Clean Energy Investments by California Public Utilities Not Created Equal
Publicly Owned Utilities Expand Renewable Energy Use But Have Far to Go, Report Finds
Published on Jul 24, 2012 - 10:07:13 AM
BERKELEY (July 17, 2012) -- California's publicly owned utilities significantly expanded their use of renewable energy over the past decade yet several still have a long way to go to meet the state's requirement to generate 33 percent of their electricity from clean sources by 2020, according to a new report by the Union of Concerned Scientists (UCS).
The report, "The Clean Energy Race: How Do California's Public Utilities Measure Up?," found that California's 10 largest publicly owned utilities (POUs) collectively increased their renewable energy investments to nearly 19 percent of retail electricity sales in 2010 from 4 percent in 2003. However, the degree to which these investments promoted new clean energy resources varied significantly among the utilities.
UCS examined how investments made by POUs fulfilled California's Renewables Portfolio Standard (RPS) of generating 20 percent of their electricity through clean energy sources like wind and solar power by 2010. POUs deliver about one-quarter of California's electricity needs and, unlike the larger investor-owned utilities, were encouraged — but not required — to meet the 2010 RPS target. Under revised legislation, the POUs are now required to purchase renewables, and reach the 33 percent standard by 2020.
"A primary purpose of California's RPS program is to increase the amount of renewable energy sources supplying electricity so we can reduce our reliance on fossil fuels," said Laura Wisland, a senior energy analyst at UCS and an author of the report. "Investments made by the publicly owned utilities that promote the development of new, clean generation resources are critical to the state's efforts to reduce global warming emissions and improve air quality."
The UCS report classifies each POU into one of three categories based on how well the utility's RPS investments supported the development of new clean energy resources and positioned it to meet future RPS requirements.
Silicon Valley Power, Turlock Irrigation District, and Modesto Irrigation District were "sprinting ahead;" Los Angeles Department of Water and Power, Sacramento Municipal Utility District, Riverside Public Utilities, and Anaheim Public Utilities were "on the right track, but must keep moving;" Roseville Electric, Burbank Water and Power, and Imperial Irrigation District were a "false start."
While nearly all of the POUs expanded their renewable portfolios, some had more impact than others on boosting California's clean energy supplies. A few POUs approached or met the 20 percent RPS goal by signing long-term contracts for new projects or building their own; others, including the Imperial Irrigation District and Roseville Electric, did not pursue new RPS investments as aggressively, or did so largely by signing short-term contracts that expanded their RPS portfolios only temporarily, which did little to promote the development of new generation facilities and will need to be renegotiated at potentially higher prices. The Los Angeles Department of Water and Power, the largest POU in the country, made several investments in new wind projects, but also relied on short-term contracts for nearly a third of its RPS program. In addition, less than half of the overall renewable electricity generated by the 10 largest POUs came from projects located in California.
"We found that not all investments in renewable energy are created equal," said Wisland. "Utilities that sign long-term contracts for new projects or own them outright are most effective at spurring development of new sources of clean energy."
The report recommends that POUs focus their RPS investments on signing contracts lasting at least 10 years or building their own clean energy facilities, which will help stabilize electricity prices for customers and ensure compliance with future RPS requirements. POUs also should acquire more than the minimum amount of electricity required to meet RPS requirements to create a cushion in case some projects are delayed or fall through.
By 2010, the POUs still relied on electricity from fossil fuels for two-thirds of their retail sales and supplied about half of the coal-fired electricity consumed in the state.
"Clean energy resources emit far less air pollution and global warming emissions than electricity generated from coal or natural gas, diversify the state's electricity sources, and create green jobs," Wisland said. "The success of California's renewable energy policies by 2020 and beyond will depend on how individual utilities choose to invest in renewables to meet the state's RPS goals."
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