United States

United States

California target rise gives industry hope

UNITED STATES: There's new hope for California's flagging wind market after Governor Jerry Brown signed off legislation requiring all state utilities to source 33% of their electricity from renewables by end-2020.

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Replacing the state's previous target for 20% electricity from renewables by 2010 - a goal yet to be met - the new renewables portfolio standard (RPS) should help kick-start a resurgence in Californian wind development, says Jesse Broehl, US advisor of Danish firm Make Consulting.

"The big issue now is how to speed up development of projects in a state that's notoriously difficult to build in," he says.

With the wind industry thwarted by regulatory logjams and congested transmission networks in recent years, along with a sluggish economy, there is still "a considerable way to go just to reach the earlier 20% level", Broehl notes.

Wind power should be the "go-to resource" to meet the 2020 target, Broehl says, as it remains a considerably less expensive option than solar. "Wind costs about $2 million a megawatt to install, versus between $5 and $6 million for solar."

But with California's best wind resources concentrated in areas of the state that have largely been developed already, most new wind projects are likely to be repowering ones, Broehl adds. "I would look for a healthy market in repowering to evolve where old small units are retired and replaced with big modern machines."

The new RPS may also see the California Public Utilities Commission review its January ruling, which limits the amount of tradable renewable energy credits (TRECs) that can be used to satisfy RPS requirements to less than 25%.

The commission hoped the ruling would spur in-state projects by capping imports from out of state, but imports could be vital if the 2020 target is to be met.

"It certainly appears that the new legislation is going to make some changes to the TREC decision," says Mark Fumia, a partner with California law firm Davis Wright Tremaine. "But we don't know what the scope of those changes is going to be, because no one's really interpreted them yet."

Meantime, on signing the bill, Governor Brown wrote to members of the state senate, calling for another RPS hike, to 40%, in the near future.

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