California Sets Interim Clean Energy Targets on Path to 2045 Goal

New bill revises California’s 2045 target of 100% zero-carbon electricity to include interim targets for 2035 and 2040.

The California legislature passed S.B. 1020, known as the Clean Energy, Jobs, and Affordability Act, which includes a change to the existing state policy on attaining zero-emission electricity. The existing law requires renewable energy resources and zero-carbon resources to supply 100% of all retail sales of electricity to California end-use customers by the end of 2045. This bill revises that policy to include interim targets for 2035 and 2040. Governor Gavin Newsom is expected to sign the bill, as it mirrors his earlier proposal for interim clean electricity targets.

Under current law, renewable energy resources and zero-carbon resources must supply 100% of California electricity sales to retail customers and state agencies by December 31, 2045. S.B. 1020 requires that renewable energy resources and zero-carbon resources must supply 90% of all retail sales of electricity to California end-use customers by December 31, 2035, 95% by December 31, 2040, and 100% by December 31, 2045. Additionally, the law moves up the target for state agencies by 10 years to December 31, 2035.

State Agency Procurement Requirements

The law requires each state agency, except for procurement for the State Water Project by the Department of Water Resources (DWR), to meet its 100% clean energy policy by (1) installing behind-the-meter resources on state-owned or state-leased buildings to serve the state agency's onsite load; (2) procuring appropriate resources through the local publicly owned electric utility or load-serving entity providing retail service to the state agency; and (3) participating in a voluntary shared renewable or green pricing program comprised of the appropriate resources.

The law also requires any new procurement requirements made on behalf of a state agency, except for the State Water Project, to satisfy all of the following criteria:

• The resource must be newly developed as a result of contracting and reach initial commercial operations on or after January 1, 2023;

• The resources meet the category types applicable to the Renewable Portfolio Standard (RPS) Program and commonly referred to as buckets one, two and three;

• The resource must be located in California;

• The retail seller or local publicly owned electric utility must require its contractors to use a multicraft project labor agreement for construction;

• The retail seller or local publicly owned electric utility must exclude the retail sales to a state agency customer from any compliance obligations relating their 100% zero-carbon targets;

• The retail seller or publicly owned electric utility must retire any renewable energy credits or environmental attributes associated with the state agency customer; and

• They must also give preference to resource options expected to yield maximum long-term employment, stimulate new economic activity.

Additional provisions

The bill includes several additional provisions:

• Disclosure of confidential information: The bill authorizes the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) to disclose to the California Independent System Operator (CAISO), upon request, confidential information relating to power purchase agreements with electric generation and energy storage projects for purposes of transmission planning.

• Progress report: The bill also requires the CPUC, CEC, and California Air Resources Board (CARB) to issue a joint reliability progress report by December 1, 2023 and annually thereafter. The report must have a particular focus on summer reliability, identify challenges and gaps to achieving system and local reliability, and identify the amount and cause of any delays to achieving compliance with all energy and capacity procurement requirements set by the CPUC.

• Energy affordability definition: The bill requires the CPUC to develop a definition of “energy affordability” and to use energy affordability metrics to guide the development of any protections, incentives, discounts, or new programs to assist residential customers facing hardships or disconnections due to electricity or gas bills and to assess the impact of proposed rate increases on different types of residential customers.

• Disclosure protections: The bill specifies that a disclosure made through the sharing of information between the CAISO and a state agency does not constitute a waiver of the existing exemptions. It also authorizes an officer or employee of the CPUC to share information with the CAISO pursuant to an agreement to treat the shared information as confidential.

• Scoping plan workshops: The bill includes regions of the state that have the most significant exposure to air pollutants as federal extreme nonattainment areas. This affects the requirement that a portion of the scoping plan workshops be conducted in these areas.