July 12, 2010
Bill Opalka
Editor-in-Chief
RenewablesBiz Daily
Long before carbon cap-and-trade or renewable energy mandates became part of the utility lexicon, California was out in front developing green energy. California is still way out in front in one important way, but there are plenty of followers, with utilities everywhere building and buying renewable energy assets from coast-to-coast.
With mandates for renewable energy in 29 states (called a renewable portfolio standard, or RPS), California is the leader with a target of 20 percent by the end of this year and 33 percent by 2020. The state is at a pace that's way ahead of everybody else's, but the significance is diminished when so many others are doing the same thing, though at lower levels. There's an expectation in the industry, even today after climate legislation became bogged down in Congress over the past year that some form of carbon regulation is inevitable. And with big-ticket nuclear still a few years away and new coal construction at a virtual standstill, utilities are in the renewables game, whether they like it or not.
San Francisco-based Pacific Gas & Electric is apparently one utility that doesn't mind. It has been at it for decades. "This is something we've always done, even before we had the RPS in California," said Hal LaFlash, director of energy technology policy at PG&E. "We had 2,000 megawatts of geothermal energy, for example, before the California utility restructuring."
They have a relatively high renewable energy penetration of 14 percent of sales for 2009, when looked at from a national perspective. That's not high for California when they are supposed to be at 20 percent later this year, but LaFlash insists they're on track to meet the "flexible compliance" date of 2013 that the state now has. PG&E has under contract more than all of the resources it may need, though there is a chance not all contracts will be completed.
While the financial crisis continues to dog renewable energy project development, PG&E is now actively looking to develop and own its own renewable energy plants, if only to escape the vagaries of the project finance market.
At perhaps another end of the spectrum, at least by reputation, are the utilities of the Southeast, where opposition to federal renewable mandates has been most intense. And it's a region where the renewable resource of choice, wind energy, is deemed to be the least prolific. Scalability is another issue related to renewables. What better expression of that came from the Southern Company, which is placing it bets on large-scale nuclear. But like many in the Southeast, it doesn't see wind potential in its region, so it's thinking small, relatively speaking.
David Ratcliffe, Southern Company CEO, said his company is looking at solar in its geographic area. "We're planning to convert an old coal plant to biomass using wood waste in South Georgia. If we do so, at 90 megawatts it'll be one of the largest wood waste biomass facilities in the entire country. We just entered into a contract in Nagatoshus, Texas for another biomass facility," he said.
New Partners
Also, it's gotten on board with a new partnership with Ted Turner to develop solar, though not in its geographic footprint. The Southern Company and Turner Renewable Energy recently announced that the companies acquired and will bring online one of the nation's largest solar photovoltaic (PV) power plants. The 30 megawatt project is the first to result from the partnership forged by Southern Company and Turner Renewable Energy in January.
Project scale is also a concern for Anthony Earley, CEO of DTE. Detroit-based DTE has 20 landfill sites in 14 states that are producing methane that's converted to electricity, but that hardly makes a dent in its power portfolio. "I could quadruple the number of landfills, and I don't think it would push past 1 percent of my capacity," says Earley. "We actually are shifting our biomass focus away from landfills, because landfills are very small producers in the big scheme of things, to taking old coal plants, coal plants that are in the 50 to 100 megawatt size range, and converting them to waste wood burners."
Conversions are relatively cheap, and especially if the source of wood waste is available, the company earns renewable energy credits.
For American Electric Power, renewable energy makes sense on different levels. As Jay Godfrey, managing director of renewable energy for Ohio-based AEP points out, the company has operations in 11 Midwestern states. Some have renewable mandates or goals of varying length or intensity, while others have no statewide policies at all.
But there's the long shadow of Congressional action on climate hovering over all states. "We're looking to add renewables to our portfolio on an incremental basis. So even though we don't have climate legislation as such, we look at renewables as an important part of our overall risk mitigation strategy," Godfrey said.
For now, AEP is looking at renewables to produce 10 percent of load, with 1,406 megawatts of combined wind and solar, the vast majority in wind, on it regulated side. The company also has 487 megawatts in its unregulated unit in Texas. Transmission access is the barrier it sees to widespread acceptance.
"There's a saying that if you love renewables, you have to like transmission, at least a little bit, because you can't get the renewable energy to load centers without a build-out of transmission," Godfrey said. "If renewables become lower cost then they automatically go into the integrated resource plans as the least-cost resources."
And that would be the perfect world the renewable energy industry wants to see.
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