Renewable power decisions create a tangled web

David R. Baker
San Francisco Chronicle
Monday, September 21, 2009

More big solar power plants in the Mojave Desert. Fewer solar panels on homes and businesses. More hydroelectric dams in British Columbia.

Gov. Arnold Schwarzenegger passes a solar energy field to sign an executive order he signed giving California the nation's most aggressive energy standards, during ceremonies held at a solar energy field in Rancho Cordova, Calif., Tuesday, Sept. 15, 2009. The order requires utilities to get a third of their power from renewable sources by 2020.(AP Photo/Rich Pedroncelli)

The flurry of recent renewable power decisions in Sacramento could have far-reaching - even contradictory - results.

Gov. Arnold Schwarzenegger last week signed an executive order forcing California utilities to get 33 percent of their electricity from renewable sources by 2020. At the same time, he promised to veto two bills passed by the Legislature days earlier that would have done the same thing, but with far more restrictions on how those goals could be met.

Meanwhile, a bill to increase the amount of electricity that utilities get from home solar systems never reached a final vote. Its backers must wait for the next legislative session and try again.

Gov. Arnold Schwarzenegger signs an executive order California the nation's most aggressive energy standards, during ceremonies held at a solar energy field in Rancho Cordova, Calif., Tuesday, Sept. 15, 2009. The order requires utilities to get a third of their power from renewable sources by 2020. (AP Photo/Rich Pedroncelli)

"It's kind of a best-of-times, worst-of-times story," said Adam Browning, executive director of the Vote Solar Initiative advocacy group. "There are some things that didn't happen, but still, there really is a lot of development going on."

Renewable power advocates are still trying to assess the effects of all the things that Sacramento did and didn't do. But they see several likely results.

-- California's renewable power industry will grow, but it also will spill over into neighboring states. Many of the solar and wind farms built to help utilities meet California's new renewable power targets will be in Nevada, Oregon or Washington.

-- Companies planning large solar power plants in the Southern California desert won't need to jump through a new bureaucratic hoop to do it. One of the bills Schwarzenegger vowed to veto would have forced those projects to get an additional government permit - from the state's Department of Fish and Game - on top of the permits already required.

-- Companies that install solar systems on homes and businesses may see their sales drop next year because the Legislature didn't pass a key bill on "net metering."

Under current law, homeowners and businesses with solar systems can get credit from the utilities for generating excess electricity and sending it to the state's electrical grid. But the utilities are only required to take so much of it - up to 2.5 percent of each utility's total electrical load - and Pacific Gas and Electric Co. will reach that level next year. The failed bill would have expanded the amount to 5 percent.

Solar impact

"I'm not a person who usually goes around saying 'The sky is falling,' but this is really going to impact solar starting next year," said Angiolo Laviziano, chief executive officer of REC Solar in San Luis Obispo.

The bill's failure means that once PG&E hits the 2.5 percent limit, the utility's customers will no longer have as much financial incentive to go solar. Although REC Solar operates in other states, cushioning the potential blow, Laviziano said he could be forced to cut as many as 120 jobs if business in California dries up as much as he fears.

"Even for us, it would be an extremely painful hit," he said. "For companies that are focused solely on California, it would put their whole operations at risk."

As the California Legislature neared the end of its session, most of the attention focused on a pair of bills that would have dramatically expanded the amount of renewable power used in the state. California law now requires the utilities to get 20 percent of their electricity from renewable sources by the end of 2010, a deadline they are almost certain to miss. The bills would have raised that requirement to 33 percent by 2020.

But the bills rankled the utilities and large-scale solar developers. The developers didn't want to face another bureaucratic hurdle - the proposed fish and game permit - that would have slowed them down. In order to qualify for federal stimulus grants, they need to start construction by the end of 2010. "They were already running behind, and adding another layer of siting permits wouldn't help," said Jan Smutny-Jones, executive director of the Independent Energy Producers Association.

The utilities wanted more flexibility to buy power from outside California. Under the bills, out-of-state wind farms and solar plants could only make up 30 percent of each utility's renewable energy supply. The limit was designed to keep new renewable power projects and jobs here in California, rather than letting them go to neighboring states.

Schwarzenegger, however, sided with the utilities, saying the limit smacked of protectionism. As a result of his decision to veto the bills, renewable energy experts say states such as Nevada and Oregon will see more solar and wind projects.

Some people fear his executive order will open California to types of renewable power that current laws discourage.

Changes considered

The California Air Resources Board has the responsibility of drafting rules to carry out Schwarzenegger's order, and a spokesman for the board said the panel will consider changing the types of alternative energy that could count toward the 33 percent goal. Nuclear power and large hydroelectric dams won't be considered, said spokesman Stanley Young, but other types of generation will.

That worries Lannie Keller, who lives near Bute Inlet on the coast of British Columbia. Canadian companies have proposed building "run of the river" hydroelectric projects on 18 rivers that feed into the inlet, and opponents fear the electricity could be sent south to meet California's demand for renewable power.

Such projects don't use large dams, but they do divert part of each river's flow to run through a turbine. They don't pass muster with California's current renewable power law, but that could change. PG&E, for example, has already expressed interest in buying hydropower from British Columbia.

"It will create a viable market for what's proposed up here," said Keller, an organizer with Friends of Bute Inlet, which opposes the hydropower projects. "The so-called green energy down there will be coming at a significant environmental cost in British Columbia."

E-mail David R. Baker at dbaker@sfchronicle.com.

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