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California covenant alive and kicking

The high level of state support to renewable energy in California could well continue past the state's four year transition to a deregulated market. In an upbeat, strongly worded and straight forward speech, California's top energy man, Bill Keese, last month said he wants the nearly $200 million in annual support to remain.

"My goal is to see we do have a policy beyond 2001É. I expect it to continue at about the same rate," said Keese. "We all agree we're going to have to stress wind." Keese was speaking at Windpower '98, the annual conference of the American Wind Energy Association, this year held in Bakersfield, California.

Keese made it clear that he expects the state government to continue to be proactive and prioritise wind, even after the four year transition to a competitive market. It was the first major overview of the state's wind policy since the launch of California's free market in electricity on April 1. Keese, chairman of the California Energy Commission (CEC), had not previously addressed an AWEA conference.

He welcomed the optimism evident at Windpower '98. "To see the industry spread its wings in other parts of the country, and in other parts of the world, should give the citizens of this state a quiet satisfaction that the seeds planted 20 years ago have borne the fruit of environmentally sound and reliable electricity today," he said. "We showed that the right incentives and public and private partnerships could create an industry which survived challenges and addressed the problems of air pollution, global climate change, and growing energy needs worldwide."

The state's deregulation of its electricity market was enacted in part, he said, because cheap natural gas meant that major users might take their business elsewhere -- -rates in California are higher than in the rest of the country -- even though in practice smaller customers will end up paying a disproportionately higher rate for electricity, he acknowledged. The state recognises, however, that renewables are not yet self supporting. Thus, $198 million in renewable energy funds has been made available in each of the four years of transition to an open market, from 1998 to 2001.

Not self supporting

Keese's support could be crucial. California's level of subsidies for renewables is a massive 70% of that available in total at state level in all of the United States. According to Dan Reicher, the top renewables man at the US Department of Energy (DOE), about $280.5 million is available yearly in six states, California, Connecticut, Illinois, Massachusetts, Montana and Rhode Island (table).

Before describing the response to the CEC renewables programs, Keese revealed that he wonders if the state made a mistake. "In my mind we should have been advertising buying green, not lowest cost," he said. "Then in four years' time we would have had the opportunity to sell the idea of lower prices." He then described the interest in the various new programs and the size of California's disbursements so far. The CEC is mandated to operate two public purpose energy programs under AB 1890, as the restructuring legislation is known. They are the Renewables Program and public interest R&D.

By late April, more than $900,000 had been distributed to the wind industry under the "Existing Technologies" portion of the state's Renewables Program. This support is meant to give renewable energy production an incentive of up to $0.01/kWh beyond any federal production incentives. The CEC started paying out money in March for January production. That is, the $900,000 paid out was for approximately two months' production. Seventy-nine wind projects have signed up.

bids expected

Also under the Renewables Program are "new" renewable resource accounts, which come on line between September 26, 1996 and January 1, 2001. The deadline for the auction, to choose the projects that will get production support of up to $0.015/kWh for five years, was May 26. "We are confident that, given the resiliency of the wind industry, many bids will be submitted," he said.

Small wind is eligible in the emerging category -- projects or turbine of 10 kW or less -- -he reminded his listeners. The CEC offers a rebate or buy-down subsidy currently at $3.00/W, or 50% of system costs, whichever is less. The program began on March 20, and less than $300,000 of program subscriptions have come in, out of the $6.3 million available for rebates. The CEC, he said, is actively working with the small wind industry to help it take better advantage of these funds.

Also under the Renewables Program is the customer credit sub-account. Customers can get a rebate of up to $0.015/kWh for eligible purchases, to help foster a sustainable market. The rebate for large users is capped at $1000 a year. Keese noted that provisions regarding a power content label should go into effect this summer, enabling customers to make better decisions about whether the electricity they are choosing to buy is really green. A power content label was put out the week before and was being circulated for comment.

State and federal R&D

In the second program area, research, development and demonstration, he noted that there will be unprecedented and close collaboration between the state and federal levels. The CEC and DOE had six weeks earlier signed a memo agreeing to collaborate.

And wind may indeed benefit. He revealed that under the Public Interest Energy Research (PIER) program, 11 wind proposals are being considered. PIER has been allotted nearly $62 million yearly for four years (Windpower Monthly, May 1998). A total of 185 proposals have been submitted, which Keese described as an "overwhelming" response. The PIER awards should have been announced last month.

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