Peak wind power capacity in the Tehachapi region has been estimated at 4,500 MW. More power will be generated there than from both California nuclear plants combined when the Tehachapi wind energy project is built out and the wind is strong. Tehachapi is a big project - and one that requires a large amount of capital. The current cost is estimated at between $8 billion and $9 billion. Where will this capital come from? Plans are proceeding on the assumption that Pacific Gas & Electric and/or Southern California Edison will finance and build the transmission lines needed to connect Tehachapi to the grid. Individual wind developers are unable to finance transmission facilities serving the entire region. But they are expected to provide the capital to build the generation facilities once transmission access to customers is available. Until the first set of new wires is available to carry wind energy to consumers, developers aren't going to install any turbines. Tehachapi transmission will cost upwards of $1 billion, but little money has been invested in Tehachapi as yet. The utilities have spent a bit on studies, and developers have made some initial investments, but the big bucks have yet to flow. The first Tehachapi power lines will be built by Edison, and applications have been filed at the CPUC. However, serious money will not be invested until the state assures the utility that its costs will be recovered. Cost-recovery mechanisms are now the subject of intense discussion at the California Public Utilities Commission. One option is to recover Tehachapi transmission costs from all the users of the California grid through the California Independent System Operator tariff. But last year the Federal Energy Regulatory Commission rejected this option, at least for the initial projects. Future Tehachapi transmission facilities are being considered that would complete a new link between Northern and Southern California and allow Edison to import more power, even when the wind isn't blowing. When completed, these "network facilities" might some day qualify for CAISO tariff treatment. In the meantime, state legislation provides for a "backstop" mechanism through which costs of transmission for renewables projects can be recovered through retail electricity rates if not through wholesale rates in the FERC-approved tariff. Some fraction would then be repaid by Tehachapi generators using the lines. In the end, I expect that investment in Tehachapi transmission facilities will be repaid jointly by generators, wholesale users of the grid, and retail ratepayers. But progress toward a deal has been agonizingly slow. Billions of dollars for infrastructure are being bandied about by politicians in Sacramento. In the real world, a billion dollars has enormous inertia and is hard to move. But remember, Tehachapi wind energy would eliminate the need to burn natural gas costing about a billion dollars every year at current prices. None of that money has been redirected into Tehachapi yet. If California is serious about reducing dependence on natural gas and easing global warming, it needs to understand that the direction in which ratepayer money now flows must change. Instead of continuing to pump massive amounts of money into the gas industry, California must redirect some toward Tehachapi. Money does indeed talk and will tell us how serious the state is about its renewable energy goals.
