United States

United States

Winning and losing in California, some help secured but no money for repowering of old projects

last minute lobbying effort won wind a fair share of available subsidies in late March when the California Energy Commission placed wind technology in its own special category. Under this final recommendation, wind would receive 13% of the total funding earmarked for renewables, or as much as $70 million.

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Any hope that California policy makers would build a bridge for the wind power industry to future markets seemed to have all but evaporated last month, until a last minute lobbying effort won wind its own share of available subsidies. In late March the California Energy Commission (CEC) placed wind technology in a special category, thereby eliminating the potential for landfill gas projects to cut into wind support.

Under this final recommendation, wind would receive 13% of the total funding earmarked for renewables, or as much as $70 million. This places wind technology on firmer, albeit less than solid, footing. Whether the support now being offered will enable the industry to survive the transition to a fully competitive electricity market in California remains an open question.

Nonetheless, the decision was greeted as "an excellent result, " by Joe Caves, the Sacramento lobbyist of the American Wind Energy Association (AWEA). It was due for final approval before the end of March.

A month earlier, at a public hearing held on February 28, the wind industry had seemed to be the biggest loser among California renewables. "The support for repowering existing projects has all been eliminated," summed up AWEA's Nancy Rader. AWEA had failed to get the repowering of projects recognised as "new" projects, thus making them eligible for CEC support. The CEC is charged with distributing a pot of cash made available under California's electricity market deregulation law to help ease the way for renewables into a competitive market.

With wind capacity declining in California due to a lack of revenue to replace and repower old and inefficient turbines, the state's wind pioneers had pinned their hopes on obtaining at least $124 million in state funding over a four year period ending on January 1, 2002. This would have made it possible to replace old turbines with new. Instead, the most the wind industry can hope for is about $70 million. Rader estimates this will allow wind developers to receive support of $0.0061 and $0.007/kWh.

Less than expected

Biomass lobbyist Bob Judd remarks "that all of the existing renewable energy projects" received less than what they asked for. Judd headed the Office of Appropriate Technology when California launched its aggressive plans to push wind power. Judd notes that generators of biomass -- the highest cost renewable selling into the California grid -- also failed secure $27 million in state funding considered critical for surviving the transition to a competitive market.

"The wind industry lost the repowering argument -- which was a surprise -- and they took this defeat a little harder than others," says Judd. He believes the CEC earmarked too much funding for emerging technologies such as photovoltaics, which he thought would be better served by accessing some $250 million in state funding set aside for research and development. "The CEC should not underwrite speculative ventures to parties with no track records, no identified customers," comments Judd, referring to dollars set aside for nurturing green power marketing.

The CEC has been barraged with a series of proposals on how best to slice up between $465 and $540 million between existing, new and emerging renewable technology categories. The law requires 40% of the total be split between existing and new projects. The CEC proposes spending 45% on existing technologies, 30% on new and 10% on emerging technologies. The remaining 15% would be invested in developing a customer base under the rationale that such funding would develop a long term market.

Rader ticked off a list of funding preferences that would have effectively invested $124 million to transform California's wind farms from working, but inefficient museums of first generation technologies into state-of-the-art wind farming showcases. Rader's ideas, such as treating a repowered wind farm as a new project, made the most sense for existing wind farm operators. These proposals had been agreed to by a coalition of companies that represented 95% of the electricity generated from renewable energy. But it was not to be. AWEA lost the battle.

Bad aspects

Although the CEC's new proposal makes as much as $70 million available to wind, Rader lambastes many aspects of the plan. She disagrees with earmarking as much as $81 million for rebates to customers who buy electricity directly from renewable resource providers. "Rebates will simply be a windfall bonus for doing what would have been done anyway," she complains. Worse still, large industrial customers that represent larger loads than residential clusters are not eligible for the customer rebates.

The green pricing issue provided one of the few humorous moments at the hearing when CEC commissioner Michael Moore scolded Jody London, CEO of Working Assets of San Francisco, for giving out his e-mail address to its long list of California credit card and phone service customers. He received some 13,000 messages and letters from residential customers pledging to buy "green" electricity.

Rader, however, remained unimpressed. She said such potential customers "don't have an inkling of the complexity of the issue of green marketing." She points out that the demand of 13,000 customers represented only 0.2% of California's current renewable energy generation.

Other issues yet to be resolved by the CEC include whether small wind turbines less than 50 kW should be considered an "emerging" technology able to compete against PV for funding. "At $1.20 to $1.70 per watt, small wind turbines are already lower cost than PV, and have the potential to reduce costs by 41% through production economies of scale," reads Rader's testimony.

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