We believe SJCE is operating in an extremely complex, difficult, and changing environment. We find that some of SJCE’s clean energy goals have not been achieved, and others may be outdated or unsustainable, or may be restricting it from certain changes in operational strategy that might increase effectiveness and efficiency. Its goals should be reviewed and updated so that they are clear, consistent, and achievable.
Mission and goals
It was more difficult than we expected to find documentation containing SJCE’s initial and current mission and goals. We found general and specific goals in the 2017 Community Choice Aggregation Implementation Plan and Statement of Intent, the 2017 City Auditor s Preliminary Review of SJCE, Title 26, and updates in a variety of other documents. Having an easy and clear way to find its mission, goals, and benefits to the City increases the likelihood that residents, City officials, and staff share a consistent vision for SJCE. We recommend that the mission, the goals, and progress toward the goals (through a tool such as an online dashboard) be made easily available and understandable to residents and staff.
According to the SJCE Community Choice Aggregation Implementation Plan and Statement of Intent, adopted August 29, 2017:
The City of San Jose's primary objectives in implementing SJCE are to provide cost competitive electric services; reduce electric sector greenhouse gas emissions ("GHGs") within the City; stimulate renewable energy development; promote energy efficiency and demand reduction programs; and sustain long-term rate stability for residents and businesses through local control. The prospective benefits to consumers include increased renewable and other low-GHG emitting energy supplies, stable and competitive electric rates, and the opportunity for public participation in determining which technologies are utilized to meet local electricity needs.
Clean Energy Community Advisory Commission Page 5
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Anecdotally, people seem to expect that SJCE, in essence, will provide cleaner energy at a lower cost when compared to PG&E.
Cleaner energy. With respect to renewable energy, SJCE uses a much higher percentage of renewable energy, as defined by California’s Renewable Portfolio Standard, than does PG&E.
SJCE is exceeding its goal to have one service with at least 10% more renewable content than PG&E’s. SJCE’s current renewable energy goals are more aggressive than required by the State.
But the clean energy advantage is less clear with respect to greenhouse gas emissions – which are what are causing climate change. Customers can opt for products between 80% and 100% carbon-free, at different rates, from SJCE, or they can choose either 85% or 100% carbon-free from PG&E.
This year, SJCE expects GreenSource (used by most of its customers) to be up to 90% carbonfree. Its lower-cost GreenValue is only 80% carbon-free, and the higher-cost TotalGreen is 100% carbon-free. PG&E indicates their base plan electricity to be 85% carbon-free, but also offers Solar Choice which is 100% carbon-free.
Year-to-year carbon content varies. In their Power Content Label for 2020, PG&E reports that their base rate electricity was 84% carbon-free. But in 2019, PG&E reported that their base rate electricity was 100% carbon free – cleaner than SJCE for that year, although 2019 may have been an anomalous year for both PG&E and SJCE. If SJCE and PG&E each continue to use more renewables and cleaner energy, the difference may narrow or disappear.
Concerning lower costs, SJCE has been tasked to provide competitive pricing. In what range is pricing considered to be competitive? Some interpret this to mean lower pricing. SJCE currently offers one of its three products at a lower price than PG&E (although the difference is only a fraction of one percent). PG&E s Power Charge Indifference Adjustment (PCIA) charges which have increased greatly over the past few years are a significant portion of electricity costs for SJCE customers. If PCIA charges are reduced over the next few years, as some predict, it may be possible for SJCE to deliver larger savings to ratepayers.
The CECAC recommends that the mission be clarified with respect to the removal of GHGs and competitive pricing, goals that could conflict with each other. Due to the urgency and general public concern about climate change, reduction of GHGs should be a high priority. A pragmatic approach and the use of technology, including interim hybrid technologies and the consideration of non-renewables on an interim basis could accelerate the reduction of GHGs while controlling costs.
Clean Energy Goals
The ad hoc committee reviewed and commented on the following clean energy goals.
Clean Energy Community Advisory Commission Page 6
Draft
Goal GreenValue GreenSource TotalGreen PG&E Goal achieved? 100% carbon-free by 2021 80% up to 90% 100% 85%
Not achieved. Was this too
optimistic? Can SJCE have
significantly cleaner energy
than PG&E, going forward?
CA RPS 60% renewable
by 2030
SJCE IRP plans 70%
renewable by 2030
36% 55% 100% 39%
Current renewable levels. Is
the goal achievable and
affordable?
CA mandate SB100: 100%
carbon-free by 2045 N/A
Title 26.40.010 At least
one rate equal or lower to
PG&E
Achieved: GreenValue is less
by a fraction of 1%
Competitive cost (with
PG&E) for typ home* $132.35 $134.74 $139.39 $132.35
What is meant by
"competitive"? Lower cost?
Near cost?
Implementation Plan -
offer one option 10% or
more renewable than
PG&E
Yes: Will SJCE set 70% for
2030? Is 10%+ sustainable
long term?
Implementation Plan -
establish renewable and
energy efficiency programs
4 years later, programs
hindered by resources, impact
is modest. Should this be
suspended as a goal?
San Jose resolution Nov 8,
2021: carbon neutral by
2030
What will this mean for
SJCE?
* Rate comparisons for typ house with 456 kWh/mo, E-TOU-C rate, as of May 15, 2021 for SJCE; SJCE residential rate page; PG&E rate comparison as of Mar. 15, 2021 Reduction in GHG emissions
The goal to achieve 100% carbon-free energy by 2021, which was announced, and included in SJCE s 2018 IRP, was not achieved. Perhaps the goal was optimistic. To reach the goals of the 2030 carbon neutrality resolution will require detailed steps and methods.
With the annual method of accounting for carbon emissions that is currently used, it is possible to be 100% carbon free and still emit significant amounts of carbon dioxide. SJCE (or any other California load-serving entity) can purchase more solar energy than it needs, during the day. In this way it can purchase an amount equivalent to its annual use and get credit for carbon-free energy. However, because only a tiny fraction of that electricity is stored, and renewable energy Clean Energy Community Advisory Commission Page 7
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is in short supply at night, San Jose electricity use at night and otherwise when solar is not available is actually generated partly or mostly from fossil fuels, thereby still creating carbon emissions. The current annual method of accounting can be very confusing. Proposed Senate Bill 67: the 24/7 Clean Energy Bill would require utility providers to match their energy procurements to the timing of their energy load, and provide a clearer, more easily understood path to 100% carbon-free.
The CECAC recommends that San Jose set goals for SJCE to provide residents with cleaner energy than they would get with PG&E, which San Jose’s resolution to be carbon neutral by 2030 would seem to provide. On the other hand, the City may have no advantage over PG&E or the CPUC in this objective and may incur significant expense and risk.
Renewable energy
Renewable energy goals are not necessarily congruent with goals to reduce GHGs. Geothermal and biomass, for example, are categorized as renewable but emit some CO2. Nuclear and large hydro, which are categorized as non-renewable generate electricity carbon-free. Renewable energy does meet other environmental and sustainability goals. We recommend that San Jose consider the higher priority of fighting global climate change with a focus on reducing GHGs as compared with the priority of the other benefits of renewable energy.
SJCE has a goal to provide at least 10% more renewable energy in its electricity generation than does PG&E. Having a greater renewable content than PG&E was not a goal that was specifically articulated in the original implementation documents for SJCE.
The current IRP draft includes plans for 70% renewable by 2030 (California RPS goal, and PG&E s stated goal is 60% renewable by 2030). San Jose should look carefully at whether this goal is achievable and at what cost. Over time, as PG&E increases its renewable content, it may become costly or simply impossible to maintain a 10% or more differential.
The current environmental situation, electric generation mix, demand profile and growth, future plant retirements, and lack of investment in new dispatchable generation place an even higher importance on electricity storage as a source during periods when non-renewable sources cannot meet demand.
Energy efficiency and carbon emission reduction programs According to the 2017 Implementation Plan, SJCE s guiding framework includes: establish San Jose-specific renewable energy and energy efficiency programs.” These programs are also mentioned in Title 26.40.010. These specifically designed programs would further reduce carbon emissions, increase use of renewable energy for the benefit of the residents of San Jose.
However the start of these programs were delayed for the first few years, as they require significant funding and staffing. Examples of programs include rebates for electric vehicles, voluntary load demand programs, rebates for switching from methane gas to heat pump water heaters. The programs have operated for a short period and the total number of residents involved has been modest. The amount of carbon emissions reduced has also been modest, and the programs have been expensive for the amount MTCO2 emission avoided.
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We do not doubt that some of these programs could be effective after gaining enough traction.
Meanwhile, there are county, state and federal agencies that offer programs that provide similar benefits for our residents. Due to the resource demands and dilution of SJCE efforts, we recommend that it be considered to suspend the goals for these programs, at least temporarily.
Long Duration Dispatchable Storage
We may purchase enough renewable energy to be equal to the total energy used by San Jose. But carbon-free, renewable energy is scarce at night. Electricity use at night currently requires fossil fuel generation sources many of which are low efficiency gas fired peaking units such as the three Calpine LM 6000 generators at Gilroy. Other more efficient gas fired units include the 650 MW Metcalf and 320 MW Los Esteros combined cycle power plants. Gas fired generation is the majority power source in all hours after sunset and may continue to be so for decades. Transition to all battery storage could take many years.
Efforts to shift loads to off-peak hours, including nighttime hours exacerbate the problem.
Conversion from gas to electric heat pumps for water and space heating may help but certainly do not eliminate the need for (primarily) gas power plants. Without electricity storage, and until some other power sources can be used, we cannot be carbon-free for power usage at night.
SJCE is committed to electricity storage at a modest scale and short duration. The recent RFO evaluation eliminated the hybrid (gas and renewable) storage option and will likely result in only modest, if any, creation of affordable long duration, low carbon, dispatchable energy storage.
Failure to develop storage capacity may result in increased natural gas generation and unreliable service.
Battery solutions have limitations of durations (most are only 4 hours) and scale. The worldwide demand for batteries, including raw materials as well as manufacturing, risks shortages. There is significant risk to a) raw material resources b) manufacturing capacity c) plan site and storage, and d) length of time required to bring projects on line.
Long duration, utility-scale, renewable power storage may be achieved in the near term using hybrid power storage technology. One option is the Liquid Salt Combined Cycle (LSCC) technology. In this approach a new or existing gas-fired, combined-cycle power plant is matched to a thermal energy storage component such as a molten salt storage tank. During the day renewable energy heats the salt to high temperature. After sunset the hot salt heats steam which turns a steam turbine generator in combination with a gas turbine. The net result is renewable energy delivered after sunset. The combined systems deliver power at about half the carbon content of a peaking unit. The liquid salt storage can be sized to store enough energy for 18 hours of continuous delivery. The benefits of this approach include: storing excess solar energy, reducing carbon emissions, dispatchable renewable power, and short time to construction.
Consider the use of natural gas as an interim renewable energy storage program. An option may be to encourage the Northern California CCAs to form a JPA to finance and build a significant, 100 MW, hybrid storage facility at an existing power plant. The Calpine Gilroy facility is an excellent site. Hybrid storage can hedge market risk—by using the excess solar power during the day to cut market exposure and reduce carbon emissions at night. There are other large scale storage options such as compressed air, pumped storage, and gravity systems, but there are few adequate sites and there are other effectiveness issues.
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Market Risk
CCAs that go long on solar PV to achieve carbon neutrality take on both buy-side and sell-side market risk. Excess solar that cannot be stored must be sold in the market, often at a loss, because most CCAs and municipal utilities are using the same carbon-neutral strategy. This approach subsidizes non-SJCE customers, while the CCA maintains its payment obligation under PPA.
When the sun sets, the CCA must procure energy in the market, typically from fossil resources, which exposes the CCA to buy-side risk (including higher fuel cost and scarcity) as well as GHG emissions from the market. Renewable Energy Certificates from the PPA are used to counter the GHG emissions from the market power –an accounting transaction that may not be consistent with customer expectations that their night-time energy use is carbon-free.
Another area of concern is the tenor of the resources agreements. Solar PPAs are locked in for long terms at prices above the likely future cost, while the dispatchable power, which has risk of escalation due to higher fuel costs, carbon taxes, or retirements, are procured on a relatively shorter-term. There might be ways to balance the resource procurements to reduce the costs and risks.
Black swan events are another area that need to be considered as severe financial risks can also be exacerbated by external conditions: fire, weather, and transmission outages due to earthquake or malefactors. Recent examples include the February freeze in ERCOT, which resulted in a $2.1 billion bankruptcy filing by Brazos Electric Cooperative. Utility scale long duration storage should help us mitigate these risks.
Are SJCE s actions to mitigate these risks sufficient?
CONCLUSION In the few years since SJCE was conceived, much has changed, including a worsening climate and environmental situation, and changes in the industry economics which have hindered SJCE s ability to provide clean energy at low and stable prices. San Jose must decide how it wishes to optimize between reduced greenhouse gas emission, renewable energy, and cost. We recommend that City Council appoint Council members, staff and external resources as needed to study this issue, review San Jose s mission for SJCE and propose revisions to its goals accordingly. _________________________________
(Name) CHAIR
RESOURCES
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2020 IRP https://www.sanjoseca.gov/home/showdocument?id=63921 May 16, 2017 memo to establish SJCE
https://sanjose.granicus.com/MediaPlayer.php?view_id=52&clip_id=9735&meta_id=635385 100% carbon free in base rate by 2021:
https://www.sanjoseca.gov/home/showdocument?id=66591
Climate Smart https://www.sanjoseca.gov/your-government/environment/climate-smart-san-jos Title 26 Community Energy
SB-67 Clean Energy: California 24/7 Clean Energy Standard Intergovernmental Panel on Climate Change: Climate Change 2021 The Physical Science Basis Summary for Policy Makers
Attach.
SJCE Community Choice Aggregation Implementation Plan and Statement of Intent, adopted August 29, 2017