There is significant excitement over the new law requiring 33 percent of California’s electricity to come from renewable sources by 2020. (Thanks to author, state Sen. Joe Simitian.) But, without reforming the process of connecting renewables to the grid, the economic benefits that can be delivered to our communities by clean renewable energy will remain limited.
“Distributed generation” – projects located close to where the power is needed – are in many ways more efficient than larger projects. Governor Brown has recently called for 12,000 megawatts, which is a massive amount, of new distributed generation, or local clean energy production, to meet the state’s energy and climate change goals.
Instead of generating clean energy from the rooftops of our shopping malls or from our highway off-ramps, however, communities, property owners, and renewable energy project developers are bogged down in out-dated regulations that were designed for large coal, natural gas, and nuclear power plants. For California and its communities to achieve the benefits of the new energy economy, we need grid access reform now.
Grid access refers to the process that energy projects undergo to connect to the electricity grid. While small projects that use energy produced onsite (retail) are relatively easy to connect, all wholesale projects, no matter how small, are suffering from an unnecessarily long, complicated, and very expensive process that was designed for large power plants. Many of our homes, office buildings, parking lots and farms could become the power plants of the future, selling clean energy wholesale, if grid access is improved.
Many people and companies want to participate in the new energy economy by developing wholesale clean local energy projects. Most, however, are unpleasantly surprised by the often insurmountable barrier that is imposed by the current interconnection process, which averages two to three years. The associated costs are equally unpleasant and largely unknown until the end of the process. These barriers prove to be insurmountable for most wholesale projects today, leaving the clean local energy potential of warehouse roofs, highway medians, and industrial brownfields unused.
Grid access policies need to encourage the delivery of electricity from these distributed generation sources because this market segment is crucial to California’s economic and energy future. In addition, these projects provide the highest value to electricity ratepayers because they avoid the significant costs associated with transmission, including substantial Transmission Access Charges and the inefficiencies of running electricity over long distances. The so-called “line losses” from moving electricity across great distances on the transmission system reduce the effective energy of transmission-interconnected generation by roughly 10%. These charges have an even bigger negative impact on ratepayers.
A University of California Berkeley study confirmed that encouraging the wholesale distributed generation market segment would stimulate three times more jobs, attract an additional $50 billion in private investment, and deliver $1.7 billion in additional state revenues compared to the current approaches for fulfilling California’s 33% renewable energy mandate. Wholesale distributed generation opens up new revenue streams for community members by maximizing project opportunities and keeping investments and tax revenues local.
Experiences in other countries have shown that streamlining grid access can directly affect the amount of clean local energy projects brought online. According to a recently published study commissioned by the California Energy Commission, both the German and Spanish grids are similar to California’s with comparable levels of power and stability requirements. But, due to streamlined grid access, both countries have been able to bring on new clean local energy projects much more effectively than California. Germany, not a particularly sunny place, added about 30 times more solar than California did last year.
Utilities may argue that no grid access reform is needed because they already have plans underway to reach the 33%-by-2020 renewables mandate. However, most of the renewable energy capacity contracted to date is for massive-scale projects in remote areas that may never come to fruition. These projects are often dependent on expensive transmission build-outs that will take a decade or more to happen, if they happen at all. Additionally, many of these large projects are planned for neighboring states, leaving Californians with the bill and none of the economic benefits.
While grid access reform may be a dry issue to most people, individuals and organizations across California are beginning to realize it is a fundamental requirement of our state’s economic future. Under the umbrella of the CLEAN California Campaign, a diverse group of partners, from real estate to agriculture, from environmental justice to business, are calling for lawmakers and regulators to make grid access reform a priority.
California communities can benefit from the new clean energy revolution if grid access is streamlined significantly. With this kind of reform, developing wholesale distributed generation projects will be far less time-consuming and expensive. These changes will result in ratepayer savings, many new jobs and other badly needed economic benefits for all California communities.