California clean energy rules may impede imports from rest of West

  • White Creek Wind Project in Washington's Klickitat County was contracted to deliver power to California to help meet its renewable portfolio standard ... until Pacific Gas and Electric backed out.

    White Creek Wind Project
 

When a group of Pacific Northwestern utilities teamed up to build a $580 million pair of wind farms in the Columbia Gorge a few years ago, they planned to help pay for the projects by selling excess generation and renewable energy credits to a California utility. Selling some or all of a project's power to California has been a common strategy among Western developers, given the state's enormous appetite for renewable energy. But tapping that market recently became much harder -- just as demand slumps elsewhere in the region.

In 2010, the utilities' plan seemed to be working. Pacific Gas and Electric signed a contract with the 205-megawatt White Creek and the adjacent 99-megawatt Harvest wind farms, located in Klickitat County, Wash. But a year later, California upped its renewable portfolio standard (RPS) -- which requires utilities to draw a certain percentage of their electricity from renewable sources -- from 20 percent to 33 percent by 2020, and also enacted tougher rules for importing power. The state approved hundreds of wind and solar deals inside California, but never reviewed the Northwest utilities' contract, and PG&E backed out.

Without the contract, Public Utility District No. 1 of Cowlitz County, one of the wind developers, had to raise its customers' rates 10 percent to help cover its $150 million share of the projects. In January, Cowlitz put California on notice that it intends to file a $10 million claim against the state's Public Utilities Commission for not reviewing the deal. It also charges that the RPS unfairly discriminates against out-of-state generation, a violation of the Interstate Commerce Clause of the U.S. Constitution.

Developers and utilities are closely watching the case, because California is now the market for renewable energy in the West. Demand elsewhere has slackened; most Western utilities have already satisfied their states' RPS needs and won't be in the market again until near the end of the decade. Meanwhile, the West's overall demand for electricity has sagged along with the economy.

In California, however, utilities have to acquire more than 20,000 megawatts of renewable energy to meet the state's new goals. By 2020, the state will make up 70 percent of the West's renewable energy market, but out-of-state developers fear they face an uphill battle to access it.

The problem lies with what's known as Category 1 contracts, the main "bucket" of power that will be used to meet 75 percent of California's renewable needs. To qualify, projects have to either connect directly to the state's grid or use what's called "dynamic transfer," a complicated process for moving renewable energy between grids. Because most Western grid managers are reluctant to use the process, though, energy development in most of the region is essentially cut off from the California market. Meanwhile, the state's rules for qualifying for Category 1 have not been set, another major obstacle for out-of-state projects.

"You can have access to the California market, if you can also fly a rocket to the moon," gripes Eric Christensen, an attorney representing Cowlitz and a group of Northwest utilities that are also considering challenging California's RPS. "Cowlitz is typical of a lot of people in the West outside of California that invested millions of dollars in renewable projects, only to see the market choked off by California's rearrangement of the regulatory landscape."

Over the past decade, Iberdrola Renewables, based in Portland, Ore., has developed 2,159 megawatts of wind and solar projects around the West -- much of it under contract with California utilities. But because of the state's import rules, the company has now narrowed its focus to building new projects inside California, according to Kevin Lynch, vice president of external affairs.

The state's rules aren't that unusual, says Carl Zichella, director of Western transmission at the Natural Resources Defense Council. "All state renewable portfolio standards place some restrictions on imported power," he says; California was simply trying to capitalize on its own high-quality solar and wind resources to help get through the recession.

Besides, he argues, California's rules for importing power are less of a burden on Western development than the lack of coordination between grids, which would allow for easier transfer of renewable energy across longer distances without as much need for new power lines. Another problem is the lack of a structured Western renewable energy market, where grid operators could purchase power to ensure a constant steam of energy –– something that's necessary because renewable generation in isolation provides only intermittent power.

But such region-wide coordination efforts are a long way off, if they ever happen. In the meantime, many Western developers are banking that California's import rules will eventually prove a serious obstacle to meeting its RPS, given how difficult it can be to build projects within the state. Then, they believe, California will have to ease the rules and again lean more heavily on its Western neighbors for help.

"California has long been a leading policy thinker and it is a very big market," Lynch says. "But I would be kidding you if I didn't say it was a very difficult market to develop in and to sell into -- there's no question."

Return to:

The fading Arizona town of Gila Bend bets big on solar
High Country News Classifieds
  • YELLOWSTONE TREASURES: THE TRAVELER'S COMPANION TO THE NATIONAL PARK
    Dreaming of a trip to Yellowstone Park? This book makes you the tour guide for your group! Janet Chapple shares plenty of history anecdotes and...
  • OLIVERBRANCH CONSULTING
    Non-Profit Management Professional specializing in Transitional Leadership, Strategic Collaborations, Communications and Grant Management/Writing.
  • SAGE GROUSE CCAA COORDINATOR
    The Powder Basin Watershed Council, headquartered in Baker City, Oregon, seeks a full-time Sage Grouse CCAA Coordinator. This position is part of a collaborative effort...
  • MARKETING COMMUNICATIONS MANAGER
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks a Marketing Communications Manager to join our...
  • EXECUTIVE DIRECTOR - OKANOGAN LAND TRUST
    Executive Director, Okanogan Land Trust Position Announcement Do you enjoy rural living, wild places, family farms, challenging politics, and big conservation opportunities? Do you have...
  • GREAT VIEWS, SMALL FOOTPRINT
    Close to town but with a secluded feel, this eco-friendly home includes solar panels, a graywater reuse system, tankless hot water, solar tubes, and rainwater...
  • EXECUTIVE DIRECTOR
    Powder River Basin Resource Council, a progressive non-profit conservation organization based in Sheridan, Wyoming, seeks an Executive Director, preferably with grassroots organizing experience, excellent communication...
  • COMMUNITY ORGANIZER- NORTHERN PLAINS RESOURCE COUNCIL
    Organize with Northern Plains Resource Council to protect Montana's water quality, family farms and ranches, & unique quality of life. Starts $35.5k. Apply now- northernplains.org/careers
  • BEAUTIFUL, AUTHENTIC LIVE YULE LOG CENTERPIECE
    - beautiful 12" yule log made from holly wood, live fragrant firs, rich green and white holly, pinecones and red berries. $78 includes shipping. Our...
  • CRAZY HORSE MEMORIAL DIRECTOR OF PROGRAMS FOR THE INDIAN UNIVERSITY OF NORTH AMERICA
    Crazy Horse Memorial, in the Black Hills of South Dakota, is currently accepting applications and nominations for the Director of Programs for The Indian University...
  • CRAZY HORSE MEMORIAL® MANAGER OF RESIDENCE LIFE FOR THE INDIAN UNIVERSITY OF NORTH AMERICA®
    Crazy Horse Memorial is currently accepting applications for the Manager of Residence Life for The Indian University of North America. This position is responsible for...
  • EXECUTIVE DIRECTOR
    Are you an art lover who dreams of living in the mountains? Is fundraising second nature to you? Do you have experience managing creative people?...
  • EXECUTIVE DIRECTOR
    The Public Lands Foundation, a non-profit organization supporting the multiple-use management of public lands managed by the Bureau of Land Management, seeks an experienced leader...
  • COLD WEATHER CRAFTS
    Unique handmade gifts from the Gunnison Valley. Soy lotion candles, jewelry, art, custom photo mandalas and more. Check out the website and buy Christmas locally...
  • EXECUTIVE DIRECTOR
    North Cascades Institute seeks their next Executive Director to lead the organization, manage $4 million operating budget, and oversee 60 staff. Send resume/cover letter to...
  • EDITOR-IN-CHIEF
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks an Editor-In-Chief to join our senior team...
  • LENDER OWNED FIX & FLIP
    2 houses on 37+ acres. Gated subdivision, Penrose Colorado. $400k. Possible lender financing. Bob Kunkler Brokers Welcome.
  • HISTORIC LODGE AND RESTAURANT - FULLY EQUIPPED
    Built in 1901, The Crazy Mountain Inn has 11 guest rooms in a town-center building on 7 city lots (.58 acres). The inn and restaurant...
  • POLLINATOR OASIS
    Seeking an experienced, hardworking partner to help restore a desert watershed/wetland while also creating a pollinator oasis at the mouth of an upland canyon. Compensation:...
  • ELLIE SAYS IT'S SAFE! A GUIDE DOG'S JOURNEY THROUGH LIFE
    by Don Hagedorn. A story of how lives of the visually impaired are improved through the love and courage of guide dogs. Available on Amazon.