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Ucilia Wang August 29, 2008 12 Comments

Prop. 7: A Bad Idea for Renewable Energy?

Opponents of the renewable-energy proposition have launched attack ads on TV, saying the California measure would present an obstacle to achieving the state's clean-energy goals.

The battle over a California ballot measure that would require utilities to sign more long-term contracts to buy renewable energy is heating up this week with the launch of a TV ad opposing the initiative.

According to the commercial, Prop. 7 will exclude small renewable-energy providers from the energy market and increase consumers' energy bills. The group behind the ad, Californians Against Another Costly Energy Scheme, received funding primarily from utilities such as the Pacific Gas and Electric Co., Southern California Edison Co. and others.

Prop. 7 proponents, Californians for Solar and Clean Energy, tout the initiative as an aggressive move to promote energy from sources such as solar, wind, geothermal and ocean waves.

Heading the campaign for Prop. 7 is Jim Gonzalez, a former San Francisco County supervisor. Funding for the petition drive to get the initiative on the ballot came from Peter Sperling, whose father, John Sperling, founded the Apollo Group, which operates the University of Phoenix and other vocational schools. Peter Sperling is the vice chairman of the board at Apollo.

The ballot measure calls for utilities - both investor- and government-owned - to get at least 20 percent of their electricity from renewable sources by 2010. The quota would increase to 40 percent by 2020 and 50 percent by 2025.

Prop. 7 also would require utilities to sign 20-year agreements to buy renewable energy, which would have to come from power plants with capacities of 30 megawatts or larger that are located in the state or near the border. Smaller hydroelectric facilities, as well as plants that generate power from garbage, also would be eligible for these contracts if they meet certain requirements.

Electricity producers could sell power to utilities at as much as 10 percent above the price for conventional power (see the full text of Prop. 7). Utilities could pass on some of the extra cost to consumers, but the rate increases are capped at 3 percent.

Currently, state law requires only investor-owned utilities to meet a 20 percent level by 2010. State regulators also are considering a 33 percent requirement by 2020 as part of the effort to implement a comprehensive plan to reduce greenhouse-gas emissions (see California Offers Plan to Clear the Air).

The 20 percent mandate has prompted utilities such as PG&E and SCE to sign large contracts to buy solar and wind energy over the past year. Last week, SCE said it had agreed to buy up to 909 megawatts of electricity from a wind farm in Oregon, to be built and operated by New York City-based Caithness Energy (see SoCal Edison to Buy 909MW of Wind Power and PG&E to Buy 808MW From OptiSolar, SunPower).

Both utilities said they are on track to meet the 20 percent mandate. Both also declined to disclose the financial terms of the agreements.

Government mandates that force utilities to buy renewable energy through long-term contracts at prices higher than conventional power aren't new. Those policies have made countries such as Germany and Spain booming markets for solar companies, for example (see Spanish Energy Commission Votes to Shrink Solar Incentives and Solar Prices Set in Germany).

But those regulations don't exclude small power plants. In fact, many homeowners and farmers in Germany have installed solar panels on their roofs and properties in order to profit from the policy.

Prop. 7 opponents say the ballot measure would only benefit large energy companies because utilities would have to buy renewable energy from power plants with a minimum of 30 megawatts of capacity.

The commercial from the anti-Prop. 7 campaign featured Sue Kateley, executive director of the California Solar Energy Industries Association. In addition to utilities such as PG&E, the trade group's members also include solar installers Akeena and SolarCity, as well as SunPower, which manufactures solar panels and builds power plants.

Some environmental groups also oppose the ballot measure. The Natural Resources Defense Council doesn't support it, and one of its bloggers penned a piece arguing that the measure is poorly written and would create regulatory gridlock that prevents California from achieving its emissions-reduction goals. 

Comments [12]

  • adam moritz 08/29/08 7:56 AM

    Yes, excluding small producers is a very bad idea—in fact, there should be a requirement to purchase a minimum amount of DISTRIBUTED renewables because you get more for your money.  With distributed generation, there are no transmission and distribution losses and no new infrastructure required.  It is also way more socially equitable, allowing a larger number of people to save money by switching to renewable energy.

     Reply
  • Ucilia Wang 08/29/08 8:19 AM

    Distributed solar sounds like a good idea. It also makes the consumers or solar installers the de facto utilities, depending on whether you’ve signed a contract with your solar installer to pay for the equipment or electricity. Wouldn’t utilities be concerned if distributed generation becomes massively popular?

     Reply
  • Ben Day 08/31/08 5:22 AM

    The provision for buying ‘green’ power at 10% above market rates is shortsighted. Why scare off potential power buyers (i.e. SCE, PG&E, etc.)? With a meltdown in the Middle East just around the corner, allowing purchase of green power AT rates comparative to fossil fuel-generated power will allow plenty of profits for everyone!

     Reply
  • Ucilia Wang 08/31/08 10:22 AM

    Solar power costs a lot more than conventional power because solar panels and the cost of installing and operating them is so much more, on a per kilowatt-hour basis, than conventional power. That’s why many states have passed mandates that require utilities to buy renewable energy. Otherwise, it’d be cheaper for utilities to build more coal-fired power plants than to invest in renewable energy.

    No one would want to sell solar panels or develop solar power plants for utilities if they aren’t going to make money. So it won’t be profitable to do so at the cost of conventional power. At the same time, utilities in California and some other states must include a certain percent of renewable electricity in their offerings (20% by 2010 in California). So utilities do have to pay more, for now, until the technology and the cost of panels come down over time.

    Reply
  • Robert Bernal 09/3/08 10:05 PM

    Reasons why “No on 7” is flawed

    They say enviromentalists are against it…
    So what, since most enviro-maniacs oppose largescale renewable energy projects, they do not care about global warming and post oil crisis or simply, they prefer big oil.

    They say that it cuts out the little guy…
    Good! Utilities buying from small producers is like wholesalers trying to buy from retailers, obviously not good for anyone but the small scale, overpriced “retailer”!

    They point to “a rate increase of 10% above market value”...
    10% more for juice rates is definately not a concern for average people even if they don’t care about reversing GW and post oil crisis. Only a short sited person would want to save that 10% in favor of not allowing RE (and California) to create largescale responsible energy.

    We need billions of mirrors to offset negative albedo, perhaps opponents should think about that too!

     Reply
  • Robert Bernal 09/3/08 10:16 PM

    That is mirrors that reflect sunlight onto steam generators. Only on a massive scale would these things be cheap enough to compete with gas fired generators. Just 1/10th of the Mojave would power 3x USA’s electrical usage and would promote the next new tech: Cheap electrical storage needed for billions of e-cars!

     Reply
  • mari eliza 09/25/08 10:05 PM

    Anything the energy companies throw so much money at can’t be all bad. The Union of Concerned Scientists web site does not mention the proposition. I emailed them to ask about their stance and have yet to receive an answer. Haven’t had any replies from anyone about it.

     Reply
  • Kevin Gardner 10/31/08 12:54 PM

    Similar thoughts and experience. What if the big three had invested the nearly $30 million into renewables instead of squelching Prop 7, which represents intentional - albeit lengthy - legislation deserving consideration and debate ... Also, only one of many Asian Am groups listed as opposed responded to contact for another story (see URL), and said a “consultant” instigated their stance.
    http://www.asianweek.com/2008/10/27/ca-prop-7-lights-fire-under-utilities/

     Reply
  • zach davis 11/3/08 8:30 PM

    Voting is an invaluable way to help alter the future of our planet - but you can’t be sure that your vote will be on the winning side.  Don’t wait for government to make a change for you.  TAKE ACTION YOURSELF - NOW!

    http://www.poweredgreen.com

     Reply
  • zach davis 11/3/08 8:30 PM

    Voting is an invaluable way to help alter the future of our planet - but you can’t be sure that your vote will be on the winning side.  Don’t wait for government to make a change for you.  TAKE ACTION YOURSELF - NOW!

    http://www.poweredgreen.com

     Reply
  • Natalie Minas 11/4/08 9:27 AM

    Smaller renewables are not excluded from this bill. If you have read it, although lengthy and wordy with Solar professional language, you can see what PG&E is doingto make us beleive why they would be discluded. Section 10 of the bill states, “In order to fulfill unmet long-term resource needs…the comission shall establish a renewables portfolio standard requiring ALL RETAIL SELLERS to procure a minimum quantity of electricity generated by eligible renewable energy resources…” It’s all there in plain english. This will not exclude them. Also, most of this bill is already law, it was changed to include smaller renewables…check out law AB32. And all of you are entirely on the right track! Our taxes won’t go up. The consumer protection clause says they can’t raise our rates anymore! Also, Sierra Club has duped everyone! They just contracted with Clorox…going green goes as deep as your pockets apparantly… here’s the story- http://www.nytimes.com/2008/03/26/business/businessspecial2/26cleanser.html. And Sierra wants to drill for Natural Gas in Louisianna…check out Carl Pope on Colbert Report. I would rather listen to Noble prize scientists and S. Davis Freeman who actually specialize in Solar rather than enviro groups trying to save wolves and hug trees. It’s so controversial and dirty on the opposition. Want to take action to fight global warming? That’s why you should vote yes!

    Reply
  • Natalie Minas 11/4/08 9:47 AM

    Smaller renewable companies are included as stated in section 10 of the bill…“In order to fulfill unmet long-term resources needs…the commission shall establish a renewable portfolio standard requiring ALL RETAIL SELLERS to procure s minimum quantity of electricity generated by eligible renewable energy resources…” There it is in plain English. And this will not raise our rates, the consumer protection clause states that. We are claiming our rights back from the utility companies. And Sierra Club has duped everyone! Did anybody know that they just contracted with Clorox…as in bleach? Who is contracting with Wal-Mart? Here is the story in NY times-  http://www.nytimes.com/2008/03/26/business/businessspecial2/26cleanser.html. And also Carl Pope’s interview on Colbert Report…http://www.yeson7.net/colbertnpope.html…What? Did I hear Sierra supports drilling? I guess going green only runs as deep as our pockets. So I’m going to listen to the Nobel Prize scientists supporting the bill and S. David Freeman (solved the 2001 energy crisis). I smell some jealousy towards Californians for Solar and Clean from the other organizations too… I heard Sierra was trying to get the same bill passed through legislature. What is the deal?

     Reply

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