R.20-11-003 Exhibit No: ___Date: September 1, 2021 Witness
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Rulemaking: R.20-11-003 Exhibit No: _____________ Date: September 1, 2021 Witness: Joel Yu Commissioner: Marybel Batjer ALJ: Brian Stevens and Sarah R. Thomas PREPARED TESTIMONY OF JOEL YU ON BEHALF OF ENCHANTED ROCK, LLC TABLE OF CONTENTS Page I. Introduction ......................................................................................................................... 1 II. Detailed Recommendations ................................................................................................ 3 A. Duration .................................................................................................................... 3 B. Justification that Policy Will Provide Reliability Benefits During Net Peak ........... 4 C. Policy Impact – Megawatts Available ...................................................................... 5 D. Implementation Requirements .................................................................................. 5 E. Potential Risks .......................................................................................................... 6 F. Regulatory Justification ............................................................................................ 7 III. Conclusion and Verification ............................................................................................... 9 EXHIBITS Exhibit 1 Statement of Qualifications of Joel Yu Exhibit 2 Excerpt of Hidden Grid: More Than Eight Gigawatts of Fossil Fueled Back-Up Generators Located in Just Five California Districts Exhibit 3 Overview: Bay Area Backup Diesel Generation Exhibit 4 CEC – Alphabetical Power Plant Listing Exhibit 5 Excerpt of Decarbonized Resilience Assessing Alternatives to Diesel Backup Power i 1 I. INTRODUCTION 2 1. Q. Please state your name for the record. 3 A. My name is Joel Yu. 4 2. Q. On whose behalf are you testifying today? 5 A. I am testifying on behalf of Enchanted Rock, LLC (“Enchanted Rock”). 6 Headquartered in Houston, Texas, Enchanted Rock provides affordable, long duration back up 7 power to commercial, industrial, and institutional customers across the country and expects to 8 operate resilience microgrids in California within the near future. Enchanted Rock has 9 commissioned nearly 400 MW of dispatchable distributed generation and resiliency microgrids 10 with over 100 MW under construction and has covered 4,400 hours of outages. Enchanted 11 Rock manages the design, construction, commissioning, operations, and maintenance of natural 12 gas and renewable natural gas-powered technology so utilities and end-use customers have 13 access to reliable back up power and demand response (“DR”) capability without the expense 14 and challenges that come with maintaining a back up generation system. With experience 15 building and operating over 120 installations that operate in grid synchronous and island modes, 16 Enchanted Rock has a deep understanding of the technical and market challenges of microgrid 17 development for DR and resiliency. Enchanted Rock has collaborated with utilities, regulators, 18 and market operators alike in developing market conditions conducive to resiliency microgrid 19 development. 20 3. Q. Please describe your experience and qualifications. 21 A. In my current role as Director of Regulatory & Legislative Affairs for 22 Enchanted Rock, I have been engaged in several California Public Utilities Commission 23 (“Commission”) proceedings, including the Microgrid proceedings, Integrated Resource Plan 24 proceedings, and Distributed Energy Resource proceedings, to propose helpful reforms to 1 1 address California’s energy resilience crisis. Prior to Enchanted Rock, I worked for 2 Consolidated Edison Company of New York (“ConEd”), representing the utility in PJM and 3 NYISO wholesale market stakeholder discussions and at the Federal Energy Regulatory 4 Commission. In my early career for ConEd, I worked as an Operating Supervisor over 5 distribution network system operations, maintenance, and construction work. I have a 6 bachelor’s degree in Chemical Engineering from Columbia University and an MBA from New 7 York University. A copy of my CV is provided as Exhibit 1. 8 4. Q. Have you previously testified before the California Public Utilities 9 Commission (“Commission”)? 10 A. No. However, I have testified on behalf of Enchanted Rock before the 11 Texas Legislature. 12 5. Q. Please summarize the principal recommendations of your testimony. 13 A. Demand response has the potential to play a significant role in maintaining 14 grid reliability and furthering California’s decarbonization efforts. In recognition thereof, 15 Governor Newsom ordered the Commission to expand and expedite approval of DR programs 16 in his July 30, 2021 Emergency Proclamation.1 Accordingly, the Commission should modify 17 the existing Base Interruptible Program tariffs to allow the temporary use of currently 18 prohibited back up generation resources to support DR activities. Concurrently, the 19 Commission should establish an incentive program to encourage cleaner, carbon-neutral fuels 20 for future back up generation resources and facilitate converting existing fossil-fueled back up 21 generation to renewable fuels. 1 See https://www.gov.ca.gov/wp-content/uploads/2021/07/Energy-Emergency-Proc-7-30-21.pdf. 2 1 6. Q. How is your testimony organized? 2 A. My testimony is organized in accordance with the Staff Guidance issued 3 by Administrative Law Judge Brian Stevens on August 11 as it relates to “modification to an 4 existing policy that could reduce demand or increase supply at net peak.”2 Accordingly, I 5 respond to the following six criteria designated in that ruling: 6 a. Duration – temporary or permanent, 7 b. Justification or demonstration that policy will support the delivery of reliability 8 benefits during net peak, 9 c. Estimate of policy’s impact (MW), 10 d. Implementation requirements, including whether other state agencies or CAISO 11 must approve, 12 e. Potential Risk of proposal, and 13 f. Statutory and/or regulatory justifications and history. 14 II. DETAILED RECOMMENDATIONS 15 A. Duration 16 1. Q. Describe the timing and duration of your proposal. 17 A. My proposal would initially and temporarily suspend the existing 18 prohibition against using fossil-fueled back up generation to support DR programs, particularly 19 the Base Interruptible Program (“BIP”) currently offered by utilities, in recognition of the 20 state’s emergency electricity supply needs. The use of fossil fuels would only be allowed 21 through the summer of 2022. Consistent with Senate Bill (“SB”) 1339, which mandates 22 encouraging clean microgrid development,3 I recommend that the Commission require that 23 generation resources that wish to continue participation in these programs for 2023 and beyond 24 must: 2 See August 11, 2021 E-mail Ruling Providing Staff Guidance on the Contents of All Program Proposals Submitted in Opening Testimony by Parties to This Proceeding, at 7. 3 Microgrids are relevant here because the likely technologies to displace diesel backup generation not only operate in island mode when the grid is in outage, but also in grid synchronous mode to provide support to the grid when needed. 3 1 1. meet the California Air Resources Board (“CARB”) Distributed Generation 2 (“DG”) Certification requirements for local emissions,4 and 3 2. run on California Energy Commission (“CEC”) Renewables Portfolio Standard 4 (“RPS”)-certified and/or CARB-certified renewable fuels. 5 2. Q. How would the Commission incentivize customers to replace existing 6 diesel back up generation with cleaner generation resources that meet 7 the CARB DG emissions standard and run on CEC RPS-certified 8 and/or CARB-certified renewable fuels? 9 A. Upgrading equipment will require significant capital investment. To 10 facilitate this investment, the Commission should: 11 1. set a price floor at the current compensation rate of at least ten years upon 12 conversion for generators participating in the BIP; and, 13 2. exempt demand resources backed by dispatchable distributed generation from 14 the DR reliability cap. 15 B. Justification that Policy Will Provide Reliability Benefits During Net 16 Peak 17 1. Q. How does the proposal support the delivery of reliability benefits 18 during net peak? 19 A. The proposal allows the Commission to easily measure the delivery of 20 reliability benefits during net peak. The amount of DR capacity available from back up 21 generation is simply the amount of back up generation turned on or the actual amount of load 22 reduced in response to dispatch instructions. Because much of this back up generation would be 23 sited at high-load factor installations like data centers, the DR capacity could be easily 24 determined, and the impact accurately measured. Accordingly, the “DR reliability cap” 25 established in D.10-06-034 and the recent update in D.21-03-056 should not apply to DR 26 backed by dispatchable distributed generation. 4 See Cal. Code Regs. tit. 17, § 94201 et. seq. and CARB’s Certification Regulation, finalfro AMENDMENTS TO THE DISTRIBUTED GENERATION CERTIFICATION REGULATION. 4 1 C. Policy Impact – Megawatts Available 2 1. Q. How much potential capacity relief may be available from this 3 program? 4 A. Over 8 GW of back up generation is in place across the South Coast, Bay 5 Area, Eastern Kern County, San Joaquin Valley, and Ventura County.5 Additionally, new 6 installations totaling 1,500 MW of back up generation are currently under development in the 7 Bay Area6 and over 800 MW of this