Setting renewable energy mandates for utilities has been the big policy hammer that forces the use of wind, solar and other sources of cleaner power in the U.S. The pressure has intensified in California now that utilities are required to meet at least a 33 percent mandate by 2020.
Utility Pacific Gas and Electric announced this week three power purchase agreements with solar-project developers. The three projects will collectively have 50 MW of generation capacity and will count as part of a 500-MW program in which PG&E will own 250 MW of solar projects and sign contracts to buy power for another 250 MW. The utility got started on the first 50 MW of its own solar projects earlier this year. Before kick-starting this program, PG&E already signed gigawatts’ worth of power purchase agreements for solar, wind and geothermal energy.
The three developers who will supply power to PG&E are Recurrent Energy, Westlands Solar Farms and Fotowatio Renewable Ventures. These companies promise to start delivering electricity around 2013. If they can meet that time line, then PG&E will be able to count the power toward a 2010 mandate that requires 20 percent of renewable electricity in its energy mix. None of the three big utilities in the state has met that goal yet, though they have a three-year grace period to do so.
By the end of 2010, Southern California Edison achieved 19.4 percent, PG&E 17.7 percent and San Diego Gas & Electric (SDG&E) 11.9 percent, according to the California Public Utilities Commission. Not all contracts signed by the utilities before 2010 have become reality. Some developers couldn’t raise the money and had to sell the development rights or get out of the business altogether.
A third of clean power
Gov. Jerry Brown, elected last November, signed into law the new mandate of 33 percent by 2020 only in April. The move received loud applause from renewable-energy advocates, of course, and set down a new race for utilities to buy more renewable energy.
SDG&E has lagged behind and has been particularly active in announcing renewable energy contracts this year. In fact, the utility said it has signed contracts totaling 1,225 MW since January, a bulk of which will come from solar.
The urgency to add more clean power also has made SDG&E a patron of a new solar technology that previously didn’t attract nearly as much interest from the two other big utilities in the state. The technology uses lenses to concentrate the sunlight onto solar cells to produce electricity. The approach is meant to reduce the amount and cost of expensive solar cells without reducing the amount of power produced by a solar farm. Soitec, one of the technology and project developers to have signed contracts with SDG&E, plans to build a factory in the San Diego area to supply the equipment for the power projects.
More than half of the states have adopted renewable-energy mandates. The regulatory push for clean power is gradually making people more aware of the sources of their electricity. Renewable-energy advocates used to say that average folks didn’t know or care where their electricity came from. This probably is still true for the majority in the country.
At the same time, a growing number of people are pushing for more clean power beyond just supporting renewable-energy mandates for their utilities. The city council of Boulder, Colo., voted this week to put a measure on the November ballot that will ask voters if the city should form its own utility instead of relying on Xcel Energy, which has been a provider for more than a century. Boulder wants more clean power than Xcel can deliver, and it believes the best way to achieve that is to run its own power business.
Although renewable-energy mandates have made utility-scale development the fast-growing segment of the solar business, they are seen by some clean-power proponents as less effective than the policy widely adopted in Europe that requires utilities to buy renewable electricity at premium rates. The policy, often called feed-in tariff, guarantees a return for project developers. In contrast, utilities in the United States typically buy power from the lowest bidders, and that sometimes causes project developers to make lowball offers that they can’t deliver.
Photo courtesy of Westlands Solar Farms