Early Hopes for Renewable Energy Quelled by Low Rates, Technology


At first glance, the increasing price of oil caused by Iraq's invasion of Kuwait ought to be enough to jump-start the stalled renewable-energy industry in this country.

But the operators of wind and solar energy facilities in San Diego County say any revival of interest in renewable energy will not be enough to rescue their projects, most of which are out of business, in mothballs or barely surviving.

In general, these operators blame their fates on a combination of stabilized energy production costs during most of the 1980s and the resulting low rates paid to them for their energy by San Diego Gas and Electric Co.

SeaWest Energy of San Diego, one of half a dozen operators who have tried to make a go of wind-power generation over the last 10 years in Boulevard, 60 miles east of San Diego, says it will probably dismantle the company's Buckeye Wind Farm sometime next year. The company maintains 30 inactive power-generating windmills on 90 acres.

Despite the higher oil prices in recent days, SeaWest vice president Andrew Parker said he does not expect oil prices to remain at a level that would make his company's wind farm economical. "SDG&E; . . . would really have to pay for us to keep that Boulevard site going," Parker said.

SeaWest's idle 40-kilowatt windmills, or turbines, have not produced any energy in the last year, although two wind farm operators based near Mojave in the Tehachapi Pass have expressed interest in buying the machines, said Andy McCuen, a SeaWest vice president.

A decade ago, San Diego County served as an incubator for many of the first privately funded, large-scale renewable energy projects in the United States. These projects included more than half a dozen wind-farm projects like SeaWest's and an innovative solar-thermal power plant operated northeast of Lake Henshaw near Warner Springs by the La Jet Energy Co. of Abilene, Tex.

La Jet President Carl Williams says he is one of those in the renewable energy industry who is optimistic about his company's future in a number of areas, but not in San Diego County.

Seven years ago, La Jet built its huge, $18.7-million field of parabolic solar energy collectors, a 4.8-megawatt facility that was the first commercially financed solar-thermal power plant in the country. The plant was designed to provide electricity to as many as 4,000 San Diego County homes.

Today, the plant has fallen into disuse, its 700 collectors in varying stages of disrepair. Williams said the facility has not generated electricity for several years but did provide some power to SDG&E;'s grid from 1984 to 1987.

In Boulevard, SeaWest's plans to dismantle its wind farm will leave a neighboring five-turbine system owned by Richard T. Immel as the last operational commercial wind farm in the county.

County wind farmers like Immel and SeaWest received 7.2 to 8.5 cents per kilowatt-hour generated in 1982. Four years later, the average dropped to 2.3 to 4.8 cents per kilowatt-hour. SDG&E; officials say plummeting oil prices and the increasing availability of other cheap resources were responsible for the lower rates.

"You can't even afford to run the damn things for that," said Martin Schroder, whose six-turbine wind farm was the first in the Boulevard area and one of the first in the country.

Today, all that stands on Schroder's 50-acre plot of land, adjacent to SeaWest's facility, is a rusty trailer home and one, mostly dismantled turbine. "It's a sad story," Schroder said. "I'm happy to be out of (this business)."

Williams also said the amount SDG&E; was willing to pay La Jet for the solar energy that it produced made operating its plant impossible.

"I'd think SDG&E; would want to be behind" the development of renewable energy systems, Williams said. "I don't understand them."

SDG&E; determines the amount it pays for independently produced energy by using a formula that was devised and approved by the state Public Utilities Commission. All three of the state's major electric utilities use this formula.

"I don't think SDG&E; had anything to do with (the renewable energy industry's) failures," said Faramarz Yazdani, program and project supervisor for the commission's Division of Rate Payer Advocates.

But, although the state's universally applied rate system was driving renewable energy producers out of business in San Diego, similar projects under contract with utilities in other parts of California flourished.

According to the California Energy Commission, state wind farmers sold 1.8 billion kilowatt hours of wind-generated electricity to California utilities in 1988. Most of this energy came from Altamont Pass near San Francisco, the San Gorgonio Pass near Palm Springs and Tehachapi Pass near Mojave, where wind farmers operate thousands of turbines under contract to serve Pacific Gas & Electric and Southern California Edison.

Only 500,000 kilowatt-hours, or less than 3%, of the wind-generated energy produced in 1988 came from San Diego County.

A number of the turbines in other parts of the state are operated by companies whose initial wind-farming efforts were mounted in Boulevard. SeaWest, for example, maintains turbines in Altamont, San Gorgonio and Tehachapi with a combined capacity of more than 250 megawatts.

One of the problems that was unique to the early wind-farm operators in San Diego County, said SDG&E; Customer Energy Contract Supervisor Mike Iammarino, was the specific type of agreement they signed with the San Diego utility.

Iammarino said the wind farmers in other parts of the state generally signed long-term contracts with utilities that paid them a set price for the power they produced over a 10-year period. But, when the San Diego County wind-farm operators built their facilities, oil prices were expected to continue rising and so the set-rate arrangements seemed like they would be less lucrative than the fluctuating rates. In late 1985, with the cost of conventional energy production falling, the fluctuating amount dipped below the set amount, and long-term contracts became the most profitable arrangement, Iammarino said.

Another factor was the wind itself. Mike Sloop, an energy analyst for the county Department of Planning and Land Use, said the wind in Boulevard is inconsistent. It is also at its strongest in the winter, not a peak energy-consumption time for SDG&E.;

Boulevard wind farmers could have conducted tests to determine this before they built their facilities, Sloop said, "But that takes a year to do, and they didn't want to wait a year."

Sloop said these entrepreneurs rushed into the area in 1981 to take advantage of state and federal tax incentives that were being offered to alternative energy producers in the early 1980s. San Diego County sites were more attractive than others in the state at the time because the County Board of Supervisors had adopted ordinances exempting their turbines from building-permit and zoning-height requirements.

"The tax credits (and ordinance exemptions) may have hurt more than it helped in the long run," Sloop said. "People rushed in too fast, and the technology was not there. Systems were sold as being fully operational that weren't."

Technology problems, complicated by what La Jet's Williams said were difficulties in dealing with SDG&E;, also plagued his company's Warner Springs solar-thermal project.

In 1986, La Jet decided to augment the plant's solar system by installing two diesel generators that would be run at night to keep the plant's steam lines hot, cutting down the solar system's morning start-up time. The company also planned to sell excess energy generated by these generators to SDG&E.;

However, La Jet failed to receive the federal approval that it needed to sell its energy at a profitable rate. "We couldn't afford to put the fuel in it. . . . It was just a nominal amount of money," Williams said.

Williams also said that La Jet could not afford to retrofit and modify its facility with what SDG&E; was willing to pay. These modifications would have cost about $1 million, according to Williams, who says that such an amount is not unusual for a project utilizing new technology.

However, Eric Pulliam, the supervisor for evaluation and analysis in SDG&E;'s marketing department, said La Jet's difficulties were caused by "a problem with the technology more than anything else. . . . (The equipment) was new and not properly tested for a large-scale application."

Contrasting La Jet's problems in making its system profitable is the apparent success of Westwood-based Luz International, which operates eight solar-thermal power plants in the Barstow area. The plants can generate a combined capacity of 274 megawatts to SCE. A ninth, 80-megawatt Luz facility is scheduled to come on line for SCE this fall, with another 320-megawatts to follow.

An 80-megawatt Luz facility scheduled to come on-line in 1994 is under contract to provide power to SDG&E.; However, this plant--like Luz's other plants--will be built in the Barstow area northeast of Los Angeles and will feed its electricity to the San Diego County grid from there.

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