A Charter For Renewable Confusion And Delay

Almost everyone agrees that the world needs much more renewable electricity, but because it is still more expensive than fossil-fuel fired electricity, it is invariably necessary for governments to have policies which help install more renewable energy capacity. So surely we should applaud renewable energy Proposition 7, which Californians will vote on come November 4th? It purports to encourage 50% renewable electricity by 2025 – much bolder than any current targets mandated elsewhere in America.

The trouble is it will almost certainly slow California down on its journey to a renewable future. The reasons are manifold: the actual wording of the proposition is confusing, misleading, and full of flaws and loopholes. In some places Prop 7 could lead to lawsuits between the California Energy Commission and the California Public Utilities Commission over who has jurisdiction for siting transmission lines. At the most general level, energy policy is complex and requires a lot more careful consideration than the rather blunt instrument of voter initiatives.

These flaws, along with loopholes that could allow a utility to avoid constructing renewable plants and a host of complex and unnecessary rule changes, has created an extraordinary coalition of opposition including solar installers, both main political parties, all the utilities (private and public), most newspapers, a host of citizen activist groups, and seemingly every green organization in the Golden State.

Amongst the serious flaws, Prop 7 specifically removes vital control from local governments and moves it upwards to state agencies, and that perhaps reveals the central problem of this Proposition: it seems designed to promote large, centralized solar power stations (greater than 30 megawatts) located in deserts far from centers of population, while at the same time suggesting that smaller solar installations won’t count towards the state’s renewable energy targets (RPS).

Whatever one thinks of this proposition, it is noticeably light on how much all this would cost. EcoWorld calculated a bare minimum price tag for the amount of solar, wind, and back-up batteries that would need to be installed by 2025. They came up with $335 billion, which averages out at $2,000 per household per year. In reality, they suggest, it would probably be closer to one trillion dollars.

That’s a lot of money even for the world’s "eighth largest economy," especially given that the global economy may spend a long time trying to recover from the continuing financial implosion. Energy prices are likely to be driven up when demand reasserts itself and meets declining oil and gas production. And while higher prices may make large capital projects easier to finance, it is not clear that producers will be able to put together the deals necessary to build enough projects in part because the Renewable Portfolio Standard (RPS), even when combined with volatile Production Tax Credits (a type of financial incentive), has shown itself to be an untrustworthy financing mechanism.

It is clear that Californians, regrettably, should vote no on Prop 7. It is also clear, once again, that both this state and America should embrace the kinds of feed-in tariff policy incentives that Germany and Spain have used to catapult themselves into being world leaders in wind and solar, a position that California once occupied.