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Major orders on the way in California -- Bids under the microscope

Two years after the law was enacted, California's three largest investor-owned utilities are finally moving ahead on meeting the state's aggressive renewables portfolio standard (RPS). Furthermore, two of the state's largest municipal utilities have voluntarily set goals and are taking steps to meet them.

Of the big three, San Diego Gas & Electric (SDG&E) and Pacific Gas & Electric (PG&E) are evaluating the bids they received from recent solicitations to fulfil their obligation under the RPS. The utilities each released a "request for offer" on July 15, the deadline set by the California Public Utilities Commission to make the solicitations. Bidding closed at the end of August. Southern California Edison continues to mull over bids from a solicitation it released late last year.

An RPS sets a minimum standard for the proportion of renewable energy utilities must include in their electricity supply portfolios -- and it provides for the buying and selling of renewable energy credits to facilitate compliance with the rule. The California RPS, from 2002, requires its three large utilities to buy 20% of supplies from renewables by 2017. Only in June were the bidding rules for the needed capacity settled, along with a framework for provision of required new transmission lines.

The three utilities decline to reveal how many bids they have received or what capacity they hope to glean. They aim to announce selection of winning bids by the first or second quarter of 2005, with construction soon after.

Utilities must acquire at least 1% of their renewables obligation each year until they reach the 20% target. That requires them to release annual procurement solicitations until they reach the target. SCE is close to meeting its obligation and, at times, renewables now provides 20% of its sales. PG&E is at 13% and SDG&E, which had no renewables when the law was enacted, is near 6% penetration. It signed contracts in late 2002 for 326 MW of renewable generation, including 156 MW of wind. Most of that is built, except for the 60 MW Oasis Power Partner project. SDG&E has yet to reach an agreement with the developer, says the utility's Ed Van Herik.

Self imposed goals

Alongside the RPS mandate on the big three, two California municipal utilities have set self-imposed goals for renewable development. They, too, have invited the renewables industry to bid for contracts so they can begin meeting those goals.

The Los Angeles Department of Water and Power (LADWP), the largest municipal utility in the United States, approved an RPS in July that calls for the city to increase renewables sales to 13% by 2010 and 20% by 2017. Already in the same month, LADWP released a solicitation to meet the 13% goal. The municipality utility has already contracted with Wind Turbine Prometheus for the 120 MW Pine Tree wind project, which will use GE 1.5 MW turbines and has an agreement to buy 40 MW from a proposed "bioconverter" green waste digestion facility.

In 2001, the Sacramento Municipal Utility District's (SMUD) set California's most aggressive renewables targets, calling for an interim penetration for renewables of 10% by 2006 and to be at full implementation at 20% of sales by 2011. The northern California utility has since released two solicitations, one a general call for renewable energy and the other for a 100 MW build-out of the utility's Montezuma wind project in the Solano Hills, now at 14.5 MW. SMUD's renewables penetration stands at 5.5%.

California leads the nation in wind capacity. In 2003, the state added 239 MW to bring the wind total to 2016 MW. Since then, with the industry waiting for the federal production tax credit (PTC) to be extended, only 5.55 MW has been developed, with 3 MW building.

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