What will be the 2050 business model for utilities in California that are being forced by the state to adopt massive renewable energy capacity? That was the basic question asked at a one-day conference held in Sacramento on Aug. 20 by Advanced Energy Economy (AEE), the national umbrella association for renewable energy organizations.
Utility spokespeople roundly supported the concept of expanding their renewables businesses, with a little help from their friends.
“Renewable energy in California is not a zero-sum game,” Elisabeth Brinton, vice president and corporate strategy officer for San Francisco-based Pacific Gas and Electric, said. “We need new partners, but we can provide core solutions and structure across a scale of technologies.”
Ron Nichols, senior vice president for regulatory affairs at Southern California Edison, based in San Diego, said: “We have filed a plan with the [California Public Utility Commission (CPUC)] to give data to customers; sharing it will move the market incredibly quickly.”
He also whimsically suggested that, “we’re going to turn ourselves upside down in the way we do things with renewables.”
Responses to the conference question that were provided by the speakers and attendees did not succinctly overlap enough to define a ready diagram for building the relationship between utilities and renewable energy players. But one clearly echoed suggestion was for more pilot programs between the utilities and new technology and/or renewable energy service providers, particularly in the energy storage area.
Others in attendance pointed out a need for utilities to embrace electric vehicle charging stations not only for consumer use, but also for basic truck transportation, which is inevitably headed toward the electric drive, they predict. Some stakeholders went further, suggesting that the state be a buyer of biofuels and other power sources that reduce greenhouse gases from petroleum-based fuels. In addition, they suggested myriad ways for utilities to help raise building efficiency to 50 percent, including utility bill credits for reductions along with state-enabled utility financing for efficiency investments.
Financing Quandaries
One mechanism for helping to finance renewable energy in California, especially in the often-overlooked commercial sector, is the line of guarantees and loans from IBank, which can support projects with up to $20 million.
“IBank has established the California Lending for Energy and Environmental Needs (CLEEN) Center to encourage public and private investments,” Teveia Barnes, executive director of the Sacramento-based institution, said. “CLEEN also will utilize IBank’s access to capital markets for clean energy and energy efficiency projects, and will help drive energy related projects for state and local government in California through the Statewide Energy Efficiency Program (SWEEP).”
Hospitals, schools and other public or quasi-public entities would be key targets, she added.
One stumbling block to new avenues of renewable financing is the still poorly-understood risk associated with these projects by financiers.
“There has to be a state or larger database to compile financial and project performance to inform financiers of credit risk going forward,” Jeanne Clinton, special advisor to the governor on energy efficiency within the CPUC, said. “The utility role could include providing capital, but we need more solutions for know-how and risk management.”
California 50-50-50 Goals
An often-cited tool at the conference that would expand renewables in California is pending state Senate bill (SB) 350. The bill would create new 50-50-50 benchmarks, raising California’s renewables portfolio standard (RPS) from 33 percent to 50 percent, strive for a 50 percent reduction in petroleum use, and increase energy efficiency in buildings by 50 percent by 2030.
SB 350 makes these standards permanent, trackable and enforceable by enacting them into law and building on the accountability mechanisms already in existence to ensure they are fully implemented. Each of these standards are added to existing clean air, clean energy and climate related statutes that have been implemented for years, according to the bill sponsors, which include California State Sen. Kevin de León and State Sen. Mark Leno.
“Thanks to the ambitious goals it has already achieved, California has become the nation’s leader in energy innovation, and has the business growth to show for it,” Graham Richard, CEO of AEE, said. “Raising our sights higher will keep the momentum going.”
The day before the conference, Richard and two dozen other renewables representatives visited Brown’s office to ask for support for SB 350, among other topics.
Renewable Jobs
Job creation as a function of expanding renewable energy in California is not being overlooked by proponents, though the industry has been criticized for overlooking that issue in the past.
“Enacting SB 350 will create jobs and drive economic growth in California,” Richard said.
In terms of net jobs, Jared Blumenfeld, regional administrator of Region 9 for the U.S. Environmental Protection Agency, predicted during the conference that there will be a stark job impact or about 50,000 new jobs by 2050, “including those jobs lost in fossil fuels.”
Lead image: Wind farm near Tehachapi, Calif. Credit: Richard Thornton / Shutterstock.com
