Jennifer Runyon, Managing Editor, RenewableEnergyWorld.com
August 27, 2012 | 23 Comments
About one year ago, California made history by enacting a law that would require the highest amount of renewable energy to be incorporated into a continental state's energy mix: 33 percent by 2020. That number is at least 8 percent higher than the next most aggressive state renewable portfolio standards and upwards of 10 percent more than the average renewable portfolio standard for all the states in the nation.
For background, a renewable portfolio standard is a law passed by the state legislature that compels all or certain utilities in that state to source a set percentage of the energy they supply to their ratepayers from renewable sources. States have various definitions of renewable sources but for the most part, wind, solar, small-scale hydropower, biomass, and geothermal energy used for electricity apply. Only some states allow thermal renewables to go towards RPS requirements like solar water heating or biomass heating and cooling but that is starting to reverse.
In any case, California embarked on its most aggressive quest to employ more renewable energy than any other continental state in the nation and so far the state has done very well in meeting its goal. As of July 2012, each of the three major investor-owned utilities were showing that about 20 percent of the energy they provide to their ratepayers comes from renewables and many other projects are underway. ‘You know, we’ve seen significant increases in installed capacity really even in the last six months,’ said Joe Weidman, a partner with law firm Keyes, Fox and Wiedman, LLP. ‘The last report that was sent to the legislature had I believe it was PG&E and SDG&E down in the teens, SCE in the high teens,’ he continued.
But if you look at the latest figures, everybody’s up over 20 percent. I mean things are really starting to move,’ he concluded.
Ben Higgins, Director of Government Affairs with Mainstream Energy, an integrated solar solutions provider, concurs: ‘California is where the future happens first and not just in solar but in lots of other things,’ he said. Higgins feels there is no question that California will meets its goal. ‘When we look at the responses to the solicitations that utilities have offered, as of late for larger-scale, utility-scale, in-front-of-the-meter solar projects, [because smaller-scale residential and commercial projects aren’t eligible] the response has been overwhelming,’ he said.
‘By way of example,’ he continued, ‘the request for offers made by the three investor owned utilities in California late last year, saw 91 gigawatts worth of projects bid in to that single solicitation. I mean, that’s more bid into the single solicitation than would be required to meet the RPS in 2020,’ Higgins said.
And the goal remains excellent. Almost all renewable energy executives agree that it is a victory for renewable energy that California even passed such an aggressive RPS. But what many analysts and solar industry executives familiar with the California market question is the infrastructure, the real means of getting all that renewable energy in the ground. Many experts believe that the state just doesn’t have enough in place to seal the deal.
‘I think it is a difficult goal to reach when you take a look at the problems California is experiencing in terms of its budget,’ said Paula Mints an analyst in the energy practice with Navigant Consulting. ‘Recently, we had a large city [Stockton] go bankrupt,’ she said. With large cities struggling, utilities struggling, people struggling, social services being cut, she said that she believes the state should keep the goal but understand that California’s infrastructure ‘is not prepared for that much renewables.’
Infrastructure is defined as transmission and money and according to Mints the money just isn’t there, nor is the transmission. A report issued by the California Energy Commission shows that the total cost of transmission to meet the 33 percent by 2020 goal is $7.2 billion dollars. A list of the twelve transmission upgrade projects, their approval status and the renewable potential they provide is below.
Mints remains optimistic that the state will do what it can but said that the goal will take a long time to reach. ‘Obviously I believe that we are in the beginning of an energy revolution and to make that happen is going to be a long, hard struggle.’
According to a report issued by consulting firm MRW and Associates, based in Oakland, California, even though California ‘aspires to be the renewable energy promised land, there are numerous obstacles to converting the megawords into megawatts.’ The firm said that to meet the 33 percent goal, seven additional power lines must be built at a cost of $12 billion, a much higher estimate than the CEC’s $7.2 billion. In addition, the firm also points out that not only will the cost of all that transmission be astronomical, significant siting hurdles will also have to be overcome.
Michael Ludgate, Senior Director of Sales with Sharp Solar agrees that the goal is worthy but not reachable: ‘I love the objective. The goal is good. The question is [then] is the rest of the infrastructure in place? I don’t mean utility infrastructure. I mean the money, the incentives,’ he said.
According to a recent article from the LA Times, California’s budget deficit hit $16 billion in January, which means that more cuts will need to be made in order for the state to balance its budget just this year alone. Finding billions of dollars more for new transmission lines and transmission upgrades could prove to be problematic, especially for a state grapping with unemployment above 10 percent and a real estate market that has lost as much as 35 percent of its value since the housing bubble burst in 2008.
Evan Vogel, VP of sales for Ampt, a company that makes optimizers for solar power agreed that the money California needs to meet its goal just isn’t there: ‘You’ve got the bragawatts and the megawatts,’ he said. ‘So the answer is no [the state won’t meet the RPS]. And it’s not because of anything else except funding. The state can’t afford anything and the deals are out of the money,’ he said.
Mints takes a very realistic look at the landscape and pointed out that California has often struggled for funds: ‘In market research, you shouldn’t take anything out of context and solar operates in the ecosystem of the world,’ she said. ‘So what is happening around solar affects whether or not the market is there. For example, I remember when PG&E declared bankruptcy many years ago. ‘