Duke Energy Progress agreed to purchase $1.2 billion in generating assets from North Carolina Eastern Municipal Power Agency; ABB won a $400 million order that would create the first electricity...
As green mandates tighten, utilities scramble to comply.
of renewables. Our first solicitation in the Carolinas got a little more than 700 MW, a lot of intermittent, with the exception of some biomass—and some of the biomass projects are counting on the same fuel source. So there isn’t 700 MW of dependable capacity in that solicitation.”
Besides having to deal with requirements that some utilities consider unreachable, project developers must deal with a policy landscape that continues changing. In 2007, for example, four states established new RPS policies, 11 states significantly revised pre-existing RPS programs (mostly to strengthen them), and three states created non-binding renewable energy goals.
Additionally, renewable developments face challenges at every turn, including issues with siting, transmission, funding, and solar set-asides.
• Siting : According to Lawrence Berkeley’s Wiser, the primary barrier in New England has been difficulty in siting, permitting, and building projects, not to mention the high costs. “For example, if wind companies can site and permit 400-MW projects in Texas in a couple of months, but it requires ten years to do so in Massachusetts, they are going to focus their efforts where it is easiest to site and permit,” he explains.
• Transmission : In some states, inadequate transmission is a constraint. “For example, the Great Plains are capable of generating large amounts of wind,” says Steve Weisman, a vice president with consulting firm Peregrine Energy Group. However, moving that power to population centers is costly and difficult. “Some of the problem relates to transmission-siting challenges,” he says. “Some has to do with the power loss over long distances.”
According to Lawrence Berkeley’s Wiser, the main reason California utilities won’t achieve the state’s 20 percent requirement by 2010 largely can be ascribed to the lack of progress in building new transmission. “In fact, while transmission challenges exist in a number of states, California is probably the only state where this is the primary barrier to achieving full compliance,” he says. In fact, the California Energy Commission has indicated it does not expect California IOUs to meet the state’s 20 percent RPS requirement by 2010, in part because of insufficient transmission.
Similar problems exist in other states. Nevada Power officials have said that, in the long term, the utility will not be able to meet Nevada’s RPS without a transmission line connecting Nevada Power to Sierra Pacific Power.
“In the next few years, transmission will become an even greater challenge,” says CESA’s Sinclair. “In light of this, a number of states are working together to determine where transmission should go and, more critically, how to allocate payment.” That is, states increasingly recognize the need to deal with the lack of transmission investment as a major barrier to achieving RPS targets. In 2007, at least five states (Texas, Colorado, California, Minnesota, and New Mexico) took important steps to try to mitigate this barrier.
• Financing: Inadequate funding can be another challenge for utilities, according to Karlynn S. Cory, with the Strategic Energy Analysis and Applications Center at the National Renewable Energy Laboratory (NREL) in Golden, Colorado, and co-author of Renewable Portfolio Standards in the States: