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SB-1305 Electricity: virtual power plant procurement.(2023-2024)



Current Version: 03/18/24 - Amended Senate

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SB1305:v98#DOCUMENT

Amended  IN  Senate  March 18, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill
No. 1305

Introduced by Senator Stern

February 15, 2024

An act to add Section 380.6 to the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


SB 1305, as amended, Stern. Electricity: resource adequacy requirements: virtual power plant procurement.

Existing law, the Public Utilities Act, directs the Public Utilities Commission to require each load-serving entity, defined to include electrical corporations, electric service providers, and community choice aggregators, to maintain physical generating capacity and electrical demand response adequate to meet their load requirements as part of their resource adequacy requirements.

This bill would require each load-serving entity to procure from virtual power plants, defined as actively coordinated aggregations of behind-the-meter distributed energy resources that can perform certain functions, sufficient capacity to meet specified minimum capacity requirements by certain dates, as provided. The bill would require capacity procured from a virtual power plant by a load-serving entity pursuant to these provisions to be used to meet the resource adequacy requirements established for the load-serving entity. The bill would authorize the commission to postpone, in one-year increments, the deadlines for compliance with these requirements for a particular load-serving entity if the commission makes certain findings. The bill would require, on or before January 30, 2026, and each year thereafter, each load-serving entity to submit a report to the commission showing the load-serving entity’s progress toward complying with the virtual power plant capacity requirements.

Existing law requires the Public Utilities Commission (PUC), in consultation with the Independent System Operator, to establish resource adequacy requirements for all electrical corporations, electric service providers, and community choice aggregators. Existing law requires electrical corporations, electric service providers, and community choice aggregators to maintain physical generating capacity and electrical demand response adequate to meet their load requirements, as specified.
This bill would require the PUC, in coordination with the State Energy Resources Conservation and Development Commission and the Independent System Operator, to take specified actions in relation to virtual power plants, as defined. The bill would require the PUC, on or before March 1, 2026, to begin a proceeding to determine targets for each electrical corporation to procure generation from cost-effective virtual power plants, and would require the PUC, on or before October 1, 2026, to finalize its proceeding and issue a decision adopting virtual power plant procurement targets to be achieved by each electrical corporation on or before December 31, 2028, and on or before December 31, 2033. The bill would, upon the PUC adopting virtual power plant procurement targets, require each electrical corporation, beginning January 30, 2028, and each year thereafter, to file a report with the PUC on its progress toward complying with the virtual power plant procurement targets.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission PUC is a crime.
Because the above above-described provisions would be part of the act and a violation of a commission PUC action implementing this bill’s 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.

 The Legislature finds and declares all of the following:
(a) Expanding the use of virtual power plants, which are comprised of behind-the-meter aggregations of distributed energy resources, can assist load-serving entities in integrating increased amounts of renewable energy resources into the electrical transmission and distribution grid in a manner that minimizes emissions of greenhouse gases.
(b) Virtual power plants, which can reduce peak electricity use, shift peak electricity use to off-peak times, and supply energy to the grid, are an important means of supporting the state’s energy loading order, which directs that California’s energy demand first be met by demand response and energy efficiency before new generation is considered.
(c) Additional use of virtual power plants can facilitate and optimize integration of the additional amounts of variable, intermittent, and off-peak electrical generation from wind and solar energy that comprise compose a significant and increasing portion of the California power mix.
(d) Expanded use of virtual power plants can reduce costs to ratepayers by avoiding or deferring the need for new fossil-fuel powered peaking power plants, avoiding or deferring distribution and transmission system upgrades and expansion of the grid, and avoiding or deferring the high cost of expansion of grid-scale energy storage systems.
(e) Expanded use of virtual power plants will reduce the use of electricity generated from fossil fuels to meet peak-load requirements on days with high electricity demand, and can avoid or reduce the use of electricity generated by high carbon-emitting electrical generating facilities during those high electricity demand periods. This will have substantial cobenefits from reduced emissions of criteria pollutants.
(f) In response to Senate Bill 846 (Chapter 239 of the Statues of 2022), the California Energy Commission State Energy Resources Conservation and Development Commission established a 7,000 megawatt load shift goal by 2030. Many of the policy recommendations in the commission’s Senate Bill 846 load-shift goal report can be achieved through the expansion of virtual power plants.
(g) Use of virtual power plants to provide the ancillary services otherwise provided by fossil-fueled generating facilities will reduce emissions of carbon dioxide and criteria pollutants.
(h) The United States Department of Energy estimates that the United States could deploy 80-160 gigawatts of virtual power plants, tripling the current scale, by 2030 to support the rapid electrification of vehicles and homes.
(i) There are significant barriers to obtaining the benefits of virtual power plants, including virtual power plant operators’ severely limited access to customer meter data, the failure to incorporate the use of virtual power plants into long-term electricity resource planning, the lack of recognition of technological and marketplace advancements, and inadequate statutory and regulatory support.

SEC. 2.

 Section 380.6 is added to the Public Utilities Code, to read:

380.6.
 (a) For purposes of this section, the following definitions apply:

(1)“Load-serving entity” has the same meaning as defined in Section 380.

(2)

(1) “Procure,” in reference to procurement from a virtual power plant, means to acquire by ownership or by contract the right to use the energy from, the energy savings or shifting from, or the capacity of, a virtual power plant owned by a virtual power plant operator.

(3)

(2) (A) “Virtual power plant” means an actively coordinated aggregation of behind-the-meter distributed energy resources, including battery storage systems like those installed with rooftop solar systems, electric vehicles and chargers, electric water heaters, smart thermostats, smart plugs, smart buildings and their controls, and flexible commercial and industrial loads, that can balance electricity demand and supply, reduce or shift demand, or provide utility-scale and utility-grade grid services similar to a traditional power plant. plant, and meet the requirements of this paragraph.
(B) For purposes of this paragraph, “smart” means a device or appliance that adjusts or reduces its energy use, is internet connected, is able to be controlled, with explicit customer consent, remotely by the consumer, the manufacturer, the utility, or the aggregator, provides information about the energy usage and operating status of the device or appliance, and enables the customer to refuse to participate in the smart features at any time.

(B)

(C) For purposes of this section, a virtual power plant shall accomplish one or more of the following purposes: reduce emissions of greenhouse gases, reduce demand for peak electrical generation, or improve the reliable operation of the electrical transmission or distribution grid.

(C)

(D) For purposes of this section, a virtual power plant shall do one or more of the following:
(i) Use controls to reduce electricity use when called upon.
(ii) Shift electricity use from peak to off-peak times through the use of automated controls managed by the virtual power plant operator.
(iii) Provide dispatchable energy, capacity, and other grid services from distributed renewable generation resources and energy storage systems.
(iv) Reduce consumer cost for electricity by reducing peak time electricity use or shifting electricity use from peak to off-peak times.

(b)Each load-serving entity shall procure from virtual power plants sufficient capacity to meet the following capacity and timeline requirements:

(1)On or before January 1, 2028, a capacity of not less than 2.5 percent of the load-serving entity’s monthly system resource adequacy obligation.

(2)On or before January 1, 2030, a capacity of not less than 5 percent of the load-serving entity’s monthly system resource adequacy obligation.

(3)On or before January 1, 2031, a capacity of not less than 7.5 percent of the load-serving entity’s monthly system resource adequacy obligation.

(4)On or before January 1, 2032, a capacity of not less than 10 percent of the load-serving entity’s monthly system resource adequacy obligation.

(5)On or before January 1, 2033, a capacity of not less than 12.5 percent of the load-serving entity’s monthly system resource adequacy obligation.

(6)On or before January 1, 2035, a capacity of not less than 15 percent of the load-serving entity’s monthly system resource adequacy obligation.

(c)Capacity procured from a virtual power plant by a load-serving entity pursuant to this section shall be used to meet the resource adequacy requirements established for the load-serving entity pursuant to Section 380.

(d)The commission may postpone, in one-year increments, the deadlines specified for compliance with the capacity requirements in subdivision (b) for a particular load-serving entity. The commission shall only approve delayed compliance if the commission finds both of the following:

(1)The load-serving entity has fully explored all reasonable methods to comply with its procurement requirements.

(2)A one-year delay is warranted because compliance would not be cost effective, after considering all lifetime avoided costs of virtual power plants, including environmental costs, and all of the purposes served by virtual power plants.

(e)On or before January 30, 2026, and each year thereafter, each load-serving entity shall submit a report to the commission showing the load-serving entity’s progress toward complying with the virtual power plant capacity targets established pursuant to subdivision (b).

(b) The commission, in coordination with the Energy Commission and the Independent System Operator, shall do all of the following:
(1) Estimate the size of the resource potential of resource adequacy-qualifying virtual power plant resources.
(2) Identify existing and potential regulatory barriers and opportunities for virtual power plant resources to qualify for resource adequacy capacity, such as streamlining or eliminating the load impact protocol process.
(3) Accelerate, where feasible, the resolution of regulatory barriers in order to facilitate the growth of virtual power plant resources.
(c) On or before March 1, 2026, the commission shall begin a proceeding to determine targets for each electrical corporation to procure generation from cost-effective virtual power plants.
(d) On or before October 1, 2026, the commission shall finalize its proceeding and issue a decision adopting virtual power plant procurement targets to be achieved by each electrical corporation on or before December 31, 2028, and on or before December 31, 2033.
(e) Upon the commission adopting virtual power plant procurement targets pursuant to subdivision (d), each electrical corporation shall, beginning January 30, 2028, and each year thereafter, file a report with the commission on its progress toward complying with the virtual power plant procurement targets.

SEC. 3.

 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.