Renewable energy rules likely to advance
A state agency is expected to approve regulations Thursday that could break an impasse in a long-sought goal to require utilities in California to obtain a third of their power from solar and other renewable sources by 2020.
The vote by the California Air Resources Board is being watched closely by clean-tech companies, many of which have curtailed expansion of their operations in the state because of the regulatory deadlock.
But critics said the regulations, which would also include a streamlined permitting process for renewable energy projects, could face an uphill battle with an unsympathetic new governor and could be overturned by a ballot initiative.
As they wait for a resolution, solar, wind and other alternative power companies say they have been unable to lay out business plans, court investors or attract customers. Many said they were considering focusing their efforts in other states or abroad, where clean-tech policies are more comprehensive.
“We’re competing against international companies that have strong policies in their home markets that give them a huge advantage now that they’re exporting into other markets,” said Kevin Smith, chief executive of SolarReserve, which develops renewable energy plants. “We find ourselves behind the curve compared to Europe and China.”
The Santa Monica company has multiple projects planned across California, but its spending will hinge on whether the state imposes the 33% requirement for renewable power, Smith said. Otherwise, the company could end up redirecting some in-state employees and more than $10 million in development spending outside California.
“We were planning our development activities, our staffing on the assumption that there would be a standard going forward,” he said. “Now we’ll have to wait and see whether we ramp up on additional activities in California or if we pull back.”
State lawmakers this month missed the deadline to pass SB 722 — widely considered the most important environmental bill of the year — which would have made the 33% requirement a state law. But a sprawling coalition of environmentalists, utilities and clean-tech companies bickered over a slew of amendments and prevented the bill from meeting a Sept. 1 midnight deadline.
“That’s how to kill a bill,” said Susan Kennedy, Gov. Arnold Schwarzenegger’s chief of staff. “We need a bill that develops a robust market, not one that carves out political favors.”
Schwarzenegger, who has championed renewable energy efforts, can still call a special legislative session to push the bill through or request that lawmakers fold the bill into the state budget they will consider before the Nov. 2 election.
But the governor is demanding that supporters fix some “fatal flaws” first, including a provision that requires utilities to sign 10-year renewable energy contracts.
None of the state’s three investor-owned utilities are on track to meet California’s current mandate to obtain 20% of their power from renewable sources by the end of this year.
In the meantime, renewable energy developers are threatening to defect to other countries or states such as Texas and Iowa, which may lack California’s abundant natural resources but make up for it with eager local government support. Private investors, who are needed to get several major wind and solar projects off the ground, also may get cold feet.
Last year Schwarzenegger, who objected to caps on the amount of renewable energy piped in from outside the state, vetoed a bill similar to SB 722. Instead, he signed an executive order that directed the Air Resources Board to draft regulations to the same effect. But critics said such regulations could be thrown out by his successor.
Even if the regulations are approved by the Air Resources Board, they could still be overturned by a November ballet initiative. Proposition 23 would suspend the law that gives the board its authority to mandate the 33% renewable energy goal.
Mark Tholke, Southwest regional director for renewable energy developer EnXco Inc., said his company might think twice before approving more money for California projects if there is no mandate. The San Diego company has two major wind projects nearing final permits in Solano and the Tehachapi region, representing around $600 million in total expenditures.
“When we see this uncertainty from the Legislature, it injects uncertainty into our management’s mind,” he said.