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Procuring Our Way to Compliance IEP 27 th Annual Meeting September 23, 2008 Fong Wan, PG&E. GHG Reduction: What’s Required of the Electric Sector?. 169 MMT of total reductions needed to reach the 2020 target of 427 MMT

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procuring our way to compliance iep 27 th annual meeting september 23 2008 fong wan pg e

Procuring Our Way to ComplianceIEP 27th Annual MeetingSeptember 23, 2008Fong Wan, PG&E

ghg reduction what s required of the electric sector
GHG Reduction: What’s Required of the Electric Sector?
  • 169 MMT of total reductions needed to reach the 2020 target of 427 MMT
  • CARB’s Draft Scoping Plan describes several incremental reduction measures that could impact PG&E if adopted:

CSI existing program targets are expected to contribute an additional 2.1 MMT

pg e compliance exposure remains uncertain
PG&E Compliance Exposure Remains Uncertain
  • CARB continues to develop its AB32 recommendations but PG&E has limited direct GHG emissions
  • PG&E has been focused on reducing its direct and indirect emissions
pg e continues to emphasize energy efficiency
PG&E Continues to Emphasize Energy Efficiency
  • PG&E’s EE programs have contributed significant savings and are expected to provide even more in the next decade
    • Over 1,000 MW of installed energy efficiency projects in the last 5 years
    • An additional 1,050 MW expected over the next 3 years
  • CARB’s EE targets rely on ambitious government action, technology advancement, market transformation, and unprecedented customer adoption and rebate levels
  • CHP as a GHG reduction measure is uncertain
    • CHP must have true efficiency advantages and be matched against existing thermal load to achieve reductions
    • Based on currently available information, it’s questionable whether efficient CHP capacity exists for the 30,000 GWh described in the Draft Scoping Plan
pg e will reach and exceed 20 renewables
PG&E Will Reach and Exceed 20% Renewables
  • PG&E has 24% RPS eligible resources under contract for future delivery
  • Pursuing power contracts with diverse energy technologies
  • Seeking new supply options both within and outside of state
  • Key components to achieving RPS targets remain elusive
    • Extension of ITC and PTC
    • Transmission improvements
    • Expedited permitting approvals
    • Developer performance and timing consistent with contract

Given the challenges with reaching 20% RPS, is 33% achievable by 2020?

pg e s role in a california cap and trade
PG&E’s Role in a California Cap-and-Trade
  • PG&E will focus on mitigating significant increases in costs to its customers that may arise in a cap-and-trade
  • Compliance will result mostly from:
    • Role as a “first deliverer” of imports
    • Recent commitments to utility-owned fossil generation
    • PG&E may have a role in managing compliance costs for some power producers

All of the uncertainties with EE, RPS and cap-and-trade suggest a need for high quality offsets and other cost containment measures

current options for compliance strategies
Current Options for Compliance Strategies
  • Strategies for compliance with a cap-and-trade
    • Reduce energy consumption through EE and DR programs
    • Reduce carbon content of energy delivered with low or no carbon energy through PPAs, UOG and Distributed Generation
    • Purchase allowances
    • Purchase offsets
  • One of the key pre-compliance options are offsets where rules and protocols remain in flux

Need defined rules to encourage offset market development before it can be a viable pre-compliance option

pg e procurement accomplishments to date
PG&E Procurement Accomplishments to Date

Since resuming procurement in January 2003, PG&E has worked to restore system reliability and implement the state’s policy goals

  • Energy Efficiency: Over 1,000MW of installed energy efficiency projects
  • Demand Reduction: About 750 MW of dependable programs
  • Renewables: Almost 3,700 MW under contract
  • California Solar Initiative: PG& E began implementation January 1, 2007 and has installed 232 MW of solar units at more than 25,000sites
  • The 2004 LTRFO and utility-owned generation: 3,000 MW of new, efficient gas-fired generation
  • The 2008 LTRFO seeks 800-1,200 MW of new, efficient, flexible resources
utility and ipp generation capacity
Utility and IPP Generation Capacity

Power Plant Ownership n Northern California by Net Qualifying Capacity (MW)

PG&E Owned New Resources and PG&E PPAs in Northern California by Capacity (MW)

PG&E Owned

PG&E

*

Signed RPS PPAs

QFs and Merchant Plants

Municipal Utilities

2004 LTRFO PPAs

2008 LTRFO

PG&E supports the current hybrid market structure for California

*RPS resources have a lower net qualifying capacity