Baseload, Geothermal

California Takes Steps Toward a New Policy Structure for Renewable Power

The California legislative session that ended last week saw geothermal initiatives at the forefront of public discussion. Geothermal supporters sought to take steps towards a new policy structure that should favor a diversity of renewable technologies. Positive accomplishments included a first-ever Geothermal Awareness Day that brought operators from all over the state to the Capitol to raise geothermal’s profile.

Another success was the passage of AB 2363, sponsored by Rep. Brian Dahle, R-Lassen, which requires the Public Utilities Commission (PUC) to incorporate integration costs into procurement decisions.  This is a good first step given that the failure to consider integration costs has been a major contributor to the unbalanced procurement of recent years and has disadvantaged resources such as The Geysers, the world’s largest geothermal energy producer, from being awarded new contracts despite its local and environmental benefits.  

Another bill the State legislature considered, SB 1139, sponsored by State Sen. Ben Hueso, D-San Diego and Assemblyman V. Manuel Pérez, D-Coachella, would have directed the state’s investor-owned utilities to procure 500 MW of new geothermal power. While the sponsors ultimately withdrew the bill prior to bringing it to the floor of the assembly for a final vote, it did shine a light on the plight of contracting geothermal resources and the economic and environmental benefits these resources provide including possible answers for the serious problems and unique opportunities facing communities around the Salton Sea.

At the GEA Summit in Reno last month, we heard from a range of different experts that as the state implements AB 32 and dramatically expands the percentage of renewable power it uses, it will need additional approaches to build on the Renewable Portfolio Standard (RPS) policy structure.  RPS policies were intended to bring a measure of new renewable power into the market. They typically favored new over existing power facilities and weren’t designed to incorporate capacity, ancillary grid services, and other important factors into their valuation methods. Geothermal can provide many of these services, and properly valued, geothermal is an affordable choice for Californians, particularly when all of the reliability, economic, and revenue factors are fairly compared.

This transition to a non-carbon economy will also take billions of dollars of new investment and needs to be completed in a relatively short period of time.  The California Council on Science and Technology’s report “California’s Energy Future – The View to 2050” stresses how dramatic the change will be and raises concerns about the level of new capital investment it will involve.  So, it will be important for public policy to sustain and encourage reinvestment in the existing base of renewable power projects in the state. 

Further, the state’s policies for the future need to facilitate contracting opportunities for existing geothermal facilities as well as the expansion of new geothermal power in California.  In addition to the significant contribution existing geothermal provides, the state has a large, untapped resource that can be utilized to provide firm and flexible power as needed by the system.  Doing so will help minimize total transition costs and ensure power reliability.  It can also help address environmental problems such as mitigating expected hazards from the changes underway impacting water, wildlife and human health at the Salton Sea. 

The state’s future policy structure must be designed to achieve more than just promoting new renewable investment.  It will also need to build on the existing renewable power base, support a reliable power system, promote a diversity of technologies, achieve significant renewable power growth, enhance environmental quality, and of course reduce carbon emissions.

It appears this timely transition beyond RPS-based policy has begun, but there is a lot more work to do.  We expect the legislature to resume consideration of these and related measures when it meets after the upcoming elections.  Meanwhile, we hope the Governor, the California Public Utilities Commission (CPUC), the California Energy Commission (CEC), and other state agencies will continue their efforts to build upon this work.   GEA and its members stand ready to support them to help secure for Californians the full benefits of their investment in renewable energy.

Lead image: Geothermal plant via Shutterstock