Friday, April 22, 2011

California Raises the Renewable Energy Stakes

While the political opposition in Ontario continues to question the value of the province's Feed-in Tariff Program, the state of California has bet the windfarm on renewable energy. Last week, Governor Jerry Brown upped the ante by signing legislation which would require California utilities to get one-third of their power from renewable sources. This creates the most aggressive alternative-energy mandate in the United States.

Senate Bill 2 (SBX1 2) will extend the current 20% renewables portfolio standard target for 2010 to a 33% renewables portfolio standard by December 31, 2020. The former version had targeted investor-owned utilities such as Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric. The new law will also apply to municipal utilities such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District, which manage about a quarter of the state’s electricity load.

The new mandate will also require utilities to draw some of their power from small local projects based near customers (i.e. distributed generation). This would include generation from rooftop solar PV or small wind. The full text of the bill can be viewed here.

Industry cited the long-term stability provided by the law as integral to moving away from the boom-bust cycles of renewable energy markets often dependent upon short-term government incentive programs. Russ Kanjorski, a vice president at Abound Solar, was quoted in the Los Angeles Times as stating, "The RPS requirements allow utilities to plan to meet higher renewable energy standards and orient the market towards meeting those goals."

Ontario's Green Energy and Green Economy Act and FIT Program were attempts to put in place a stable investment climate for business, which would create viable conditions for the development of a domestic renewable energy market. Of course there are valid concerns about aspects of an initiative as comprehensive as the GEGEA. That's why the government included a regular review period of the FIT Program. As a provincial election approaches in the Fall of 2011, Ontarians will have their say on whether to double down on the current strategy or fold and hope the Californias of the world are left holding a bad beat.

Sunny Days

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