JUICE RPS Fuels Munis

By Published On: October 27, 2006

Some public power agencies are going gangbusters on renewable and alternative energy supplies, while others are trudging ahead, expecting that renewables will make up a growing share of their portfolios over the next decade. (Editor’s note: In an attempt to keep from repeating the same word – renewables – incessantly, I’m coining a new word, “regeneration.” The word reflects that the power generated comes from fuel sources that are not fossil-based. At the same time, it avoids the term “green” because all energy production has environmental impacts.) The mixed “regeneration” records reflect the munis’ size, leadership, resources, and location. Public power agencies that are pouring money into renewables help dispel the myth that it’s too costly an investment. They have reaped both environmental and financial benefits. One thing all the public power agencies that Circuit contacted had in common was that they counted only projects that actually provide regeneration. In contrast, investor-owned utilities face criticism for counting nonproducing contracts toward their renewables portfolio standards. All munis must establish a renewables portfolio standard, but they are not required to have those supplies add up to 20 percent by 2010, unlike investor-owned utilities. SB 107, signed into law last month, advanced the investor-owned utilities’ regeneration mandate from 2017 to 2010. Pressure, legal and otherwise, to reduce greenhouse gas emissions is also putting the squeeze on munis to lower their operations’ air pollution. At the farthest end of the green spectrum is the city of Santa Monica, which matches 100 percent of its 5 MW of energy purchases with renewable energy credits. The city got the alternative energy bug well before the renewables portfolio standards law, SB 1078, was enacted. It’s a direct-access customer of Commerce Energy and has bought a bundled package of energy and regeneration credits since 2001. Its rates are below those of its investor-owned utility neighbor, Southern California Edison. “We are saving money by doing the right thing,” said Susan Munves, Santa Monica’s energy and green building administrator. In a related policy move that is becoming increasingly intertwined with energy production, Santa Monica, like some other munis, also made significant investments in alternative-fuel vehicles. To date, 80 percent of the city’s vehicle fleet has been converted. Of its 519 vehicles, 267 run on natural gas, 87 on biodiesel, 27 on electricity, 10 on propane, 9 on biofuels, and 5 on hydrogen. “If they come out with a new vehicle, we’ll try it,” said Rick Sikes, the city’s fleet manager. Sikes admitted that these vehicles cost more than gasoline-powered ones – particularly the heavy-duty trucks that go for $30,000 more – but the higher cost is covered by funding from the Air Quality Management District. Funding is provided by the Carl Moyer program as well as a program created by AB 2766, enacted in 1990. AB 2766 authorized the air districts to collect a $4 fee on motor vehicle registration and use the money to support alternative fuels and clean-air transportation projects. The next most proactive regenerator is Silicon Valley Power, with 33 percent of its energy supplied by on-line renewables projects. John Roukema, assistant director, noted that the regeneration investment was an economic plus “given fuel volatility.” Silicon Valley also touts its rates for being below those of Pacific Gas & Electric. Silicon Valley has replaced 47 of its staff vehicles, about half its fleet, with hybrids. It will continue to replace old cars with cleaner ones, according to Roukema. At the other end is Anaheim Public Utilities, with on-line power resources from regeneration adding up to 6 percent, up from 2 percent in 2005. When I received the breakdown of its renewables mix, I excluded the 3 percent from large hydro because it doesn’t count toward the renewables mandate under state law. Anaheim expects to reach a 10 percent regeneration level by 2010 and 20 percent by 2015 – minus large hydro, according to Mike Ebbing, Anaheim spokesperson. In a major green move for the city utility, however, Ebbing noted that the agency declined to invest in the replacement of steam generator units at the San Onofre Nuclear Generating Station, planning instead to invest in regeneration and other supplies. The agency also may accelerate its vehicle fleet replacement to six alternative-fueled light and medium vehicles a year so that 90 percent of the fleet is less polluting by 2020. The investment depends, however, on the appropriate technology being available and meeting “business requirements,” according to Ebbing. Doing a bit better than Anaheim in the regeneration arena is the Modesto Irrigation District. Renewables currently make up 7.3 percent of its energy supplies. Modesto expects to grow its regeneration to 11 percent in 2007, when a wind project in Washington State that it’s invested in becomes fully operational. The level of regeneration is projected to grow to 14 percent when a biomass project comes on line. That is forecast for 2008. Modesto invested in one electric vehicle two years ago, but the truck was a lemon, needing to be recharged far more often than advertised, said Kate Hora, Modesto spokesperson. The district is not inclined to make like investments because “it has not seen anything that promising,” she added. The Sacramento Municipal Utility District’s portfolio is 13 percent renewables, but it expects to beat the 20 percent goal in five years. That 13 percent does not count 2 percent of its projects in which the green attribute is sold separately from the energy. Those renewable energy credits are sold instead of being added into its renewables portfolio because it brings in more revenue, allowing SMUD to buy more renewable infrastructure, said Mike DeAngelis, SMUD renewables program manager. The muni estimates that its renewables portfolio will reach 23 percent by 2011, following additional investments in wind projects and landfill gas. SMUD has also been replacing its traditional vehicle fleet with hybrids and fuel cell- and battery-charged ones, as well as vehicles that run on ethanol – E-85 – and propane. “We are testing a lot of different technologies to support the market,” said Bill Boyce, supervisor of SMUD’s electric transportation group. Last year, the muni estimated that the less polluting vehicles cut emissions of nitrogen oxides and volatile organic compounds by 4.52 tons, according to Boyce. The Sacramento muni is also investing in emerging technologies in which alternative-fueled cars are used to store energy from intermittent wind projects. The storage unit would then send power back to the grid at peak periods. The market for plug-in hybrids must expand before this vehicle-to-grid (V2G) project is viable (Circuit, Oct. 13, 2006). The batteries in electric vehicles also need to come down in price and have more staying power. The technology is there, Boyce said, adding that “there is not enough of a large-scale market where it would make economic sense.” In the Merced Irrigation District, regeneration makes up about 8 percent of its energy. All of its power contracts expire in 2008, so more renewables deals are likely, said Jem Brown, Merced assistant general manager. However, the big renewables boost won’t come before 2014, when Merced reclaims the output from an 8 MW hydropower contract, which is currently contracted out to PG&E, he added. That project would push the renewables level of Merced – which has a load of 85 MW – to 15 percent. In addition, if the district receives bond funding, it will also invest in 3-4 MW of biomass that would come on line in two years. Investing in cleaner vehicles has got little attention because Merced’s fleet is fairly small, Brown said. Some of the munis, particularly in the southern half of the state, are banking on an upgraded and expanded transmission project to allow them to increase their renewables supplies. For example, the Imperial Irrigation District, and also the Los Angeles Department of Water & Power, expect the Green Path transmission project to let them tap into large amounts of geothermal power in Imperial County. Green Path is a three-part project that will connect geothermal projects near the Salton Sea with San Diego Gas & Electric’s Sunrise Powerlink transmission project. There are currently 500 MW of operating geothermal plants in Imperial County, but the potential is estimated at 2,200 MW, said Rosa Maria Gonzales, the irrigation district’s spokesperson. The Green Path project involves a deal among IID, LADWP, Citizens Energy, and SDG&E. The joint project would also allow SDG&E to hook to the grid a large solar thermal project – a potential 900 MW – which has not performed on a large scale. IID’s level of renewables is close to 10 percent. Much of that – 8 percent – is power from small hydro, with 1 percent coming from geothermal and less than 1 percent wind energy. It just launched a 500 kW solar project at San Diego State University projected to come on line at the end of next year. The district also has invested in some alternative vehicles that run on natural gas, and it will buy a small number of hybrids next year, according to Gonzales. Wind energy played a large part in many of the muni portfolios. The Modesto Irrigation District’s renewable resources are 100 percent wind-generated. Much of Merced’s renewables are wind, currently 5 MW, and it has a few solar projects. Anaheim’s regeneration is two-thirds wind, with the remaining one-third geothermal power. SMUD’s renewable supplies are about 31 percent wind energy. The rest is made up of biomass at 24 percent, geothermal at 27 percent, small hydro at 17 percent, and 1 percent solar. Silicon Valley got a 12 percent renewables boost from two new wind projects. In addition, 17 percent of its eligible regeneration come from geothermal and 6 percent from small hydro. – Elizabeth McCarthy

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