September 24, 2017

September 22, 2017

Subscribe to Latest Legal News and Analysis

September 21, 2017

Subscribe to Latest Legal News and Analysis

California Looks Ahead to S.B. 100

California continues to cement its position as a global leader in renewable energy policy and climate change reform.  This session, California State Senate President, Kevin de León, authored Senate Bill 100 (S.B. 100), which would require California utilities to procure 100 percent of their energy from renewable sources by 2045.  S.B. 100 has been approved in the State Senate as well as two key committees in the State Assembly.  The Assembly Appropriations Committee and the full Assembly will vote on it before the legislative session ends for this year on September 15, 2017.

Under the California Public Utilities Code (CPUC), current renewable energy standards require utilities to procure 50 percent of their energy from renewable sources by 2030 (S.B. 350, De León).  S.B. 100 would increase the 2030 target to 60 percent and expedite the 50 percent goal to 2026.  Currently, almost 29 percent of California energy comes from wind, solar and other clean sources.  To achieve the 2030 goal, S.B. 100 maintains the current renewable sources defined in prior state renewable portfolio standards (RPS) legislation (a list of clean energy sources that count toward the state renewable goals).  But, for the 2045 100% goal, S.B. 100 contemplates a different “zero carbon” requirement, which would allow additional sources of clean energy presently excluded from the RPS, such as hydroelectric generating facilities.

S.B. 100 will further test the California Independent System Operator’s (CAISO)ability to integrate renewables onto the power grid.  When renewable sources are incorporated into the grid, variability in renewables—when the sun doesn’t shine, or the wind fluctuates—can create a supply problem unless the grid is engineered to efficiently store renewable energy or adjust (for example, through demand side management or the use of natural gas-fired generation) for inconsistent output.  California uses a “baseload” approach—it continually runs conventional power plants at a minimum baseline—to account for renewable energy variability.  But, over-generation results when renewables are at peak output but the “baseline” is still maintained.  Consequently, this has led to occasional negative pricing of power (when generators pay grid operators to avoid curtailment).  Last spring, California experienced negative pricing due to substantial power generation from the continued expansion of solar farms combined with an increase in hydro reserves from the rainy winter.

Additional efforts outside of S.B. 100 also seek to address variability in renewables generation.  Battery storage companies—from startups to multinational giants—as well as solar and other distributed energy resource providers are offering services to increase grid efficiency and reliability.  Southern California Edison conducted an accelerated procurement of energy storage resources from Tesla, Greensmith Energy, and AES Energy Storage.  Similarly, pursuant to a 2010 state law, A.B. 2514, CPUC has mandated the procurement of 1.3 GW of energy storage, which the state’s utilities are satisfying.  With decreasing prices for renewable energy, and the state’s support of large-scale energy storage deployment, a policy such as a 100% RPS is presumed by some policymakers to be more attainable and affordable than just a few years ago.

S.B. 100 also stipulates that California’s transition to a zero-carbon electric system “shall not increase emissions elsewhere in the western grid and shall not allow resource shuffling.”  This addresses leakage, a concept in which policy changes mandate emissions reductions in California, but could cause emissions increases associated with imported power from outside of California.  Measures that would preclude leakage could have significant implications for increasing grid interconnectivity between California and other Western states, which may remain somewhat dependent upon fossil-fuel generation.  California has historically implemented policies in its RPS and its carbon regulations designed to limit resource shuffling.  S.B. 100 may require additional policies that might limit imports of fossil-fuel generation.

S.B. 100 has a good chance of becoming law.  There is substantial support for S.B. 100 from state legislators, environmental groups, large businesses, and the general public.  However, utility companies have expressed their concern over its ambitious goals.  As a result, it will not be surprising to see amendments considered in the next week designed to address these difficult questions, and to provide assistance to the industries that may bear the economic burdens of a future zero carbon electric grid.

© 2017 Covington & Burling LLP

TRENDING LEGAL ANALYSIS


About this Author

Jason Kornfeld, attorney Covington Burling San Francisco, corporate lawyer, business financings, mergers and acquisitions,
Associate

Jason Kornfeld is an associate in the corporate group of the firm’s San Francisco office. He represents companies with respect to financings, mergers and acquisitions, and general corporate matters.

Practice Areas

415 591 7013
Jake Levine, Covington Burling Law Firm Los Angeles, Ca attorney, Climate Change and Energy Law lawyer
Associate and Policy Advisor

Jake Levine is a member of the firm’s Public Policy and Government Affairs Practice Group, and its Clean Energy and Climate Industry Group. Mr. Levine advises clients on a variety of public policy, legislative, regulatory, and business matters related to clean energy, climate, water, transportation, and technology.

Prior to joining Covington, Mr. Levine held a number of senior positions at the intersection of clean energy policy and technology. Mr. Levine served most recently as Senior Counsel and Principal Consultant to California State Senator Fran Pavley, where he led a team focused on state policy related to climate change, electric vehicles, energy storage, drought and water policy. As part of his duties in the State Senate, Mr. Levine led the successful campaign to draft, design, and enact SB 32 (Pavley) and AB 197 (Garcia), new climate and environmental justice legislation in California.

Mr. Levine also served as Chief of Staff to the President of Opower, a software firm that uses big data and behavioral science technology to help consumers take control their energy use. In this role, Mr. Levine managed a series of cross-organizational projects, including development of policy innovation, partnerships, and sales opportunities in Latin American and Asia, as well as federal and state-level regulatory reforms related to the U.S. utility sector.

Mr. Levine also has experience in the White House Office of Energy and Climate Change, where he worked on a host of innovative energy policies, including the most stringent fuel economy standards ever set and the first-ever greenhouse gas emissions standards for cars and trucks. He served as a member of President Obama's delegation to the U.N. Conference of Parties in Copenhagen, as a member of the 2009 Presidential Inaugural Committee, and during the 2008 presidential campaign, traveled with Senator Obama to more than 20 states and Europe, managing the national press corps

424 332 4776
Partner

Ingrid Rechtin advises clients on a range of corporate issues.  Her experience includes complex patent monetization transactions, numerous public and private mergers and acquisitions, venture and private equity financings and general corporate matters. She represents companies, including start-ups and global corporations, in the life sciences, technology and clean tech sectors.  Before joining the San Francisco office, she was resident in the firm’s New York office.

415.591.7080