Carbon Neutral Plan Update &
RPS Compliance Strategy Options
February 5, 2020
Jim Stack, PhD
Purpose & Outline
- Seek a motion to recommend Council approval of changing the carbon accounting methodology used in the Carbon Neutral Plan to one based on average hourly emissions factors.
- Present refined strategy options for complying with the state's Renewable Portfolio Standard law:
- Sell Renewables > 104.5% of Load (to remain Carbon Neutral)
- Sell Renewables > Load
- Trade In-State Renewables > RPS Requirement for Out-of-State Renewables
- Discuss implications of these potential changes.
2
Part 1:
Carbon Neutral Plan Updates
3
Proposed Carbon Neutral Plan Amendment
- Primary Changes:
- Switch from an annual carbon accounting methodology to one based on hourly average emissions factors.
- Permit the use of RPS-eligible, unbundled RECs to neutralize any residual emissions that result from this change in carbon accounting methodology.
- Additional minor clean-up
lbCO2/MWh
1100
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0
Average 2018
CAISO Emissions
Hour Ending Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec12:00 AM 1:00 AM 2:00 AM 3:00 AM 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM 10:00 PM 11:00 PM
4
Part 2:
Refined RPS Compliance Strategy
Options
5
Background - CPAU Renewable Supplies
- Palo Alto's renewable energy supplies greatly exceed state requirements
6
Refined RPS Compliance Strategy Options
Annual Carbon- | In-State Carbon- | ||
Portfolio Options | Note | Free Supplies | Free Resources |
(as % of Annual | (as % of Annual | ||
Load)* | Load)* | ||
1) Sell renewables > | Staff began | ||
Load (remain Carbon | |||
implementing this in | 104.5% | 104.5% | |
Neutral w/ hourly | |||
2019 | |||
accounting) | |||
2) Sell renewables > | Would require | ||
purchasing small volume | 100% | 100% | |
Load | of unbundled RECs to | ||
remain Carbon Neutral | |||
3) Trade in-state | Staff would like to | 75% | |
renewable energy > RPS | |||
explore this, seeking | 100% | (25% out-of-state | |
requirement for out-of- | |||
UAC feedback | renewables) | ||
state renewable energy | |||
*in an average hydro year |
Note: Current portfolio (before sales) has Carbon Neutral supplies equal to ~110% of annual load
7
Part 3:
Implications of RPS Compliance
Strategy Changes
8
Effects of RPS Compliance Strategies (2020-2030)
Annual Averages | Current | 1) Sell Supplies | 2) Sell Supplies | 3) Renewable |
Portfolio | > Load (& | > Load | Exchange | |
Remain CN) | ||||
Supply Cost | --- | +$1.7 | +$0.6 | +$1.0 |
Savings ($M) | ($2.3 total) | ($3.3 total) | ||
Retail Rate | ||||
--- | -1.1% | -0.5% | -0.7% | |
Impact (%) | (-1.5% total) | (-2.2% total) | ||
RPS Level | 63% | 50% | 45% | 39% |
Emissions | ||||
42 | 131 | |||
Intensity (Hourly | -125 | 0 | ||
Accounting) | (0 w/ RECs) | (0 w/ RECs) | ||
(lb CO2/MWh) | ||||
Emissions | ||||
Intensity (Power | 13 | 10 | 9 | 65 |
Content Label) | ||||
(lb CO2/MWh) |
9
PCLs of Various RPS Compliance Strategies (2020)
Projected | Save $2.3M | Save $3.3M Total |
Supply Cost: | (1.5%) | (Add'l $1.0M) |
$81M | (2.2% total) | |
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Supply Cost Savings Comparison
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RPS Level Comparison
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PCL Emissions Intensity Comparison
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Next Steps
- Staff will take the amendment to the Council-approved Carbon Neutral Plan to the Finance Committee and Council.
- Staff will seek additional feedback from the environmental community on the merits of trading in-state renewables for out-of-state renewables prior to returning to the UAC.
- Staff will also bring a discussion of the proposed RPS strategy changes to the Finance Committee and Council.
- Staff will implement any changes to portfolio strategy.
- Staff will also bring a report to the UAC and Council this spring about the 2025 Western contract renewal.
14
QUESTIONS?
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Potential Uses of Revenue
- Reducing electric rates ($1.9M is just over a 1% reduction)
- Building electrification & decarbonization programs
- AMI investment
- EV infrastructure investment/incentives
- Second transmission line
16
Part 1-A:
Affirmation of UAC Support for
Hourly Carbon Accounting
17
Alternative Carbon Emissions Accounting Methodologies
- Today's Discussion:
- Time-stepGranularity: Annual vs. Hourly Accounting
- Emissions Intensity: Average vs. Marginal Emissions (for Hourly Accounting)
- State 2019 Changes:
- Unbundled RECs (which we deem Carbon Neutral) will be treated as System Power
State Changes | ||||
Unbundled RECs | Unbundled | to 2019 Power | ||
Current CPAU | Content Label | |||
= Carbon | RECs | |||
Method | Neutral | = System Power | ||
If no accounting | ||||
Annual Accounting | Method A | Method B | change today, this | |
will still make our | ||||
Hourly Accounting | Method C | Method D | portfolio appear | |
(Average Emissions Factors) | more carbon- | |||
Hourly Accounting | intensive | |||
Method E | Method F | |||
(Marginal Emissions Factors) | ||||
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Calculation of Palo Alto's 2018 Emissions on an Hourly Basis
8760
= � ℎ ∗ ℎ
ℎ=1
=x
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2018 Average Net Load & Total Emissions
Net Annual
Emissions:
16,118 mT CO2
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2018 Total Emissions by Accounting Methodology
After purchase of 3,638 unbundled RECs
(Note: 3,638 MWh @ system power emissions intensity = 1,557 mT CO2)
Unbundled RECs | Unbundled RECs | |||||
= Carbon Neutral | = System Power | |||||
Net | Emissions | Net | Emissions | |||
Method | Emissions | Intensity | Method | Emissions | Intensity | |
(mT) | (lb/MWh) | (mT) | (lb/MWh) | |||
Annual Accounting | A | 0 | 0 | B | 1,557 | 3.8 |
Hourly Accounting | ||||||
(Average Emissions | C | 16,118 | 39.2 | D | 17,675 | 43.0 |
Factors) | ||||||
Hourly Accounting | ||||||
(Marginal Emissions | E | (2,038) | (5.1) | F | (526) | (1.3) |
Factors) |
*If our whole portfolio consisted of average grid power we would have emitted 237,000 mTCO2 and had an emissions intensity of 576 lb CO2/MWh.
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Part 1-B:
Affirmation of UAC Support for Portfolio Management Choices
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Potential RPS Compliance Strategies
Lower | • | Use Banked RECs | |
• | Bucket Swap (maximize Bucket 3 RECs) | ||
Cost | |||
• Sell RPS Supplies Exceeding RPS Requirement | |||
• Sell RPS Supplies Exceeding Load | |||
• Current Portfolio - Exceeding RPS with All Bucket 1 Resources | |||
• Rebalance Portfolio (sell solar, buy geothermal) | |||
• | Carbon Neutral Every Hour | ||
Higher | |||
Cost |
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Supply Cost Impacts of RPS Compliance Strategies
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Potential RPS Compliance Strategies
Lower | • | Use Banked RECs |
• | Bucket Swap (maximize Bucket 3 RECs) | |
Cost |
- Sell RPS Supplies Exceeding RPS Requirement
- Sell RPS Supplies Exceeding Load
- Current Portfolio - Exceeding RPS with All Bucket 1 Resources
• | Rebalance Portfolio (sell solar, buy geothermal) | 2020 | |||
Staff | |||||
Report | |||||
Higher • | Carbon Neutral Every Hour | ||||
Cost
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Supply Costs Savings (2019-2030)
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RPS Level Impacts (2019-2030)
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PCL Average Emissions Intensities (2019-2030)
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Background - Duck Curve
- In 2013, Palo Alto approved its Carbon Neutral Electric Supply Plan - and the Duck Curve first appears
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Background - Duck Curve, cont.
- Because of the Duck Curve, the CO2 emissions intensity of grid electricity now varies tremendously, on an hourly and seasonal basis
Source: CAISO (Hourly Average CO2 Emissions Rates for March 16, 2019)
http://www.caiso.com/TodaysOutlook/Pages/emissions.aspx
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Average vs. Marginal Emissions
*Appropriate emissions factor for a
Average* Emissions Intensity: portfolio approach
Total System-wide Emissions
Total Energy Generation
Marginal Emissions Intensity:
•
•
•
The emissions intensity of the generating unit called on to provide the last MWh
Useful for thinking about the impact of an individual action (e.g., turning on a light switch)
Not appropriate for a whole sector inventory
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Background - CPAU Load & Resource Balance
- Palo Alto's electric supply resources vary both hourly and seasonally
Monthly
Totals
January | July |
(Average day) | (Average day) |
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State Changing Treatment of Unbundled RECs (Bucket 3 RECs)
- Unbundled RECs: Selling the environmental attribute of renewable generation separate from the underlying energy, generally outside of California
- Industry convention: The REC carries all of the environmental properties of the energy generated (including the emissions profile), while the energy is treated as "null" or "system" power
- Counts towards RPS requirements (with limitations - 10% of RPS requirement)
- Current CPAU accounting methodology: Unbundled RECs + market purchases are treated as carbon neutral
- Power Content Label treatment: CEC proposal is that 2019 Power Content Label will nottreat unbundled REC purchases as carbon neutral
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2017-2018 Loads & Supply Resources
CY 2017 | CY 2018 | |
Hydroelectric | 667,772 | 342,419 |
Solar | 329,938 | 342,640 |
Wind | ||
97,239 | 107,414 | |
Landfill Gas | 107,495 | 110,140 |
Net Market Power | ||
(255,795) | 3,638 | |
Total Load | 946,649 | 906,251 |
Carbon Neutral Supplies | ||
127.0% | 99.6% | |
(% of Total Load) | ||
"Average year" hydroelectric generation:
496,000 MWh
3,638 RECs needed
under current Carbon Neutral accounting method
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Takeaways from Hourly Emissions Analysis
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Average 2018 | Marginal 2018 | Palo Alto Resources | ||||||||||||||||||||||||||||||||||||||||
CAISO Emissions | CAISO Emissions | Exceeding Load | ||||||||||||||||||||||||||||||||||||||||
Hour Ending Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec | Hour Ending Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov | Dec | ||||||||||||||||||||||||||||||||||||||||
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11:00 PM | 11:00 PM |
- We are displacing a lot of carbon with the hydro resources in the summer evenings.
- By generating at times of peak electricity prices, our hydro resources displace a lot of carbon (price and carbon are correlated in CAISO).
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Palo Alto's2018Net= LoadbyHour−
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CAISO's 2018 Hourly Average Emissions Intensities
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CAISO's 2018 Hourly Marginal Emissions Intensities
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Palo Alto's 2018 Hourly Average Total Emissions
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Background - CPAU 2018 Electric Supplies
CPAU RPS Level: 64%
State requirement: 29%
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Seeking feedback on the following issues:
- Power Content Label Confusion: If we opt for an accounting methodology whose end result differs from the PCL methodology, how do we address the confusion that might cause?
- Hourly Emissions Accounting: Should we adopt an hourly emissions accounting approach? If so, how should we address the portfolio's residual emissions-e.g. in a dry year, or if hourly accounting yields a positive annual emissions total?
- RPS Strategy Change to Reduce Portfolio Cost: If we choose to sell excess renewables and "swap" bundled REC resources for unbundled RECs (and system power), the above issues will be accentuated. Is that OK?
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Key Takeaways from Hourly Emissions Analysis | ||||||
Average 2018 | Marginal 2018 | Palo Alto Resources | ||||
lbCO2/MWh | Hour Ending | CAISO Emissions | Oct Nov Dec | Hour Ending | CAISO Emissions | Exceeding Load |
Jan Feb Mar Apr May Jun Jul Aug Sep | Jan Feb Mar Apr May Jun Jul Aug Sep | Oct Nov Dec | ||||
1100 | 12:00 AM | 12:00 AM | ||||
1:00 AM | 1:00 AM | |||||
1000 | 2:00 AM | 2:00 AM | ||||
3:00 AM | 3:00 AM | |||||
900 | 4:00 AM | 4:00 AM | ||||
5:00 AM | 5:00 AM | |||||
800 | 6:00 AM | 6:00 AM | ||||
7:00 AM | 7:00 AM | |||||
700 | 8:00 AM | 8:00 AM | ||||
9:00 AM | 9:00 AM | |||||
600 | 10:00 AM | 10:00 AM | ||||
11:00 AM | 11:00 AM | |||||
500 | 12:00 PM | 12:00 PM | ||||
1:00 PM | 1:00 PM | |||||
400 | 2:00 PM | 2:00 PM | ||||
3:00 PM | 3:00 PM | |||||
300 | 4:00 PM | 4:00 PM | ||||
5:00 PM | 5:00 PM | |||||
200 | 6:00 PM | 6:00 PM | ||||
7:00 PM | 7:00 PM | |||||
100 | 8:00 PM | 8:00 PM | ||||
9:00 PM | 9:00 PM | |||||
0 | 10:00 PM | 10:00 PM | ||||
11:00 PM | 11:00 PM |
- By generating at times of peak electricity prices, our hydro resources displace a lot of carbon (price and carbon are correlated in CAISO).
- Even in a drier than average hydro year, and using an hourly accounting method, the City's average electric portfolio emissions intensity is extremely low.
- Average emissions intensities are appropriate for evaluating the emissions associated with the City's entire electric load.
- Marginal emissions intensities are appropriate for calculating the emissions impact of energy efficiency and load shifting measures.
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Methods of Abating Residual Emissions
The mechanisms that could be used to abate the City's residual emissions, and their current approximate costs per metric tonne of CO2 abated, include:
- Unbundled RECs ($3.50/mT CO2)
- Carbon Offsets ($14/mT CO2)
- Carbon Allowances ($18/mT CO2)
- Bundled (Bucket 1) RECs ($44/mT CO2)
- Rebalancing the Portfolio (Difficult to quantify)
Purchasing unbundled RECs or carbon offsets would be the easiest mechanisms to implement, and the easiest to explain. The argument against unbundled RECs is that they don't provide any "additionality."
However, aside from the CEC's PCL protocols, all industry protocols recognize the emissions value of unbundled RECs.
43
Methods & Cost of Abating Residual Emissions
Cost of Abating 2018 Total Emissions
Annual | Hourly Accounting | |
(Average Emissions | ||
Accounting | ||
Factors) | ||
Total Emissions | 1,557 mT CO2 | 17,675 mT CO2 |
Unbundled RECs | $5,500 | $62,000 |
Carbon Offsets | ||
$21,800 | $247,000 | |
Carbon Allowances | ||
$28,000 | $318,000 | |
Bundled (Bucket 1) RECs | ||
$68,500 | $778,000 | |
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Renewable Energy in California
- Bucket 1 (PCC1) - Energy and RECs (typically from CA) delivered to a California Balancing Authority (CBA) without substituting electricity from another source. Premium product, ~$20/MWh, Min 75% RPS
- Bucket 2 (PCC2) - Energy and RECs (typically from an out-of-state renewable energy project) that cannot be delivered to a CBA without substituting energy from another source (i.e. intermittent wind energy needs to substitute in another energy source to meet demand during times when the wind facility is not generating electricity). $8 to $12/MWh
- Bucket 3 (PCC3) - Unbundled RECs, or RECs that do not meet Category 1 and 2 conditions. $2/MWh, Maximum 10%
Source: SVCE 2/19/19 | |
Board Presentation | 45 |
Effects of RPS Compliance Strategies in 2020
RPS Compliance Options
Minimal RPS | A: Use | B: | C: Sell | Sell | Carbon | |||
For CY 2020 | Compliance | Current | Sell Solar, | Neutral | ||||
Banked | Bucket | Supplies > | Supplies | |||||
(Sum of | Portfolio | Buy Geo | Every | |||||
RECs | Swap | RPS Req. | > Load | |||||
options A, B, C) | Hour | |||||||
Supply Cost | ($7.4) | ($2.0) | ($0.5) | ($4.9) | ($2.9) | --- | +$7.2 | +$6.3 |
Change ($M) | ||||||||
RPS Level | 21.6% | 49.3% | 60.7% | 33.0% | 44.4% | 60.7% | 60.7% | 44.4% |
PCL Emissions | 237 | -45 | -118 | 104 | --- | -148 | -148 | --- |
Intensity | (Delta: +385 from | |||||||
(+103) | (+30) | (+252) | (+148) | (+0) | (+148) | |||
(lb CO2/MWh) | Current Portfolio) | |||||||
Total Emissions | ||||||||
(Annual | 98,200 | -18,500 | -48,900 | 42,900 | --- | -61,300 | -61,300 | --- |
Accounting) | (Delta: +159,500) | (+42,800) | (+12,400) | (+104,200) | (+61,300) | (+0) | (+61,300) | |
(mt CO2) | ||||||||
Total Emissions | ||||||||
(Hourly | 114,300 | -2,400 | -32,800 | 59,000 | 16,100 | -45,200 | -61,300 | --- |
Accounting) | (Delta: +159,500) | (+42,800) | (+12,400) | (+104,200) | (+61,300) | (-16,100) | (+45,200) | |
(mt CO2) | ||||||||
46 |
2018 Annual Total Emissions by Accounting Methodology
After purchase of 3,638 unbundled RECs
(Note: 3,638 MWh @ system power emissions intensity = 1,557 mT CO2)
Unbundled RECs | Unbundled RECs | |||
= Carbon Neutral | = System Power | |||
Net | Net | |||
Method | Emissions | Method | Emissions | |
(mT) | (mT) | |||
Annual Accounting | A | 0 | B | 1,557 |
Hourly Accounting | ||||
C | 16,118 | D | 17,675 | |
(Average Emissions Factors) | ||||
Hourly Accounting | ||||
E | (2,038) | F | (526) | |
(Marginal Emissions Factors) | ||||
47
Heat Map of Average CO2 Emissions Intensities
Hour Ending Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec12:00 AM 1:00 AM 2:00 AM 3:00 AM 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM 10:00 PM 11:00 PM
48
Heat Map of Marginal CO2 Emissions Intensities (2018)
Hour Ending Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec12:00 AM 1:00 AM 2:00 AM 3:00 AM 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM 10:00 PM 11:00 PM
49
Heat Map of Marginal CO2 Emissions Intensities (2030)
Hour Ending Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec12:00 AM 1:00 AM 2:00 AM 3:00 AM 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM 10:00 PM 11:00 PM
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2030 Projected Marginal CO2 Emissions Intensities
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2018 Marginal CO2 Emissions Intensities
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Development of "Average" Marginal Emissions Rates (1)
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Development of "Average" Marginal Emissions Rates (2)
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Development of "Average" Marginal Emissions Rates (3)
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Development of "Average" Marginal Emissions Rates (4)
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Development of "Average" Average Emissions Rates (1)
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Development of "Average" Average Emissions Rates (2)
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Development of "Average" Average Emissions Rates (3)
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Qualitative Factors to Consider
- Public messaging consistency (Treatment of unbundled RECs on PCL)
- Public perception of carbon intensity
- Carbon impact of alternative products (unbundled RECs, carbon offsets, Bucket 1 RECs)
- Additionality, verifiability
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Disclaimer
City of Palo Alto, CA published this content on 29 January 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 January 2020 15:29:00 UTC