What Stands in the Way of California's 33 Percent Renewables Goal?

On April 12, California Governor Jerry Brown signed Senate Bill 2X into law, requiring that 33 percent of the state’s electric generation come from renewable sources by 2020.

Under S.B. 2X, all load-serving entities must meet a 20 percent renewables target by Dec. 31, 2013, a 25 percent target by the end of 2016, and achieve the 33 percent criterion by the end of 2020.

S.B. 2X applies to all electricity retailers in the state – investor-owned utilities, municipal utilities and independent sellers. The current 20 percent renewable energy requirement applies only to investor-owned utilities and independent power producers.

One municipal utility, the Los Angeles Department of Water and Power, has already reached the 2013 goal of generating 20 percent of its power from renewables. Smaller municipal utilities like Glendale, Anaheim, Pasadena and Burbank, are behind at this stage in terms of how much renewable power they have in their portfolios, said Dario Frommer, partner at Mayer Brown law firm.

Most investor-owned utilities in California are hovering just under 20 percent renewables now. While it may seem that investor-owned utilities are close to meeting the 2013 goal, many of these projects are in litigation over siting issues and may not be completed in time to meet the 2013 target, Frommer said.

“It’s incumbent on the political leaders to address the siting issues that are creating problems for financing,” Frommer said. “Those issues are an impediment to realizing the 33 percent goal.”

Concerns over siting issues and financing may abound, but S.B. 2X is expected to bring stronger solar and wind markets to the state. During the signing ceremony, U.S. Energy Secretary Steven Chu said he sees the measure as a model for other states. Chu also announced a tentative commitment of $1.2 billion in loan guarantees for a 250 MW solar energy project in San Luis Obispo County.

Jenya Meydbray, CEO of Berkeley-based PV Evolution Labs, said S.B. 2X creates long-term sustainability in the California solar market. “The lack of long-term policy foresight has been one big challenge for solar manufacturers in North America. This new law solidifies California’s dedication to developing a sustainable solar market, which will in turn enhance solar’s viability as a job-creating industry.”

Solar won’t be the only renewable energy to brighten in the Golden State. According to the American Wind Energy Association (AWEA) Annual Market Report for 2010, California came in third for the most wind capacity installed in 2010, totaling 3,177 MW of total capacity. Wind growth in California is expected to continue with the implementation of S.B. 2X, said Denise Bode, CEO of AWEA.

“California understands the direct link between sound policy and renewable energy’s multiple benefits … California has already seen the jobs and economic development that follow when the right policies are put in place to create a stable business and investment environment,” Bode said.

Since it was passed during a special legislative session, S.B. 2X is not expected to take effect until early July.