A utility that prides itself on a diverse power supply will soon be removing one particular resource from its portfolio for good. Silicon Valley Power (SVP), the municipal electric utility serving Santa Clara, California, will become coal-free after Dec. 31, 2017, when it ends electricity imports from the San Juan Generating Station.
The Federal Energy Regulatory Commission issued its final approval of the move on Dec. 30, 2015. Cleaner energy from renewable and natural gas resources will replace the power from the New Mexico coal-fired power plant for 53,000 Santa Clara customers. The confluence of many different policies and pressures led to this decision, observed Larry Owens, SVP manager of customer services. “But mostly, it is because our customers want us to reduce greenhouse gas (GHG) emissions,” he said.
Currently, about 36 percent of the utility’s power comes from state-mandated renewable resources, exceeding California’s 33-percent-by-2020 requirement . With large hydro included, more than 50 percent of the power the utility supplies is carbon-free, even as SVP maintains some of the lowest electricity rates in the state.
Changing times, concerns
The commitment to affordable, reliable electricity made coal power a sensible choice in 1980, when SVP partnered with Modesto Irrigation District and Redding Electric Utility to form the M-S-R Public Power Agency . The joint power authority purchased an interest in the San Juan Generating Station in 1983 to supplement seasonal hydroelectric generation and reduce the need to buy expensive and often cost-volatile short-term power.
Over the years, however, concerns grew about the effect of carbon emissions on the environment, and in 2006, California passed the Global Warming Solutions Act, Assembly Bill (AB) 32. In keeping with its history of environmental responsibility, Santa Clara launched its own strategy to fight climate change, starting with an inventory of all community emissions. Cataloging the city’s sources of emissions gave Santa Clara a good baseline to work with and aligned with the reporting requirements that preceded the carbon cap-and-trade market AB 32 established, starting in 2013, noted Owens.
One thing the inventory revealed was that although coal-fired power provided just 10 percent of SVP’s electricity, it accounted for 50 percent of the utility’s carbon emissions. Cleaning up those emissions and complying with other new environmental regulations covering all emissions promised to increase the costs and liabilities associated with the plant.
SVP, through M-S-R Public Power Agency, began confidential negotiations in 2011 to pull Santa Clara out of the San Juan contract, and started to examine alternatives to coal-powered resources. “Replacing 10 percent of our generation to get rid of 50 percent of our emissions just made good sense,” said Owens.
Many parts to lower emissions puzzle
Making the decision was the only easy part, though. SVP was still a part owner in the plant and was still paying on the bond that financed that purchase. The utility could have sold its interest to another power provider, but that would just be passing the climate-change buck, Owens explained. “When the opportunity came up to affect a true reduction in emissions by working toward the closure of two of the four units, we got behind it immediately,” he said.
Accomplishing that goal involved working with multitude of partners and interests, not only several utilities besides M-S-R, but also coal producers, the local economy, regional, state and federal agencies, environmental groups and other vested interests. “It was a lot of hard work,” Owens recalled. “All of the parties in that complicated effort deserve recognition for honoring everyone’s interest and still attaining the goal.”
Replacing 51 megawatts (MW) of electricity from the San Juan plant has proven to be as much an opportunity for SVP as a challenge. The utility became a major partner in the Lodi Energy Center (LEC), a state-of-the-art natural gas plant, and has received electricity from it since 2012. The combined-cycle LEC incorporates cutting-edge, “fast-start” technology to reach full load in 30 minutes. The ability to quickly ramp up reduces startup emissions and makes the system complementary to intermittent renewable resources.
Small hydropower plants present yet another opportunity for SVP to acquire new renewables. “We have two new facilities on deck ready to produce 32 MW,” Owens said. “Some of the hydropower we have picked up in the past few years was from expiring contracts with PG&E, but we are starting to see more projects that add capacity to existing facilities.”
Keeping customers satisfied
Ending its exports of coal-generated electricity in 2018 will reduce the carbon footprint of SVP’s generation by 50 percent, two years ahead of the 2020 deadline in Santa Clara’s Climate Action Plan. That won’t be the end of the utility’s efforts to maintain a sustainable and affordable power supply.
Part of the motivation is staying ahead of state and federal environmental and renewable mandates, but most of it comes from the customer. “For one thing, our service territory includes some of the world’s high-tech giants,” Owens said. “Many of those large commercial customers have advanced their own sustainability initiatives and they expect their utility to keep up.”
For Silicon Valley Power, it all comes down to meeting and exceeding its customers’ expectations. “I can’t overstate how big a part our customers’ interests played in driving toward a coal-free portfolio,” Owens stated.