California Enters the Renewables Tug-of-war

At a time when some legislators are pulling for the developments of renewable energy, a ballot initiative known as Proposition 23 is tugging in the opposite direction. In a state with a 12.4 percent unemployment rate, the debate over whether a renewable energy standard will create or kill jobs has been heated. The tug-of-war for renewables’ future in California – and possibly nationwide – is in full force.

A.B. 32, the 2006-implimented law in question, requires cutting carbon and other greenhouse emissions to 1990 levels by 2020 by mandating power companies to cap their emissions and by slashing carbon in gasoline. Some oil industry leaders said it would necessitate investing millions of dollars to comply, forcing companies to cut jobs and raise the price of gas at the pumps.

On Nov. 2, Californians will vote on Proposition 23, which has been created to suspend the law from going into effect in 2012 until state unemployment falls to 5.5 percent or lower for at least four consecutive quarters. Since that has happened just three times over the last 40 years, the passing of the proposition could efficiently kill A.B. 32.

Largely behind the financial support of Proposition 23 are Charles and David Koch, the Kansas billionaires who own the oil company Flint Hills Resources. With their contribution, backers of the proposition have raised $8.2 million, with $7.9 million coming from energy companies outside of California.

The California power industry is stuck in the middle of the debate, with developers unsure whether to move forward full-force in establishing higher percentage renewable portfolios, or to pull back because of uncertainty over A.B. 32’s future.

Some large developers continue to push forward. On September 22, the California Energy Commission approved plans from BrightSource Energy Inc. to build a 370 MW solar plant in the Mojave Desert. 

Still other solar companies are in limbo until the threat of Proposition 23 has been lifted.

Mike Hall, CEO of San Diego-based Borrego Solar, said that power companies approach Borrego for solar consulting or installations because they have an initiative to reduce carbon emissions and develop renewable energy portfolios, and that Proposition 23 brings a degree of uncertainty to these efforts and the power sector at large.

“Everyone is expecting the market to be driven by the renewable portfolio standard and the value of carbon reduction,” Hall said. “If we start to bring those things into question, it becomes very unclear where the industry in California goes next.”

Outside of California, Hall said the passing of Proposition 23 could cause reticence toward carbon legislation and renewable portfolio standards.

“I think it would motivate those businesses who have an interest in drilling down those regulations to try harder in other states,” Hall said. “Pennsylvania, Massachusetts, New Jersey and many other states are emerging as solar players as well, and that is largely due to progressive policy.” 

Hall said that short-term, Proposition 23 would stall renewable energy growth in California, but long-term it could also have damaging effects on nationwide solar and renewable energy policies. 

Skyline Solar is a 2007 start-up solar technology company based out of Mountain View, Calif. Tim Keating, vice president of marketing and field operations, said that while he does not see the passing of Proposition 23 to be likely, it could cause California solar companies to focus on overseas exports to countries more welcoming of renewables if it did pass.

“We need a healthy home market,” Keating said. “Until Congress gets a renewable energy bill, we need the states to innovate.”

Keating said the potential passing of Proposition 23 would have more long-term effects, pulling California out of the leadership position in renewables it has established and weakening nationwide renewables legislation.

“Long term, it would back flight the momentum we’re gaining towards a real renewable energy policy.”

For now, California power companies watch carefully to determine their next step, enduring the game of tug-of-war until the outcome of the Nov. 2 Proposition 23 vote deems them winners or losers.

This article was reprinted with permission from Power Engineering as part of the PennWell Corporation Renewable Energy World Network and may not be reproduced without express written permission from the publisher.