Dian Grueneich: California’s Clean Energy Transformation

By: LOUIS SPANIAS, Acting Director of the Hixon Center

On March 7th, 2018, the Hixon Center invited Dian Grueneich (senior research scholar, Stanford University) to speak at Harvey Mudd College as part of the “Black, Gold and Green” Speaker Series. Ms. Grueneich, who is a internationally renowned energy expert, delivered a great talk on the progress California has made in regards to its energy portfolio and management, and what challenges still remain ahead when it comes to tackling climate change and other environmental issues.

I was fortunate enough to sit down with Ms. Grueneich and ask her some follow up questions about California’s energy and emissions targets and legislation, the importance of developing improved renewable and storage technologies, and about the challenges that the state and the rest of the country still has to face in meeting the goals of the Paris climate agreement.

Interview

Thank you for taking the time to answer some questions, Dian. To start off, I’d like you to set the stage for us. What are California’s most urgently upcoming energy and emissions targets, and is California on track to meet them?

California has a goal of reducing its carbon emissions to 80% below 1990 emission levels by 2050. To reach that goal, the California legislature has passed two key laws.  The first (AB 32) requires the state to reduce its emissions levels back to 1990 emission levels by 2020 and the second law (SB 32), passed in 2016, requires emissions to be reduced to 40% below 1990 levels by 2030.  Clean energy and transportation is key to reaching these goals and to do that, California passed a law in 2015 (SB 350) that requires California utilities and others to have 50% of their electricity sourced from renewables by 2030, doubled the state’s energy efficiency goals, and focused on the need to electrify California’s transportation system.

The state’s energy and emissions targets have come from some critical pieces of state legislation in the past 10-15 years. What are the pieces of legislation that you think every Californian should know about as it pertains to the state’s environmental efforts and energy goals?

The three most critical laws are the ones I mentioned above – AB 32 (2006), SB 32 (2016), and SB 350 (2015).  The 2050 goals are set forth in three Executive Orders, two by Governor Schwarzenegger and one by Governor Brown.  SB 350 also has provisions to ensure the move to clean energy and transportation includes our disadvantaged communities, which is a key focus of state policy efforts now.

Are any of the state’s more ambitious renewable energy goals contingent on the improvement of renewable energy technologies, electric vehicles, or battery technology? How do policymakers account for these sorts of future developments when drafting legislation?

Certainly getting to the 50% renewable goal by 2030 will involve improvements in wind and solar technologies and the continued lowering of costs.  But with this amount of renewables, California will need large amounts of storage and new technologies for grid integration.  The state has set goals for procurement of storage by its utilities and I think these requirements will lead to both new storage technologies and lower storage costs.  And, the growth of electric vehicles will certainly drive new technology.  Good policymaking tries not to choose winners and losers in future technologies but instead  sets goals, provides stable financial incentives and then lets private industry innovate and develop new technologies, products, and services.

Is California in complete control of its own destiny as it pertains to achieving its environmental goals? Does the federal government’s opposition towards global climate action and lacking action on domestic environmental issues have any bearing on what California can or will achieve over the next few decades?

The answer to this question will likely play itself out in lawsuits lasting years.  California has been able to adopt more stringent fuel standards for vehicles used in the state and tighter building codes and appliance standards for energy efficiency savings, due to long-standing federal laws that allow such state action.  The new federal Administration has said that it will no longer permit the fuel exemption; luckily the energy efficiency standards are safe so far.  California will vigorously defend its right to have a clean, green economy but, if no political solution is reached, there will be litigation.  Certainly, the failure of the Trump Administration to uphold the Paris climate commitments has set back the United States in terms of world leadership but, regardless of climate change deniers, the economics are quickly moving the U.S. away from coal and towards renewables and natural gas powerplants.  Under Governor Brown and other California political leadership, the state has extensive international cooperative efforts on climate action and clean energy.  In fact, California will be hosting in September a global climate action summit in San Francisco to convene the world’s climate leaders.

Historically, how much influence does California have over the legislative action of other states on energy issues? Do other states tend to follow California’s lead on decarbonizing the electric sector and electrifying other sectors?

California has had extensive influence, with other states, nationally, and internationally.  California’s groundbreaking policy actions, followed by other entities, includes: energy efficiency appliance standards and building codes, regulatory mechanisms to incentivize utilities to support energy efficiency, renewable portfolio standards, rate incentives to support local solar PV installations, automobile fuel standards, and energy storage goals, to name but a few.  Each state determines what goals are best for it but the majority of the states now have renewable standards, energy efficiency requirements, and support for cleaner energy investments.

Large energy utilities in other states have shown resistance to individuals and small companies for installing solar on their homes or facilities. For instance, Arizona imposed property taxes for leased rooftop solar systems (though recent litigation may reverse this action). As solar becomes more accessible and affordable for individuals and companies to lease, which will lower bills and save money for California residents, how and why has the response from the California utilities been different and seemingly more receptive?

Utilities depend on revenues (e.g., payment of rates through bills) to provide services, which in turn depend on infrastructure like reliable distribution systems and transmission lines.  Utilities have been a mainstay of California’s renewable energy achievements, because they sign long-term contracts for developers of the larger size wind and solar projects.  The costs of such contracts are included in utility rates and thus utilities are able to collect revenues to pay for the power.  However, when individuals and small companies install solar on their roofs, a major issue becomes what money the utility will pay the customer for the power provided and what amount the customer will pay the utility for services and past investments.  And, the utility may no longer have a dependable revenue stream from selling power and services to all its customers and thus the financial ability to support long-term utility investments in distribution lines and other equipment, may be at risk.  This situation has been deemed the “utility death spiral”.  So, the perspective of California policymakers has been to try to balance several items: 1) the differing costs of large-scale renewables vs. rooftop solar, which traditionally has been more expensive, 2) the very different financial interests of utilities, customers installing solar on their roofs, and the larger number of customers who either cannot afford solar, who rent, or whose roofs are not feasible for solar and who may end up paying for investments made on the part of the customers who are no longer buying utility power, 3) societal goals such as reducing carbon emissions, and 4) the value (both costs and benefits) of distributed resources like rooftop solar to the larger electricity grid.  There is no single answer but California regulators and stakeholders have a long history of addressing complex energy issues.

You identified a few key challenges in your presentation at Harvey Mudd College last week that the California will face going forward, including community choice aggregation, how we design and implement a 21st century grid, decarbonizing the transportation sector, and dealing with unexpected environmental and weather events. Which of these do you feel is the most urgent to act upon, and where do you feel we have the best chance to make real progress?

I believe that most urgent challenge is moving to a sustainable transportation system.  To do so we need to not only electrify vehicles but also get consumers to buy them, enact increasingly tighter fuel standards, and have a major cultural shift towards shared transportation on a large scale, far beyond car-sharing between a single passenger and a paid driver.  A second challenge is the changing climate in California. 2017 was the hottest year on record with the highest wind speed ever recorded.  Six of California’s 20 most destructive wildfires in the last decade were in 2017.  This type of weather may be our new normal and how we plan development in areas now at risk, have adequate insurance, and ensure our infrastructure such as utility distribution lines can be secure, are very complex and challenging issues. Community choice aggregation is another issue since it is eroding the model we have used to support billion-dollar, long-term investment in large-scale solar and wind projects and the transmission lines to carry them.  And, an issue still to be addressed is the revenue erosion from lower sales of electricity that community choice aggregators will also face, just like traditional utilities, if their residents and businesses embrace large-scale energy efficiency and solar on rooftops.  I have been involved in California energy and environmental issues since the late 1970s and I have seen a consistent record of California’s political leadership, its residents and businesses, and other stakeholders grapple with huge issues and reach successful outcomes.  We have an amazing array of new technologies available, even more under development, a robust history of technological innovation, and large-scale public and private sources for investment. So we have many of the tools we need to decarbonize our electricity system, reduce dramatically the energy usage in our buildings, and develop a clean transportation system.  But we have to stay focused and ensure that all Californian’s understand the scope of the challenge in the decades ahead, participate in addressing the challenges, and benefit in some fashion from the transformations taking place.

Lastly, do you have any advice for California residents? What should we do as individuals to take part and help address the state’s energy challenges?

First, understand how you contribute to carbon emissions and energy use in your life. Take simple steps like recycling, riding a bike, or buying energy efficient light bulbs.  Second, understand the carbon and energy footprint of your community and, if you can, get involved in helping move toward a cleaner future. And finally, follow the political debates around climate change and clean energy and support efforts to make the transformations that need to be made.

About Dian Grueneich

Dian Grueneich is a nationally and internationally recognized energy expert. Dian began her career in the late 1970’s at the California Energy Commission in the first Jerry Brown administration and help developed the first clean energy policies and programs. Dian served as a Commissioner on the California Public Utilities Commission from 2005-2010 and led its efforts on energy efficiency, demand response, transmission planning and permitting, and Western energy issues. Dian oversaw the successful permitting of three major new transmission lines to carry renewable energy and led development of California’s Long-Term Energy Efficiency Strategic Plan.

In May 2014, Dian began an appointment with Stanford University. She works with Stanford’s Precourt Institute for Energy, the Hoover Institution’s Shultz-Stephenson Energy Policy Task Force, the Graduate School of Business, and the Precourt Energy Efficiency Center, to spearhead an increased focus on energy policy issues, state energy regulation, the evolving energy system, and the next level of energy efficiency. She oversees the Stanford Energy Internships in California/Colorado (SEIC) program, which places graduate and undergraduate students in California and Western energy agencies. Dian co-teaches two seminar courses at Stanford: “Energy Efficiency: The Intersection of Technology, Policy, and Investment” and “California and Western Energy Agencies and Policies”. She also assists Stanford’s research initiative on the 21st century electric grid – Bits & Watts and the Stanford Energy Club Community on Policy. Dian is a graduate of Stanford University (Human Biology) and holds a J.D. from Georgetown University.