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Tuesday, September 15, 2009

Business-friendly RE mandates

Today Governor Schwarzenegger again demonstrated what a business-friendly green activist politician looks like. It’s a pretty rare species, and this is one case where it looks like a viable one.

Tuesday, the governor signed an executive order increasing California’s Renewable Portfolio Standard from 20% of 2010 energy consumption to 33% in 2020. At the same time, he has vowed to veto more complex legislation (SB14) that imposes the same standard and more.

The governor’s main objection to SB14 is that the legislature doesn’t want imported renewable power to count. The nominal reason for this restriction is is a promise by key legislators to create “green jobs” are created in California. However, building any power plant (renewable or otherwise) in California is notoriously expensive and time consuming.

The other key issue of SB14 was that it would make it harder to get approval in California to build concentrating solar power plants — one of the most feasible technologies today for utility-scale renewable power production. Thus, the veto won praise from the Independent Energy Producers, a trade association representing the state’s smaller alternative energy producers.

Even with the governor’s flexibility, this new targets outstrip the projected availability of renewable power in the US, currently projected to comprise 8% (excluding hydro) of US energy consumption in 2030. However, as the NYT reports:
Establishing a requirement, however, is far different from meeting it, as California is already finding out. The state’s interim mandate of 20 percent of electricity from renewable sources and energy efficiency by 2010 looks likely to fall short. The San Diego Gas and Electric Company, the furthest behind of the state’s three big utilities, says it currently gets 10 percent of its electricity from such sources.
SDG&E has a particular problem in that its service area (and thus the coverage of its transmission lines) is largely limited to two of the state’s 58 counties: urbanized (or mountainous) San Diego County, and the deserts of Imperial County. CSP plants in the desert could meet some of these needs, assuming SDG&E is ever allowed to build a transmission line from Imperial County.

Under the governor’s more flexible plan, utilities will be able to buy RPS power wherever it is available, at the lowest possible price. This will reduce (but not eliminate) the impact of the price increases on California consumers and businesses; many believe that in the long run renewable power will be cheaper than fossil fuels, but that’s not true today. Of course, imported RPS power will reduce CO2 emissions as much as that produced in California.

While the unmet 2010 goals are a problem, the decade-long lead time will also give more time for utilities, businesses and consumers to plan for the increase. This also gives residential and commercial PV production another decade of slow adoption, and for utility and end-user PV investments to drive down the technologies down the experience curve.

The one substantive criticism of Schwarzenegger’s approach is that (as the Mercury News notes), it can be reversed by a future governor. It makes sense for the governator to negotiate with the legislature to pass a clean bill that enacts his goals into law, allowing both sides to claim victory.

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