Sun Stroke!

As Arnold and the California Legislature struggle to figure out how to pay the electric bill for July, the California Public Utilities Commission was business as usual releasing a preliminary report on what it will take to achieve a proposed 33% renewable energy mandate by 2020.  See: http://docs.cpuc.ca.gov/PUBLISHED/GRAPHICS/102354.PDF .

Getting to the current 20% RPS by 2010 target will require four major new electric transmission lines costing $4 billion three of which in the permitting and siting pipeline. Getting to a 33% RPS by the 2020 target will mean building seven additional high voltage transmission lines at an estimated cost of $12 billion AND a 300% increase in the renewable electricity under contract to 75 terawatt hours from the 27 terawatt hours (TWh) available today.

How Much is Too Much for Renewables?

The report said that California average electricity costs per kilowatt-hour will rise by 16.7% in 2020 compared to 2008 in real terms even if the state makes no further investments in renewable energy.

Getting to the 20% RPS by 2020 (the target) will increase costs 2.8% more than using natural gas.

Pushing the target to achieve a 33% RPS will raise the costs an additional 7.1% higher than the 20% RPS, and 10.2% higher compared to an all-gas scenario.

YIKES!  So much for least cost, best fit integrated resource planning!

The Legislature is Serious about 33%

A bill to set the 33 percent RPS is being considered in the California Assembly after the State Senate adopted such a bill in March.  While both the CPUC and the California Energy Commission have “endorsed” the goal of 33% renewables, the report and, no doubt, the back channel advice to the Legislature is WAIT A MINUTE!

The report estimates that the soonest a 33% RPS target could be achieved in 2024 and that infrastructure investment required is about $115 billion—assuming everything goes smoothly.  That is safely beyond the term limits of all current Legislators so chances are good they will pass it and take the credit for it now—and leave the mess on the step of the next guy!

California utilities are already struggling to meet the 20 percent RPS goal signing power purchase agreements with solar, wind, geothermal and other renewable energy producers. In recent years there have been high failure rates for these projects since there are few penalties for developers to over promise with the utilities holding the bag to replace them if they do.

Currently, 12.7 percent of the electricity delivered by California’s three regulated utilities comes from renewable sources, according to the latest figures available from the CPUC. See: http://www.cpuc.ca.gov/PUC/energy/Procurement/ .

Western Renewable Energy Zones (WREZ) are Coming

Meanwhile, the Western Governors Association joined with the US Energy Secretary and Interior Secretary to release a joint report on Western Renewable Energy Zones as phase 1 of a multi-stage process to create more access to renewable energy across the broad WECC interconnected power grid.  See: http://www.westgov.org/wga/publicat/WREZ09.pdf .

The Obama Interstate Electric Transmission Super Highway System?

Pressure is clearly building on the Federal Government to take action to expand transmission access across the US.  Watch carefully the US DOE National Interest Electric Transmission Corridor (NIETC) report due out in September as required by the last Energy Policy Act.  Only the Federal Government has to the power to cut through the red tape and delay caused by state by state regulations governing land use, siting, and permitting of high voltage electric transmission lines and NIETC is the vehicle for doing so.

Scaling renewable energy, leveraging smart grid and making a market in energy efficiency to make it profitable requires access across North America for the big players.  The current power grids were designed to frustrate not facilitate such access East-to-West.

Expect the states to pay lip service to advances in renewables and technology but fight furiously to protect their regulatory authority.  The motivation in favor of smart grid and renewables is admirable but this could end up as the mother of all federal power grabs.  That might be good if it creates broad, competitive, transparent competitive markets for renewable energy, smart grid technology, energy efficiency and retail access for customers.  Bad if it is a political game of using stimulus and tax credits to enable the Government to select winners and losers.