Brown Signs Law Requiring 33% Renewable Energy
by David R. Baker
San Francisco Chronicle, April 13, 2011
Gov. Jerry Brown on Tuesday signed legislation requiring California's utilities to get 33 percent of their electricity from renewable sources by the end of 2020, casting the new law as a way to maintain the state's lead in the emerging clean-energy industry.
As part of the fight against global warming, California already requires its large, investor-owned utilities to get 20 percent of their electricity from the sun, the wind, and other renewable energy sources, a goal they have not yet met. Developers are racing to build wind farms and solar power plants across the state, often using technology developed by California companies.
Upping the goal to 33 percent will bring even more investment and jobs to the state, Brown said, shortly before he signed the legislation inside a new solar panel factory in Milpitas.
"Today we have a real success story," Brown told a large crowd packed into the factory, which is owned by Flextronics and makes panels for San Jose's SunPower Corp. "It's about California leading the country and the country leading the world."
Brown noted that he promoted renewable power during his last stint in the governor's office, during the oil-price shocks of the 1970s, even when critics ridiculed him for it.
"I didn't get my name, Gov. Moonbeam, for nothing," he told the crowd. "I earned it!"
Many of Silicon Valley's green-tech businesses pushed for the new law, saying it would give them and their financial backers the confidence to invest in new factories and renewable power facilities in California.
"Policy leads to a market, which leads to jobs," said SunPower Chief Executive Officer Tom Werner, who attended the signing ceremony in a neck brace after a bicycle accident last week. "A broken neck couldn't keep me away," he told the crowd.
SunPower also scored a significant win on Tuesday when the U.S. Department of Energy conditionally committed $1.2 billion in loan guarantees to a solar power plant that the company plans to build in San Luis Obispo County. The California Valley Solar Ranch is expected to generate up to 250 megawatts of electricity, supplying 60,000 homes.
Energy Secretary Steven Chu announced the loan guarantees at the signing ceremony with Werner and Brown, prompting wild cheers from the SunPower employees in the room. Just a day earlier, his department finalized terms for $1.6 billion in loan guarantees for another solar power plant project in California, developed by Oakland's BrightSource Energy Inc.
"The loan program is a necessary part of making sure we not only invent things here in America, we build things in America," Chu said after the ceremony.
The law signed Tuesday will give California one of the country's most ambitious goals for the use of renewable power.
California's large, investor-owned utilities were supposed to meet the original target of 20 percent renewable power by the end of 2010. Two of them came close. Pacific Gas and Electric Co., based in San Francisco, derived 17.7 percent of its electricity from renewable sources last year, while Southern California Edison got 19.4 percent.
The new law requires that all the state's utilities, public and private, reach 33 percent in three steps. First, they must satisfy the original 20 percent goal by the end of 2013, at the latest. By Dec. 31, 2016, 25 percent of the electricity they sell must come from renewable sources. Finally, they must hit 33 percent by Dec. 31, 2020.
Critics have often feared that the renewable power requirement - referred to as the "renewable portfolio standard" - could drive up California's already-high electricity prices.
By forcing the utilities to buy a specific amount of renewable power by a specific date, critics said, the state could accidentally create a seller's market, with solar and wind power developers charging sky-high prices for their electricity. A recent study from the California Public Utilities Commission found that the need to buy renewable power had added about $6 billion to the amount the state's utilities spent on long-term power purchase contracts since 2002.
So the new law, written by state Sen. Joe Simitian, requires the utilities commission to place limits on how much the utilities can spend on renewable power. The commission now must hammer out many of the details about how those limits will be set and implemented, said Commissioner Mike Florio.
"Our staff is already looking at it and figuring out what we'll need to do," he said. "It's clearly a high priority for the state, so we'll get it done as fast as humanly possible."
PG&E, California's largest utility, opposed the new law, arguing that it didn't give the utilities the flexibility they will need to keep costs down. Southern California Edison, however, supported the legislation. Marc Ulrich, Edison's vice president of renewable and alternative power, said Tuesday that the utilities could meet the new requirement without bankrupting their customers.
"We've seen significant drops in prices for solar," Ulrich said. "With more demand across the world, more production, that should continue."
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