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SB-423 Energy: renewable and zero-carbon resources.(2021-2022)

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Date Published: 02/12/2021 09:00 PM
SB423:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 423


Introduced by Senator Stern

February 12, 2021


An act to add Section 38561.5 to the Health and Safety Code, to add Sections 25216.8 and 25305.5 to, and to add and repeal Section 25216.7 of, the Public Resources Code, and to amend Sections 380 and 454.52 of, and to add Section 701.7 to, the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


SB 423, as introduced, Stern. Energy: renewable and zero-carbon resources.
The 100 Percent Clean Energy Act of 2018 established as a policy of the state that eligible renewable energy resources and zero-carbon resources supply 100% of retail sales of electricity to California end-use customers and 100% of electricity procured to serve all state agencies by December 31, 2045. Existing law requires the Public Utilities Commission (PUC) and State Energy Resources Conservation and Development Commission (Energy Commission), in consultation with the State Air Resources Board (state board), to take steps to ensure that a transition to a zero-carbon electric system for the State of California does not cause or contribute to greenhouse gas emissions increases elsewhere in the western grid. Existing law requires the PUC, Energy Commission, state board, and all other state agencies to incorporate that policy into all relevant planning. Existing law requires the PUC, Energy Commission, and state board to use programs authorized under existing statutes to achieve that policy.
This bill would require the state board and Energy Commission to timely incorporate emerging renewable energy and firm zero-carbon resources, as defined, into its energy and resource planning processes, as specified.
This bill would require the Energy Commission, in consultation with the PUC, Independent System Operator, and state board, on or before December 31, 2022, to submit to the Legislature an assessment of emerging renewable energy and firm zero-carbon resources that support a clean, reliable, and resilient electrical grid in California. The bill would require the Energy Commission and PUC, on or before December 31, 2022, to each adopt, and update as necessary, measures to bolster the near-, mid-, and long-term reliability and resiliency of California’s electrical grid consistent with California’s goals to reduce localized air pollutants and emissions of greenhouse gases, as specified.
Existing law requires the PUC, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities, including electrical corporations, electric service providers, and community choice aggregators, in accordance with specified objectives.
This bill would require the PUC, as part of establishing the resource adequacy requirements, to ensure that the resource adequacy requirements result in the load-serving entities having sufficient resources to maintain reliable electrical service during multi-day extreme or atypical weather events and that methods used to assess the qualifying capacity of stand-alone energy storage systems or hybrid resources account for how the reliability value of those resources may vary, as specified.
Existing law requires the PUC to adopt a process for each of those load-serving entities to file an integrated resource plan and a schedule for periodic updates to the plan to ensure that it meets, among other things, the state’s targets for reducing emissions of greenhouse gases and the requirement to procure at least 60% of its electricity from eligible renewable energy resources by December 31, 2030. Existing law additionally requires that the integrated resource plan contribute to a diverse and balanced portfolio of resources needed to ensure a reliable supply of electricity that provides optimal integration of renewable energy resources in a cost-effective manner and prevents cost shifting among load-serving entities.
This bill would require the PUC, as part of the integrated resource planning process, to evaluate and analyze potential needs for emerging renewable energy and firm zero-carbon resource and technologies to contribute to a reliable, resilient, cost-effective, and clean electrical grid and integrate variable renewable energy resources into the electrical grid, to pursue opportunities to lower ratepayer costs by considering the ability of existing and emerging technologies to simultaneously address multiple reliability needs, and to establish mechanisms to encourage the stable development of emerging renewable energy and firm zero-carbon resources at a pace that is necessary to achieve both reliability needs and long-term renewable energy and zero-carbon energy goals.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because certain of the provisions of this bill would be a part of the act and because a violation of a PUC action implementing its requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) There is an urgent need to accelerate development and procurement of zero-carbon energy resources in California, bolster electrical grid reliability and resiliency, and support economic development and job growth in a manner that aligns with the state’s clean energy objectives.
(2) California is a global leader in solar energy and lithium ion battery storage deployment, and these resources are increasingly and urgently needed to boost electrical grid reliability and support the state’s transition to clean energy in a cost-effective manner; however, additional resources are needed to provide for a clean, reliable, and resilient electrical grid.
(3) The recent joint agency report developed pursuant to Chapter 312 of the Statutes of 2018 highlights the value of developing a diverse set of additional clean energy resources, including geothermal, offshore wind, longer duration energy storage, and cost-effective firm baseload and firm flexible zero-carbon resources, to most efficiently and cost-effectively meet the state’s clean energy goals.
(4) Several promising renewable and zero-carbon resources are emerging, which can provide firm baseload or firm flexible electricity, including green electrolytic hydrogen and new long-duration and multi-day energy storage resources. California also has world-class geothermal and offshore wind resources.
(5) Quickly and cost-effectively deploying these and other firm baseload and firm flexible zero-carbon resources will provide reliability and resiliency benefits for California’s electrical grid and communities, benefits to electricity ratepayers, and broad environmental benefits, including in those communities disproportionately impacted by pollution.
(b) It is the intent of the Legislature that state agencies take near-term steps to support the rapid and ongoing deployment of renewable and zero-carbon resources at levels needed to support a clean, reliable, and resilient electrical grid.
(c) It is further the intent of the Legislature that state agencies take near-term steps to support and accelerate commercialization and deployment of a diverse set of promising emerging renewable energy and firm zero-carbon technologies in California, which will be necessary to support a clean, reliable, and resilient electrical grid, including, but not limited to, incremental levels of geothermal, offshore wind, green electrolytic hydrogen, and new lower-cost long-duration and multi-day energy storage resources.

SEC. 2.

 Section 38561.5 is added to the Health and Safety Code, to read:

38561.5.
 (a) The state board shall timely incorporate emerging renewable energy and firm zero-carbon resources into its energy and resource planning processes, including the scoping plan and baseline planning scenarios.
(b) For purposes of this section, “emerging renewable energy and firm zero-carbon resources” include, but are not limited to, geothermal, offshore wind, green electrolytic hydrogen, long-duration energy storage, multi-day energy storage, and other resources identified in the joint reports issued pursuant to Section 454.53 of the Public Utilities Code.

SEC. 3.

 Section 25216.7 is added to the Public Resources Code, to read:

25216.7.
 (a) On or before December 31, 2022, the commission, in consultation with the Public Utilities Commission, Independent System Operator, and State Air Resources Board, shall submit to the Legislature an assessment of emerging renewable energy and firm zero-carbon resources that support a clean, reliable, and resilient electrical grid in California.
(b) In developing the assessment, the commission shall do all of the following:
(1) Identify all available, commercially feasible and near-commercially feasible emerging renewable energy and firm zero-carbon resources that are likely necessary to support a clean, reliable, and resilient electrical grid, and distinguish which resources are capable of addressing system reliability needs, local reliability needs, and deenergization events.
(2) Evaluate the magnitude of potential needs for and role of emerging renewable energy and firm zero-carbon resources using a reasonable range of resource cost and performance assumptions that reflect emerging technology trends in order to help integrate generation from eligible renewable energy resources into the electrical grid on a daily, multiday, and seasonal basis.
(3) Identify barriers to the procurement of emerging renewable and firm zero-carbon resources, and possible pathways for additional procurement of those resources by load-serving entities, including joint procurements by electrical corporations, community choice aggregators, direct access customers, local publicly owned electric utilities, and other public entities, or a central procurement entity.
(c) For purposes of this section, the following definitions apply:
(1) “Eligible renewable energy resources” has the same meaning as defined in Section 399.12 of the Public Utilities Code.
(2) “Emerging renewable energy and firm zero-carbon resources” include, but are not limited to, geothermal, offshore wind, green electrolytic hydrogen, long-duration energy storage, multi-day energy storage, and other resources identified in the joint reports issued pursuant to Section 454.53 of the Public Utilities Code.
(3) “Load-serving entities” has the same meaning as defined in Section 380 of the Public Utilities Code.
(d) (1) The assessment to be submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795 of the Government Code.
(2) Pursuant to Section 10231.5 of the Government Code, this section is repealed on January 1, 2026.

SEC. 4.

 Section 25216.8 is added to the Public Resources Code, to read:

25216.8.
 (a) On or before December 31, 2022, the commission shall adopt measures to bolster the near-, mid-, and long-term reliability and resiliency of California’s electrical grid consistent with California’s goals to reduce localized air pollutants and emissions of greenhouse gases, including early priority on disadvantaged communities and support for emerging renewable energy and firm zero-carbon resources through research and development, demonstration, procurement, and incentives.
(b) The commission shall as necessary update those adopted measures.
(c) For purposes of this section, “emerging renewable energy and firm zero-carbon resources” include, but are not limited to, geothermal, offshore wind, green electrolytic hydrogen, long-duration energy storage, multi-day energy storage, and other resources identified in the joint reports issued pursuant to Section 454.53 of the Public Utilities Code.

SEC. 5.

 Section 25305.5 is added to the Public Resources Code, to read:

25305.5.
 (a) The commission shall timely incorporate emerging renewable energy and firm zero-carbon resources into energy and resource planning processes, including into integrated resource planning, the integrated energy policy report, and baseline planning scenarios.
(b) For purposes of this section, “emerging renewable energy and firm zero-carbon resources” include, but are not limited to, geothermal, offshore wind, green electrolytic hydrogen, long-duration energy storage, multi-day energy storage, and other resources identified in the joint reports issued pursuant to Section 454.53 of the Public Utilities Code.

SEC. 6.

 Section 380 of the Public Utilities Code is amended to read:

380.
 (a) The commission, in consultation with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.
(b) In establishing resource adequacy requirements, the commission shall ensure the reliability of electrical service in California while advancing, to the extent possible, the state’s goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:
(1) Facilitate development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economic and needed.
(2) Establish new or maintain existing demand response products and tariffs that facilitate the economic dispatch and use of demand response that can either meet or reduce an electrical corporation’s resource adequacy requirements, as determined by the commission.
(3) Equitably allocate the cost of generating capacity and demand response in a manner that prevents the shifting of costs between customer classes.
(4) Minimize enforcement requirements and costs.
(5) Maximize the ability of community choice aggregators to determine the generation resources used to serve their customers.
(c) Each load-serving entity shall maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves. The generating capacity or electrical demand response shall be deliverable to locations and at times as may be necessary to maintain electrical service system reliability, local area reliability, and flexibility.
(d) Each load-serving entity shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the Board of Directors of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.
(e) The commission shall implement and enforce the resource adequacy requirements established in accordance with this section in a nondiscriminatory manner. Each load-serving entity shall be subject to the same requirements for resource adequacy and the renewables portfolio standard program that are applicable to electrical corporations pursuant to this section, or otherwise required by law, or by order or decision of the commission. The commission shall exercise its enforcement powers to ensure compliance by all load-serving entities.
(f) The commission shall require sufficient information, including, but not limited to, anticipated load, actual load, and measures undertaken by a load-serving entity to ensure resource adequacy, to be reported to enable the commission to determine compliance with the resource adequacy requirements established by the commission.
(g) An electrical corporation’s costs of meeting or reducing resource adequacy requirements, including, but not limited to, the costs associated with system reliability, local area reliability, and flexibility, that are determined to be reasonable by the commission, or are otherwise recoverable under a procurement plan approved by the commission pursuant to Section 454.5, shall be fully recoverable from those customers on whose behalf the costs are incurred, as determined by the commission, at the time the commitment to incur the cost is made, on a fully nonbypassable basis, as determined by the commission. The commission shall exclude any amounts authorized to be recovered pursuant to Section 366.2 when authorizing the amount of costs to be recovered from customers of a community choice aggregator or from customers that purchase electricity through a direct transaction pursuant to this subdivision.
(h) The commission shall determine and authorize the most efficient and equitable means for achieving all of the following:
(1) Meeting the objectives of this section.
(2) Ensuring that investment is made in new generating capacity.
(3) Ensuring that existing generating capacity that is economic is retained.
(4) Ensuring that the cost of generating capacity and demand response is allocated equitably.
(5) Ensuring that community choice aggregators can determine the generation resources used to serve their customers.
(6) Ensuring that investments are made in new and existing demand response resources that are cost effective and help to achieve electrical grid reliability and the state’s goals for reducing emissions of greenhouse gases.
(7) Minimizing the need for backstop procurement by the Independent System Operator.
(i) In making the determination pursuant to subdivision (h), the commission may consider a centralized resource adequacy mechanism among other options.
(j) The commission shall ensure appropriate valuation of both supply and load modifying demand response resources. The commission, in an existing or new proceeding, shall establish a mechanism to value load modifying demand response resources, including, but not limited to, the ability of demand response resources to help meet distribution needs and transmission system needs and to help reduce a load-serving entity’s resource adequacy obligation pursuant to this section. In determining this value, the commission shall consider how these resources further the state’s electrical grid reliability and the state’s goals for reducing emissions of greenhouse gases. The commission, Energy Commission, and Independent System Operator shall jointly ensure that changes in demand caused by load modifying demand response are expeditiously and comprehensively reflected in the Energy Commission’s Integrated Energy Policy Report forecast, as well as in planning proceedings and associated analyses, and shall encourage reflection of these changes in demand in the operation of the grid.
(k) In order to support electrical grid operational flexibility and reliability, enhance resiliency on the transmission and distribution levels of the electrical grid, and align with statutory renewable and firm zero-carbon energy resource goals, the commission, as part of establishing the resource adequacy requirements pursuant to subdivision (a), shall do both of the following:
(1) Ensure that the resource adequacy requirements result in load-serving entities having sufficient resources to maintain reliable electrical service during multi-day extreme or atypical weather events that may occur in all seasons of the year at least as frequently as once in ten years.
(2) Ensure that methods to assess the qualifying capacity of stand-alone energy storage systems or hybrid resources account for how the reliability value of those resources may vary based on the storage system duration or a hybrid resource’s ratio of storage capacity and duration to generation capacity.

(k)

(l) For purposes of this section, “load-serving the following definitions apply:
(1) “Eligible renewable energy resources“ has the same meaning as defined in Section 399.12.
(2) “Hybrid resources” means resources that combine energy storage with eligible renewable energy resources or zero-carbon resources.
(3) “Load-serving entity” means an electrical corporation, electric service provider, or community choice aggregator. “Load-serving entity” does not include any of the following:

(1)

(A) A local publicly owned electric utility.

(2)

(B) The State Water Resources Development System commonly known as the State Water Project.

(3)

(C) Customer generation located on the customer’s site or providing electric service through arrangements authorized by Section 218, if the customer generation, or the load it serves, meets one of the following criteria:

(A)

(i) It takes standby service from the electrical corporation on a commission-approved rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.

(B)

(ii) It is not physically interconnected to the electrical transmission or distribution grid, so that, if the customer generation fails, backup electricity is not supplied from the electrical grid.

(C)

(iii) There is physical assurance that the load served by the customer generation will be curtailed concurrently and commensurately with an outage of the customer generation.

SEC. 7.

 Section 454.52 of the Public Utilities Code is amended to read:

454.52.
 (a) (1) Beginning in 2017, and to be updated regularly thereafter, the commission shall adopt a process for each load-serving entity, as defined in Section 380, to file an integrated resource plan, and a schedule for periodic updates to the plan, and shall ensure that load-serving entities do the following:
(A) Meet the greenhouse gas emissions reduction targets established by the State Air Resources Board, in coordination with the commission and the Energy Commission, for the electricity sector and each load-serving entity that reflect the electricity sector’s percentage in achieving the economywide greenhouse gas emissions reductions of 40 percent from 1990 levels by 2030.
(B) Procure at least 60 percent eligible renewable energy resources by December 31, 2030, consistent with Article 16 (commencing with Section 399.11) of Chapter 2.3.
(C) Enable each electrical corporation to fulfill its obligation to serve its customers at just and reasonable rates.
(D) Minimize impacts on ratepayers’ bills.
(E) Ensure system and local reliability on both a near-term and long-term basis, including meeting the near-term and forecast long-term resource adequacy requirements of Section 380.
(F) Comply with paragraph (1) of subdivision (b) of Section 399.13.
(G) Strengthen the diversity, sustainability, and resilience of the bulk transmission and distribution systems, and local communities.
(H) Enhance distribution systems and demand-side energy management.
(I) Minimize localized air pollutants and other greenhouse gas emissions, with early priority on disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.
(2) (A) The commission may authorize all source procurement for electrical corporations that includes various resource types including demand-side resources, supply side resources, and resources that may be either demand-side resources or supply side resources, taking into account the differing electrical corporations’ geographic service areas, to ensure that each load-serving entity meets the goals set forth in paragraph (1).
(B) The commission may approve procurement of resource types that will reduce overall greenhouse gas emissions from the electricity sector and meet the other goals specified in paragraph (1), but due to the nature of the technology or fuel source may not compete favorably in price against other resources over the time period of the integrated resource plan.
(3) In furtherance of the requirements of paragraph (1), the commission shall consider the role of existing renewable generation, grid operational efficiencies, energy storage, and distributed energy resources, including energy efficiency, in helping to ensure each load-serving entity meets energy needs and reliability needs in hours to encompass the hour of peak demand of electricity, excluding demand met by variable renewable generation directly connected to a California balancing authority, as defined in Section 399.12, while reducing the need for new electricity generation resources and new transmission resources in achieving the state’s energy goals at the least cost to ratepayers.
(4) In order to support electrical grid operational flexibility and reliability, enhance resiliency on the transmission and distribution levels of the electrical grid, and align with statutory renewable and firm zero-carbon energy resource goals, the commission, as part of the integrated resource planning process pursuant to paragraph (1), shall do all of the following:
(A) Evaluate and analyze potential needs for emerging renewable energy and firm zero-carbon resources to contribute to a reliable, resilient, cost-effective, and clean electrical grid.
(B) Evaluate and analyze the potential for existing and emerging renewable and firm zero-carbon technologies to cost-effectively and reliably integrate variable renewable energy resources into the electrical grid on a daily, multiday, and seasonal basis, including during atypical weather years.
(C) Pursue opportunities to lower ratepayer costs by considering the ability of existing and emerging technologies, including emerging renewable energy and firm zero-carbon resources, to simultaneously address multiple reliability needs, including community energy resiliency during deenergization events, system and local reliability during atypical multiday weather events, and local grid reliability during grid contingencies.
(D) Establish mechanisms to encourage the stable development of emerging renewable energy and firm zero-carbon resources at a pace that is necessary to achieve both reliability needs and long-term renewable energy and zero-carbon energy goals.
(b) (1) Each load-serving entity shall prepare and file an integrated resource plan consistent with paragraph (2) of subdivision (a) on a time schedule directed by the commission and subject to commission review.
(2) Each electrical corporation’s plan shall follow the provisions of Section 454.5.
(3) The plan of a community choice aggregator shall be submitted to its governing board for approval and provided to the commission for certification, consistent with paragraph (5) of subdivision (a) of Section 366.2, and shall achieve the following:
(A) Economic, reliability, environmental, security, and other benefits and performance characteristics that are consistent with the goals set forth in paragraph (1) of subdivision (a).
(B) A diversified procurement portfolio consisting of both short-term and long-term electricity and electricity-related and demand reduction products.
(C) The resource adequacy requirements established pursuant to Section 380.
(4) The plan of an electric service provider shall achieve the goals set forth in paragraph (1) of subdivision (a) through a diversified portfolio consisting of both short-term and long-term electricity, electricity-related, and demand reduction products.
(c) To the extent that additional procurement is authorized for the electrical corporation in the integrated resource plan or the procurement process authorized pursuant to Section 454.5, the commission shall ensure that the costs are allocated in a fair and equitable manner to all customers consistent with Section 454.51, that there is no cost shifting among customers of load-serving entities, and that community choice aggregators may self-provide renewable integration resources consistent with Section 454.51.
(d) To eliminate redundancy and increase efficiency, the process adopted pursuant to subdivision (a) shall incorporate, and not duplicate, any other planning processes of the commission.
(e) This section applies to an electrical cooperative, as defined in Section 2776, only if the electrical cooperative has an annual electrical demand exceeding 700 gigawatthours, as determined based on a three-year average commencing with January 1, 2013.
(f) For purposes of this section, “emerging renewable energy and firm zero-carbon resources” include, but are not limited to, geothermal, offshore wind, green electrolytic hydrogen, long-duration energy storage, multi-day energy storage, and other resources identified in the joint reports issued pursuant to Section 454.53.

SEC. 8.

 Section 701.7 is added to the Public Utilities Code, to read:

701.7.
 (a) On or before December 31, 2022, the commission shall adopt measures to bolster the near-, mid-, and long-term reliability and resiliency of California’s electrical grid consistent with California’s goals to reduce localized air pollutants and emissions of greenhouse gases, including early priority on disadvantaged communities and support for emerging renewable energy and firm zero-carbon resources through research and development, demonstration, procurement, and incentives.
(b) The commission shall timely incorporate emerging renewable energy and firm zero-carbon resources into energy and resource planning processes, including integrated resource planning, the integrated energy policy report, and baseline planning scenarios.
(c) For purposes of this section, “emerging renewable energy and firm zero-carbon resources” include, but are not limited to, geothermal, offshore wind, green electrolytic hydrogen, long-duration energy storage, multi-day energy storage, and other resources identified in the joint reports issued pursuant to Section 454.53.

SEC. 9.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.