California Bill Would Require More Solar, Wind and Geothermal — Possibly at the Salton Sea
With 10 days left for California lawmakers to pass bills this year, renewable energy companies are rallying around legislation that could jump-start geothermal energy development by the Salton Sea — and also give a boost to solar, wind and bioenergy.
The bill from Assemblymember Eduardo Garcia, a Coachella Democrat, still faces an uphill battle. It's opposed by the state's major investor-owned utilities and the California Chamber of Commerce, which are worried about the costs to homes and businesses.
But if Assembly Bill 893 passes in the next 10 days, it could have a more dramatic immediate impact than several higher-profile pieces of energy legislation being debated in Sacramento. The other bills include SB 100, which would require California to get 100 percent of its electricity from climate-friendly sources by 2045, and AB 813, which would start the process of California expanding its power grid across the western U.S.
Garcia's bill, AB 893, would require California utility companies to buy more energy from geothermal power plants, which, unlike solar and wind farms, can generate climate-friendly electricity 24 hours a day, 7 days a week. The bill would almost certainly lead to new geothermal plants being built by the southern shore of the Salton Sea in Imperial County, which is home to one of the world's most powerful geothermal reservoirs.
Garcia's predecessor V. Manuel Perez, who is now a Riverside County supervisor, tried and failed to get a geothermal mandate through the legislature in 2014. But Garcia's bill, unlike Perez's, has won last-minute support from other parts of the renewable energy industry. That's because Garcia plans to amend the bill to require new contracts over the next few years for solar and wind projects, before federal tax credits begin to decrease.
"Historically, the efforts to try to bring geothermal to the forefront have been very divisive among the other renewable energy groups. And today we are working in collaboration," Garcia said in an interview Tuesday.
Garcia, who represents Imperial County and the eastern Coachella Valley in Riverside County, said the bill would advance California's fight against climate change in a way that spurs economic development in one of the poorest parts of the state. He sees geothermal, as well as solar, wind and bioenergy, as key to his region's economic future.
"This is extremely important as it relates to economic development, jobs and more importantly, continuing on the path of meeting our 2030 goals," Garcia said, referring to California's goal of reducing planet-warming emissions 40 percent below 1990 levels.
The current version of AB 893 would require California utilities to buy 3,000 megawatts of new geothermal power by 2030 — far more than the 400 megawatts of geothermal that have been built by the Salton Sea thus far. While changes to the bill are still being hammered out, Garcia said the 3,000-megawatt figure will drop. He estimated the bill could ultimately require between 4,000 and 5,000 megawatts of new and extended contracts for geothermal, solar, wind and bioenergy facilities across the state.
For the solar and wind industries, the bill represents an opportunity to get new projects built before federal tax credits begin to drop. Solar projects that start construction in 2019 can still qualify for a full 30 percent investment tax credit. Similarly, a production tax credit for wind disappears entirely for projects that start construction after 2019.
"This is the best and probably last opportunity for California (utilities) to buy solar energy at a 30 percent discount. And it's great for the ratepayers," said Shannon Eddy, executive director of the Large-scale Solar Association, a state trade group.
Utilities, local governments and big corporations have continued to sign contracts for renewable energy facilities in California. Just last month, for instance, the developer EDF Renewable Energy announced a deal for its upcoming Riverside County solar farms that involves the cities of Anaheim, Burbank and Vernon. Also last month, the developer BayWa r.e. announced a long-term contract with Marin Clean Energy, a Bay Area power provider, for its 101-megawatt Strauss wind farm in Santa Barbara County.
June 22, 2016. (Photo: Jay Calderon/The Desert Sun)
But renewable energy firms say fewer long-term contracts are being signed than earlier this decade, despite the falling costs of solar and wind power and the availability of federal tax credits. They cite several reasons for the slowdown, including the fact that California's investor-owned utilities — Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric — have already lined up most of the power they need to meet the state's renewable energy mandate, which is currently 50 percent by 2030.
Another factor is the rise of locally run "community choice" programs, in which cities and counties ditch the investor-owned utilities and buy their own electricity. So far, those local energy providers have mostly signed short-term contracts that haven't led to the development of new solar and wind projects. The investor-owned utilities, meanwhile, have had trouble forecasting their long-term energy needs as more customers depart.
Danielle Mills, director of the American Wind Energy Association's California Caucus, said some community choice programs are starting to sign long-term contracts. But overall, she said, "We're just not seeing the levels of procurement that we have seen in the past in California. And that's a shame, because renewable prices are really low."
"AB 893 is an effort to make sure there is some certainty and some settling of who is going to be doing the procurement going forward, because we just haven't been seeing some of these larger (renewable energy) projects getting contracts," Mills said.
The bill's supporters include several companies that stand to benefit, including Controlled Thermal Resources, which wants to build a massive geothermal plant by the Salton Sea; EnergySource, which runs one of the Salton Sea area's 11 existing geothermal plants; and Calpine Corporation, which owns and operates 13 geothermal plants at the Geysers, another geothermal hot spot in Northern California. The Imperial Irrigation District, Imperial County and several local labor unions support AB 893 as well.
Garcia said the amended legislation will also require utilities to buy power from biomass facilities that convert organic matter, such as dead trees, into electricity. Bioenergy advocates say the technology could help California reduce the damage from wildfires by creating an economic incentive to cut down dead trees that might otherwise burn.
Critics say Garcia's bill would lead to higher electricity costs for homes and businesses. Those arguments are based largely on the fact that it's more expensive to build a geothermal plant than a solar or wind farm — an economic reality that has largely stalled development of the Salton Sea's geothermal resource over the last two decades.
A coalition of groups and companies including the California Chamber of Commerce, the International Council of Shopping Centers and Shell Energy North America is circulating a letter in Sacramento this week urging lawmakers to oppose AB 893. The letter, which was written before amendments focused on solar and wind were added to the bill, says a geothermal mandate "will significantly increase costs to selected California ratepayers by requiring the utilities to invest in as-yet unbuilt and unplanned geothermal projects."
"Electricity rates in California are already among the highest in the nation. Without competitive bidding and cost containment, both of which are impeded by AB 893, utilities will be forced to purchase more expensive power and pass the increased rates along to California ratepayers," the letter says.
The investor-owned utilities are opposed to AB 893, as are publicly owned utilities like the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District. In another letter being circulated this week — which was also written before the bill was changed to expand its scope beyond geothermal — a coalition of utilities says AB 893 "would significantly increase costs for customers by billions of dollars." The letter is also signed by CalCCA, a trade group for locally run community choice programs.
"While California leads the nation in clean, environmentally-sustainable electricity generation, setting unnecessary procurement mandates will not advance the state's ambitious clean energy goals," the letter says.
Asked about the cost argument, Garcia pointed to a benefit of geothermal energy that he said isn't reflected in its high up-front costs: the ability of geothermal plants to generate climate-friendly electricity around the clock. As California continues its shift away from fossil fuels to cleaner energy sources, the state will need to deal with the fact that solar and wind farms only generate energy when the sun shines or the wind blows. Garcia said geothermal can play a key role in getting fossil fuels off the grid entirely.
"It's critically important to look at what needs to be done when it comes to balancing the grid," he said. "We need to make sure that we truly put forward a balanced portfolio."
Stephen Berberich is president of the California Independent System Operator, which runs the power grid for most of the state. In a recent interview, he expressed mixed feelings about Garcia's geothermal mandate. On the one hand, Berberich said, he sees geothermal as "part of the solution" to California's energy future. But on the other hand, he said he's "a little hesitant" about state lawmakers requiring utilities to buy geothermal, rather than utility regulators making the decision about when geothermal is needed.
The Senate's appropriations committee passed AB 893 in a 5-2 vote last week, but Garcia said the bill will go back to the Senate's energy and utilities committee once the amendments are finalized. AB 893 would then go to the Assembly floor before being advanced to the Senate, where its co-author is Henry Stern, a Canoga Park Democrat.