California’s renewable energy standards pose practical and economic challenges

Riverside Public Utilities thought they had locked in a deal for renewable energy that would put them comfortably ahead of the new California law mandating that all utilities be 33% renewable by 2020. They had a contract with Shoshone Renaissance in Utah to provide geothermal energy at a competitive price, but Shoshone was unable to get adequate financing to build the plant, with the result that the contract was voided.

This leaves Riverside scrambling for new sources of renewable energy as they are just at the 20% mark. Because they are a smaller utility, they are allowed to count large hydropower as renewable energy while, nonsensically, larger California utilities cannot.

Unfortunately, this type of renewable energy shortfall will be happening more and more as utilities try to meet the new 33% standard. Let’s parse this confusing, contradictory mess of laws and regulations shall we? (My bias: I’m completely in favor or renewable energy but believe the way the State of California is doing it is problematic, at best.)

First, the renewable energy plan for California was highly touted as being a massive job creation machine. Yet, large amounts of renewable energy will be coming to California from other states. This clearly does little to create jobs for California, so the economic benefit for the state may be far less than expected.

Second, while massive renewable energy projects are planned for California and elsewhere, they will undoubtedly be delayed by NIMBYs (many of them supposedly green) who will block or slow projects from being constructed. While there may be legitimate concerns here, the overall effect will be to slow the available amount of new renewable energy. Yet California utilities by law must be 33% renewable by 2020. A shortfall in available renewable power is inevitable, and that means existing renewable energy will cost more because utilities will have no choice. They must buy it. This will raise costs for power in California and almost certainly make consumers grumpy.

Third, California has offered little in the way of guidance or planning as to how the renewable energy goals can be met except to say that they must be. Saying ‘make it so’ is not long-term planning.

Fourth, the current designation of large-scale hydropower as not being renewable energy for big utilities is absurd. Under the current mishmash of a law, small-scale hydro is always renewable, yet big hydro isn’t for big utilities, but is for smaller utilities. This makes no sense. Some say that large-scale hydropower takes huge resources to build, which is certainly true. But solar panels and arrays are built with toxic substances, while massive wind turbine parts must be transported for hundreds of miles on roads. Manufacture, transportations, and assembly of all types of energy plants, including renewables, are hardly carbon-neutral. But once big hydro is built, water powers the turbines, and that’s as renewable as it gets.

Fifth, sharply higher utility prices inside California will put it at an economic disadvantage compared to nearby states like Nevada and Utah.

California’s plan to move to renewable energy is laudable. But, it is unclear how this will be accomplished, and the economic impact will probably hurt rather than help its economy, at least in the short to mid-term.

(crossposted from CAIVN)

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