The Transmission Agency of Northern California (TANC), a public power joint action agency made up of fifteen municipal power agencies gave up on plans to build a 600-mile, $1.5 billion high-voltage power line in the face of public opposition that caused several of its most vocal supporters of renewable energy to back out leaving the project without adequate funding support to continue.

The Sacramento Municipal Utility District (SMUD) was the first to bail out in the face of landowner opposition to building the line. As the largest participant in the project contracted to take 35% of the project budget, SMUD bet big on the project to bring to Sacramento access to some of the region’s substantial renewable energy potential.  When SMUD backed out two other key players, Modesto and Turlock Irrigation Districts feared being stuck with picking up the SMUD share which drove the cost out of reach.

Delivering on Renewable Energy’s Potential is a Growing Financial Risk

The California Energy Commission estimates that Northern California has the potential to deliver an additional 11,000MW of wind, solar and geothermal energy to help achieve California’s ambitious 33% renewable portfolio standard goal.  Northwest Nevada has potential to add another 2200 MW of renewable energy to the WECC market.  But getting that clean, renewable energy to market at an affordable price is the challenge.

There are three major financial risks associated with the growing reliance on renewable energy to meet our future power needs that are not being adequately considered in the rush to embrace clean energy sources to reduce emissions:

Risk # 1: Inadequate Transmission to get Renewable Energy to Market.  The backbone WECC transmission system was designed to move high voltage bulk power from the large hydropower facilities of the Pacific Northwest to Southern California.  While there may be some “wiggle room” for non-dispatchable renewables North and South, it is much more difficult to move power East and West in the WECC market.

The region’s transmission planners say don’t count on moving lots of renewable energy on the existing high voltage transmission system without facing bottlenecks, congestion, and higher congestion prices. Here is the link to the map for the proposed TANC project that was cancelled.  This is hardly densely populated urban areas we’re talking about folks.  See: MAP: http://www.sacbee.com/ourregion/story/1850173-a1863214-t46.html.

This is the same problem in Southern California where a substantial amount of solar potential exists but the transmission bottlenecks between Arizona generation and the California consumer limits its access.  It is for exactly this reason that the US DOE designated one of the first National Interest Electric Transmission Corridors (NIETC) in the Southwest.

Risk # 2: Green is not a Defense from NIMBY. Interior Secretary Ken Salazar’s announcement he would authorize more than 675,000 acres of “solar energy study areas” in six Western states is being met by full frontal opposition from environmental groups arguing the government is not doing an adequate job of studying the environmental impacts of siting wind farms and other renewable energy plants on public lands. Others argue the 24 solar study zones Salazar proposes would wipe out habitat for federally protected species.  Don’t count of fast action here.

So the Obama Administration has a plan B for its “engine for the clean-energy economy.” It will spend billions of federal dollars on loan guarantees and investment tax credits to build renewable energy projects before it knows whether it can get that clean energy output to the markets that need it.

The financial risk is plain, while the Interior Department says it is reviewing 34 applications for projects within solar study zones in Arizona, California, Colorado, Nevada, New Mexico and Utah and expects to have 13 large-scale commercial solar plants under construction in these areas by the end of next year—it has not approved a single new solar project on federal lands, according to the Solar Energy Industries Association.

Risk #3:  We can’t Build Enough Renewable Energy to Meet Demand. The other problem facing advocates of renewable energy is you just can’t build enough of it to meet the demand for energy foreseen in the future.  SMUD is one of the Nation’s most ardent supporters of renewable energy especially solar but it faces the reality that if rooftop solar were installed at every feasible location in its service territory it would only supply enough power for 2.5% of the SMUD customer demand.  SMUD preaches renewable energy and conservation but its needs transmission to have a fighting chance to deliver on that promise.

Hedge Your Energy Bets with Natural Gas

In California, the law prohibits building either coal or nuclear generation.  It also prohibits utilities from purchasing energy from coal fired sources.  If renewables can’t meet the energy needs of California and the rest of the WECC, we have only one alternative to brownouts—build gas fired combined cycle generation.

Building for a clean energy future is a worthy goal.  But having a reliable, affordable energy balance is what our economic recovery demands.   Our politicians are rushing to sign up for renewable portfolio goals that may exceed practical reality, cost more than conventional sources, not be able to reach their intended markets for lack of transmission, and not be sufficient to meet demand.

‘Other than THAT, Mrs Lincoln, how did you like the play?’

In our haste to install a new order of things, we are forgetting the principles of “least cost, best fit” which has served customers of the electric power industry well.   In so doing we are dramatically increasing the financial and credit risk of the very renewable energy sector we seek to nurture, grow and sustain while sowing the seeds for another crisis of reliability by risking our ability to meet the future power needs of the nation without the adequate energy resources our economy demands.

Just wait until the customers figure out how much all this is going to raise their rates—steam will be pouring from every household in sustainable quantities.