Wednesday, June 30, 2010

Am Embarrassment of Riches

Renewable energy is taking off in many places around the world. Growth rates of 30-50% in wind and solar have been the norm for the last decade in the US and around the world. Unfortunately, California has been stuck in neutral when it comes to wholesale renewables, relinquishing its early lead in the global renewable energy race.

The nations that have led the way on renewable energy in the last decade have used robust “feed-in tariffs” to create entire new industries. The litany is familiar to those in the renewable energy business: Germany, Italy, Spain, Ontario (a province in Canada) and now China. These five regions have all seen growth go from low levels to record levels practically overnight right after they started requiring that utilities buy power at a set price from third party developers of wind, solar and other renewables.

A sixth jurisdiction is less well-known: California. But not the California we live in now. Rather, the California that created a robust feed-in tariff in the 1980s under the federal Public Utilities Regulatory Policy Act (PURPA). Under PURPA, California faced an “embarrassment of riches” in terms of renewable energy projects coming online, as the Public Utilities Commission (CPUC) described it at the time.

The large majority of wind and solar projects online today in California came online in the 1980s and 1990s under PURPA. Since PURPA was effectively gutted in the early 1990s, due to declining fossil fuel prices and tax policy changes, California has seen very little wholesale renewable energy come online. The current system, the Renewables Portfolio Standard (SB 1078 and SB 107), started in 2003 and has resulted in a tiny amount of new renewable energy development since then. All three of California’s big investor-owned utilities will fail to meet the current 20% by 2010 mandate for renewables and have, in fact, slid backwards in terms of their renewable energy percentages since the start of this policy

See here for the rest of this article.

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