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California Adopts Ambitious Renewable Energy Target

California regulators approved a rule that would require the state’s utilities to get a third of their power from solar, wind or other renewable sources by 2020, the most ambitious standard in the U.S., Bloomberg News reports.

The California Air Resources Board voted yesterday at a meeting in Sacramento to require PG&E Corp.’s Pacific Gas & Electric, Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric to meet the new standard. Thirty-three states and the District of Columbia have set renewable energy targets, all of which are lower than 33 percent, according to the U.S. Environmental Protection Agency.

“This standard is going to further diversify and secure our energy supply while also growing California’s leading green technology market, which will lead to cost savings for customers,” Mary Nichols, chairwoman of the board, said in a e-mail statement.

But the goal faces significant challenges. It will require more investment in infrastructure and transmission, and a shorter lead time for projects, says Christine Hersey, an analyst at Wedbush Securities in Los Angeles. The approval process in California now takes years, Reuters reports.

Unless that changes, “it will be hard to meet 33 percent… by 2020 with large scale projects,” Hersey said. She said there may be a trend toward projects in the 20-megawatt range that are “easier to site, permit, finance and connect to the grid.”

Governor Arnold Schwarzenegger ordered the board last year to adopt regulations for the one-third target under the authority of the state’s 2006 greenhouse-gas reduction law. That law could be suspended if voters in November approve a ballot proposition backed by the oil industry. It could also be suspended by the governor, including the new target, for up to a year. Republican candidate Meg Whitman has said she would do this if elected.

California law now requires utilities to get 20 percent of their electricity from renewable sources by the end of the year. The California Public Utilities Commission doesn’t expect that goal to be met and may push the deadline back as much as three years in cases where transmission lines are not available to connect new power plants.

The California legislature last month failed to vote on a bill that would have made the 33 percent target a state law after utilities, environmentalists and labor unions couldn’t agree on how much renewable power may come from out-of-state generators.

Laura Wisland, a clean energy analyst at the Union of Concerned Scientists, said her group wants a 33 percent standard, but not this one, she told the Associated Press.

She said the air board’s plan would actually slow clean technology investment because it allows utilities to meet the entire 33 percent by purchasing “renewable energy credits” rather than actually using renewable energy to supply their customers. The credits would represent renewable power that was generated at facilities outside California and never ends up in the state.

“California doesn’t get any power for that (energy credit) purchase, so we get no greenhouse gas reduction benefits, no air quality improvements and no clean jobs,” Wisland said. “But the utilities still have to provide electricity for customers, and that could still come from fossil fuels.”

Under current law, utilities are not authorized to use any renewable energy credits to satisfy the 20-percent targets. All the energy must be produced in California or in another state connected to its power grid.

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2 thoughts on “California Adopts Ambitious Renewable Energy Target

  1. As always California rolls out the forward thinking, pioneering law! And hopefully as California goes, so will the nation… or at the very least New York and Illinois! But now this regulation differs from prop 23, which is making a lot of noise and would void all of the efforts the state has made so far to clean up its energy consumption?

  2. Over 990,000 rooftops, of the “million solar rooftops” campaign, are still waiting for a reasonable cost model and ROI to go solar and help solve this RES conundrum for the utilities. All with no additional investment required for infrastructure, transmission, distribution, etc. Yet the utilities in CA along with the CEC seem bent on reducing financial incentives leaving the consumer burdened with excessive carrying costs and weak financial returns that often require 25+ years for a simple break-even.

    Perhaps the new RES will force utilities and the CEC to adjust the residential solar incentives to encourage greater adoption of solar in the 5kW and below category. This represents the single largest available market and as noted requires zero utility investment for deployment. Talk about a win-win for everyone.

    Let’s see a $6/w CEC rated AC net power installed incentive and let the utilities keep the RECs in the process.

    Currently at the residential level in the US even when assuming electricity costs of $0.14/kWh, a $1.65/W utility incentive, and the 30% ITC, the installed cost required to achieve a five-year break-even on avoided energy purchases is in the range of $3.75 / watt CEC rated net AC power. Note: any discussion of Peak DC power is meaningless. The grid doesn’t run on Peak DC. We must standardize solar PV quotes on CEC rated Net AC power, post inverter.

    Today that is far from reality. Most quotes we are seeing are in the range of $9.25 – $10+/W CEC rated net AC power installed.

    Most people are not willing to pay more for their energy.

    Further – given the large CAPEX investment required on the front end the lost opportunity costs associated with that investment off-set any potential increase in the future cost of energy.

    Simply put, investing $25,000 at 0% return to avoid a potential (though not statistically correct) future increase in energy costs of 6% on an annual energy bill of $600 to $1000 is a very poor investment. One is always financially better off to invest the $25,000 in almost any other market play including oil & gas exploration or for that matter any solid wind-turbine/renewable/green industry mutual fund, and use their after-tax return to more than offset any future increase in energy costs.

    On the other hand – energy hog homes – those using more than 15 kWh/day average on an annual basis – should first go on an energy diet via the adoption of ENERGY STAY (R) appliances, HVAC, low emissivity windows, increased insulation to the new 2009 IECC standards, adoption of CLFs/LEDs, and associated life-style changes.

    Those actions will provide an immediate demand-side reduction, often generate utility incentives/rebates, qualify for tax deductions/credits, and for energy-hog homes usually bring said home below typical utility Tier/threshold levels where excess demand charges significantly increase the cost of energy. They will usually have a 1 to 3 year simple payback on avoided energy costs on a current cost energy basis.

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