Big news from the Interior Department this week as it gave final approval to three new renewable energy projects on public lands in Arizona and Nevada. But among all the self-congratulatory statements, one fact went almost unmentioned: one of those plants probably won't be built until the developer finds a California utility to buy the power, and that might not be easy.
Among the three projects approved Monday is the 100 megawatt Quartzsite Solar Energy Project, a concentrating solar power tower project to be built by the firm SolarReserve north of the Arizona town with the same name about 20 miles from the California line. Quartzsite doesn't yet have a power purchase agreement (PPA) with a utility, and it's quite likely that construction won't begin until SolarReserve has lined up a willing buyer.
Also granted positive Records Of Decision by Interior this week: Boulder Solar Power's 350-megawatt Midland Solar Energy Project in Boulder City, Nevada, and Terra-Gen's 70-megawatt New York Canyon Geothermal Project near Lovelock.
Here's how SolarReserve spun the lack of a PPA, in its press release announcing the thumbs-up from Interior:
The Quartzite [sic] Solar Energy Project has completed all major permitting necessary for advancing the project into construction and is actively engaged in power marketing efforts. The project is slated to begin construction in 2014, once a Power Purchase Agreement has been contracted and financing for the project complete.
SolarReserve is talking to utilities in both California and Arizona to find buyers for its 100 megawatts of power. But Arizona utilities have pretty much met their (pathetically low) legally mandated renewable energy percentages and are reluctant to buy more. California utilities are getting to that point as well, and selling renewable energy to California utilities from across the state line is not the easiest thing in the world.
The reason, as we've mentioned here before, is that the reporting requirements of California's Renewable Portfolio Standard law make it extremely cumbersone to import energy from out of state. Unless an out-of-state area is part of the California Independent System Operator's (CaISO's) grid, CaISO has to engage in an arcane practice called "dynamic transfer" to properly account for renewables imported across state lines. That's not something CaISO likes to do if it doesn't have to: it's complex even compared to the mind-numbingly Byzantine practices of routine grid operation.
The process is daunting enough that CaISO annexed a lot of southern Nevada's grid last year in order to be able to distribute power generated by the now-languishing Hidden Hills solar project in Inyo County. Hidden Hills would have been built in California, but in order to get its power to coastal utilities its operators would have needed to use transmission lines in the Las Vegas area, or else run new transmission across hundreds of miles of the Mojave Desert -- including a National Park.
It's not just the technical issue that's a hurdle. California also officially discourages imports of renewables, a stance that has caused complaints from energy developers in other states. Governor Jerry Brown, usually an uncritical advocate of all kinds of renewable energy, has criticized the vulnerabilities introduced when relying on long-distance transmission, as well as the relatively fragile grid covering other western states.
It's not impossible to sell renewable energy to California utilities from out of state, as witness the Los Angeles Department of Water and Power's agreement to buy power from the Moapa Band of Paiutes' solar plant. But it's no slam dunk.
Complicating things is the fact that SolarReserve's Quartzsite project will incorporate thermal storage, which adds to the cost of producing energy. Thermal storage offers the possibility of a more easily regulated, more dependable source of solar energy, and the California Public Utilities Commission (CPUC), which must approve power purchase agreements in the state, has been willing to forgive costly solar power PPAs if they offer the possibility of improving thermal storage.
But as solar developer BrightSource found last year, the CPUC is only willing to have ratepayers pay so much in order to develop thermal storage. Whether SolarReserve's future PPAs can meet the CPUC's standards remains to be seen.
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