Community choice aggregator Peninsula Clean Energy, serving 21 cities and towns in the Bay Area, aims to provide them with 24/7 clean energy by 2025. In this episode, Peninsula CEO Jan Pepper discusses the ambitious goal, the tool they’ve built to tackle it, and challenges and lessons learned so far.
Text transcript:
David Roberts
Back in November of 2021, I did a series of stories and podcasts on the hottest new trend in clean energy: attempting to achieve not just 100 percent clean energy but 24/7 clean energy, ie, clean energy at every hour of every day.
For reasons explained at length in those pieces, 24/7 is a much more difficult goal. Offsetting 100 percent of your energy use with clean energy mainly involves buying bulk wind and solar wherever and whenever they are cheapest. But matching your energy use with clean energy on an hourly basis means finding sources that can cover for wind and solar when they are not available.
Some big corporate players like Google have taken the first steps down this road, but the first energy provider to attempt it, as far as I know, is Peninsula Clean Energy (PCE), a Bay Area community choice aggregator (CCA) that serves all 20 of the cities and towns in San Mateo County, as well as the City of Los Banos.
In December 2021, PCE issued a white paper on the need for 24/7 clean energy, its rationale for pursuing 24/7 by 2025, and the steps it intended to take to get there. Earlier this month, it issued a follow-up white paper reporting on the tool it built to map out 24/7 and the lessons learned.
I am fascinated by the practical challenges of getting to 24/7, so I’m excited to talk to Jan Pepper, CEO of Peninsula and lead author on the latest white paper, about why PCE is setting out to achieve 24/7, the main barriers, and the ways it may get easier in the future.
(To read more about Peninsula Clean Energy’s 24/7 push — and see charts! — check out Jeff St. John’s latest article for Canary Media.)
So without any further ado, Jan Pepper, welcome to Volts. Thank you so much for coming.
Jan Pepper
Well, thank you again for having me here today. It's really fun to be on your podcast.
David Roberts
I have so many questions for you. I'm so geeked about this. So, I think Volts listeners—loyal Volts listeners—will be familiar with the distinction between 100% clean energy and 24/7 clean energy and will be consequently aware of just how difficult 24/7 is relative to 100% clean energy. So maybe let's just start with: what is Peninsula? How big is it? How much energy are we talking about? And what is it about Peninsula that enables or brought it around to adopting this goal? This is something I don't think any investor-owned utility would do, since they are sort of under a legal obligation to maximize revenue at all times. So just tell us a little bit about Peninsula and how you came around to this.
Jan Pepper
Peninsula Clean Energy started in 2016. We're a community choice aggregation agency, which means that we are a not-for-profit public agency serving the communities that voted to be a part of us, which started a while ago when California restructured its electricity industry. There was a bill passed in early 2000's that allowed communities to choose to aggregate their own electrical load.
David Roberts
Right, and this basically means defecting from PG&E, more or less. You procure energy for these people rather than PG&E procuring it.
Jan Pepper
That's right. We are the generation provider. We procure the electricity. PG&E still delivers the power over their poles and wires. They still send out the bill, but we select what the generation mix is going to be so our customers have more say. So back in 2016, when we started, we decided that we would be 100% renewable by 2025. And in 2017, we decided that we would be 100% renewable on a 24/7 basis by 2025 in order to greatly reduce our demand signal for fossil fuels from the grid. When we started, we were 50% renewable.
And at this point, we're 50% renewable, 100% clean for our 310,000 customer accounts, which serves about 810,000 people in San Mateo County, all the cities and towns, as you noted, as well as the City of Los Banos in Merced County, where we're hoping to further expand in the Central Valley. Our overall electric load is about 3,600 gigawatt hours per year.
David Roberts
Pretty big.
Jan Pepper
It's pretty big. And due to the requirements that we have in the state of California for reporting, we report on an annual basis how much renewables we procure, how much clean energy we procure, and it's on an annual basis, so our load is 3,600 gigawatt hours. We procure 50% renewable, so we procure 1,800 gigawatt hours over the course of the year and the rest of it clean energy, which is essentially large hydro to be 100% clean. But that's on an annual basis as opposed to an hourly basis.
David Roberts
Before we get past the part about Peninsula itself, I don't know a ton about how CCAs run. So is this the kind of thing where the membership have a kind of vote or something? Or once the CCA is established, do you all just have sort of autonomy to set your own policy? How does that work?
Jan Pepper
Oh, that's a great question. So, as I say, we're a public agency. So each of the jurisdictions that voted to be a part of Peninsula Clean Energy have a seat on our board. So we essentially have a 23-member board that consists of an elected council member from each of the 20 cities and towns in San Mateo County, a member from the City Council of Los Banos as well, and two of the county supervisors. So I have 23 bosses that I report to. And we have public meetings every month for our board for Thursday of the month at 6:30 pm, and everyone is invited to attend.
And, we as the staff, put together what we recommend, being the professionals who work in the energy industry. And then we bring it to our board. They ask questions, they ponder it, and they typically like what we bring forward, and they go ahead and say, "Yeah, go do it."
David Roberts
So you proposed this 24/7 idea to the board and they approved it.
Jan Pepper
Yes.
David Roberts
Got it, got it. So I want to start—in the spirit of this very geeky podcast—with the procurement tool you designed to do this. So you set out to get 24/7 clean energy and that's extremely complicated, relative to sort of buying a year's worth of renewable energy. Balancing on an hour-to-hour basis is very complicated, and you need probably new tools to figure out how to do it. So just tell us a little bit about this procurement tool you built.
Jan Pepper
So we built this model that we're calling the MATCH model, which stands for "Matching Around-the-Clock Hourly energy."
David Roberts
Cleverly done.
Jan Pepper
Which was an outgrowth of another model called the SWITCH model. And actually we have posted this. This is an open source software now that is available on GitHub so anyone can find the model and play with it. We modified the model so that it would reflect the circumstances that we have as a community choice aggregator for how we procure electricity. Basically, we do not own any generation resources at this time. We contract for everything. So we look at contracted prices, we look at the generation profile for the different kinds of resources that we are putting into our mix, the hourly data for those resources, our hourly load data. We look at the locational marginal prices, also known as LMPs in the California market. So every node where a generation resource inputs into the market, every node has a different price. We look at weather and things like that. So all of those things are part of the model.
David Roberts
So you feed all this data into the model and the model spits back "Here is the lowest cost way for you to get to 24/7." Basically. That's the idea.
Jan Pepper
Right.
David Roberts
As far as you're aware, that's the first tool. I mean, for a specific utility area or for a specific sort of bounded area, did you look around for existing tools or was this something you had to do yourself?
Jan Pepper
Yeah, we looked around for existing tools and this, the SWITCH model was the best one we could find as a start. And then we had Greg Miller, who was a PhD student at UC Davis, who was looking at these issues as part of his thesis work, come work for us as an intern. And he did a lot of the work starting with the SWITCH model and then kind of converting it into what we're calling the MATCH model.
David Roberts
Fun. So, you know, I think people who understand the theory behind 24/7, I think the first question that comes to mind for me is, you know, you can buy a bunch of cheap solar power—you're in California. So you can buy a bunch of cheap solar power, you buy a bunch of cheap wind. And that, I imagine it's just relatively easy to cover those hours when the sun is out and the wind is blowing, but they're not always blowing. So I wonder what, in terms of both kind of hours of the day and times of the year, what are the hardest times to cover? What are the sort of gaps where you found yourself kind of scratching your head like, "How are we going to cover this bit"?
Jan Pepper
Yeah, actually the results are really interesting. So, we will be utilizing a lot of energy storage and in the summertime in particular, there's a lot of excess solar being generated. So we will charge the storage from the solar in the summer afternoons and then discharge that storage back into the grid in the evening hours when the sun goes down. One of the interesting things is, yeah, you can add more and more solar, but the solar doesn't produce as much in the wintertime. So the solar can charge up some of your storage in the winter. But what we found is that the hours that are the most difficult to serve are actually the winter nighttime hours.
So it's kind of an interesting discovery and that's really the challenge. What we've agreed to do as an organization is that we're going to be 100% renewable and our target is to match 99% of the hours on an hourly basis. Because what we found is to do that last 1% requires us to procure about 50% more additional renewables because of the difficulty of serving those nighttime hours in the wintertime.
David Roberts
I was interested in that because this is a familiar feature of all these models that trying to show decarbonization is always the last few percent are the trickiest and most expensive to cover. I was actually surprised that you got to 99 relatively smoothly. I, sort of, like, just intuitively, based on my priors, would have thought that would kick in a little earlier, like 95% or 96%, so you can get to 99% coverage relatively cost effectively. We're going to discuss costs later. But this is all about, in the end, balancing out wind and solar energy. It's all about finding those other sources that can fill the gaps in solar and energy.
And I'm sort of curious like what you found available for that role, what you thought is cheapest for that role, and, sort of, what you found to sort of be not quite market-ready that you think might play that role later down the road.
Jan Pepper
Right now, as you note, solar is the least expensive resource and there's a lot of that available in California. There's also some wind, both in California and out of state. There's some geothermal and...so those are the main resources that we're looking at down the road. We're definitely interested in offshore wind. Recently there was a sale for leases for developing offshore wind off the coast of California. That happened a few months ago. But that technology and those resources aren't going to be ready by 2025 when we have our goal. So we're also looking at contracting for some shorter-term renewable resources, still wind and solar, but under shorter-term contracts that we can use as a bridge until the offshore wind is available at the end of the decade.
David Roberts
The storage in your model, is that all lithium-ion batteries or did you find any sort of market-viable, longer-term storage out there?
Jan Pepper
Yeah, that's another thing that we're looking for for the future. Right now, the contracts that we have for storage are with lithium-ion technology, lithium-ion batteries. But we are very interested in other types of technologies that are better environmentally. We're also looking at long-duration storage. We do have one contract for a portion of a long-duration storage project, which is an eight hour storage project, which is lithium-ion. But we are looking at some other technologies and are considering some projects right now that use other technologies.
David Roberts
Yeah, it's interesting. I know California, the state, has run some programs trying to sort of juice the development of some of those longer forms like flow batteries and such. I just didn't know if any of them were kind of on the market yet.
Jan Pepper
We would love to see those. We haven't seen a lot of offers yet for flow batteries. It's also compressed-air energy storage. There's also pumped hydro. So there's other technologies out there. There's also some gravity storage projects. So all of these look really interesting to us. And we would love to be able to pilot new technologies. Because part of what we're about is innovation. And I didn't note that at the beginning. San Mateo County, we're kind of in the middle here of Silicon Valley. Our board members, who are elected council members, are also luminaries in their own fields.
A number of them have been involved in new technologies and other kinds of new things coming out of Silicon Valley. So we're really interested in helping new technologies move along. We're really interested in being a test site for companies that want to try out their new technologies.
David Roberts
But you don't own these things. So when you say you're trying to stimulate innovation, you're just sort of offering yourself as a first offtaker for some of these things when they are developed.
Jan Pepper
Yeah, as you know, we're not yet buying any of these technologies. But if someone's looking for a site to test their technology, if they're early on in their development and want to see how something is operating, we're interested in working with them.
David Roberts
So I just want to kind of pause and put an exclamation point on this, which is that you are getting to 99% 24/7 clean energy with just wind, solar, geothermal, and batteries, basically, more or less. Because people I think, have it in their heads that you can't do this without a lot of future tech that's not on the market yet. And so it's just worth noting that you're doing this with stuff that's around today.
Jan Pepper
Yes, there's a little bit of small hydro in there too, but very small percent.
David Roberts
So talk about the role of excess supply, which I think is a big part of how you get there using only existing tech.
Jan Pepper
Right. So what we found in our modeling is that in order to meet that 99% matching, we do need to procure more than what we need. A lot of it is because of the winter needs that if you're relying on solar—solar doesn't produce as much in the winter. So we've got to have a certain amount of solar available in the winter which ends up having us be quite overprocured in the summer for the solar. And we are hopeful that as other entities look at what we've done and make the plunge themselves, that we can partner up with other load-serving entities like ourselves who may have a larger summer load where we can provide some of that excess solar. Maybe they have a smaller winter load and can help us out. So there might be some synergies there, but as we put more load together and more resources together, my expectation is that the amount of over procurement might be able to be reduced a bit.
David Roberts
Yeah, I was sort of wondering why you can't just kind of sell that to your neighbors if you find you don't need it. Is it more complicated than that?
Jan Pepper
Yeah, well, we are hopeful that we can sell some of the excess to other entities, to other states, to other CCAs like us or utility companies. And part of our modeling is that, yeah, we will have a bit of excess renewables. So, our model assumes that—there's a lot of things going on—but in our conservative-economic case scenario, we assume that we're able to sell back 75% of our excess renewables and 75% of our excess resource adequacy, which is a capacity product. And that helps the economics. But we also find that if we aren't able to sell any of it, it's still not that much more costly than just doing the business-as-usual approach that we're taking right now.
David Roberts
Right. It's a little wild, I think a little bit counterintuitive for people. But rather than buying more batteries or more of these sort of exotic other technologies, wind and solar are so cheap, it's often the cheapest option just to buy the bucket load and buy much more than you need. So you're kind of covering these edge cases.
Jan Pepper
Right.
David Roberts
Just to, sort of, like testament to how cheap wind and solar have gotten.
Jan Pepper
Yeah, I mean another thing with that is—and maybe we'll get into this later—but by having excess, we're helping to further clean up the grid. So we may not be using it, but someone else is going to use it. And by putting that excess solar into the grid, then other fossil-based resources don't need to be running during those hours. So it helps to start overall reducing grid emissions.
David Roberts
This is sort of a big topic, but I'm curious in anything you have to say about it. The model is for doing this in the year 2025, which is just a few years away, not that far out. And there's a lot kind of going on in the world today that sort of makes this even more difficult, maybe relative to sort of an average baseline. You got the Ukraine war and supply chain this and that and lingering effects of COVID and on and on. So you're doing this in 2025 in some fairly inclement circumstances. So, I wonder how and whether you think this procuring 24/7 is going to get easier over time.
Like, what are the factors that you think are going to make this easier and bring down the cost, or do you think it's going to get easier and the cost is going to come down?
Jan Pepper
Yeah, I think the costs are going to come down. We used a couple of different market scenarios, because when we first started looking at this, we've been modeling this for a couple of years now and at the end of 2021, market prices were coming down. We're looking at a lowering cost curve for energy storage and things were great. But then in 2022, things changed. As you noted, the war in Ukraine supply chain disruptions. There's some uncertainty about the solar tariffs. Interest rates started going up, commodity prices for lots of things went up, inflation went up. So we had two different market condition scenarios.
One we called the optimistic case, which reflected the market conditions at the end of 2021 before everything changed. And then we have our conservative case, which reflects really where the market was mid-2022 before the passage of the Inflation Reduction Act, which should be helpful in bringing some costs down. So, our analysis and our conclusions are based on that conservative case where things were not so great, or continued to not yet be so great. But even under those conditions, our modeling shows that the cost of implementing this is maybe 2% more than the path we're taking right now. So that's very, very promising.
David Roberts
Yeah. So a 2% bump in price and costs is not the worst case scenario, but let's say a conservative scenario.
Jan Pepper
Yeah. Using market conditions as they are today. And if market conditions improve, then that would improve as well. Because when we looked at it on our optimistic case, it actually looked like it could even be less expensive than now.
David Roberts
That's interesting. So one thing that could make this easier and cheaper is just the market settling down and the global economy is settling down. Who knows if that will happen, but presumably things won't stay quite this crazy forever. That's kind of the market question. But what about in terms of technologies that you think will make this easier and cheaper? Are there particular kinds of technology that you have a particularly close eye on?
Jan Pepper
Well, one that I noted was offshore wind.
David Roberts
And in the report you mentioned demand-side stuff, which I have tons of questions about. Like I would again, just based on my priors, I would think that demand-side resources would be cheap and available already, but you don't actually include a lot of them in this.
Jan Pepper
Yeah, we don't include a lot of them in this because they aren't really that prevalent at this point in time. So, when we think about demand-side resources, one could be all of that battery capacity in those electric vehicles that people are buying.
David Roberts
Yes.
Jan Pepper
And certainly when we look at trying to serve those difficult-to-serve nighttime hours in the winter, those EVs, having those be available to feed energy into the grid would be great. But, right now we're still kind of waiting. The transition is just happening now that car manufacturers are building cars that allow you to draw energy from the batteries and the infrastructure to have those available is just starting up. Certainly the number of EVs that are coming on the market is expanding. And here in San Mateo County, I think we saw that last year, 50% of car sales were EVs. So that's awesome.
David Roberts
Crazy.
Jan Pepper
And we're excited about that because having this clean electricity, we want that to be used for cleaning up transportation and cleaning up buildings as well.
David Roberts
Aren't there some demand, kind of, aggregators? I know FERC kind of opened things up to demand aggregators a few years ago. Are there none of those kind of operating, even without EVs, just demand aggregators that move around, demand for whatever hot water heating and all this kind of stuff? Are none of those around at a sufficient maturity?
Jan Pepper
There are demand aggregators and there is definitely more focus on that in the market. But when we were looking at our overall load, the contribution that they can make to what we're trying to do in the near-term is relatively small. And it's still a pretty, I guess I would call it an immature market that we can't count on a significant number of megawatts coming from those resources at this point. Certainly we hope that that's going to change. We expect that that's going to change. And if we look at years farther out, then demand-side resources definitely would have a larger place to play in this.
David Roberts
And I meant to ask this earlier, but I'm just curious. In any energy conversation, this will come up, or someone will yell at me for not bringing it up. Do you count nuclear power as among your clean energy sources?
Jan Pepper
We do not. When we provide clean energy to our customers right now, we get that all from large hydro. Nuclear is considered greenhouse gas-free. But our board made the decision not to include nuclear as part of our organization's portfolio mix.
David Roberts
Got it. So, obviously, for any given entity going to 24/7 hugely depends on kind of your circumstances, right. Your geographical, in part, economic, and in part, by sociocultural, but also just geography and, sort of, the available energy sources. So I just wonder whether you have any thoughts about whether...you're in California, which is fairly specific, and then you're in kind of Silicon Valley, which is culturally, I think, fairly specific, and then you're also in kind of a specific microclimate within California, which sort of dictates your demand profile. And so I just wonder like what you've learned from doing this. How transferable do you think these lessons are to say other CCAs or other utilities in other parts of the country?
Jan Pepper
I think it's pretty transferable. We are every utility, every CCA is unique, and their load profile is unique. And we are actually a winter peaking because the weather here is rather mild—or it has been up till a few years ago. So the summers haven't been as hot, so there's not as much air conditioning load. So others that may have a higher summer peak load. You can use the model, put your inputs in as to what your resources are that are available, what your load looks like and see what comes out and see where that kind of leads your organization to go.
David Roberts
Yeah, I guess I would just sort of suspect that it would be more expensive in other places. I kind of almost think you're in the sweet spot in the country to do this. You're surrounded by a state that has a lot of solar going and a lot of hydro. I'm just sort of guessing that it'll be more expensive in other places but I guess these things aren't always intuitive as we've discovered.
Jan Pepper
Yeah, one of the things that we looked at was kind of the risk, the risk premium for different types of portfolios. And, actually, when you have more renewables, your risk decreases because you've locked in the price. The cost is all in the capital cost of building the facility as opposed to any kind of variable cost for the energy. The fuel is free, the sun is free, the wind is free. And right now, we're looking at gas prices that are at record height and really, really expensive. So if you have a portfolio that's built on renewables you're not subject to the volatility of natural gas prices and other fossil fuel prices.
David Roberts
It's not just that they're high, it's like who on earth knows what they're going to do next? It's been crazy fluctuations the last few years and like a war came out of nowhere. I did a podcast on this a few months ago about how fossil fuel price volatility is such a big piece of inflation and how moving to renewable energy is deflationary because it's so much more stable and predictable.
Jan Pepper
Right.
David Roberts
So then let's talk about costs. It was a little mind-blowing for me. Your conclusion that, as you say, even in the conservative economic case, getting to 99% 24/7 clean energy is just a 2% bump in costs from your existing portfolio.
So, two questions about that. One, I guess, just how on earth—why is it so cheap? Did you expect it to be that cheap? And is it just, is the answer for why it's that cheap as simple as renewable energy is super cheap, or is there something else going on here? So I'd love to hear why you think it's turned out to be that cheap. And then secondly, I'd like to talk a little bit about this sort of delta between 99 and 100 and how much cost jump and what explains that weird...you look at all the charts in your paper and cost spike and the amount of excess supply spikes, everything spikes between 99 and 100. So I'd like to hear a little bit about that.
Jan Pepper
So, yeah, on the cost side, we used costs based on RFOs that we have done recently. So these are actual pricing that we've received from developers fitting into our RFOs.
David Roberts
It's just worth emphasizing here, this is not a matter of trying to project prices in the future. This is...
Jan Pepper
These are actual prices.
David Roberts
...2025 we're talking about. So we're working with existing market prices.
Jan Pepper
Yeah, and it really is, it's because renewables are less expensive. Once you have contracted for those, you've locked in the price. So you reduce your risk and you're not subject to the market volatility. So, that's really part of what it is, is that it is less expensive for solar. We have seen storage prices, all prices over this last year have gone up a little bit just because of all the uncertainty in the market.
David Roberts
Right.
Jan Pepper
But once the market settles down, it is less expensive and you lock in your price. It's just like if you put a solar system on your roof, you know what the cost is, you lock in the price and you have price certainty for a long time. So that's really a lot of what this is.
David Roberts
And it's also handy, it seems to me that you're in California, which means you have sort of existing geothermal resources available, which is another thing that's a little bit unique to California. And when I look at your chart, like how you're getting that nighttime power, that's wind and geothermal, basically wind and geothermal playing that sort of quasi-base load role.
Jan Pepper
Yeah, we would love to have more geothermal. There's actually not a whole lot of geothermal available in the state.
David Roberts
Did you max out what you could get?
Jan Pepper
Well, the model does a cost optimization and it selects resources based on the cost. And so if geothermal goes way up in price, the model is going to choose more solar-plus storage. If geothermal goes down and it's more competitive, then the model would choose more geothermal.
David Roberts
But is there more geothermal to be had if it does choose more geothermal, I guess?
Jan Pepper
That's a little bit of a challenge. We wish there was more geothermal. There are some new projects being built. There's actually a regulatory requirement that all load-serving entities in the state procure a certain amount of what they're calling firm clean resources, which is essentially geothermal. So, because there is so much demand for geothermal right now in the state, we know in economics, if demand goes up, prices go up if you have limited supply.
David Roberts
So that's funny, there's a lot of LSEs fighting over the existing geothermal.
Jan Pepper
The xxisting and the new geothermal. There is new geothermal being built. We've contracted for some new geothermal, some of it's being built in California, some of it's being built in Nevada. So if it's out of state, then it needs to be able to import into California, which is a whole another challenge.
David Roberts
Well, another recurring theme of this podcast is the sort of extraordinary promise of geothermal, sort of enhanced geothermal, advanced geothermal, maybe being able to get on something like the cost curves that renewable energy is on. And it's just like you really can't overstate how helpful geothermal is to this particular project you're doing to 24/7 clean energy, having it be firm and clean, it really fills a nice role in these models.
Jan Pepper
Right. Yeah, so the new geothermal technologies that are out there that don't need to rely on a resource like the geysers in Northern California are definitely promising. And then there's also other technologies like hydrogen. So if you have a lot of excess solar, for example, can you use that solar energy to split water to make hydrogen and then use that in a converted natural gas plant, for example.
David Roberts
Right, and I'm just assuming that that's not on the market yet.
Jan Pepper
That's not cost-effective yet. But again, that's a new technology that hopefully would be available in ten years or something like that, which would be clean. Yeah.
David Roberts
Another tool to make this easier. So let's talk about that delta between 99 and 100. Is that something that you all anticipated, or was it kind of a little bit of a surprise? Like, just the, sort of, I guess how flat it is out to 99 and then how steep it is from 99 to 100 both surprised me a little bit. So talk a little bit about that delta.
Jan Pepper
Yeah, it was a little surprising. Well, I guess we didn't know. I mean, that's why we were doing this work, right? Because everyone says, "Oh, you can't do that, you can't get to 100%" when we could. It is a little bit more expensive and not outrageously more expensive, but the amount of resources we would need to procure to get to 100% and namely to cover those nighttime winter hours is interesting.
David Roberts
So you're covering 99% of hours of the year?
Jan Pepper
Yes.
David Roberts
And I'm guessing that 1% of hours. Those are winter nighttime hours.
Jan Pepper
Right. I don't know if you have our paper in front of you. But we provide a heat map showing the hours of the day over the course of the year. And what we get to covering 99% of the hours is that the heat map is pretty much green for every hour of every day throughout the year. And where we see it not green, which indicates that the carbon emissions are higher during certain hours are in the wintertime, in the early morning hours between midnight and 6:00 am and then in the evening from like 9:00 pm to midnight. So during those nighttime hours.
David Roberts
If you did cover those, how would you be covering those? Is it just buying more wind or is it buying more batteries? What could you theoretically do to cover those if costs were no constraint?
Jan Pepper
Yeah, well, our modeling results show that if we were to go to 100%, we would procure a lot more solar and we would procure a lot more storage, using that storage to store that solar, and we would procure more geothermal.
David Roberts
And that just checks out the cost of everything.
Jan Pepper
Yeah, well, you just have a lot more excess procurement by doing that, and so the risk increases as well. But, yeah, there's more cost to buy all of those resources. So right now, our current portfolio, we have about just under 1,300 megawatts of capacity. To get to 99%, we'd add about another 600 megawatts of capacity. But to get to the 100%, we'd have to add, yet again, another 600 or so megawatts of capacity.
David Roberts
Oh, wow.
Jan Pepper
So, just to serve those last few hours.
David Roberts
Is this something the board has approved? Is this like a proposal to the board, like, "Hey, how about 99%?" I'm assuming nobody's going to bug you about that last 1%.
Jan Pepper
No, the board is on board. We presented our preliminary findings in September to our board, and they agreed with the goal to go 99% hourly.
David Roberts
Relative to your, sort of, baseline-existing portfolio, is this a big greenhouse gas emissions accomplishment to get to 24/7?
Jan Pepper
Yes, it is. Right now, when we report out on an annual basis and we use the calculators that are out there now, we report that our emissions are 5 pounds CO2 per megawatt hour on an annual basis. But when we actually break this down on an hourly basis and this is not how anyone reports, but on an hourly basis, our emissions are really 222 pounds CO2 per megawatt hour.
David Roberts
This just speaks to the vast difference between the clean hours and the dirty hours, right?
Jan Pepper
Right. So when we go to the 100% hourly or the 99% hourly, it's going to bring our emissions down to 26 pounds CO2 per megawatt hour. So it's by a quarter of magnitude. And so if we're doing that, if we're able to reduce our emissions by that much, then that would be true for everyone as we try to do more hourly matching. And really what it does, it turns off the dirtiest power plants during the peak hours.
David Roberts
Right. It's peak shaving, right. I mean, you're basically using batteries instead of peaker plants, for the most part.
Jan Pepper
Right. And we're charging those batteries with renewable energy and then when we discharge it, it's still the equivalent renewable energy.
David Roberts
I thought it was interesting that even at the limit, you can't get to true zero greenhouse gases because of...something having to do with geothermal or trace emissions around geothermal. What's the deal there?
Jan Pepper
Yeah, geothermal does have some carbon emissions pretty low, but there are some carbon emissions due to geothermal. So that's why we don't get to zero. So if we had no geothermal, then we could get to zero. We also don't have any biomass in our mix, mainly because our board made a decision early on that we wouldn't have any biomass in our mix because of other types of pollutants from biomass facilities.
David Roberts
Right. So if no geothermal, you could get to 100, but then you'd have to just sort of wildly over procure wind and solar. It's interesting that the difference between, sort of, 100% offsetting clean energy—the, sort of, traditional way people are doing it, and your way of doing it—is basically invisible given existing kind of reporting tools, given the way people currently report. And you have to squint down to that hourly level to, sort of, discover what is a fairly substantial difference in emissions.
Jan Pepper
Right.
David Roberts
It's just like looking at things in a microscope, I guess, or a more granular way. You discover some pretty big swings in emissions that you're eliminating.
Jan Pepper
Yeah, but actually things are moving in that direction. There was a bill passed in the California legislature this last year, authored by our local state senator, Josh Becker, SB 1158, that is going to require load-serving entities in future years and I think it starts in 2026 to start looking at their emissions on an hourly basis.
David Roberts
Interesting.
Jan Pepper
So it's not requiring that people publicly report that, but just to start taking a look at what's going on. And then, you know, it gives the state agencies time to get the tools together to help entities track their information that way.
David Roberts
Right. Because you got to figure out hourly recs to hourly renewable energy certificates, which is a whole other complicated thing that people should go back and listen to my old podcasts about. So there's a big win on greenhouse gas emissions, but also—something I was also really keen to read about, it's really interesting—is what you're doing for the larger grid. So your territory is embedded in a larger California grid, basically run by PG&E for the most part, is what you're doing helping the larger grid? And if so, sort of like, how does that manifest?
Jan Pepper
Yes, it does help the larger grid, which is PG&E's one of the transmission owners as a Southern California Edison and it's operated by the California Independent System Operator, and it helps the grid in a few different ways. So right now we have in the summertime evenings, what they call the net peak demand. That's kind of the most challenging time to meet the state's load.
David Roberts
Right. And this is when, just for listeners benefit, this is when all the solar in California is starting to decline because the sun is going down, but it's still sort of relatively early in the evening, so demand is still going up. And when those two lines sort of cross, like there's a weird spike, there's a weird sort of ramp up in the evening. This is a known problem in California.
Jan Pepper
Right. So what we find is that by matching on an hourly basis, we are able to help reduce the net peak demand. And our modeling shows that the hourly 99% does help reduce that somewhat. And some of the other things you talked about the system ramp, which is the need for gas resources essentially to quickly come online to meet the increasing load, or the increasing demand, because the solar is going down and the load is going up.
David Roberts
And those are the dirtiest gas plants spinning up to cover those hours.
Jan Pepper
Right. So by having those storage facilities available and inputting into the grid at that time, the renewable energy that they store during the day, that helps to reduce the daily ramping needs and turns off some of those dirtiest gas resources.
David Roberts
Shutting down peakers, that is really God's work there. That's like the first thing that needs to happen.
Jan Pepper
Yeah.
David Roberts
I think people who are more skeptical about renewable energy might look at this and say, "Okay, you've covered 2025. A single year. You've figured out how to get to 24/7 for a single year." But over the course of time, they might say, there will be seasons, maybe even whole years where wind and solar are unusually low, right? It's sort of a dimmer than usual year or a less windy than usual year. And this is sort of why people say you're going to need these giant seasonal storage options. Do you have any thoughts about that? I mean, are you worried in your little territory there about trying to model this out to 2050 or to the year 3000 or whatever? Like, do you think this is good enough to start with or do you feel confident, I guess, that you'll be able to hit 24/7, not just in 2025, but in every year, under every circumstance?
Jan Pepper
Yeah, I mean, in our internal modeling, we did look at other years and we also did stochastic modeling. So this MATCH model is what's called a deterministic model. You put in one set of inputs and you get one set of outputs. Of course we did multiple, multiple different sets of inputs and got multiple sets of outputs. But then, when we found the best match, then we also put it into another stochastic model, which allows us to look at other variables and what is the worst-case scenario and what if this happens and what if that happens, how are things going to look?
So we are pretty confident that even if things change, if weather patterns change, if generation isn't occurring the way we expect it to, or if the load is doing something different than we expect it to, I think because we actually have so much excess capacity that that protects us in some sense and we are expecting other technologies to come in when we look at resources. We also diversify our portfolio by having resources in different locations. So, yeah, if the solar is bad in Northern California, but we're getting some from Southern California or Arizona, the wind isn't blowing in one location, it's likely blowing in another location. That, because you have a diverse portfolio of resources, if something happens in one place, it's not going to affect your entire portfolio.
David Roberts
Yeah, that's interesting. I was so excited to see your paper because this is 24/7, this is showing that 24/7 is A. reachable today, but B. not that much more expensive today. And it just seems to me that almost on every metric it's going to get easier and cheaper, right? Like you got demand-side stuff coming, you got better geothermal coming, you got long-duration storage coming, there's just a million different kind of tools that are coming that are going to make this job easier. And so if it's starting in today's circumstances, barely more expensive than the status quo, then it's just, like, smooth sailing ahead, it seems like to me.
Although I guess if you're in California, I'm not sure about for everyone else, it'll come more slowly to everyone else, let's say.
Jan Pepper
Yeah, well, we'd be happy to work with entities outside of the state anywhere to look the model and help them figure out how it works for them and see how it might pan out. But one other thing, if I could say about the cost, we serve retail customers and since we started in 2016, our rates have been 5% below PG&E's for generation services. So we've been saving our customers money since the beginning, delivering a superior product at a less cost. And so since we're already 5% less, even if our costs go up 2%, we can still be less expensive than their alternative, which is PG&E.
And, to me, I've been in this industry for a few decades. The thing we need to do to move the world and to have a sustainable future is to have renewable energy be less expensive. So it's a no-brainer and people just say, "Yes." Everyone's interested in saving money, and even those who may be skeptics, they're going to be okay with having renewable energy if it's less expensive and it's reliable. So that's really what's, to me, really exciting about this is that we can get to cleaner energy for everyone and it can be less expensive for everyone. So that's where we need to go.
David Roberts
So this brings me to my final question, which is once 2025 rolls around and you, as the CCA, are providing 99% clean energy, 24/7, at a cheaper rate than PG&E, what's next? Like, what's what's left to do? Do you have further goals for the CCA beyond this?
Jan Pepper
Well, we want to have that clean electricity used for other uses that are still producing greenhouse gases, namely transportation and buildings. So let's convert those cars that are burning gasoline to using this clean electricity. Let's convert those homes that are burning natural gas for their space heating and their water heating and their cooking to use electricity so that we can clean up everything. And that it's not just here in San Mateo County where we're based, but that others are doing it as well, because that's really where we need to go.
David Roberts
Awesome. Well, thank you for coming on today. And thank you for being the first to kind of stick your neck out and attempting to do this 24/7 thing in the real world. It seems incredibly promising. So I hope this sort of, like, prompts other entities to sort of steal themselves and believe that they can do this without breaking the bank.
Jan Pepper
Yeah. Well, thank you so much. This has been lots of fun talking to you.
David Roberts
Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much and I'll see you next time.
An energy provider attempts to achieve 24/7 clean energy