The California Energy Commission (CEC) has just updated the joint agency report, a pathway to meet the 100% clean energy goals by 2045 (SB 100 Joint Agency Report).  The SB 100 Report is a collaboration of the CEC, California Public Utilities Commission (CPUC) and the California Air Resources Board (CARB).  The latest update to the SB 100 Report says most of California’s existing generation and an additional 145 and 180 GW of new power will be needed to meet California’s future energy demands.  

According to CEC staff, Liz Gill, Energy Assessments Division, “SB 100 is achievable with existing technologies. However, sustained record-setting resource build rates will be required to meet SB 100.” 

CEC staff outlined some scenarios to achieve clean energy goals depending upon future energy demands.  However, every scenario relied on large build-outs of solar, wind, and battery storage resources.  

Under a high electrification demand scenario, California will need to build 2.7 GWs of solar, 0.9 GWs of wind, and 2.2 GWs of battery storage annually for 25 years.  The level of energy infrastructure construction is more than double the State’s average.  In fact, California’s record annual builds are 2.67 GWs of solar, 0.98 GWs of wind generation, and 0.1 GWs of battery storage. 

Gill stressed that if California does not start immediately on new energy construction, the amount needed to be built per year will only increase.  CEC Commissioner Janea Scott asked if incentives or policies were needed to accelerate construction.  CEC staff responded that some recommendations would be in the final report as well as subsequent updates to the report that are due every four years. 

The staff estimated the cost of new facilities to be an additional $66 billion.  That cost would result in an extra 16 cents per kWh – additive to California’s current electrical cost. 

Energy In Focus (EIF) has spent a lot of time on the matter of cost.  In fact, our reports stress the broad impacts are hurting those that could likely afford it the least.

In our latest published update for August 2020, EIF identified the following:

California Residential Electricity Prices in June

  1. •  California average Residential Price for the 12 months ended June 2020 was 19.61 cents/kWh, 55.1% higher than the US average of 12.64 cents/kWh for all states other than California. California’s residential prices remained the 7th highest in the nation.
  2. •  For the 12 months ended June 2020, the average annual Residential electricity bill in California was $1,266, or 27.4% higher ($272) than the comparable bill in 2010 (the year the AB 32 implementation began with the Early Action items). In this same period, the average US (less CA) electricity bill for all the other states grew only 2.2% ($30).

Note:  Residential bills, however, vary widely by region, with the estimated annual household usage in 2018 as much as 59% higher in the interior regions compared to the milder climate coastal areas.

California Commercial and Industrial Electricity Prices in June

  1. •  California average Commercial Price for the 12 months ended June 2020 was 17.25 cents/kWh, 71.6% higher than the US average of 10.05 cents/kWh for all states other than California. California’s commercial prices remained the 3rd highest in the nation.
  2. •  California average Industrial Price for the 12 months ended June 2020 was 13.93 cents/kWh, 119.0% higher than the US average of 6.36 cents/kWh for all states other than California. California’s industrial prices remained the 5th highest in the nation.

But interestingly, even with that added cost, the power will not be completely green.  Gill noted, “Natural gas capacity is largely retained, but fleet-wide utilization decreases by 50% compared to a 60% RPS future.  Cost reductions and innovation in zero-carbon firm resources and storage resources may reduce economic gas fleet retention.”

Under this scenario, natural gas generation presently in the California fleet is retained—at least to some degree.  But there is an alternate scenario which would have no natural gas generation retained.  Under the “no natural gas retained” scenario, CEC staff estimated the cost of new facilities to be an additional $74 billion.  That cost would result in an additional 18 cents per kWh – additive to the current cost of electricity in California. 

According to a June 2019 study by Energy and Environmental Economics, Inc., Long-Run Resource Adequacy Under Deep Decarbonization Pathways for California, the annual cost to keep the lights on in California is approaching $110 billion annually.  Now imagine adding another $66 billion to $74 billion.  

One more thing, transportation and transmission additions to achieve this electrification scenario do not appear to be included in the SB 100 report.  Conservative estimates would add at least another $0.08-$0.10 per kWh.  Obviously, these cost totals would seemingly make the realities of achieving the 100% renewable future at the very least, challenging. At worst, the costs could overburden ratepayer classes that could afford it the least, making the goals unachievable.

What’s Next? 

The CEC, the CPUC and CARB will continue to work on the report until the new year when the final report will be presented to the State Legislature.  A draft report is expected to be completed in November 2020. 

Note: The clean energy report is being developed to help implement Senate Bill 100 (2018), which established clean energy goals.  The law calls for 60% of California’s power to come from renewable resources by 2030.  The law further calls for 100% carbon-neutral energy by 2045.