The interests of San Diego Residents and SDG&E Shareholders…

The interests of San Diego Residents and SDG&E Shareholders are NOT the same.

What role should the county’s Regional Decarbonization Framework play in our clean energy future?

San Diego County is in the process of completing its comprehensive decarbonization plan, the San Diego Regional Decarbonization Framework (RDF).¹ The core of the RDF is the clean energy strategy. The clean energy strategy in its current form prioritizes development of utility-scale solar and wind resources in San Diego County backcountry and Imperial County. Central elements of the RDF clean energy strategy, developed by prime contractor UC San Diego School of Global Policy and Strategy (UCSD GPS), are largely indistinguishable from SDG&E’s decarbonization strategy.² The SDG&E strategy was co-written with UCSD GPS staff.

The Protect Our Communities Foundation (PCF) participated in the County’s April 7, 2022 RDF energy sector workshop, attended by representatives from about seventy local and regional organizations.⁴ At the workshop, and in subsequent written comments, PCF identified three principal errors in the RDF clean energy strategy that, if corrected, would result in a RDF strategy that prioritizes rooftop and parking lot solar and minimizes remote solar and wind – for economic reasons alone.
These errors are:

Error #1: The RDF identifies two transmission projects as necessary, a $3.9 billion line to support remote solar and wind development and $89 million for a local San Diego area upgrade to support energy storage, but uses only the $89 million cost to calculate the cost-of-energy of remote solar and wind energy. This is an error by the UCSD GPS contractor.

The $3.9 billion project will add $90 per megawatt-hr (MWh) or more to the cost-of-energy of remote solar and wind delivered over the transmission line.⁵ This additional $90/MWh cost burden on remote solar and wind is missing from the analysis.

The RDF assumes a remote solar production cost of ~$30/MWh. The total remote solar cost-of-energy is at least $120/MWh when the cost of new transmission to support the remote solar is correctly added to the solar production cost.

Error #2: The RDF presents two solar rooftop potential estimates for San Diego County, 61,000 acres, equivalent to around 20,000 MW and 3,360 MW. Only the low, unsubstantiated estimate of 3,360 MW is used, to assert rooftop solar could only play a minor role in County decarbonization.

Error #3: The RDF uses a high and obsolete 2018 commercial rooftop solar cost of $92 MWh, nearly double the 2022 National Renewable Energy Laboratory cost of $50/MWh, to artificially widen the cost gap between rooftop solar and remote solar. There is no new transmission cost associated with rooftop solar, as it is delivered over the existing lower-voltage distribution grid.

PCF raised concerns about the RDF clean energy strategy at the December 7, 2022 Clean Energy Supply Forum held at San Diego City College. Correcting the three primary errors in the RDF clean energy analysis would result in commercial rooftop solar & parking lot solar – coupled with battery storage & connected to the distribution grid - being identified as the most cost-effective renewable energy pathway for San Diego County residents.

It’s crucial the County get the clean energy strategy in the RDF correct from the beginning. The die will be cast with the first RDF. The County can’t rely on future updates to correct the fundamental flaws in the core assumptions in the current version of RDF clean energy strategy.

The RDF Strategy = Maximum Cost, Maximum Environmental Disruption, and Highest Returns to SDG&E Shareholders.

Figure 1. RDF preferred Scenario 1 – Extensive solar and wind development throughout San Diego County backcountry

Scenario 1, the preferred decarbonization scenario in the RDF, where all renewable resources are developed in San Diego County, is shown in Figure 1. Essentially every part of the San Diego County backcountry would be heavily impacted by utility-scale projects by 2050 under this scenario. The high cost of transmission to make this scenario viable is simply ignored by the RDF contractor to frame this approach as least-cost. Scenario 1 is prioritized in the RDF, purely on economic grounds, despite the local opposition to the handful of larger utility-scale solar and wind projects that have been proposed or built in the County already, and rising concerns about the industrialization of San Diego County’s iconic backcountry.

The RDF preferred Scenario 2 spreads the remote renewable resources over San Diego County & Imperial County. In essence, this relieves on the San Diego County backcountry by shifting much of the remote solar development to Imperial County.

Figure 2. In RDF preferred Scenario 2, much solar development shifts from San Diego County to Imperial County

Scenario 2 matches the decarbonization approach advanced by the state’s high voltage transmission grid operator. The grid operator, the California Independent System Operator (CAISO), has developed projections of its preferred decarbonization renewable energy development zones, shown in Figure 3.

CAISO identifies the San Diego County / Imperial County area as one of three primary utility-scale solar & wind development zones in the state. Rooftop solar & parking lot solar, which don’t utilize the transmission grid (rather they use the lower voltage distribution grid), are de-emphasized in CAISO’s decarbonization approach.

Figure 3. CAISO vision of renewable resource development to achieve decarbonization

Commission Worried about Massive Utility Spending on Transmission

As described in PCF’s December 2022 newsletter, the state’s investor-owned utilities (IOUs), of which SDG&E is one, make their best return building transmission lines. That money is collected from ratepayers. The California Public Utilities Commission (Commission), tasked with assuring just and reasonable rates, is finally beginning to raise concerns about the IOU’s out-of-control transmission spending, which is ostensibly intended to support the IOU- and CAISO-preferred decarbonization strategies.

In this context, the Commission is initiating a Transmission Project Review Process that will begin in January 2024. The December 2022 background document establishes the need for formal review by recounting the massive and largely uncontrolled spending by the IOUs on transmission lines:

Since 2008, California’s three largest (IOUs) collective transmission rate base has increased by over 350% from $4.6 billion to over $21 billion.
Most transmission projects haven’t received any review by CAISO or the Commission – these self-approved projects represent 63% of IOU transmission capital additions over the past 3 years.
The majority are self-approved transmission projects, lacking transparency of their planning, prioritization, budgeting, and implementation.
CAISO estimates $30.5 billion of new transmission capacity will be needed to meet the state’s clean energy goals.⁶
A majority of transmission projects are currently self-approved repair or replacement projects and future costs are not included in this $30.5 billion estimate.
Approximately 40% of costs to operate the current CAISO-controlled transmission grid are for the portion of the transmission grid that operates below 200 kV.
The (renewable) generators which trigger network upgrades are typically reimbursed in full for the costs of network upgrades they initially finance, with the full upgrade costs ultimately falling on ratepayers.

The Commission is projecting over $110 billion in new grid investments to decarbonize if California follows the “remote solar and wind” paradigm being pursued by CAISO and the IOUs.⁷ This overwhelming projected expenditure on new transmission has yet to capture the attention of decision-makers or the general public, despite California IOUs charging the highest rates in the country.⁸

A decarbonization strategy that prioritizes remote solar and wind will maximize the construction of new transmission lines. From an IOU revenue growth perspective, it’s the ideal path forward.

The SDG&E decarbonization plan, “The Path to Net Zero” (April 2022), follows the same approach. SDG&E does not differentiate between distributed and remote solar. However, it identifies that “growth in distributed & local power generation” could lead to (shareholder) risk and uncertainty. SDG&E sees its interest best being served by a decarbonization strategy that maximizes remote solar and wind while minimizing rooftop and parking lot solar.

Smart Decarbonization = Solar on Warehouse & Commercial Rooftops

Once in a while disruptors appear on the IOU scene that have the power to make an impact, like former Gov. Schwarzenegger (2010), a big advocate for rooftop solar:

“You can have all the renewable energy in the Mojave Desert but you still need to build transmission lines to bring it in . . . . But if you have it on the rooftops of those warehouses it goes right to the grid and you don't have to build the transmission lines.”

He made this comment not long after the Commission approved a 500 MW warehouse rooftop project, the largest solar project of its day. In its press release, the Commission said:

“These projects can get built quickly and without the need for expensive new transmission lines.”

This, in effect, is the ballgame. If you have to build expensive new transmission lines to move lower-cost remote solar power to the customer, the economics for the customer swing in favor of building solar power on rooftops without building new transmission.

Meanwhile, the private utility industry has been fighting for decades against rooftop solar as a threat to their industry business model. Their attacks have been effective. In California, on December 15, 2022, the CPUC issued a decision severely undercutting the value of customer-owned rooftop solar.

In contrast states like Hawaii are in the vanguard of modifying the utility business model to embrace rooftop solar and battery storage. We are not there yet in the RDF clean energy strategy or in California. We need to get there if we are to use all available tools to decarbonize.

Rooftop Solar Must Play A Big Role in the RDF if the RDF Is to Reflect the Best Interests of County Residents

Customer-owned rooftop solar in San Diego County is a dramatic decarbonization success story. We have the highest rooftop solar concentration of any county in the state, about 1,800 MW. All of this rooftop solar is NEM solar, used primarily to meet onsite demand. In contrast, there is less than 300 MW of remote utility-scale solar and wind operating in the County.

Customer-owned NEM rooftop solar is currently being added in the County at a rate of ~200 MW per year, almost seamlessly, and supporting thousands of workers. Meanwhile, remote utility-scale solar and wind projects often encounter opposition.

On the ground, customer-owned rooftop solar is the dominant clean energy resource in San Diego County by far. In the RDF, it exists only as something that is qualitatively desirable but impractical. The RDF rooftop solar assessment is limited to wholesale commercial rooftop solar.

These are solar arrays located on larger rooftops and parking lots with the output sold to wholesale buyers, like San Diego Community Power. Wholesale rooftop solar is an excellent resource in its own right.

As former Gov. Schwarzenegger urged, we also need to get solar on large rooftops and sell it straight to the grid at scale. Sadly, in its current form the RDF largely mirrors the IOU strategy, enthusiastic about remote solar and wind and generally dismissive of rooftop solar and storage in any form as too expensive.

The rooftop solar industry has been largely non-union. One long-standing allegation of critics of rooftop solar has been that the industry pays inadequate wages to rooftop solar workers. That allegation is now moot for commercial NEM rooftop projects. Governor Newson signed AB 2143 into law in October 2022 requiring all commercial NEM rooftop projects be built with prevailing wage labor beginning January 1, 2024.⁹

The key questions that must be answered are: 1) is there enough rooftop solar potential to make a substantial difference, and 2) is the higher cost of rooftop solar offset by the cost of expensive new transmission lines that will be needed to move remote renewable power? The answer to both questions is “YES.” The RDF should have a strong rooftop solar element. It does not.

For the RDF to serve as a genuine roadmap, San Diego County residents have to buy into it and have confidence it is the right road.

Under the current schedule, the RDF will not go before the County Board of Supervisors for adoption until the Spring of 2023. PCF will work with the Supervisors’ offices to resolve the internal contradictions in the RDF and spotlight the lead role rooftop solar should continue to play, prior to adoption.

Would you like to be part of this effort? Hit reply and let us know!

The Protect Our Communities Foundation is a nonprofit organization prioritizing the defense of communities and nature by advancing clean energy solutions and promoting affordable electricity rates for Californians.

Board of Directors
Lori Saldaña, President
Michael Pinto, VP/Treasurer
Bill Powers, Secretary
Dianne Jacob
Denis Trafecanty

¹ See: https://www.synapse-energy.com/sites/default/files/RDF_Technical_Report_FINAL_21-047_0.pdf

² SDG&E, Prof. David Victor – UCSD GPS, Black & Veatch, Boston Consulting Group, The Pathway to Net Zero, April 2022: https://www.sdge.com/sites/default/files/documents/netzero2.pdf

³ See: https://calssa.org/press-releases/2022/12/14/calssa-statement-on-cpucs-final-proposed-decision-on-solar-net-metering

⁴ See video for County of San Diego RDF Energy Sector Workshop, April 7, 2022: https://www.youtube.com/watch?v=k0kQoMhxnmI

⁵ B. Powers, Powers Engineering Comments on the Renewable Energy Assumptions in the March 2022 Draft San Diego Regional Decarbonization Framework, May 20, 2022, p. 6 (pdf p. 49 of compiled comments on draft RDF): https://www.sandiegocounty.gov/content/dam/sdc/lueg/regional-decarb-frameworkfiles/2022_comments_final.pdf

⁶ CAISO defines transmission voltage as > 200 kV.

⁷ CAISO new transmission + IOU self-approved new transmission + new IOU transmission < 200 kV = $30.5 billion + ($30.5 billion ÷ 0.63) + [[$30.5 billion + ($30.5 billion ÷ 0.63)×0.40] = $30.5 billion + $48.4 billion + $31.6 billion = $110.5 billion. This calculation assumes a 40 percent cost adder, relative to the cost of new transmission, for new transmission below 200 kV

⁸ See: https://www.cbs8.com/article/money/amped/san-diego-has-the-highest-electricity-rates-in-the-country/509-b33c2aa1-5414-431d-a060-273059f1e0da

⁹ See: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB2143