Photo: Elena Koycheva/Unsplash

The Basics of Integrated Resource Planning in California

, Energy analyst | May 23, 2019, 9:18 am EDT
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Energy experts geek out over a process known as Integrated Resource Planning. It’s not widely followed by the general public, but Integrated Resource Plans (“IRPs”) determine where consumers’ electricity will come from, how clean that power will be, and whether states will meet their clean energy and climate goals. In California, IRPs are key to decarbonizing the electricity sector and turning the state’s climate goals into reality.

Why this process?

The purpose of IRPs is to develop a path forward that meets renewable energy goals and global warming emissions reduction targets. Current law requires 60% of California’s electricity to come from renewable sources, such as wind and solar, by 2030. Current law also requires California to reduce global warming emissions to 40% below 1990 levels by 2030. Electricity providers must spell out in their IRPs how they will meet these goals while simultaneously minimizing costs, ensuring grid reliability, and minimizing the impact of air pollution on California’s disadvantaged communities.

In California, integrated resource planning was mandated by a 2015 state law. The law requires investor owned utilities, community choice aggregators, and almost all electric service providers to develop an IRP every two years and submit those plans to the California Public Utilities Commission for approval. Publicly owned utilities are required to develop a plan every five years and submit them to the California Energy Commission.

How does it work?

To ensure that California achieves all its clean energy and climate goals, the California Public Utilities Commission (CPUC) has developed an integrated resource planning process that repeats every two years. (The California Energy Commission has a separate process for publicly owned utilities that is not discussed here.) The CPUC’s process goes like this:

  1. The CPUC sets a global warming emissions reduction target for California’s electricity sector. The “40% below 1990 levels by 2030” requirement applies to the entire state, and since it is easier to reduce emissions from the electricity sector than from other sectors of the economy (e.g. transportation, agriculture, and industry), the electricity sector contribution to the state-wide requirement must be frequently reevaluated to ensure that California’s emissions reductions remain on track.
  2. The CPUC performs electricity grid modeling of the entire state to determine the amounts and types of new resources (e.g. wind, solar, and batteries) that are necessary to achieve the global warming emissions reduction target while meeting future electricity needs. This modeling is used to develop an overall plan for the state’s electricity sector.
  3. Electricity providers create individual IRPs, illustrating how they will reduce their global warming emissions by providing customers with additional clean electricity while minimizing costs, ensuring grid reliability, and minimizing air pollution in California’s disadvantaged communities. Electricity providers must demonstrate that they are doing their part to reduce emissions as part of the statewide plan.
  4. The CPUC collects all the individual plans from electricity providers and puts all those plans together. The CPUC then compares their original plan (in Step 2) to this new plan to make sure that California will still meet its goals if the state’s electricity providers all follow their individual plans.
  5. Lastly, the CPUC brings all this planning to life by implementing new policies and authorizing electricity providers to develop clean energy projects.

At the end of the day, the last step is the most important part. No matter how much planning you do, planning by itself doesn’t reduce global warming emissions. California’s electricity providers must follow through with their plans and buy more clean energy in order to achieve all the goals of the integrated resource planning process.

The CPUC’s integrated resource planning process has five steps. The entire process repeats every two years.

What’s the latest?

The California Public Utilities Commission recently completed the first two-year cycle of its integrated resource planning process. Importantly, the approved plan does not call for any new natural gas power plants – instead, it paves the way for 12 gigawatts of new, clean resources to come online by 2030, including solar, wind, geothermal, and battery storage. (For reference, California already has roughly 30 gigawatts of renewable generation capacity, which generates approximately one-third of the state’s electricity.)

The CPUC has also set the stage for the next cycle of the integrated resource planning process with a couple new features:

  • Natural gas power plant study: The next cycle will focus more closely on existing natural gas power plants and the extent to which they are required for maintaining reliability over the coming decade. Last year, the Union of Concerned Scientists conducted a study that indicated, out of all the gas plants in the California Independent System Operator territory (which covers 80% of California), roughly a quarter of those gas plants could be retired without negative consequences. This coming integrated resource planning cycle will include a similar study to better understand how many natural gas power plants really need to stay online through 2030.
  • Planning for 100% clean electricity: California passed a law last year that sets a goal for all electricity sold to customers to be 100% carbon-free by 2045. The next cycle of the integrated resource planning process will begin to study the investments necessary to achieve this bold goal.
  • Procurement track: The CPUC has stated their intention to begin a “procurement track” that will run parallel to the integrated resource planning process. The main motivation behind the procurement track is to make sure that California is developing the clean energy projects necessary to meet its renewable energy and decarbonization goals – if progress stagnates, the Commission would be able to mandate more clean energy projects through the procurement track. The procurement track will serve as a safety net that ensures sufficient clean energy progress even if an individual electricity provider fails to follow its IRP, or if, collectively, the IRPs of all the state’s electricity providers do not add up to meet the state’s renewable energy or decarbonization goals.

With the next cycle of the integrated resource planning process already underway, California is continuing to rapidly decarbonize its electricity sector with the integrated resource planning process helping to show the way.

Photo: Elena Koycheva/Unsplash

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