Re­new­able en­ergy rules likely to ad­vance

Clean-tech firms are watch­ing ac­tion by the state air board.

Los Angeles Times - - Business - Tif­fany Hsu

A state agency is ex­pected to ap­prove reg­u­la­tions Thurs­day that could break an im­passe in a long­sought goal to re­quire util­i­ties in Cal­i­for­nia to ob­tain a third of their power from so­lar and other re­new­able sources by 2020.

The vote by the Cal­i­for­nia Air Re­sources Board is be­ing watched closely by clean-tech com­pa­nies, many of which have cur­tailed ex­pan­sion of their op­er­a­tions in the state be­cause of the reg­u­la­tory deadlock.

But crit­ics said the reg­u­la­tions, which would also in­clude a stream­lined per­mit­ting process for re­new­able en­ergy projects, could face an up­hill bat­tle with an un­sym­pa­thetic new gover­nor and could be over­turned by a bal­lot ini­tia­tive.

As they wait for a res­o­lu­tion, so­lar, wind and other al­ter­na­tive power com­pa­nies say they have been un­able to lay out busi­ness plans, court in­vestors or at­tract cus­tomers. Many said they were con­sid­er­ing fo­cus­ing their ef­forts in other states or abroad, where clean-tech poli­cies are more com­pre­hen­sive.

“We’re com­pet­ing against in­ter­na­tional com­pa­nies that have strong poli-

cies in their home mar­kets that give them a huge ad­van­tage now that they’re ex­port­ing into other mar­kets,” said Kevin Smith, chief ex­ec­u­tive of So­larRe­serve, which de­vel­ops re­new­able en­ergy plants. “We find our­selves be­hind the curve com­pared to Europe and China.”

The Santa Mon­ica com­pany has mul­ti­ple projects planned across Cal­i­for­nia, but its spend­ing will hinge on whether the state im­poses the 33% re­quire­ment for re­new­able power, Smith said. Oth­er­wise, the com­pany could end up redi­rect­ing some in-state em­ploy­ees and more than $10 mil­lion in devel­op­ment spend­ing out­side Cal­i­for­nia.

“We were plan­ning our devel­op­ment ac­tiv­i­ties, our staffing on the as­sump­tion that there would be a stan­dard go­ing for­ward,” he said. “Now we’ll have to wait and see whether we ramp up on ad­di­tional ac­tiv­i­ties in Cal­i­for­nia or if we pull back.”

State law­mak­ers this month missed the dead­line to pass SB 722 — widely con­sid­ered the most im­por­tant en­vi­ron­men­tal bill of the year — which would have made the 33% re­quire­ment a state law. But a sprawl­ing coali­tion of en­vi­ron­men­tal­ists, util­i­ties and clean-tech com­pa­nies bick­ered over a slew of amend­ments and pre­vented the bill from meet­ing a Sept. 1 mid­night dead­line.

“That’s how to kill a bill,” said Su­san Kennedy, Gov. Arnold Sch­warzeneg­ger’s chief of staff. “We need a bill that de­vel­ops a ro­bust mar­ket, not one that carves out po­lit­i­cal fa­vors.”

Sch­warzeneg­ger, who has cham­pi­oned re­new­able en­ergy ef­forts, can still call a spe­cial leg­isla­tive ses­sion to push the bill through or request that law­mak­ers fold the bill into the state bud­get they will con­sider be­fore the Nov. 2 elec­tion. But the gover­nor is de­mand­ing that sup­port­ers fix some “fa­tal flaws” first, in­clud­ing a pro­vi­sion that re­quires util­i­ties to sign 10-year re­new­able en­ergy con­tracts.

None of the state’s three in­vestor-owned util­i­ties are on track to meet Cal­i­for­nia’s cur­rent man­date to ob­tain 20% of their power from re­new­able sources by the end of this year.

In the mean­time, re­new­able en­ergy de­vel­op­ers are threat­en­ing to de­fect to other coun­tries or states such as Texas and Iowa, which may lack Cal­i­for­nia’s abun­dant nat­u­ral re­sources but make up for it with ea­ger lo­cal govern­ment sup­port. Pri­vate in­vestors, needed to get sev­eral ma­jor wind and so­lar projects off the ground, also may get cold feet.

Last year Sch­warzeneg­ger, who ob­jected to caps on the amount of re­new­able en­ergy piped in from out­side the state, ve­toed a bill sim­i­lar to SB 722. In­stead, he signed an ex­ec­u­tive or­der that di­rected the Air Re­sources Board to draft reg­u­la­tions to the same ef­fect. But crit­ics said such reg­u­la­tions could be thrown out by his suc­ces­sor.

Even if the reg­u­la­tions are ap­proved by the Air Re­sources Board, they could still be over­turned by a Novem­ber bal­let ini­tia­tive. Propo­si­tion 23 would sus­pend the law that gives the board its author­ity to man­date the 33% re­new­able en­ergy goal.

Mark Tholke of re­new­able en­ergy de­vel­oper EnXco Inc. said his com­pany might think twice be­fore ap­prov­ing more money for Cal­i­for­nia projects if there is no man­date. The San Diego com­pany has two ma­jor wind projects near­ing fi­nal per­mits in Solano and the Te­hachapi re­gion, rep­re­sent­ing around $600 mil­lion in to­tal ex­pen­di­tures.

“When we see this un­cer­tainty from the Leg­is­la­ture, it in­jects un­cer­tainty into our man­age­ment’s mind,” he said.

Ri­cardo DeAratanha

WIND FARM: Al­ter­na­tive power firms say un­cer­tainty has kept them from ex­pan­sion in the state.

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