[Editor’s note: This story first appeared in the April 2013 Energy Services Bulletin.]
Renewables already make up the bulk of CPAU’s supply portfolio. The utility buys renewable energy certificates to offset the market power portion. (Artwork by City of Palo Alto Utilities)
Boldly going where very few municipalities in the United States have gone before, the Palo Alto, Calif., city council has committed to pursue only carbon-neutral electric resources from now on. Implementing a Carbon Neutral Plan is expected to reduce 330,000 metric tons of greenhouse gas (GHG) emissions in 2013 through 2016. Beyond 2016, most of the city’s reductions of GHG emissions will come from achieving a renewable portfolio standard (RPS) of about 50 percent.
Taking carbon dioxide (CO2) out of the atmosphere won’t take money out of rate payers’ pockets, however. The City of Palo Alto Utilities (CPAU) estimates that the carbon neutrality plan will increase the average electric bill by less than $3 per year.
No time like the present
Reaching carbon neutrality was not a matter of “if,” but “when.” The city got the ball rolling in 2003, passing an RPS of 33 percent new renewable energy by 2015—five years sooner than California’s target. Creating a Climate Protection Plan in 2007 moved the ball forward, and when renewable energy prices dropped over the last two years, the goal came within reach sooner than expected. Mayor Greg Scharff commented, “When we realized we could achieve a carbon neutral electric supply right now, we were compelled to take action.”
To meet its aggressive RPS, Palo Alto issues requests for proposals (RFPs) annually. The response to the RFPs was particularly strong in 2011 and 2012, and the prices were very competitive. “Especially on solar,” noted Jane Ratchye, Palo Alto’s assistant utilities director for the Resource Management division. “We signed one large solar contract that increased our renewable portfolio by about 5 percent. We are also negotiating with three more solar developers that could increase our RPS dramatically.”
Along with wind, landfill gas-to-energy and existing hydropower from Western and other hydro plants, more than 70 percent of CPAU’s electricity supply is renewable now. Short-term renewable energy certificate (REC) purchases offset the non-renewable market power that provides the balance of the city’s needs.
Palo Alto layered on renewable energy contracts, starting with two large wind purchases that were signed in 2004 and began delivering renewable energy in 2005 and 2006. Several more long-term contracts have been signed to bring CPAU’s new renewable generation to 35 percent by 2015.” After that, we will be negotiating to reach 50 percent, as long as we can stay within the RPS annual rate impact limit of .5 cents per kilowatt-hour (kWh),” Ratchye said.
It’s all in the planning
Renewable acquisitions alone are not enough to turn a city carbon neutral. The Climate Protection Plan set short-, medium- and long-term goals to reduce GHG emissions citywide and identified the steps to reach them.
Resource planners will immediately recognize the strategies: Rebates for energy efficiency upgrades, a generous solar incentive (and a new feed-in tariff), a voluntary green power premium program and the RPS. These measures enabled the city to reduce emissions by 42,968 metric tons of CO2, or 10 percent below 2005 levels. Having exceeded its 2009 and 2012 goals, Palo Alto is updating its long-range emissions reduction goal of 15 percent below 2005 levels by 2020. This would avoid 119,140 metric tons of CO2 and bring the community in line with state emission reduction goals.
Demand side management plays a critical role in freeing Palo Alto from carbon- intensive resources. The utility submits an update of its 10-year Energy Efficiency Plan to city council every three years. The 2010 update more than doubled the energy-efficiency goals of the previous report. The goals are also aimed to meet state mandates requiring efficiency resources as the first choice in evaluating utility supply options.
California continues to raise its energy-efficiency standards for buildings and appliances, and that pushes utilities to work harder and spend fractionally more to achieve energy savings. CPAU’s levelized cost of electric energy efficiency in 2010 was $.05 per kWh, compared to $.056 in 2012. Its annual report points out, however, that compared to new renewable energy purchases, the city is still getting a bargain. “The state law only allows us to claim the energy savings above the standards, but the upgrades still produce savings,” added Ratchye. “And those are significant.”
You can do it too
Admittedly, Palo Alto’s location helped its quest to become carbon neutral—being in a state with high standards for sustainability, policies to support efficiency and renewables and an abundance of alternative energy sources has its advantages. Also, as a built-out community, Palo Alto anticipates little load growth, although a new large businesses coming to the area could increase demand.
None of that should keep other cities from striving to reduce GHG emissions, though. The Carbon Neutral Plan is designed to be transparent, sustainable and repeatable by other communities. The first step, Ratchye advised, is to get the city council’s buy-in, and then agree on the definition of carbon neutral. “Once you have that definition, you can move forward,” she said.
To measure Palo Alto’s GHG emissions and verify reductions, the city council chose the outside, independent The Climate Registry (TCR) Electric Power Sector Protocol. “It was important to adopt a standard that would have meaning to other entities and that they could use as a reference,” stated Ratchye.
Under the protocol, the city will achieve carbon neutrality on an annual basis. The system allows the utility to bank RECs from one year to the next, and to calculate the emissions from renewable energy sources so that those, too, can be offset. “That’s critical, because some renewables, such as geothermal energy, may have modest amounts of emissions,” Ratchye explained. “You have to account for those if you claim to be truly carbon neutral.”
Make no mistake, the City of Palo Alto wants to be truly carbon neutral and hopes other cities will follow its lead. As Bruce Hodge, founder of Carbon Free Palo Alto, noted in the city’s press release, “By taking this first step of de-carbonizing its electricity supply, Palo Alto has established itself in the vanguard of forward-thinking communities.”