Oil report

California study shows high cost of renewable power

LOS ANGELES, Nov 6 (Reuters) - If California expands its renewable power generation to be a third of electricity delivered in the state by 2020, it may cost $60 billion, the state’s utility regulator said in a report issued on Thursday.

It is more costly to make electricity with renewable power -- solar, wind, geothermal and other sources that emit no or low amounts of global-warming greenhouse gases -- than with natural gas, nuclear and coal power plants.

Renewable power in 2007 accounted for about 12 percent of the electricity delivered in the state, compared with 45 percent for natural gas, 17 percent for coal, 15 percent for nuclear and 12 percent for large hydropower projects. Large hydropower projects are not counted in California’s so-called renewable portfolio standard (RPS) goals.

“Reaching a 33 percent target will require procurement of more expensive renewables -- preliminary analysis indicates that such a target may require a state investment of about $60 billion in generation and transmission from 2010 to 2020,” said the report issued by the California Public Utilities Commission.

The Cal PUC said California’s legislature should stiffen the requirement for renewable energy to 33 percent of total power generation by 2020. Currently, the state requires a 20 percent target by 2010, but the utilities will not meet that goal until 2013, it said.

The target of 33 percent renewables by 2020 has the backing of Gov. Arnold Schwarzenegger and is expected to be debated in the next state legislative session.

The California Public Utilities Commission has yet to determine how much more it will cost retail electricity customers to increase renewable power.

A 33 percent target by 2020 would mean the construction of seven major transmission lines costing about $6.4 billion.

On Tuesday, California voters overwhelmingly -- 65 percent of the vote -- rejected a statewide ballot measure that would have required 50 percent of power to be generated from renewables by 2025. The measure was fought by both environmentalists and utilities because, they said, it was poorly drafted and would hinder renewable power development.

Reaching the 33 percent target would mean 70,000 gigawatt-hours of renewable power, the report said.

While renewable power one day may compete with baseload power sources such as natural gas, coal and nuclear, it currently is more costly, and much less dependable.

“If the state is required to generate 33 percent of its energy from renewable resources by 2020, then all new procurement of new energy resources between now and 2020 must be entirely renewable energy, except some new fossil for peaking capacity and to replace aging fossil plants critical to renewable integration,” the report said.

The California Public Utilities Commission’s staff is studying the costs of implementing a tougher target as well as methods to alleviate the hurdles to attaining that goal.

“The Cal PUC has identified a number of barriers affecting current RPS (renewable portfolio standard) projects, including extension of the federal production tax credits, transmission, developer inexperience, financing, site-control, price, military radar, technology, fuel supply, equipment procurement, and other sources of risk,” the report said.

The report can be viewed onlinehere . (Reporting by Bernie Woodall; Editing by Gary Hill)