Oregon's Renewable Energy Act Paves Way for Projects

Jul 26 - Daily Journal of Commerce (Portland, OR)

With the passage last month of a state renewable energy standard, Oregon's largest utilities have begun the hunt for developers building renewable power plants.

Senate Bill 838 requires Portland General Electric, PacifiCorp and the Eugene Water and Electric Board - utilities that serve more than 3 percent of Oregon's total power sales - to meet 15 percent of power production with renewable energy sources by 2015. The standard increases to 20 percent by 2020, and 25 percent by 2025.

Smaller utilities must meet lower targets of 5 percent or 10 percent renewable power by 2025.

To meet the 2015 standard, Oregon's top utilities will first seek turnkey wind, solar, biomass, and geothermal projects from which to purchase power, PGE and PacifiCorp analysts told the Oregon Geothermal Working Group on Monday.

The cost and risk of exploration and development make it unlikely that the major utilities will build their own renewable plants, they said.

That's good news for developers of renewable energy projects. Utilities looking to sign power purchase agreements help ensure a future cash flow for the plants and make viable projects in the early stages of development.

"There's a lot of development potential," Daniel Hand, project development manager for Chevron, which is eyeing renewable projects in Oregon, said. The renewable energy act, he said, is "a huge deal."

PGE's integrated resource plan, released in July just weeks after the new renewable energy standard passed, calls for 300 megawatts of additional renewable energy production by 2015.

PGE plans to fill the gap with wind projects to start, including the company's under-construction Biglow Canyon Wind Farm in Sherman County, which will supply 105 megawatts of electricity to the grid. The remaining amount of electricity, about 200 megawatts, will come from sources yet to be determined, PGE spokesman Steve Corson said.

Ideal wind farm sites are in limited supply and development costs are expected to increase as the best sites disappear to new projects, Joe Eberhardt, a PGE financial analyst, said.

He expects geothermal power to play an increasing role in the utilities' portfolio of energy sources.

"As we work through these easy access projects, we'll quickly see costs go up dramatically," Eberhardt said, "- so bring on geothermal."

PacifiCorp's long-term resource plan, released in May, calls for an additional 2,000 megawatts of renewable sources by 2013.

PacifiCorp, a subsidiary of MidAmerican Energy Holdings Company, also plans to initially meet the standard with new wind sources. But geothermal energy will become a more attractive option over time, Nick Rahn, vice president of resource development and construction for Pacificorp, said.

"Construction costs of natural gas and coal plants (are) climbing faster than geothermal plants with the rising cost of steel and labor costs," Rahn said. "Geothermal has become much more competitive in the last year.

"There's a huge appetite for geothermal in our resource portfolio," he said.