To develop a sustainable and healthy economy, California policy requires utilities to rely on clean energy resources whenever it is cost-effective and before turning to the dirtier options. The Public Utilities Commission (PUC) recently finalized its plans to implement this policy—and the results show that, with the right policies, we can build a clean energy economy.
Every two years, the Public Utilities Commission assesses demand for power over the coming decade and the utilities’ proposals to meet that demand. The PUC first analyzes how much energy California is expected to use, and then analyzes how many, and what types of resources—including energy efficiency, demand response, renewable energy, and conventional power plants—to rely on to meet the state’s energy needs. The PUC recently issued its final ruling, which shows that California’s plans for a clean energy future are viable, bringing clean energy resources online while phasing out the dirty options that harm our environment and pollute our air.
Specifically, the Commission will keep the state on a clean energy path with these five results:
- We are relying on energy efficiency to avoid the need for 11 giant power plants over the next decade.
- We will get 33% of our energy from renewable sources by 2020.
- Dirty power plants that use up too much of our water will be phased out.
- The utilities will participate in the state’s carbon market to help the state reach its greenhouse gas reduction goals.
- The utilities are not currently authorized to build or buy power from any new fossil-fueled power plants.
This ruling enforced the “loading order” of resources (which makes energy efficiency the state’s top priority) by including robust forecasts of energy efficiency savings. California plans to achieve a tremendous amount of efficiency in the next decade, over 5,500 MW in total. Without this energy efficiency, we would need 11 additional giant power plants, as I discussed here. With all the increase in efficiency and renewable energy that is in the works, the Commission found no need for any new fossil-fueled power plants right now. By relying on efficiency and renewables, instead of traditional dirty power plants, this decision keeps us on track toward a clean energy future.
The Commission analyzed various ways for California to meet its goal of getting 33% of our energy from renewable resources. In some cases, we would build a little more solar, in other cases, a little more wind, but the overall analysis showed a consistent result: We need about the same amount of resources to balance a grid that has 33% renewable energy as we do to balance a grid that just added conventional gas-fired power plants. Some parties have argued that the amount of variability in renewable energy is greater than the amount of variability in conventional generation, and that consequently we would need more resources to balance a grid with a lot of renewables instead of a lot of conventional generation. However, the amount of flexible resources needed to balance our electric grid is about the same in both cases. 
In order to protect our water resources, we must phase out the power plants that use excessive amounts of our water, which harm ecosystems around those plants, (and the economies that depend on those vital ecosystems). The State Water Board has adopted deadlines for these power plants to either use less water or to get phased out, as my colleague Noah Long discussed here. This CPUC decision reinforces the Water Board’s deadlines to fix these dirty power plants by prohibiting the utilities from buying any energy from these plants beyond the deadlines. This moves us one step closer to phasing out these water-hogging gas-fired power plants.
Last, the decision will help the state meet our climate goals by facilitating the utilities’ participation in the GHG reduction market. California has rolled out the first-in-the-nation GHG reduction plan that applies to the whole economy. To meet our climate goals in 2020, we must reduce our GHG emissions back to 1990 levels. As part of this climate plan, utilities will need to reduce their emissions by helping customers use energy more efficiently, supporting renewable energy, investing in cleaner power plants, and participating in a carbon market to cut emissions even more. This decision lays out the rules for how the utilities will participate in the carbon market.
Over the past decade, California has been developing a clean energy economy by passing climate change legislation and establishing priorities for energy efficiency, renewable energy, and cleaner power plants. This CPUC decision implements those goals: by reducing our reliance on dirty power plants that harm our health, and by reinforcing our ability to depend on clean energy resources that save customers money and clean our air.
 Requirements for some types of ancillary services, like spinning and non-spinning reserves, are actually higher in the case where we build out conventional generation instead of renewables (about 100 MW), while other types, like load following up and regulation up, are slightly lower (about 400 MW). In either case, the difference is small. E3, Contextualizing Need in Step 2 of the CAISO’s LTPP Analysis, slides 11-12 (February 2012). http://www.caiso.com/Documents/Presentation_E3_CAISO_Step2NeedAnalysis_Feb10_2012.pdf