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Energy Providers Under Pressure to Meet 2010 Deadline

The next two years are critical to energy independence in California. Statewide, utilities providers are feeling the pressure to meet what Will Gabrielski, analyst at Broadpoint.AmTech, calls “the most aggressive renewable energy mandates” in the country.

In 2006, Senate Bill 107 created the state’s Renewables Portfolio Standard, which requires energy providers to generate 20 percent of their electricity from renewable energy resources by 2010.

Predicting 2009 will be a “volatile” year, Gabrielski believes the expense and complicated nature of wind and solar farms make it unlikely that the state will meet its energy goals in time.

“The state of California is in a financial emergency,” he said. “Access to capital right now is so low that it’s tough to get the finances necessary. The utilities have the money, but are being more conservative with where they spend it because electricity demands have been declining and profits are down.

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“Private companies need to raise money. Sixty to 70 percent of new solar and wind farms across the nation are owned by utilities and the remaining 30 to 40 percent of those owned by private companies are having a hard time raising capital.”

Sunrise Saga

But utility providers looking to build renewable energy projects face major obstacles , finding an expansive plot of land in a remote location and connecting the energy to the cities.

“You need large transmission lines, and that requires a substantial investment and also a substantial change in the way people view the transmission lines,” said Gabrielski. “There are political and environmental hurdles to getting the transmission lines built quickly.”

Sempra Energy, parent of San Diego Gas & Electric and Southern California Gas, is hoping to develop wind, solar and geothermal projects in the Imperial Valley. Its plan to connect these energy sources to San Diego County through the proposed Sunrise Powerlink line in Anza-Borrego Desert State Park and East County areas was thwarted by public opposition. The California Public Utilities Commission approved the Sunrise Powerlink project Dec. 18 via a new route.

The project is expected to be completed in the summer of 2012, according to Mike Niggli, chief operating officer at Sempra.

“Within this next year we will finalize the engineering activities, complete cultural and environmental studies, and we will have all the towers and access roads specifically located,” Niggli said.

Sempra is also proposing to invest up to $250 million during the next five years in solar photovoltaic generation facilities, generally 1 to 2 megawatts in size, and expects approvals soon on a 49-megawatt power plant in Miramar to meet energy demands during peak periods.

And with the large-scale implementation of SDG & E;’s smart meter program in the first quarter 2009, up to 1.4 million electric and natural gas meters will be replaced with digital smart meters by the third-quarter 2011. Customers will ultimately be able to read their energy consumption online.

Local Green Efforts

Many businesses and organizations in San Diego have energy projects that will either be starting up or be in full swing by 2009.

UC San Diego is teaming up with private investors in putting together an 8-megawatt alternative energy portfolio, which currently includes a planned 2.8-megawatt fuel cell system, power-storage system that was approved by the PUC on Nov. 21, and 1-megawatt solar photovoltaic system that will be completed this month.

The private investor for the photovoltaic system is Mill Valley-based Solar Power Partners.

The estimated $16 million fuel cell system, from Connecticut-based FuelCell Energy, converts methane gas directly into electricity. The renewable methane will be collected at the city of San Diego’s Point Loma Wastewater Treatment Plant and purified by the project’s private investor, Germany-based The Linde Group.

According to Byron Washom, director of strategic energy initiatives at UCSD, the fuel cell installation will be completed in September 2009.

As the first step to UTC Shopping Centre’s $900 million green revitalization, Australian-based retail center owner-operator Westfield Group recently installed a 100-kilowatt solar array to provide half the power requirements for the mall’s ice rink and food court.

In early December, St. Louis-based Enterprise Rent-A-Car designated San Diego International Airport as one of 13 hybrid branches in California, adding 150 hybrid vehicles to its four Southern California locations. Vehicles available in San Diego include a Toyota Prius, Nissan Altima and Ford Motor’s Escape.

The Flip Side

While renewable energy sources are in the planning stages, local business owners and consumers are feeling the immediate economic effects of the more traditional gas tank-filler, fuel.

According to Rob Mellors, staff scientist at San Diego State University’s Geological Sciences Department, when it comes to gas price predictions for 2009, the variable is demand, not crude oil production.

“They aren’t finding a whole lot more oil,” he said. “If the economy starts picking up again I expect prices to skyrocket again. I would bet money that they will rise.

“The world’s oil production has stayed the same for the past three or four years and it’s not going to change much. If demand stays low, the price will stay moderate.”

Mellors points out California’s No. 3 position , after Texas and Alaska , in national oil production as a reason why high gas prices are actually good for the state, economically speaking.

“If the price of the barrels is high, it’s good for certain parts of our economy, (namely), the oil and gas industry,” he said.


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