May 24, 2010
Bill Opalka
Editor-in-Chief
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, 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. They've 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."
PG&E has 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 state's flexible compliance date of 2013. 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. Southern Company is placing its 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 chief executive officer, said it is looking at solar and other options. "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 Nacogdoches, Texas, for another biomass facility," he said.
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 will bring online one of the nation's largest solar photovoltaic power plants. The 30-megawatt project is the first to result from the partnership forged by Southern Company and Turner Renewable Energy in January. The project is a not-for-profit wholesale power supplier to 44 electric cooperatives serving 1.4 million customers across Colorado, Nebraska, New Mexico and Wyoming.
Dipping Toe
Project scale is also a concern for Anthony Earley, chief executive officer of DTE Energy, as that company is shifting its renewables strategy. 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," he said. "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.
Duke Energy is dipping its toe into offshore wind with its plans to build up to three wind turbines within a 3-square-mile area on the Outer Banks' Hatteras Island. The project is a test by Duke and the University of North Carolina at Chapel Hill of commercial-scale wind energy along the North Carolina coast. That's also long-term, but Duke has the added distinction of being based in the only southeastern state with a renewables mandate, though a rather modest one, at 12.5 percent by 2021.
"When we look at renewables, we focus on where we think we can build competencies. In their case, it's solar, wind and biomass," said Owen Smith, managing director of renewable strategy and compliance.
One innovation is its commercial solar roof program in which the buildings are not tied into the systems but are only leased, host sites to distributed power plants that Duke integrates into its grid as it would any other generation site.
Increased costs are not yet an issue, though North Carolina, like some states, allows an "exit ramp" if more expensive renewables' costs exceed $10 per year per customer. Renewable energy proponents point to improved technologies and lower costs to achieving the elusive grid parity they need to compete.
State mandate may be the motivation. But some utilities are taking up the green energy challenges with gusto.
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