Renewable Alternative Power Senate Energy Utilities Communications Committee

Renewable & Alternative Power Senate Energy, Utilities & Communications Committee The Hon. Christine Kehoe, Chair February 26, 2008 Stuart R. Hemphill Director, Renewable and Alternative Power Southern California Edison

Renewable & Alternative Power Overview • SCE still leads the nation in renewable deliveries • • 16 percent of customers’ needs are met with renewable energy Contracted-for renewable energy is sufficient to meet 20% target • Based on current law, however, it is clear that load serving entities will not achieve energy deliveries of 20% by 2010 • • • Contracts are sufficient, but on-line timing is problematic Transmission and a clogged interconnection queue have impeded near term deliveries Increasing customer demand creates a moving target • With modest changes to existing law, 2010 deliveries may still be possible • • • Expand supply options by looking out of state Authorize the use of unbundled renewable energy credits Expand eligibility for California Solar Initiative Page: 1

Renewable & Alternative Power SCE’s Resource Mix 2007 (Estimated) All Resources Renewable Resources 100% = 79 Billion k. Wh 100% = 12. 5 Billion k. Wh Natural Gas Small Hydro Geothermal Solar Renewables Wind Large Hydro Coal Nuclear Biomass Page: 2

Renewable & Alternative Power Eligible Renewable Procurement Activity 2002 To Present 35 Contracts • • 17 Billion k. Wh Alta Wind Power (4. 9) Calpine (2. 0) Coso (1. 8) Stirling (1. 8) w Completed five solicitations to date; 2008 solicitation pending release w Contracts are primarily 10 -20 year agreements Number of Contracts Maximum Energy Under Contract Page: 3

Renewable & Alternative Power The Interconnection Queue Has Become Backlogged Cumulative of Renewable Generators Only in Interconnection Queue, in MW (Summer Maximum) Source: SCE Generation Interconnection Database Massive amount of projects in queue leads to breakdown of queue process Until 2005, there were few renewable projects in queue Renewable projects begin to enter queue Note: Full generation in queue = 41, 400 MW Page: 4

Renewable & Alternative Power Increasing Customer Demand Creates Higher Goals GWh Primary Causes for Higher than Expected Growth • Much greater level of new construction • Higher use, due to homes in inland regions • Historically low interest rates, including mortgage rates Mar ‘ 03 Mar Apr ‘ 03 ‘ 04 Mar Apr Dec Oct ‘ 03 ‘ 04 ‘ 05 Source: SCE’s Demand Forecasting Group Page: 5

Renewable & Alternative Power Direct Access Customers Returned, Creating Even Higher Goals 2002 -2006 Change in Annual Energy Consumption (Billion k. Wh) 10. 4 (15. 2% Increase) Returning Direct Access Customers 2. 1 (15. 2% Increase) Page: 6

Renewable & Alternative Power Steps California Can Take To Increase Renewable Deliveries Before 2010 w Broaden and deepen the renewables market n Relax the in-state delivery requirement l l n Neighboring states have abundant, high quality resources Increasing supply will increase competition and reduce overall program costs Authorize the use of Renewable Energy Credits (RECs) l Use of RECs is widespread in other states with Renewables Portfolio Standards w Increase the eligibility for the California Solar Initiative n n Eliminate the “on site” requirement in the Million Solar Roofs statute to increase penetration of solar installations Expand eligibility for CSI funds to all entities installing distribution level solar systems Page: 7

Renewable & Alternative Power Estimates of Potential Energy Deliveries By 2010 Billions of k. Wh, SCE’s Portfolio Percent of 2010 Energy Needs 0. 25% 1. 0% 10. 0% Page: 8

Renewable & Alternative Power Steps California Can Take To Increase Renewable Deliveries Beyond 2010 w Accelerate California’s Renewable Energy Transmission Initiative n New transmission will likely take 7 -10 years after new lines are identified w Encourage the federal government to extend and lengthen incentives n n Production Tax Credits for wind Investment Tax Credits for solar w Support CPUC’s environmental reviews for new transmission lines w Work with federal government agencies to gain n n Concurrence on State renewable policy Land access to support transmission needed for renewables w With CAISO’s lead, continue to champion interconnection queue reform Page: 9