While a vision of solar power generating from a million California rooftops is inspiring, even that grand number wouldn’t be enough to meet the state’s ambitious goal of one-third of its electricity coming from renewable sources within the next decade.
That’s one of the reasons why the California Public Utility Commission ( CPUC) established a renewables portfolio standard, or RPS, that requires electric utilities and other energy supply companies to obtain an increasing percentage of their sales from solar, wind and other renewable sources, and by doing so, is helping to create an enhanced marketplace for renewable generation producers. A long-term and predictable RPS will enable developers to obtain lower-cost financing and achieve economies of scale.
Some 31 states and the District of Columbia have enacted an RPS, also known as a renewable energy standard, to encourage competition between renewable energy providers and to reduce the cost of meeting RPS targets. President Obama has made a national standard a cornerstone of his energy strategy – advocating an RPS of 25 percent by 2025. According to a study by the Union of Concerned Scientists, a 25 percent renewable standard would create 297,000 new jobs, generate $263 billion in new capital investment and save consumers $64 billion on their utility bills by 2025.
California’s RPS, one of the nation’s most ambitious programs, was established in 2002 with the goal of 20 percent renewable energy by 2010, and in 2009, Governor Schwarzenegger upped the ante to 33 percent by 2020. So far, efforts have fallen short with the state’s three investor-owned utilities, which account for nearly 70 percent of California’s electric retail sales, collectively supplying about 15.5 percent of their 2009 electric load with renewable energy, albeit up from 13 percent in 2008. Other countries such as Australia, China, Japan and the United Kingdom, as well as several provinces in Canada, have all adopted renewable electricity standards.
San Diego Gas & Electric served 10.2 percent of its 2009 load with renewable energy. While scrambling to accelerate the PACE of new supplies, the company did exceed its renewables procurement target five out of the past seven years. The CPUC permits utilities to bank procurement in excess of its annual targets and apply banked excesses toward shortfalls in future years. SDG&E’s excess procurement in past years gives it a banked amount of renewable energy credit to apply toward meeting 2010 goals, according to Uyen Nguyen, SDG&E energy contracts originator. Nguyen gave a workshop on California’s RPS at CCSE in early August.
Nguyen went over the competitive solicitation process applicable to large-scale generation projects. The projects may be inside or outside of the SDG&E service territory, Nguyen said. In July, the CPUC approved a contract between SDG&E and Calpine Energy Services L.P. for renewable generation from the Geysers geothermal resource area in California’s Sonoma and Lake Counties. Under the power purchase agreement, SDG&E will receive approximately 212 gigawatt-hours of energy per year through 2014. Earlier in the year, SDG&E signed contracts with Centinela Energy for up to 175 megawatts of solar energy from the Imperial Valley.
In 2008, total electrical output in the territory was roughly 20,650 gigawatt hours for 1.4 million business and residential accounts in San Diego and parts of Orange County.
While debate and controversy focus on specific aspects of the overall program, such as the tracking and trading of in-state and out-of-state renewable energy credits (or RECs – proof that 1 megawatt-hour has been generated with a renewable-fueled source), RPSs are fast becoming the major factor in moving the electricity industry further down the path toward increasing sustainable energy.
Don’t miss the RPS breakout panel at the CCSE Clean Energy Conference featuring Sara Kamins, the CPUC expert on tradable RECs, Sue Kateley of CalSEIA and Mike McClenahan of SDG&E.
Learn more:
California Public Utilities Commissions RPS website
California Energy Commission RPS proceedings
Solar Energy Industries Association federal issues
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