About the Business

Planning for California’s Clean Energy Future


Percentage of electricity that came from a combination of renewable and greenhouse gas-free resources in 2012

PG&E, like other utilities today, faces an increasingly complex landscape as we work to provide safe, reliable and affordable service. We are simultaneously working to reduce energy demand through energy efficiency and demand response; meet customers’ interest in rooftop solar and other distributed generation options; integrate increasing supplies of intermittent renewables into our energy mix; and maintain enough conventional generation to fill in when renewables are unavailable. Balancing these priorities is essential to the long-term success of PG&E, our customers and the environment.

PG&E’s 2012 Electric Power Mix

In 2012, PG&E’s retail customers used 76,205 GWh of electricity. Of that amount, 31,671 GWh were generated by PG&E’s own natural gas, hydroelectric and nuclear facilities, as well as small amounts of diesel, fuel cell and solar energy. The remainder was purchased from third-party generators, via either contracts or the open market.

The chart below shows our overall electricity supply mix for 2012, which included both the energy PG&E generated and the energy PG&E purchased from third parties.

PG&E’s 2012 Electric Power Mix Delivered to Retail Customers

PG&E’s 2012 Electric Power Mix Delivered to Retail Customers
  • * “Other” includes diesel oil and petroleum coke (a waste byproduct of oil refining) and “Unspecified Power” refers to electricity purchased from the grid that is not traceable to specific generation sources by any auditable contract trail.
  • ** As defined in Senate Bill 1078, which created California’s Renewable Portfolio Standard, an eligible renewable resource includes geothermal facilities, hydroelectric facilities with a capacity rating of 30 MW or less, biomass, selected municipal solid waste facilities, solar facilities and wind facilities. These figures are preliminary and will not be finalized until verified by the California Energy Commission.

Our Long-Term Procurement Plan

To meet California’s growing demand for electricity, the state benefits from a “loading order” of preferred energy sources originally adopted in the state’s 2003 Energy Action Plan.

This state-wide comprehensive energy strategy emphasizes an aggressive expansion of customer energy efficiency and demand-side management programs and looks to secure additional renewable power resources before meeting remaining energy needs through efficient traditional generation sources. The loading order serves as the foundation for energy policies and decisions to develop and operate California’s electricity system in the best, long-term interest of the public.

PG&E procures resources to meet its customer electricity needs based on a long-term procurement plan approved by the CPUC. In preparing its plan, PG&E follows the California loading order.

Historically, PG&E’s long-term resource planning has focused on anticipating the growth in electricity demand and determining how to meet that growth in keeping with the loading order. Importantly, it was generally the case that generating resources such as conventional power plants had sufficient operational flexibility to meet daily variations in energy demand. The primary focus was ensuring that the system could meet peak demand to continue to deliver reliable service.

As increasing amounts of intermittent resources, such as wind and solar generation, are being added, it presents challenges for balancing energy supply and demand. Today, we must anticipate the amount of electricity our customers require as well as the ability of each generating resource to provide electricity at a given time—taking into account elements such as wind speed, cloud cover and weather patterns. Simply put, today’s electric system needs to be more communicative and more flexible—a challenge we’re meeting by investing in a smarter grid, piloting new approaches to energy storage and integrating more flexible conventional generation resources alongside additional renewables.

We also continue to work with our customers to reduce energy demand through a range of energy efficiency and distributed generation opportunities. In fact, between 2012 and 2022, forecasts show PG&E meeting more than 50 percent of the anticipated demand growth in its service area through energy efficiency and generation from combined heat and power and solar at the customer site. As a result, electricity sales are projected to grow at an average rate of just 0.7 percent per year between 2012 and 2022.

Composition of Projected Energy Load Growth
Met by Demand-Side Resources, 2012 – 2022

Composition of Projected Energy Load Growth Met by Demand-Side Resources, 2012–2022
  • 1 PG&E’s combined heat and power (CHP) forecast is based on the rate of historic installations.
  • 2 PG&E recognizes that there is a great deal of uncertainty in any forecast of distributed generation installations. While costs of solar generation have dropped dramatically, the California Solar Initiative program incentives are nearly depleted. The Self-Generation Incentive Program (SGIP) includes CHP incentives, but funding is limited. Additionally, the feed-in-tariff (FIT) for CHP up to 20 MW is expected to result in some generation that offsets customers’ usage, but the tariff was only recently implemented. It is expected that the efficiency requirements of both the CHP FIT and the SGIP program might act as market barriers to CHP installations.

Piloting Energy Storage

As we move to a smarter grid that integrates more renewable energy sources, the potential role for large-scale energy storage technologies is growing—whether in the form of batteries or other devices. Energy storage may be able to provide some of the increased need for operating flexibility; however, it is too early to tell whether and for what applications additional amounts of storage could be cost-effective. Accordingly, PG&E is exploring emerging storage technologies through a variety of pilot projects.

Compress air

PG&E’s compressed air energy storage project could help integrate renewable resources into our energy mix.

PG&E has deployed two battery storage systems to test the operational capabilities of energy storage on the electric grid: a 2 MW system at PG&E’s Vaca Dixon substation and a 4 MW system at a customer site in San Jose. These pilots aim to provide critical real-world data on the technical and financial performance of battery energy storage to inform future decisions about how these assets can serve PG&E’s customers.

PG&E is also developing a project to demonstrate the viability of advanced, underground compressed air energy storage technology. As envisioned, the project would store large amounts of energy from intermittent renewable energy resources that generate at night, especially wind, in the form of high-pressure air in an underground reservoir. The air would then be withdrawn to power an industrial turbine to produce electricity when demand is highest. (Watch a video to learn more.)

PG&E is in the first phase of the project, which involves exploring the technical and economic feasibility of a 300 MW facility with up to 10 hours of storage capability using a porous rock structure for energy storage at a location within PG&E’s service area. PG&E has collected geological samples at two locations and is analyzing the viability of these sites for a future air injection test. By establishing the project’s feasibility, costs and benefits, PG&E is helping to advance a project that has the potential to benefit California and beyond.