EDITOR’S NOTE: San Francisco based PG&E was rocked by a devastating natural gas explosion five years ago, and its smart meter rollout was challenged by customers concerned about the new technology’s possible health and privacy impacts. To deal with these and other challenges, PG&E brought in industry veteran Anthony Earley as chairman, chief executive and president four years ago. For an update, The Energy Times recently sat down with Earley for an exclusive interview.
This is the first part of a two-part series.
Next week: In Pursuit of a grid of Things.
ENERGY TIMES: How is PG&E managing the California mandate to have 33 percent of generation from renewables by 2020?
EARLEY: We’ll hit that easily. We’re in the high 20’s now.
THE ENERGY TIMES: So is your system already able to embrace all that renewable power or is there a lot work left to be done?
EARLEY: Well, the proposal is to get to 50 percent by 2030 – so there is more work to be done. We’ve developed a lot of expertise in how you manage the system. We have better forecasting than we’ve ever had. We know how to monitor this stuff. We’ve got historical records on what the solar rays produce and at what time of day.
ENERGY TIMES: So do you think PG&E can teach the whole industry how to get it done? Hawaii, for example, has struggled.
EARLEY: Well, Hawaii’s a much smaller system. And each island is its own system. When you have a small system it’s harder to move power around. There aren’t places to take it from or send it to. With the size of our system you get a lot of flexibility to be able to move power into the right places. There are things I think people can learn from us. We do have people coming out benchmarking on how we manage that amount of solar. PG&E, the California ISO and South California Edison have all gotten pretty good at it.
ENERGY TIMES: Solar leads the way on the renewables front for you, right?
EARLEY: Virtually all new renewables that are coming on now are solar. For a long time wind was probably the largest. Wind has now been surpassed. From an economic standpoint, solar is very attractive right now. We do multi-year bids. Each year we go out for what we estimate we’re going to need over the next couple of years. There’s probably a two- to three-year time lag between the time a bid gets accepted, we negotiate a contract, and then you actually start to see power coming in from the project. Every time we do bids we keep seeing electric power prices come down.
ENERGY TIMES: What role will storage play – and how will you get all the storage you will need built?
EARLEY: California has a storage mandate right now. Like we did on renewables, we’re going out for bids. We just got our first round of bids back on storage projects and we’re in the process of evaluating them. There will be multi-year cycles of asking for different storage technologies. One of the things we’re starting to see is there are many different types of storage that address different issues. You’ve got storage on the individual residential customer level, and that’s what Elon Musk is talking about with the Tesla Powerwall. There is also bigger, industrial storage that might be at your substation. The other thing we’re finding is at some point it’s more important to have storage that can shift your peak between seasons as opposed to within a day.
ENERGY TIMES: Are you talking about pump storage on a hydroelectric system?
EARLEY: Pump storage plants are perfect for that. We’ll have to look at whether that’s an option down the road – to do more pump storage. We already have one pump storage plant, but we’d like to look at whether there are options for more.
ENERGY TIMES: How is the drought affecting that?
EARLEY: The pump storage recycles the water back and forth. But the drought is impacting us. Last year our purchase power cost increased $200 million because we had to go out and buy power in the market instead of using our hydro. This year it will be about the same. Customers end up paying more. Fortunately, since power prices are continuing to be pretty low it’s not a big impact. But if it continues long term we’re going to start to see some upward pressure on our purchased power cost.
ENERGY TIMES: How’s your relationship with Gov. Jerry Brown?
EARLEY: We’ve got a very good relationship with the governor.
ENERGY TIMES: Is he telling you the policies to implement or is their collaboration?
EARLEY: Well, it’s a combination. I’ve had a number of discussions with him. He is very much invested in greenhouse gas reduction. So in his State of the State address, he came out with some very broad goals – achieving 50 percent renewables, cutting gasoline usage in half, doubling energy efficiency and improving heating systems and their efficiencies. Now the legislature has taken up those goals and is crafting them into legislation.
ENERGY TIMES: What’s your take on all this change?
EARLEY: There needs to be optionality. I’m fine with 50 percent renewables as a goal, but it may be that 40 percent or 45 percent is optimal for our system, and instead of doubling energy efficiency maybe we increase energy efficiency by 60 or 65 percent. What I would like to see is the ability to trade-off among all those things to get the right mix that is easiest to operate, most reliable, and lowest cost.