SAN FRANCISCO (Reuters) – California on Friday forecast high costs for the most ambitious clean energy plan in the nation, including a 28 per cent rise in electricity rates and $115 billion in construction if the state wants to get a third of its electricity from renewable sources by 2020.
And even so, it might not hit the goal.
The Public Utilities Commission in a draft report nails down the most populous U.S. state’s price of going green at a time of economic turmoil and as Congress considers federal legislation to address global warming, which is the impetus of the California push.
The report is a litany of challenges facing California, including environmental conflicts over building transmission and power plants in pristine areas, dependence on largely untested technology called solar thermal, and conflicting state priorities.
California is also facing a budget gap of $24.3 billion for the fiscal year beginning in July and the worst drop in state revenues since the Great Depression.
Many of the issues reflect California’s plan to move quickly. The state’s ambitious goal is based on environmental consensus about what is needed to avoid unsustainable climate change, rather than a bottom-up view of what could be done.
Policy makers, engineers and utilities are left to work out what to do, and the Friday report made clear they had big doubts, saying even hitting 33 per cent renewables in 2021 would be difficult.
California already requires 20 per cent renewable energy by 2010, and the report said that, if all that power was in place by 2020, new generation and transmission building costs would be $51.8 billion and electricity costs would rise to 15.8 cents per kilowatt hour from 13.2 cents in 2008.
Only a few states have higher per-kilowatt electricity retail rates, and the ones with higher rates are in the Northeast and in Alaska and Hawaii, according to the federal Energy Information Administration.
And aiming for 33 per cent renewables by 2020, as Gov. Arnold Schwarzenegger has advocated, would more than double capital costs to $114.5 billion and increase state electricity costs to 16.9 cents per kilowatt hour, the report said.
20-nine of the 50 U.S. states have requirements for renewable power distributed, called renewable portfolio standards.
Green advocates want a national standard.
California’s 2020 scenario is based on contracts and discussions in process, which are strongly focused on solar thermal. It uses the sun’s rays to heat fluids which then creates steam to turn turbines.
California’s plan is a 14-fold increase over current global solar thermal capacity, the report said, illustrating the technology risk inherent in the buildout.
But California could take other paths, from buying wind energy from out-of-state suppliers to putting up relatively expensive small solar arrays around the state, a move which could cost more but avoid fights over building big plants and transmission lines.
California’s main electricity utilities are PG&E Corp’s Pacific Gas & Electric, Sempra Energy’s San Diego Gas & Electric and Edison International’s Southern California Edison, all of which mostly buy renewable power from other companies for now.
Major independent power suppliers to California include Pinnacle West Capital Corp, Portland General Electric Co, Sierra Pacific Resources, Calpine Corp, and AES Corp.
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