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By Sherry Listgarten

Is our carbon-free electricity really carbon-free?

Uploaded: Nov 24, 2019

One of the most important steps we can take to cut our greenhouse gas emissions is to transition to clean power. Our local power providers are moving aggressively in that direction, and in fact all three provide 100% carbon-free electricity. (Palo Alto uses the term “carbon-neutral.”) Peninsula Clean Energy in San Mateo County offers it as their ECO100 option (their default is 90%) , while the City of Palo Alto Utilities and Silicon Valley Clean Energy in much of Santa Clara County offer it as the default. (1)

But there is some confusion among residents about what it means for our electricity to be carbon-free (or carbon-neutral), so I’m going to dig into two of the main things that trip people up. The first is that our power grid is shared, so the clean power we put on the grid is not the same as what we consume. The second is that our carbon accounting is based on matching annual purchases with annual use, while an hourly accounting would be more accurate. (2) Let’s start with the first one.

When you hear the phrase “carbon-free electricity”, you may imagine that we operate our own windmills and solar plants and hydroelectric turbines 365x24x7 to power our activities. But that is not the case. We generally don’t operate our own plants -- we have agreements to purchase power from various vendors. But the bigger issue is that we don’t use the very same power that we buy. Instead, “our” power plants put clean energy onto California’s shared electric grid, as do plants operating on behalf of other providers. Then we all consume energy from the grid. The grid and the power market serve as middlemen between power production and power consumption. And that messes with our intuition about “carbon-free power”.

Think of the grid like a big puddle of water. Power providers across the state are filling that puddle with water; some are putting in cleaner water and some are contributing dirtier water. At the same time, little streams of water are running from the puddle into homes across the state. Each home is getting pretty much the same mix of water (electricity) regardless of what their utility or other power provider (3) is purchasing. In 2018, for example, homes got power that was, on average, 51% carbon-free.

I didn’t understand how this worked for a while. I thought that it didn’t matter how big my EV was or how much I drove it or how often I ran my clothes dryer because it was all running on carbon-free power. But that’s not the case. The fact is, we buy clean power but much of the electricity we use comes from gas-powered plants. (4) On the plus side, that means when we find ways to use less electricity, we can reduce our emissions even more. But some of you may feel ripped off, misled, even yearning to go back to buying dirty electricity(?!) because you aren't getting what you pay for. One Palo Alto commenter is concerned: “It is great that the grid has a cleaner mix (from our contributions). But should we (and other progressive cities) be the ones paying for it? If you were to ask residents to vote on paying for a project that benefits just Palo Altans vs. diluting the benefit across all Californians, how would the votes tally?”

Happily, that is not a relevant question since our local power providers work hard to keep our rates below those of PG&E. They buy power that is both cleaner and cheaper. In fact, low prices for renewables are one of the things that keeps Jan Pepper, CEO of Peninsula Clean Energy, so optimistic about the future of clean energy. “Prices continue to drop. We have seen that with solar, and we are starting to see it with batteries.” California’s robust economy helps ensure that as utilities buy more renewables (portfolios must be 60% renewable by 2030) and reduce use of fossil fuels (portfolios must be carbon-free by 2045), the growing demand for clean power will spur innovation and competition to keep prices low. I asked Don Bray, Director of Account Services & Community Relations for Silicon Valley Clean Energy, for his thoughts on any “secret sauce” that has allowed our utilities to provide cleaner and cheaper power. He emphasized that utilities across the country are innovating in their own ways, from Texas to the midwest to the deep south. But he did add that a concerned customer base in Santa Clara County helps to keep the pressure on. “We have a few large, sophisticated commercial customers who are committed to using the cleanest energy and continuously help to push us forward.” A large commercial base also means a smoother load curve, with more midday demand that is easier to serve with cheap solar energy. (5)

Bray’s observation about midday demand brings me to the second point of confusion about our carbon-free electricity. The electricity that our utilities purchase and put on the grid is carbon-free. If we consumed our energy at the exact same time we were putting it onto the grid, we would have a pretty straight-forward claim to carbon-free electricity, even though we use a shared grid. But we consume energy from the grid at different and possibly dirtier times than we put it on the grid. You can imagine, for example, a utility purchasing midday solar but its customers consuming night-time gas-powered electricity. This utility could pencil out as carbon-neutral on paper based on an annual accounting. But in reality the utility’s customers would be responsible for a good deal of greenhouse gas emissions. (6)

You can see below how the power supply for Palo Alto matches up to demand (the black line) for a typical year and typical winter and summer days. Notice how the flexible hydropower resources are scheduled for the evening hours in summer, and for both morning and evening in winter. But even with that plus a fairly steady load, it is still difficult to meet demand on an hourly basis, particularly in fall and winter.

Palo Alto’s electric supply vs demand for a typical year and two typical seasonal days.

Below are similar graphs for Silicon Valley Clean Energy, though these are projected for the future. You can see how battery storage stretches the solar into the evening hours, and how wind and hydro complement the midday solar, but still there are difficulties meeting demand with supply, especially in the cooler months.

This mismatch of supply with demand is not scalable. If many utilities operated that way, we would quickly run out of power at certain times of the day and year. And in fact, CAISO and CPUC are predicting a shortfall of evening power for the next three years, in part because many gas-powered plants along the coast are scheduled to be shut down in that time period. (7)

Source: 2019 CAISO presentation

Power shortages are not taken lightly; our local utilities and our state want to correct this. Peninsula Clean Energy has a goal for its load to be time-coincident with supply by 2025. Silicon Valley Clean Energy is looking at the “clean net short” standard being promoted by CPUC as a better way to evaluate their emissions intensity. Using that methodology, a utility that puts more power on the grid than it consumes during a given hour gets a credit based on the emissions intensity of the extra power it added, while if its production falls short of consumption, it is “charged” based on the average grid emissions intensity for that hour. This yields a more accurate value for the emissions intensity of a utility’s portfolio, since it matches supply with demand on an hourly basis.

With lofty goals and ever stricter accounting, I heard a planner for Silicon Valley Clean Energy consider, during their recent October board meeting, that perhaps “not enough resources exist for all of us to meet our carbon-free goals”. The fact that more and more of the western states are adopting renewable and carbon-free goals makes it even harder, since it reduces the amount of clean energy available for us to import (e.g., hydropower from the northwest). But Pepper believes that resource availability in general is not a concern. “New resources are coming online all the time; there are lots of developers.” She also says that the big utilities like PG&E have contracted for large amounts of carbon-free power that they are no longer using, since they are shedding customers to smaller power providers like her own. Those extra allocations may become available for the smaller players.

Some of the strategies that our power providers are looking at to better align supply with demand include:

Geothermal energy. Geothermal energy is a baseline resource, which means that it is available year-round, 24x7. While standard geothermal plants such as the one at the nearby Geysers facility have a small amount of emissions, Silicon Valley Clean Energy is particularly interested in “binary” (closed-loop) geothermal plants that have no emissions.

Solar with storage. Both Silicon Valley Clean Energy and Peninsula Clean Energy are looking to battery storage to make solar energy available in the critical evening hours. Peninsula Clean Energy’s Pepper notes that there is a lot of innovation in storage, in terms of chemical composition, power characteristics, and sustainability. This 2019 SolarPaces article reviews a locally-developed mechanism for thermal storage that has attracted investments from the Breakthrough Energy Ventures fund and more. Basically, it stores and later releases energy using a combination of hot and cold tanks operating much like a heat pump.

Demand shifting. Big and small utilities across the state, including our three local utilities, will be rolling out time-of-use rates in the next year or two to encourage customers to shift loads away from the evening hours. Peninsula Clean Energy’s Pepper hopes these rates will reinforce to customers that power is not uniformly available and clean throughout the day, that it is more expensive (and dirtier) during the peak 4-9pm hours. This level of understanding, if coupled with relevant actions, will help keep emissions down and rates low.

Out-of-state wind. Silicon Valley Clean Energy's Bray reports that local wind resources such as the one near the Altamont pass can be pretty variable, while wind power from Colorado and even Southern California can be much more reliable. So he advocates looking at power profiles throughout the year when evaluating possible resources. This 2018 press release from Silicon Valley Clean Energy has some information about New Mexico’s wind resource. Offshore wind is another promising avenue for California, though it is a ways out.

Local resources. With growing constraints on transmission and a need for more reliability, Peninsula Clean Energy’s Pepper sees local resources as particularly appealing. Local microgrids, for example, are an interesting development that Peninsula Clean Energy is supporting.

Optimized solar locations. Bray said that with solar prices “crashing”, utilities need to be careful with longer-term contracts so they don’t overpay. One optimization is to choose the location of the plant carefully, so it is situated in an area that doesn’t have an oversupply of solar power. Since power prices are location-sensitive, prices in those areas won’t drop as much.

At the end of the day, all of our local power providers are looking to diversify their portfolios with a mix of energy sources, short-term and long-term contracts, local and imported energy, and so on, to keep prices low and stay nimble as the various managing agencies (CPUC, CEC, CAISO, and CARB) continuously adjust requirements for reporting, procurement, and operations. If you are interested in learning more about portfolio planning and evaluation, they all have open discussions on these topics that you are invited to attend. You can find meeting dates and agendas, along with presentations and often notes and videos online for Palo Alto Utilities, Peninsula Clean Energy, and Silicon Valley Clean Energy.

To answer the question posed in the title -- Is our carbon-free electricity really carbon-free? -- I’d say that the answer is “not yet, but getting there”. We are learning as we go, particularly in California, but also increasingly in all regions across the US. I like to think that as customers we can do our part to support this transition by being more aware of the characteristics of the power we are using, reducing our power use (and especially our dirty power use) where we can, and supporting our utilities in their efforts to transition to clean power.

Notes and References

1. Silicon Valley Clean Energy also offers a 100% renewable option because not all carbon-free sources are considered “renewable” by the state of California. Examples of carbon-free sources that are not considered to be renewable are large hydroelectric plants and nuclear plants, because of concern about impacts on the environment.

2. A third source of confusion about "carbon-free" terminology is the concept of energy credits, which I will cover in a separate blog post.

3. I use the word “utility” colloquially but somewhat inaccurately in this blog to refer to our energy providers. Peninsula Clean Energy and Silicon Valley Clean Energy are CCAs (Community Choice Aggregation providers) rather than utilities. They operate under very different rules and often have different goals from utilities. You can read more about CCAs here or here. Another type of power provider is an ESP, or Energy Service Provider, which sometimes provide power to commercial or industrial organizations. Together these types of power providers are referred to as “Load Serving Entities” or LSE’s. To avoid too much jargon, at the cost of some inaccuracy, I use the word “utility” to refer to a power provider more generally. This is yet another indication that I am not a real journalist :)

4. You may be wondering if it ever makes sense to think of our power as being clean, given what we get from our outlets is not. I’d say in some cases, sure. For example, if you are tallying up your home’s carbon use in order to buy offsets, then it’s fine to tell the calculator that your power is carbon-free. You wouldn’t want to buy offsets for your power use since you are already purchasing clean electricity. But if you are using a carbon calculator in order to get recommendations for reducing emissions, I would use the grid mix. You reduce your emissions if you use less power!

5. Both Silicon Valley Clean Energy and Peninsula Clean Energy have about two-thirds of their load from commercial customers, while Palo Alto Utilities’ commercial load is about 80% of its total(!). Silicon Valley Clean Energy’s Bray observed that the utility’s solar power is relatively more valuable for these customers because behind-the-meter penetration (e.g., solar panels) tends to be lower for commercial customers. I asked why that is, and he wryly noted that the exceedingly high real estate prices here make it less practical to use solar panels in parking lots, since they prevent the site being used for more valuable purposes. Similarly, rooftops are often encumbered with equipment for multi-story buildings.

6. FWIW, this utility would probably go bankrupt pretty quickly. Its midday solar would not be worth much on the market, and it would be paying through the nose for evening power. Because electricity prices generally track with emissions, the need for power providers to balance their budget serves as a check on this kind of imbalance.

7. CAISO and CPUC have requested additional procurement of clean evening energy by utilities to address the shortfall, though postponing the shutdown of the gas plants is also an option they are considering.

Current Climate Data (October 2019)

October 2019 was the second warmest October on record for the globe.

Global impacts, US impacts, CO2 metric, Climate dashboard (updated annually)

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