This post is crossposted at Vote Solar's blog.
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Proposition 7 [PDF] is a California ballot initiative that would dramatically increase the state's renewable energy requirement to 50 percent renewably sourced by 2025. Yet most environmental groups and almost all renewable energy companies and trade associations oppose it. Why?
The problem is not with the goal. We urgently need to increase our usage of renewable electricity to 50 percent -- and more. The problem is that the initiative is unlikely to deliver the desired result. Most of the opposition comes from a belief that Prop. 7 is so flawed that it will make the task of growing renewable energy markets harder, not easier.
Different groups have found many elements of the initiative problematic. You can read CalSEIA's analysis here, Union of Concerned Scientists here, and NRDC's here. The Solar Alliance, American Wind Energy Association, and the Large Scale Solar Association all also oppose. For those keeping score, that's just about every industry that would ostensibly stand to benefit (with apologies to geothermal, wave, etc).
The element that I would like to focus on is the market that Prop. 7 would establish. Renewable technologies work great -- but bringing them to scale is a question of market design and for that reason, I believe this issue is paramount. In my view, Prop. 7's market design is unworkable and a recipe for disaster.
Here's why: Under the current process for the Renewable Portfolio Standard, the California Public Utilities Commission calculates a benchmark that is designed to represent the cost of the fossil-fuel alternative (this is known as the known as the Market Price Referent, or MPR, and it is calculated as the 20-year, levelized cost of energy of a combined cycle gas turbine, plus some adders). Prop. 7 absolves utilities from having to contract at prices 10 percent above the MPR. While many renewable resources can meet this standard (as long as gas prices remain high), to get to 50 percent we are going to need a wide range of resources, including some technologies that will initially need extra price support in order to commercialize.
Secondly -- and here's the real crux of the problem -- Prop. 7 also requires utilities to accept "all bilateral offers for electricity" offered at or below the MPR if a utility does not have enough renewable electricity procured and delivered in a given year. The effect of this "must-take" provision is twofold. First, renewable generators will have no incentive to sell electricity below the MPR. Think about it. If you could produce wind electricity for 9 cents/kWh, why would you sell it at that price if you knew that the utilities had to buy it at 13 cents/kWh? Prop. 7 effectively guarantees that renewables will always be priced at the cost of natural gas. The great advantage of renewables is that they provide a hedge against volatility in fossil-fuel prices, and the great hope of renewables is that they have the potential of being cheaper than fossil fuels. Google.org's motto is "renewable energy cheaper than coal," not "renewables locked into the same volatility as natural gas." Doesn't have quite the same zing, does it?
Further, one of the limitations of many renewable resources is that they are intermittent and non-dispatchable. Solar generates when the sun shines and wind produces when the wind blows. Under this must-take provision, not only is there no market incentive to develop storage technologies, but also the utilities' challenge of efficiently managing procurement to match generation with load will be significantly compromised. In effect, utilities could be forced to accept massive amounts of night-time wind -- at inflated prices -- when the grid needs it least, at the expense of contracting for wind or solar resources that match peak demand.
Getting to 50 percent is an enormously difficult proposition, and it will not only require companies to quickly commercialize new renewable technologies, but also require utilities to radically revise their non-renewable generating portfolio to best complement the limitations of intermittent and non-dispatchable resources. It will be hard enough to do this under any scenario. While utilities can absorb a certain level of unscheduled resources, to manage a grid effectively and efficiently at 50 percent, utilities will have to have significant input on time and place of delivery (via a competitive RFP solicitation process), and the "must-take" provision has the potential to make the whole process unworkable. Prop. 7 undermines the "least cost best fit process," and effectively eviscerates the possibility of rational planning.
If you want to go more in-depth on these issues, read this analysis [PDF] by Tom Beach of Crossborder Energy.
Over the past year, Vote Solar has had innumerable discussions with energy experts in the environmental and renewable industry communities to analyze the impacts of the proposition. This was not a conclusion we came to lightly, and there is no one more depressed about the results than we. We've spent the last six years working our tails off on a shoestring budget, and the prospect of a well-funded, game-changing ballot initiative is hugely alluring. The fact that that the initiative is so flawed is, frankly, a tragedy of Shakespearean proportions.
We have also had numerous discussions about these concerns with campaign proponents over the past year, but to no avail. We find the campaign's counterarguments unconvincing (as does the entire renewable energy industry), and our requests that they change course were not accepted.
If the initiative were to pass, could some of the more problematic elements be changed later, at the legislature? Unfortunately, the ballot contains a provision that would require any changes to be approved by a two-thirds super majority in both branches of the legislature. Since any legislative effort would need the votes of the most radical elements in the legislature to meet the two-thirds requirement, those people would be in a position to make demands, and they would have to be accomodated. In effect, Prop. 7 would put the future of energy policy in California in the hands of the most extreme members in the legislature. Think about this year's budget process for a sense of how that might work.
So what is the alternative? The short answer is that advocates are working furiously to put the infrastructure in place for massive growth in renewable energy. As I discussed here, we are working on establishing a new market mechanism for solar delivered at the distribution level. Meanwhile, the great challenge of the day is developing transmission to link the best renewable resource areas to population centers, and do so in a way that maximizes the conservation values that we all share. The Renewable Energy Transmission Initiative is a coordinated regional effort to do just that, and it is laying the groundwork to bring solar and other renewables to scale. Finally, in 2009 there will be a tremendous legislative push for a reformed 33 percent RPS. And if those efforts are not successful, there's always 2010 (Note to any billionaires in the audience: If the ballot initiative simply said: "RPS target is 50 percent, relevant agencies, figure it out," it would have received a very different response. Let's talk.)
Renewables are the answer. But to deliver on their promise, they need a market that values value, incentivizes cost reductions, and allows for a well-planned portfolio and well-managed grid. Prop. 7 fails on all these points.
‘Heretic’ battles straw man
Comments
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stopgreenpath Posted 8:44 am
23 Oct 2008
best for the environment because massive destruction of habitats and carbon sinks will not be required (yep, the Mojave is an excellent carbon sink). best for the environment because building and maintaining giant power plants and power lines will emit so many GHGs that the offsets gained from carbon-free fuel will not be nearly enough to mitigate the GHGs from construction and maintenance (see sunrise powerlink EIS). best for the environment because new roads will not kill even more habitat, introduce non-native grasses that harm creatures and cause fires, encourage illegal dumping, or create more illegal OHV use.
best for ratepayers because WE get the money for producing clean power on our properties, not Big Energy monopolies. best for ratepayers because FITs have proven far more effective at encouraging conservation than steep price hikes and/or net metering. best for ratepayers because their property values immediately increase. best for ratepayers because local skilled jobs are created, the community tax base is strengthened and utility bills drop to zero and turn into profit centers. best for ratepayers because there will be NO eminent domain forcing us from our family homes to install giant, horrendous power towers. best for ratepayers because we will not have to bear 100% of the cost of extremely expensive, utility-owned infrastructure which will only be used to hijack us. best for ratepayers because even though rates will increase with FITs a few bucks a month, it will be less than the increases for $10 million/mile transmission lines, a whole new waterline infrastructure (CSP uses billions of gallons of water/year), and giant, remote power plants with experimental technology. best for ratepayers because there will not be any 10% efficiency losses down those gold-plated powerlines we will have to buy without owning.
RETI is a complete sham, too. only pro-transmission shills at NRDC and Sierra Club are allowed to "represent the environment," and NO CONSIDERATION OF PROJECTS LIKE ROOFTOP SOLAR THAT DO NOT KILL THE PLANET even count for their schemes, other than the pittance of 3,000 mW of CSI incentives. Germany installed over 2000 mW of rooftop solar THIS YEAR ALONE because of FITs. if you are in a community that will be destroyed by these projects, or you are a TRUE environmentalist who does not believe that killing wilderness is the best way to protect the planet, you are not allowed to participate in RETI. but, of course, if you are a big investor in Bright Source Solar, like NRDC's Robt. Kennedy, your organization gets one of two "environmentalist" voices, the other being Pickens-worshipping Sierra Club.
Note to billionaires: if you REALLY cared about the planet, you would lobby for a feed in tariff, payable at roughly 50 cents/kwH for 100% of power produced from (oversized) rooftop solar and microwind systems in CA, so the entire economy can get back on its feet, the right people are rewarded for doing the right thing, and the planet will be protected from Big Energy mercenaries and their greenwashing investors/"environmentalists." not one acre of our precious deserts should be killed until every rof in the state has solar panels. no-brainer.
the greenest energy is that which you needn't ever produce.
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aramis720 Posted 3:50 am
24 Oct 2008
I would hope all public policy advocates would agree on one thing at least: we need as much renewable energy as we can get. The pie is big enough for all and we need all the wind, geothermal, solar, biomass and small hydro that we can get without breaking the bank.
Prop 7 does not discriminate between types of renewable energy. But it does provide a number of large carrots for getting more renewables on the grid. It improves the benchmark cost-effectiveness calculation (the "market price referent") by requiring that this calculation consider the benefits of renewable energy explicitly. This is not currently required by law. Prop 7 also allows a 10% boost above the benchmark price, giving a significant leg up to renewables. And Prop 7 provides a powerful feed-in tariff for any size renewable energy project.
This feed-in tariff has not been discussed much but it's probably the biggest benefit in Prop 7. It's modeled on PURPA, the 1978 federal law that was responsible for almost all the renewable energy we have online in California today. Very little has come online in the last six years under the current system - and this is why the utilities are actually backsliding in the percentage of power they get from renewables, falling from about 14% a few years ago to about 12% now.
Prop 7 is on balance a very smart bundle of policy changes and Vote Solar and other enviro gropus who are opposing are missing a big opportunity due to misunderstandings about current law and the changes that Prop 7 will make.
My organization, the Community Environmental Council, has endorsed Prop 7 for the reasons stated above. We have not received any compensation from the Prop 7 campaign, and nor will we accept any compensation. We are independent advocates.
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Adam Browning Posted 3:33 am
27 Oct 2008
One more thing. For the record, the title of the post comes courtesy of Grist's editors--I submitted it with something much less confrontational and provacative, and am displeased with the change. The whole thing makes me heartsick, and I wanted to shed light, not heat, on the issue.
Get Some Sun: http://www.votesolar.org
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aramis720 Posted 9:04 am
27 Oct 2008
Intermittency does indeed require that all renewables be considered re their correct place in the grid lineup. But numerous studies have found that intermittency isn't an issue until 15% or more comes from intermittent renewables. We are a LONG way from that point in California.
As for why renewable energy companies are opposing Prop 7, frankly it's because the big enviros like NRDC and CEERT have provided a poor anlaysis of Prop 7, arguing that it would eliminate projects under 30 MW from the RPS. As you and I know, this is a very bad argument and is based on a mis-reading of Prop 7. Very few groups have performed independent analyses of Prop 7 because it is complex and requires a broad contextual understanding of California's energy laws to grasp what it actually does.
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