LOS ANGELES (Reuters) - California regulators voted on Thursday to boost the state’s renewable energy target to 33 percent by 2020, which could provide a big boost to the alternative-energy industry in the nation’s most populous state.
But the goal, approved in a vote by California’s Air Resources Board, faces significant challenges.
Industry veterans say this goal is more achievable than a prior target of 20 percent by 2010, but will require faster approvals for plants and continued government help for developer financing.
“We’re going to need all the tools in the toolbox to meet that,” said Southern California Edison manager for regulatory and legislative affairs Laura Genao.
At Pacific Gas & Electric Co., “meeting the 33 percent target is going to be challenging,” says spokeswoman Cindy Pollard.
But Pollard believes that the company and regulators “can develop a framework that allows us to achieve the goal in a manner that adequately contains costs for our customers.”
Hitting the increased objective - the highest in the nation - will require more investment in infrastructure and transmission, and a shorter lead time for projects, says Christine Hersey, an analyst at Wedbush Securities in Los Angeles. The approval process in California now takes years.
Unless that changes, “it will be hard to meet 33 percent... by 2020 with large scale projects,” she said. She said there may be a trend toward projects in the 20-megawatt range that are “easier to site, permit, finance and connect to the grid.”
Given the state of credit markets, financing for plants remains a major issue. Currently developers can tap into government help, but not without headaches.
Many developers complain about the slow pace of review for Department of Energy loan guarantees. And one of the most favorable programs, a Treasury Department grant for up to 30 percent of the cost of renewable-energy projects, expires at the end of the year.
Yet another question is whether the 33-percent regulation will even stay on the books. An initiative on November’s ballot aims to overturn the law that authorizes regulators to create the 33 percent target.
The state’s governor has the right to suspend provisions of the law, including the new target, for up to a year. Republican candidate Meg Whitman has said she would do this.
A TRACK RECORD
Even if the regulation stands, utilities’ track records on meeting their targets has been less than excellent. Pacific Gas & Electric and Southern California Edison each will end this year at 18 percent renewable energy, Wedbush says. San Diego Gas and Electric, which was hit hard by transmission issues, will end the year at 14 percent.
Pollard at Pacific Gas & Electric says the company plans to meet the 20 percent goal by 2013 or sooner. Genao at Southern California Edison said the company would meet the goal “sometime very soon.” A spokeswoman for San Diego Gas and Electric did not respond to a request for comment.
“It took time to get the program off the ground,” says Terrie Prosper, a spokeswoman at the California Public Utilities Commission, which oversees the program.
“But it’s rolling now.”
In recent weeks, for example, California regulators have approved almost 2,000 megawatts of solar power - enough to power more than one million homes.
Problems with reaching the earlier 20-percent target included utilities signing contracts with alternative-power developers whose projects never acquired the necessary financing, says John White, executive director of the Center for Energy Efficiency and Renewable Technologies.
Other projects turned out to be technologically impractical, White said, or required new transmission lines that were not built. Now, the transmission issues are being resolved as more lines are built or expanded.
Separately, CARB voted on Thursday to implement regional reductions on greenhouse-gas emissions. Southern California will have to reduce emissions by 8 percent by 2020, while the Bay Area will have to reduce emissions by 7 percent by 2020.
Environmentalists say the targets are too low, whereas large-scale builders say they are too high.
Thursday’s measures build on a joint plan released on Tuesday by three state agencies and the state’s electricity grid operator. The plan to increase efficiency and renewable energy use would cut red tape for companies.
“It is an unprecedented step for us to come together and agree on one document that really crystallizes the state’s policies,” Public Utilities Commission Commissioner Nancy Ryan told reporters.
Reporting by Sarah McBride; editing by Carol Bishopric
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