Ensuring that PG&E procures more clean energy

Distributed renewable energy projects smaller than 20 megawatts (MW) face a number of challenges in California. The California Public Utilities Commission (CPUC) has recognized the need to overcome these challenges to spur the development of renewable energy. So in 2010, the CPUC developed the Renewable Auction Mechanism (RAM), a program designed to streamline and quicken the advancement of sub-20 MW distributed renewable energy projects in the state.

Holding utilities accountable

The Clean Coalition has played a major role in holding California’s investor-owned utilities (IOUs) accountable for the significant amounts of clean energy they were required to procure and connect to the grid under RAM. Recently, Pacific Gas & Electric (PG&E) proposed canceling some of their mandated allotment — until the Clean Coalition intervened.

PG&E first requested to delay their remaining RAM auctions in July 2016. The utility argued that the CPUC should defer PG&E’s further procurement of renewables because costs may decline in the future. However, as the Clean Coalition noted, if the CPUC had followed this rationale a decade ago, prices for renewables would not have dropped to current levels. In fact, the inaction caused by waiting for prices to drop can mean a failure to create the very circumstances necessary for prices to drop even further.

The Clean Coalition also opposed the utility’s request because the delay would lead to substantial losses for developers and higher costs for electricity customers, in part due to the upcoming expiration of tax credits.

To further exacerbate matters, this summer PG&E requested to fully cancel their clean energy procurements under RAM. A motion to deny this request was filed, and the Clean Coalition intervened to support the denial.

The Clean Coalition argued that uncertainty can be highly damaging to well-functioning renewables markets. In these markets, it’s important to ensure predictability and avoid unnecessarily introducing more uncertainty — particularly for developers focused on small project sizes. These developers are generally less liquid, and risks on the road to project completion are higher.

In PG&E’s request this summer, the utility argued that no harm would be done by delaying or cancelling the 2016 and 2017 RAM solicitations. The reality, though, is that parties participating in RAM would face substantial losses from preparing for renewable projects that never got off the ground. Developers who enter the line for interconnection must expend time and money on siting activities, negotiating land leases, and performing initial permitting work. Delaying or canceling these projects would increase the risk for RAM participants, which would harm ratepayers.

Moving clean energy forward with RAM and ReMAT

After the Clean Coalition submitted additional comments as the sole intervening party, we were successful in urging the CPUC to deny PG&E’s cancelation request. In doing so, we helped ensure that 190 MW of clean energy will come online.

The main intent of the RAM program is to foster a broad range of clean energy procurement — in this specific instance, the sub-20 MW market segment that has been missing in California. This kind of program can potentially be replicated to develop the wholesale distributed generation market nationwide.

The Clean Coalition stands behind small wholesale renewables markets and leading innovation at the distribution grid level. One of our strategic objectives is to ensure that California’s RAM and Renewable Energy Market Adjusting Tariff (ReMAT) programs are efficiently bringing local renewables online.

ReMAT, which requires the state’s three major IOUs to procure 494 MW of wholesale DG projects sized no larger than 3 MW each, is currently under attack. The Clean Coalition is leading the defense of the ReMAT program to ensure that the remaining 246 MW of unfulfilled local renewable energy capacity is built, and we plan to continue being diligent and engaged through regulatory channels.

Sahm White on Linkedin
Sahm White
Economics & Policy Analysis Director
Sahm White brings over 20 years experience in economic and environmental policy, with over 200 filings before public utility and energy commissions. Prior to joining the Clean Coalition he held positions as a Senior Research Consultant to the Center for Ecoliteracy, Technical and Policy Analyst in the development of the Ecological Footprint, and Associate Director of Progressive Secretary, a leading web source of legislative constituent engagement.