Green power surges in Calif. as utilities eye mandate
The Golden State last year added 830 megawatts of wind and solar energy, capacity that at peak power would supply about 400,000 homes. It was the largest annual increase since the inception of California’s renewables portfolio standard (RPS), a program requiring utilities to make portions of their power from clean sources.
The renewables market is “robust, competitive, and has matured,” since the 2002 start of the mandate, the California PUC said in its RPS fourth-quarter 2011 report.
“We’ve actually created an entire market that didn’t exist” in 2002, said Paul Douglas, supervisor of the RPS program at the CPUC. “This is a major infrastructure investment that’s unparalleled anywhere in the United States.”
The RPS report, which will be given to the state Legislature, complies information from contract solicitations that the largest utilities put forward each year. It details how close power companies are to meeting the state’s green electricity requirements.
The state has one of the most aggressive renewable power mandates in the country. By 2020, it wants the largest utilities to make 33 percent of their power from green sources. Gov. Jerry Brown (D) has said that he considers that level “a floor, not a ceiling” (E&ENews PM, April 12, 2011).
Overall drop in power prices
The governor and his supporters say that the standard is fueling investment in the state and spurring job creation. Critics, however, argue that the state’s environmental hurdles will make it difficult to reach that green goal and that the state’s transmission system will need major upgrades to manage green power levels above 20 percent. They also note that utilities haven’t yet hit the 20 percent mark they were supposed to reach in 2010.
California’s three largest power companies combined in 2010 made about 17 percent of their electricity from green sources, short of the 20 percent mark they originally were supposed to have met two years ago. The state’s Legislature since has moved out that deadline, and utilities now need to average that level for the period between 2011 and next year. They are expected to reach that 20 percent requirement based on contracts filed with the CPUC.
Power prices are tumbling, the report says, with the average bid last year 30 percent lower than those seen in 2009, the CPUC said. The amount of energy reflected in the bids was up 300 percent from 2009, Douglas said.
The biggest power companies for last year submitted to the CPUC 68 contracts representing 4,525 MW of renewable capacity, the report says.
“The market, especially for solar PV, has matured meaningfully over the last two years, as measured by an increase in experienced market developers, an increase in projects with high viability, and a significant decrease in bid prices,” the report says.
Power years away
Some green power advocates cautioned, however, that while there is good news, it’s not all positive. Obstacles remain to getting renewable projects built, said Adam Browning, executive director of Vote Solar, a San Francisco-based nonprofit.
“Through the history of the program, there’s been quite a few contracts that have been signed that did not come online,” Browning said, because they were canceled or the terms were changed. “There has been a concern how many of these contracts that have been signed and sent to the commission for approval are the real deal,” he said.
Contracts utilities have submitted often reflect projects that will not be completed for several years, Browning noted.
“Building any of these plants, it just takes a while to do this,” Browning said. “You see a lot of signed contracts. They’ve got delivery dates that go out a bit. What we want to see is not just contracts but actual clean electrons.”
There have been concerns about keeping costs affordable for consumers, he said, and there remain challenges on where developments can be built.
Other advocates worry that the RPS has fueled development of mega-projects versus smaller-scale developments located closer to cities — known as distributed generation.
Utilities tend to prefer large-scale projects because they see them as the easiest, least costly way to hit their RPS mandate, said Ted Ko, associate executive director of Clean Coalition, a nonprofit advocacy group funded by foundations. But there are greater benefits, he said, with distributed generation.
More competition and consolidation
“We should be encouraging that market segment,” Ko said. “The RPS has essentially ignored that market.”
Bid prices for large scale projects are averaging about 10 to 14 cents per kilowatt-hour, Ko said. But that figure leaves out the costs incurred in building needed transmission, he said. That typically adds 1 to 3 cents more per kilowatt-hour to the cost, he said.
While distributed power might have a higher “sticker price,” Ko said, there would not be additional transmission costs. As well, he said, with larger projects, “you lose anywhere from 3 to 8 percent of the energy just moving it.”
As vibrant as the renewables market is, some caution it could be headed for a bust.
“There’s increased competition,” the CPUC’s Douglas said at a conference last week. “That’s going to put downward pressure on price.”
Already there are company consolidations under way, Douglas said. “Everyone’s laying people off.” Lower prices for solar and wind might disadvantage other renewable power types and “decrease technology diversity,” Douglas added, asking: “Is that a good thing or a bad thing?”