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Landmark Legislation Could Put Geothermal Back on Track for California

The California Assembly is up next to consider a 500-megawatt (MW)-by-2024 geothermal procurement bill. This follows the May 28 passage of S.B. 1139 by the state Senate in a 21-11 vote. Electricity procured under this new geothermal bill would be separate from RPS-counted electricity. Industry, utilities, government agencies, and environmentalists say this bill is an answer that solves many time-sensitive problems at once. Some opponents, as stated in the May 28 Senate floor analysis, asked whether a mandate for geothermal in the case of this bill is fair and cost-effective. But geothermal companies working in California find fairness to be something they have been lacking and see this bill as a potential way to get geothermal valued properly.

Despite being renewable, geothermal is not treated equally in practice under California’s Renewables Portfolio Standard (RPS) program. Bob Sullivan, Vice President of Business Development at Ormat Technologies, says: “California has a preferred loading order, and renewables are at the very top along with distributed generation and efficiency. Then fossil fuels start coming on. But geothermal keeps getting overlooked.” The problem lies in the lack of recognition of geothermal energy’s differences from other renewable sources, and a lack of incentives for the ancillary benefits that make it key to the energy mix.

Local government such as the Imperial Irrigation District (IID), Imperial County agencies, Salton Sea Authority, and others working on the bill are pioneering fairness efforts for legal recognition of the unique values that geothermal energy provides. Geothermal’s characteristic differences from other renewables are apparent in the geography and chemical make-up of the strategically placed Salton Sea geothermal area.

The Salton Sea is currently facing imminent deterioration that would further devastate many of the businesses and inhabitants in one of the most economically challenged areas of California. With its enormous geothermal potential, those involved see no reason for Imperial County to continue having the highest unemployment rate in the state, at 21.6 percent.

Imperial County District Supervisor Michael Kelley says, “As the leading area for geothermal resources in the U.S., Imperial County is very pleased with the progress of S.B. 1139. This bill is critical to address California’s renewable energy needs, our County’s economic needs, and the creation of new and exciting industries. We are proud to partner with IID, labor and environmental groups and others to take this step forward for our State and our County.”

Assemblymember V. Manuel Pérez who co-authored the bill along with State Senator Ben Hueso has stated that the development of geothermal resources in the Salton Sea basin supports local economic development and job creation and could actually fund the Salton Sea restoration.

In part, S.B. 1139 strengthens a regional initiative that addresses the Salton Sea Restoration and Renewable Energy Initiative.  Responding to both environmental and economic needs, over 1,000 MW of geothermal power and important transmission links would be constructed.

“Geothermal, with its ability to provide baseload power with negligible greenhouse gas emissions, has the potential to anchor southern California’s energy needs, while keeping us on track to achieve our state’s emissions reductions goals,” said the Assemblyman.  “Either we are serious about these goals or we aren’t.  At the same time, the development of these resources could produce thousands of jobs for our Coachella and Imperial Valley communities while also serving as a source of financing for Salton Sea restoration.”

However, the Senate Appropriations Committee’s Fiscal Summary high-balls the costs of the program and leaves out the economic benefits. “We expect that the net result of this legislation will be cost-savings for Californians,” says Geothermal Energy Association Executive Director Karl Gawell. “As the E3 report concluded in January, an RPS with greater diversity and more geothermal will benefit the state, consumers and the environment.”

Geothermal’s long-term value has been proven, and since the cost of geothermal operation and maintenance is lower than any of the early development stages, geothermal plants begin making money as soon as they are operable.

Support Builds Steadily for S.B. 1139 on Energy, Water, and Environmental Fronts

Environmental groups like Sierra Club California and Defenders of Wildlife; labor representatives, including CA State Association of Electrical Workers and Desert Valleys Builders Association; water groups, such as IID and Latino Water Coalition; and industry experts have rallied in support of geothermal energy.

Meanwhile, the state’s powerful utilities lined up in opposition including Pacific Gas & Electric, Sacramento Municipal Utilities District, San Diego Gas & Electric, and Southern California Edison.

In April, Senator Hueso and Assemblymember Pérez hosted a Sacramento hearing on the status of geothermal in California. At that hearing, Gawell provided testimony on the values that geothermal energy brings to the state, along with fellow panel members California Energy Commission Commissioner David Hochschild and Executive Director of Independent Energy Producers Association Jan Smutny-Jones. Other witnesses included IID’s General Manager, Kevin Kelley; California Independent System Operator’s Vice President, Karen Edson; and Energy Division Director for California Public Utilities Division Edward Randolph.

“We view SB 1139 as critical to unlocking the vast geothermal energy potential at the Salton Sea and advancing the cause of a smaller but sustainable sea through renewable energy development,” says IID Board President James Hanks. “Senator Hueso and Assemblymember Pérez have provided real leadership in taking up this cause, and IID stands ready to help as the bill moves on to the Assembly.”

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In IID’s view, geothermal energy development holds much promise for answering California’s needs. IID’s official letter of support for S.B. 1139 states, “New geothermal energy on the grid will help stabilize and balance California’s renewable portfolio by adding needed diversity to its reliance on intermittent resources like wind and solar.” (The California Wind Energy Association opposes the bill.)

The statement continues, “The policy direction of [S.B. 1139] could not come at a more critical juncture for the future of the Salton Sea. As you are already aware, the state’s statutory and contractual obligations to mitigate the effects of the country’s largest agricultural-to-urban water transfer and to restore the Salton Sea loom large in light of the rapidly approaching 2017 deadline that will cease deliveries of mitigation water into the Sea.”

The “2017 deadline” mentioned in IID’s letter is a contract known as the 2003 Quantification Settlement Agreement. The Agreement is scheduled to change water allotment in southern California. If nothing is done to help, this will have drastic effects including loss of foods grown in the region, greater unemployment, desert conditions, and specifically, loss of water to the Salton Sea.

Geothermal Will Bring Diversity While Combatting Habitat Decline and Pollution

The Sierra Club is supportive of geothermal as a key component of a diverse renewable energy mix, says Sarah K. Friedman, Senior Campaign Representative, Beyond Coal Campaign, Sierra Club. Friedman sees this bill as having a meaningful impact for California in two ways.

First, she says, it supports the rapid decarbonization of California’s electricity grid. This requires “a diverse mix of clean resources,” she says. “Geothermal provides baseload energy and can balance wind and solar resources by providing power during periods of the day when wind and solar produce reduced power or no power at all, a role which might otherwise be served by fossil-fuel facilities with air and climate impacts. For these reasons, geothermal is integral for higher penetration of renewables without carbon and air quality impacts.”

Second, Friedman says, this bill provides the impetus for increased geothermal development at the Salton Sea. The Salton Sea is home to sensitive bird species and has key environmental impacts on local communities:

“The Salton Sea is located on the Pacific Flyaway, and is an important migratory stopover for many sensitive bird species,” says Friedman. “The Salton Sea has become an increasingly important refuge as the wetlands throughout California have been developed, and a reduced Salton Sea will cause dramatic habitat loss for species that can ill-afford it. Development of geothermal at the Salton Sea could, if properly structured, potentially fund much-needed habitat restoration efforts at the Salton Sea.”

Friedman adds, “A diminished Salton Sea poses a significant human health hazard, since receding water will expose more than 100,000 acres of lakebed, known as a playa, which is made up of silt and fine-grain soil and salt particles.

“This toxic dust can get lofted by desert winds and degrade air quality for residents in the Imperial and Coachella Valleys, impairing public health by exacerbating respiratory conditions, in a region where childhood asthma rates are already three times higher than the state average and unemployment is rampant. It will also have significant impact on California and the nation’s food supply, as the area which is not only a major population center but serves as a major winter vegetable source and a large part of the nation’s food supply, which may be contaminated by dust and particles from the exposed playa.

Friedman concludes: “If properly sited and developed, geothermal development on the playa of the Salton Sea could minimize dust emissions, helping to avoid health impacts to the surrounding communities.”

Of course, it isn’t assumed that all 500 MW would be located in Imperial Valley. The Geysers area in northern California is another geothermal region with additional potential. The CEC would have until June 30, 2015 to determine the proportionate share for each retail seller.

Geothermal Industry Embraces Opportunity in California

Geothermal Energy Association members who actively supported the bill include: CalEnergy, Enel Green Power North America, Energy Source, MidAmerican Renewables, Ormat Technologies, and U.S. Geothermal.

California has a solid geothermal industry that provides more of the total system power (4.4% in 2012) than any other non-hydro renewable. The state’s total capacity is about 2,711 MW.

The Known Geothermal Resource Area in and around the Salton Sea of southern California contains around 2,000 MW of untapped geothermal energy. Overall, GEA estimates about 50% of California’s known resources are still untapped and much of that is ready to develop.

Industry experts have put their support behind the bill, indicating they are ready to fill the request for the additional 500 MW of geothermal power required by the bill.

“Enel Green Power North America is supportive of legislation that furthers geothermal expansion in California,” said Terry Page, Director of Regulatory Affairs at Enel Green Power North America.

“CalEnergy is eager to be a part of the California legislature’s renewed objective to recognize the unique values and attributes of geothermal generation within the renewable energy mix to achieve a reduction in greenhouse gas emissions along with an increase in the State’s Renewable Portfolio Standard,” said Randy Keller, Director of Development, Transmission & Land Assets for CalEnergy.

“We commend Senator Hueso and Assemblymember Pérez for their persistence in spurring geothermal development in California,” said Heidi Bethel, Public Relations Manager at Ormat Technologies.

As of earlier this year, California’s industry reported 25 geothermal projects that are under development already.  Geothermal projects often take about four to six years to complete. Projects qualifying under the potential new law would need to begin construction after January 1, 2015.

The Senate action is a positive sign, but the struggle to pass this landmark legislation is not over yet.  However, if approved by the legislature, and signed by the Governor, the S.B. 1139 implementation timeline would be:

  • January 1, 2015: Geothermal projects that would be included in this mandate would begin construction after this date.
  • June 30, 2015: The deadline for the Energy Commission to determine the proportionate share of the 500 MW of electricity that each retail seller is required to procure. The “proportionate share” will be based on the forecast retail sales for the year 2018.
  • January 1, 2016: The deadline for each retail seller to file a compliance plan with the Commission.
  • December 31, 2019: The deadline for each retail seller to procure at least one-half of its proportionate share of the combined 500 MW.
  • December 31, 2024: The deadline for each retail seller to procure the total of its proportionate share of the combined 500 MW of new geothermal power.

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