State law requires the Golden State’s three large investor-owned utilities to procure 20% of their retail electricity sales from clean sources by the end of 2010. But with less than six months left to meet that requirement, even government watchdogs don’t expect the power companies to make it.
California utilities struggle to meet RPS
July 12, 2010
California boasts some of the toughest standards in the nation for boosting the use of renewable power. Getting utilities to meet those mandates is proving to be even tougher.
Pacific Gas & Electric Co., Southern California Edison and San Diego Gas & Electric Co. are likely to end this year with a combined 18% of their retail sales coming from clean sources such as wind, solar and geothermal power, according to the California Public Utilities Commission.
“It’s highly unlikely that they’ll make the exact number by the end of this year,” said Commissioner James D. Boyd with the California Energy Commission, which is administering the program along with the public utilities agency. “I hate to be a naysayer, but … even though many contracts have been entered, the actual construction and thus the delivery of electricity has lagged.”
Utility executives said they’ve moved aggressively to ink deals with renewable power producers throughout California. But some of those firms have had difficulty securing financing in a troubled economy. Others have hit technological snags or run into permitting and land-use hurdles that have delayed their timetables by months or even years. Transmission bottlenecks are another obstacle.
“The renewable projects tend to be out in the distance where our customers are not,” said Stuart Hemphill, senior vice president of power procurement for Southern California Edison.
Critics complain that the power companies haven’t been selective enough in choosing producers that can successfully deliver clean electricity. That’s partly because there’s no immediate penalty for failure. Regulators wouldn’t begin fining the utilities — if at all — until 2013 because of a flexible-compliance provision that in effect gives them three extra years to meet the 2010 deadline.
“Some of the contracts the utilities have signed are really pie in the sky,” said Arthur O’Donnell, executive director of the nonprofit Center for Resource Solutions in San Francisco. “They might sign anything down the pike just to get the regulators off their back.”
The Golden State’s green-power shortfall underscores the challenges facing the nation as it seeks to reduce its dependence on dirty fossil fuels. About half of the country’s electricity comes from plants fired by coal, a major source of greenhouse gases.
California in 2006 adopted what’s known as a Renewable Portfolio Standard, or RPS, to force power companies to shift to clean sources of electricity. It requires investor-owned utilities operating in the state to increase their renewable-energy-based retail sales to a minimum of 20% by 2010. Utilities are allowed to use power delivered into California from out-of-state sources toward the requirement.
Clean-energy advocates largely favor such government mandates because they help guarantee a market for alternative energy, regardless of the price of fossil fuels. The standards are credited with helping California jump-start a homegrown clean-energy economy. The state leads the nation in the number of so-called green jobs, with more than 125,000 in 2007, according to the Pew Charitable Trusts.
The trick, experts said, is developing a standard that prevents utilities from dragging their feet while ensuring that consumers get green power that’s reliable and affordable.
“The utilities signed a lot of poor contracts in the early days,” said V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies in Sacramento. “It’s been a race against time.”
Last year renewables accounted for 17.4% of the power that Southern California Edison delivered to customers, according to a recent report from the Public Utilities Commission. PG&E ended last year at 14.4% and San Diego Gas & Electric Co. hit 10.5%. By the end of 2010, government forecasts project Southern California Edison and PG&E will reach 19% and SDG&E about 14%.
The San Diego utility blamed its low number on the absence of natural renewable energy sources, such as hydropower or geothermal, in its service area. The company also said it faced a steep learning curve earlier in the decade, when it was drawing less than 1% of its retail load from sources that qualified for the Renewable Portfolio Standard. But with the flexible-compliance provision, executives said the utility would reach the 20% target.
As the deadline approaches, the three utilities have been on a deal-making spree. In the first quarter of 2010 alone, the companies combined submitted 37 contracts to the state utilities commission for approval. The agency approved just 26 in all of 2009.
Still, the investor-owned utilities have been outpaced by some of their municipal utility counterparts in ramping up the use of green energy. The Los Angeles Department of Water and Power and the Sacramento Municipal Utility District, for example, are on track to reach a self-imposed 20% target by the end of 2010, according to environmental experts and utility executives.
“The [investor-owned] utilities have done a great job signing contracts, but they’ve done a terrible job signing contracts that get built,” said Gregg Morris, the Berkeley-based director of renewable energy research at the Green Power Institute. “The system has not worked.”
The playing field is littered with stymied projects. Regulators rejected an application in 2008 from Pacific Gas & Electric and Finavera Renewables Inc. to develop a 2-megawatt wave-power project off the coast of Humboldt County. Engineering holdups have slowed San Diego Gas & Electric’s 49-megawatt Mt. Signal Solar project in the Imperial Valley, which was supposed to be operational in 2008. It’s much the same for some wind and biomass projects in Santa Barbara and San Diego counties.
Transmission remains a thorny issue. Giant power towers and high-voltage lines are often opposed by citizen groups. Permitting can take years. Just three of 11 segments planned for Southern California Edison’s $2.1-billion Tehachapi Renewable Transmission Project have been completed. San Diego Gas & Electric is wading through reviews and approvals for its $1.8-billion Sunrise Powerlink effort.
Then there’s the clash of the environmentalists. Clean-power advocates who favor utility-scale renewable projects have been butting heads with activists concerned that gigantic wind turbines and massive solar farms with their acres of reflective mirrors are damaging California’s natural landscapes and threatening wildlife. Concern over the fate of a native ground squirrel have stalled Solar Millennium’s proposal to build a 250-megawatt solar farm in the Mojave Desert. Last year, Brightsource Energy Inc. ditched plans for a 500-megawatt solar plant in the Mojave Desert after Sen. Dianne Feinstein (D-Calif.) said she would push for legislation to turn the area into a national monument.
The obstacles will only loom larger as California moves toward an even more aggressive standard in 2020.
Gov. Arnold Schwarzenegger issued an executive order last year for the state to derive 33% of its electricity from renewable sources within the next decade. A bill pending in the Legislature seeks to turn that executive order into law.
The big power companies are now looking at getting clean electricity from rooftop solar panels on commercial buildings, gas from landfills, even wind power from turbines on Indian reservations.
“We’ve been pursuing all avenues here,” said Michael Niggli, president of San Diego Gas & Electric. “Our eyes are on the prize.”