Energy-Initiative-Roadmap-Final-June-2017

Executive Summary As the Port of Long Beach the Port moves toward a goal of increasing zero-emission operations, our reliance on electrical power is dramatically increasing, and there is

P ORT O F L ONG B EACH

JUNE 2017

Contents:

Executive Summary 1

Introduction 3

The Energy Initiative and the Port’s Strategic Plan 4

The Energy Initiative Supports Environmental Stewardship 5

Current Assets and Future Energy Needs 5

Energy Initiative Drivers 7

Partnerships and Advisories 9

Advocacy 10

Approach to Program Development 10

Studies 10

Near-Term Priorities 12

Funding 15

Strategic Energy Planning Process and Long-term Approach 16

Conclusion 16

Glossary 18

Executive Summary

As the Port of Long Beach (the Port) moves toward a goal of increasing zero-emission operations, our reliance on electrical power is dramatically increasing, and there is greater need for resiliency in the electrical system and stabilized costs for energy On-terminal electricity usage is predicted to quadruple

by 2030, compared to 2005 levels At the same time, the electrical grid is aging and its long-term energy costs are not predictable The Port’s Energy Initiative will improve port-wide energy management and infrastructure to provide system resiliency, create long-term cost stability, provide value for our

customers, and create new business opportunities, while achieving the Port’s environmental and

regulatory mandates

The Port adopted an Energy Policy in 2013, with objectives to reduce reliance on limited natural

resources, work with customers on mutually beneficial energy choices and infrastructure, promote energy conservation and efficiency, optimize generation of alternative and renewable energy, foster innovative energy technologies, and ensure a safe and reliable energy supply to support continuity of Port operations The Port’s Energy Initiative is the program that will implement the Port’s Energy Policy

The Port’s initial energy planning efforts have focused on education, data gathering and forecasting, developing partnerships, technical collaborations, and promoting energy efficiencies As the Port moves forward with further implementation of the Energy Initiative, we will follow a step-wise approach, with continuous evaluations and check-ins to ensure we stay focused on the priority needs and make smart decisions about where to focus our resources We anticipate following the approach outlined below:

Energy Initiative Priorities

Near-term (1 year) • Refine the scope of the pilot project at the Joint Command and

Control Center (JCCC) to incorporate solar generation, energy storage and microgrid controls, and submit an application for California Energy Commission grant funding (solicitation anticipated summer 2017)

• Secure technical resources to assist with Energy Initiative development and implementation, including contracts with the National Renewable Energy Laboratory (NREL) and technical consultants

• Continue to implement the Energy Efficiency Rebate Match (EERM) program to provide incentives for port tenants to reduce energy use Consider modifications to increase participation

• Continue to gather technical information on power generation technologies to supplement existing white papers and studies, including information on available geothermal energy resources

• Prepare a forecast of potential future energy needs, including the anticipated energy demand associated with zero-emission equipment deployment

Energy Initiative Priorities (cont.)

Mid-term (2-5 years) • Continue to gather the latest technical information on power

generation technologies to best meet the Port’s Energy Initiative goals and objectives

• Continue to implement the Energy Efficiency Rebate Match (EERM) program to provide incentives for port tenants to reduce energy use

• Implement JCCC pilot project and evaluate use of technologies for future applications in the port

• Refine the scope of the pilot project at the Maintenance Yard, and seek grant funding as available to initiate the project

• Prepare a Strategic Energy Plan to outline the Port’s energy-related goals, specific objectives, technical alternatives and strategies, and decision-making approach Include prioritization of meeting critical loads first, and long-term implementation

• Develop design standards for new energy infrastructure

• Develop electrical infrastructure plans and proceed with capital improvement program to support zero emission terminal equipment deployment

Long-term (5+ years) • Ongoing implementation of Strategic Energy Plan and emerging

technology demonstrations

• Design energy infrastructure into new capital improvement projects

Introduction

Preparing for the future energy needs of the Port of Long Beach (the Port) has been a priority for more than a decade In this document, the Energy Initiative Roadmap, the Port describes the rationale, goals, and process by which it will move forward to ensure that the energy systems that will power the “Green Port of the Future” can operate reliably and competitively

Energy planning groundwork began in 2005, when the Board of Harbor Commissioners (the Board) adopted the Green Port Policy, which established the Port’s environmental priorities and set the

direction for addressing our environmental impacts The Port recognized that some of the strategies resulting from the policy would have significant energy implications These strategies were outlined in the subsequent 2006 San Pedro Bay Clean Air Action Plan (CAAP) For example, the Port committed to shore power for container vessels and also described the need for technologies that replaced diesel engines with alternative-fueled or electric-powered equipment to meet our long-term emission

reduction goals As shore power implementation proceeded and demand escalated, the Port needed to ensure that adequate electricity was available and that costs associated with greater electrical power use would be economically viable for our customers As a result, staff worked closely with Southern California Edison (SCE), the Port’s electricity utility, and the Board approved significant investment toward enhancing electrical infrastructure New substations, transmission and distribution lines, and other ancillary infrastructure was installed, and the Port negotiated a new rate structure for most of our tenants This valuable experience offers a strong foundation of success to build upon

In 2013, recognizing the continued need for energy planning, partnerships, emerging technologies, and the various opportunities available to meet those needs, the Board adopted the Port’s Energy Policy This policy outlined six broad goals to guide Port energy decisions and designs:

1 Reduce the Port’s reliance on limited natural resources

2 Work with customers for mutually beneficial improvements to energy choices and

infrastructure

3 Promote energy conservation and efficiency

4 Optimize generation of alternative and renewable energy

5 Foster innovative energy technologies

6 Ensure a safe and reliable energy supply to support continuity of Port operations

The policy also described a framework for its implementation:

1 Collaborate with City departments, tenants, shipping lines, marine terminal operators, utilities, universities, the Port of Los Angeles, labor and other stakeholders to implement cost-effective energy efficiency, conservation, resiliency, and renewable energy generation measures

2 Evaluate existing Port energy use to establish a baseline from which to measure goals and opportunities for improvement

3 Establish goals and targets to achieve these measures and develop specific metrics to measure progress toward meeting the goals

4 Align the Port’s energy program with other Port policies, plans and programs

5 Seek funding for these activities through grants and partnerships

6 Maintain a diverse portfolio of cost-effective energy efficiency, conservation, resiliency, and renewable energy strategies and provide incentives to the Port community in furtherance of these strategies

7 Identify emerging technologies for energy efficiency, conservation, resiliency, and renewable energy generation, and establish a process for the evaluation and deployment of these

technologies

8 Further local, state, and federal legislative proposals in support of this policy

9 Provide periodic reports on these activities to the Board and the City Council detailing progress and achievements

It is the Port’s Energy Initiative that will implement the Energy Policy

The Energy Initiative and the Port’s Strategic Plan

Building infrastructure to support increasing energy loads will not be as simple as providing additional substations and electrical outlets The Port must think strategically about the types of infrastructure and equipment it will need to meet our environmental objectives while simultaneously providing the greatest value and security for our tenants and other stakeholders

Indeed, the Port’s Fiscal Year 2017 Strategic Plan identifies our Value Proposition as:

Customers choose the Port of Long Beach because we are the greenest, most reliable,

and most cost-effective gateway for the movement of goods to America’s major

consumer markets

The Port’s Energy Initiative can support our “greenest” value through:

• Energy efficiency – in marine terminal design as well as retrofits for existing structures and equipment

• Renewable energy generation – such as the rooftop photovoltaic systems or solar carports that are already being integrated into Port projects

• Near zero- to zero-emissions – in vehicles and equipment used on Port terminals and other operations

The Port’s Energy Initiative can support our “most reliable” and “cost-effective” values by:

• Minimizing potential losses or downtime by providing alternative (to grid) power in times of emergency or planned outages This may be in the form of on-site energy storage or

self-generation

• Testing energy strategies with minimal disruption to Port tenants

• Developing and analyzing metrics for cost-effectiveness that incorporate capital costs,

operational costs, life cycle (including, potentially, disposal), risks and delays, and alternatives Reliance on a single, vulnerable grid could cost Port customers hundreds of millions of dollars in lost

labor and cargoes if an outage occurs

A comprehensive approach to resiliency and risk management for all Port operations enhances the Port’s value proposition and should be one of the key attributes of the Port’s Energy Initiative

The Energy Initiative Supports Environmental Stewardship

The Port is currently working on our third iteration of the CAAP, which will include a greater focus on implementation of zero-emission equipment technologies over the next 15 to 20 years The CAAP will also identify the related energy needs, such as electrical infrastructure and alternative fuels to support deployment of those technologies within the timeframes identified The Energy Initiative provides the link between CAAP strategies to lower air emissions and the engineering and infrastructure necessary to make these strategies successful

In addition to the Port’s energy policy and planning efforts, state and other local agencies have also been working to integrate energy planning with environmental and transportation planning The

Governor’s Executive Order B-32-15 was adopted in July 2015 in order to support the state’s freight transportation system, achieve air emission reductions through a transition to zero-emission

technologies, and ensure continued economic competitiveness Energy planning and investment in energy resources is an integral component described in the Order The effectiveness and sustainability

of energy planning efforts will be dependent upon the extent to which the planning body considers and addresses all of the various related components, including air quality and transportation This integrated planning approach is being carried through in efforts like the California Sustainable Freight Action Plan

Current Assets and Future Energy Needs

In mid-2015, the report “Electrical Power Risk Assessment and Planning for Standby System Equipment” was completed in support of the Port’s business continuity efforts The report identified several risk factors for power interruptions that could affect long-term terminal operations The report assessed current electrical infrastructure in the Port, prioritized critical loads, and identified where to apply standby power to keep those critical loads operating The report emphasized the need to procure a fleet

of traditional standby power (i.e diesel generators) but also highlighted the opportunity to integrate cleaner power under the Energy Initiative as it develops

Building upon the Electric Power Risk Assessment work, the Port commissioned development of a Baseline Power Demand Assessment, completed in 2016 The expanded study looked at port-wide utility power demand for a 12-month period from 2014 to 2015 Results show the Port requires

between 10-14MW for base load, and approximately 40MW for coincident peak demand

These estimates do not account for the Port’s Middle Harbor operations, which were under construction during the time the study was conducted However, the study estimated that a fully-electrified marine container terminal would use about 4 times more power than a traditional container terminal

Additional shore power requirements under the California Air Resources Board (CARB) rule that

increased in 2017 and will continue to increase in the next few years were also not accounted for in this study, nor was additional electrification of terminal equipment throughout the Port At the time of this study, shore power accounted for 19% of the total energy used

As the Port moves toward a zero emission future, our power demand will significantly increase

Modernization of the remaining marine terminals at the Port could quadruple port-wide electrical demand the next 20-30 years

To forecast future energy demand, the Port will integrate information from a variety of sources The Port is currently engaged in several initiatives that will influence our energy needs At the core of these initiatives is the Port’s Strategic Plan, which provides goals and objectives for various long- and short-term Port programs The Energy Initiative must align with the mission, vision, and values stated in the Strategic Plan, and provide cost-effective alternatives to meeting the Port’s strategic goals

Other Port programs, including the CAAP, the Port Master Plan update, Supply Chain Optimization, Sustainable Design Guidelines, and Business Continuity, are moving forward simultaneously The energy needs of these programs will continuously inform, or be informed by, the Energy Initiative efforts For

example, the CAAP may provide information about the potential deployment of electricity-intensive technologies in Port operations and the supply chain optimization efforts may identify efficiency

improvement strategies that have energy demand implications The Energy Initiative can also inform other efforts For example, it may help identify siting requirements for energy facilities in the Port Mater Plan or updates to the Sustainable Design Guidelines to include advanced energy infrastructure and controls during construction to avoid costly retrofits later

It is critical that energy planning efforts are coordinated with other Port initiatives and capital programs and that these efforts are checked and updated as the Port’s strategic goals are met or reprioritized

Energy Initiative Drivers

There are several specific drivers that compel the Port to engage in energy planning As discussed earlier, the Port’s power demand in the future will significantly increase Yet, technologies relating to energy, such as generation, controls, storage, and distribution are dynamic, and could significantly improve the Port’s ability to maintain reliability, resiliency, and long-term cost-competitiveness

The Port currently relies on SCE’s grid for electricity distribution, including the distribution (tie-in) of self-generated power The U.S Department of Energy (DOE) has predicted that, due to a variety of factors like severe weather events, equipment failures from aging infrastructure, and cybersecurity attacks, the frequency and duration of grid outages is anticipated to increase A 2015 study, Assessing Changes in the Reliability of the U.S Electric Power System (Lawrence Berkeley National Laboratory), found “a statistically significant trend in increasing annual average duration of power interruptions” over a 13-year study period This trend, to a large extent, is attributed to extreme weather, including abnormally windy, cold, and wet climate events The report also found that the frequency of power outages is increasing for the same reasons

The downtown area of Long Beach experienced the effects of a multi-day power outage during the summer of 2015 which resulted in negative economic and quality of life impacts to the public While the Port has a more modern grid infrastructure than downtown Long Beach, it is still vulnerable to potential outages As marine terminal operations become more dependent on electric power, adequate reliable power must be available so those operations can continue uninterrupted The economic consequences

of a port wide power outage could be significant Rough estimates of financial loss from a 1-day port-wide power outage could include over $100 million in spoilage of perishable cargo, and lost labor costs and wages

The Governor’s Executive Order, the priorities outlined by the regulatory agencies, and the Port’s

priorities for air emission and greenhouse gas reductions reflect technological innovations in marine transportation equipment that rely primarily on non-fossil fuel sources As a result, environmental planning and energy management need to be integrated to support these efforts and ensure their success Future energy projects offer an opportunity for furthering progress toward meeting the Port’s Green Port Policy goals Demonstration of green power options will result in reduced greenhouse gas

emissions by the Port and marine terminal operations The Port may be able to leverage the current momentum and interest in renewable energy and energy technologies by the regulatory agencies, and their apparent interest in dedicating resources, both in terms of technical support and funding

opportunities

As Port tenants consider investments in greater electrification, an increasing proportion of their

operating costs will be associated with procuring power Future energy costs can be predicted by analyzing past increases, but energy generation and transmission paradigms are vulnerable to rapidly-changing technological, economic, and political factors Securing energy resources that can provide long-term cost stability for our tenants adds to our value proposition and would give the Port of Long Beach a competitive advantage for attracting and maintaining customers Potential new customers interested in modern, reliable infrastructure – particularly for energy intensive uses like cold storage— may be attracted to business with the Port of Long Beach as result of predictable costs associated with newly procured energy resources

The Center for Labor Research and Education at the University of California reports that since 2012, over 30,000 jobs have been created in California due to the advancement of clean power As a direct

consequence, they estimate that $46.6 million has been invested in apprenticeship training The Port’s Energy Initiative could provide partnership and training opportunities in association with labor

apprenticeship programs and support the City’s desire to become an important technical innovation hub

Finally, the Port has an interest in evaluating the energy system and optimizing its effectiveness on a port-wide basis – a systems integration approach SCE is doing this type of assessment on a grid-wide scale The Port’s focus is much narrower and specific to ensuring our system meets the needs of Port users in the most economical and efficient way A well-planned, system integration approach will allow

us to best match the various sources of power - such as on-site generation, storage, grid power, and fuels – with the energy demand over a port-wide area, which provides greater efficiencies and

minimizes waste Many tenants are considering on-site power generation through solar or other

technologies The Port is uniquely positioned to help integrate these systems, and to help make sure the right choices are made for the overall benefit of the Port and our tenants, to preserve future resiliency and flexibility, ensure that the various systems are able to communicate securely, and to maintain an appropriately-sized system

Goal Statement:

The Port’s Energy Initiative will improve port-wide energy management and

infrastructure to increase system resiliency, provide long-term value, and

create new business opportunities, while achieving the Port’s environmental