California Renewable Energy Targets are Working

California has one of the most aggressive renewable energy targets of any state in the U.S. The type of standard California uses is called a Renewable Portfolio Standard (RPS). What this means is that all investor owned utility companies, such as PG&E or SMUD, must get a certain percentage of their electricity from a renewable energy provider. That source could be a privately held 3rd party energy company such as a hydro-electric plant, solar farm or wind farm operator. It could also come from solar or wind farms that are owned directly by the utility.

In 2011 California passed Senate Bill 2 (SB-2) which raised the portfolio standard from 20% renewables to 33% by 2020. This move was seen as exceedingly ambitious by many renewable energy critics and was quickly discounted as just a political ploy. However, what these critics failed to grasp is that RPS standards actually work! This week PG&E, California's biggest investor-owned utility announced that it is making significant progress towards meeting this demanding target. PG&E stated that for 2011 it had generated more than 19.4% of its energy from completely renewable energy sources including wind, solar, geothermal, biomass and small hydro-electric sources. Furthermore, PG&E says that it is completely on track to hit the 33% RPS target by 2020.

Since 2002 PG&E has signed more than 110 contract for energy from renewable energy contractors. That's about 10,000 Megawatts of energy! Moreover, PG&E has been able to do this without having to increase the price it pays for energy. Many citizens do not realize that in 2012 modern renewable energy power plants such as wind farms and solar farms are completely cost competitive with polluting fossil-fuel sources such as coal and natural gas when a long-term contract is used. That's because the cost of renewable energy sources are already low and going down, and fossil-fuel and nuclear sources are steadily going up in cost. PG&E has done the math and has seen how much solar and wind sources have come down in cost. For them renewable energy is a win-win. They get the positive public image of supporting non-polluting renewable energy and they completely avoid the risk of price spikes because they have locked in the price with a long-term RE contract. Most fossil-fuel providers won't sign long-term contracts because they know fossil-fuel prices will inevitably increase in the future as supplies begin to dwindle or as speculation drives up the cost (as we are seeing right now with Iran).

The progress California is making towards its RPS goals is incredibly good news. Think about it! The country's largest, most energy hungry state will be getting one third or more of its energy from renewable energy in less than 8 years. This would be an enormous step forward for California and would clearly give it a huge economic advantage over competing states. In terms of GDP California is the fifth largest economy in the world. If California can do this, nearly any other country in the world could do this to. And that, my friend, is the whole point! Renewable energy is real, its big, and its working now, not just in some distant future.

The great success states like California and Colorado have had in using aggressive RPS standards leads to the obvious question of why not have a national RPS, not just a state-by-state standard. National level RPS standards have worked wonderfully for countries in Europe so why not in the United States. This week Senator Jeff Bingaman, a Democrat from New Mexico introduced the Clean Energy Standard Act of 2012, a bill that would try to set nationwide standards for large retail utilities. Unfortunately, the bill does not limit sources to truly renewable energy sources, but includes coal with carbon capture and nuclear power.

We think the idea of having a national RPS is a good one but it needs to be limited to truly renewable sources, not just less polluting sources. Nonetheless, it is a start and it will be interesting to see how it fares in Congress. At least it will get the discussion started and hopefully in a few years our entire country can begin chasing and achieving a national RPS target. Let's go for it!!