ATTAINING GREEN ENLIGHTENMENT. WITHER THE DUCK

If it looks like a duck, and quacks like a duck, we have at least to consider the possibility that we have a small aquatic bird of the family anatidae on our hands. ~ Douglas Adams 

The road towards a cleaner environment by producing greener electric power has been a steadfast policy of Democrats and Republicans for quite a while, but will likely take a detour with the browner vision of Micro-Man, President Donald Trump. Sadly, clear blue sky and water are not a priority for the 45th president. This is just one part of the tragedy connected with his political ascendency. Other key parts include 14 million people losing their health coverage, according to the Congressional Budget Office, in just the first year after his new American Health Care Act takes effect.

Here I’m examining the rise of green power – meaning electricity generated from renewable resources, such as solar, wind and biomass. During the past ten years renewable electricity production – including hydroelectric facilities – has increased from 8.8% of total electricity produced in the US to 13.4%. Much of this increase has been due to both public subsidies and individual states setting Renewable Portfolio Standards (RPS) – mandates for renewable electricity to reach a set percentage of total electricity sold in the state by a specified date.

The federal and State subsidies provided to solar, wind and other renewable energy sources have been instrumental in increasing renewable energy’s production. Rooftop solar installations continue to grow, with 12 states more than doubling their deployment in 2016. These subsidies – mainly tax credits – aren’t insubstantial; $13.2B in FY13 for electricity-related renewable energy. Non-renewable energy producers – principally fossil-fuel producers like oil and natural gas companies – typically protest subsidies that promote renewables but rarely mention they have received much larger subsidies like depletion allowances for much longer (since the 1920s). As one observer of the energy industry stated, “There is no such thing as an unsubsidized unit of energy” in the US, whatever its source.

Currently, 29 states, Washington, DC, and 3 territories have adopted an RPS; 8 states and one territory have set renewable energy goals. Each state defines its RPS differently. As environmentally-beneficial as green power is, achieving these standards and goals is not without challenges and consequences.

What’s a key RPS strategy for politically blue (and green) states like California, Colorado and Oregon can be much different for red states like Alabama, Nebraska and North Dakota. California’s RPS is among the nation’s highest: 33% of all electricity sold by 2020, 50% by 2030. Colorado’s goal is 30% by 2020. Oregon’s goals are 25% by 2025, 50% by 2040. In contrast, North Dakota’s goal was 10% by 2015 and seems to have met this modest mandate.

The path towards producing more green power cost-effectively is becoming a fraught one. Challenges for achieving these ever-larger goals include the Duck and political opportunism.

First, the Duck. No, it’s not a reference to the biological family anatidae that includes ducks, geese and swans. The renewable-energy Duck is the icon for the effect that electricity generated by residential renewables is having on demand for grid (state-wide) electricity, and consequently on utilities’ revenues. The increased reliance on solar and wind has significantly changed California’s state-wide pattern of electricity demand.

The California Duck

The California Duck, shown in this chart from The Economist, illustrates the typical spring day’s net electricity load requirements. These requirements have dropped between 2012 and 2015 from 07:00 to 15:00 (7am to 3pm), and are projected to continue dropping through 2020. This substantial reduction is chiefly due to increased solar PV and wind generation because of California’s aggressive RPS. Conversely, system net demand after 15:00 (3pm) has risen rapidly (as solar and wind energy subside) and reaches a peak between 19:00 and 20:00 (7 and 8pm). Due to these changes the hourly net load profile looks like a duck’s profile; hence the name. These fluctuations, induced by increased renewable electricity generation, are causing significant issues, including lost revenues for the California utilities and the state transmission grid operator (California ISO).

As the chart’s subtitle suggests, an issue connected with assertive RPS’s are the increased costs associated with meeting the standard, in California’s case 33% of electricity sales within the next 3 years. California’s electricity is, on average, 37.2% more expensive than the average national price. In 2016, 27% of California retail electricity sales came from RPS eligible renewable sources (including only “small” hydropower, dams less than 30MW). Part of this cost is due to California utilities having to pay a credit to residential customers who’ve installed solar PV panels (like we did in 2008) when the panels generate kWh to the grid. The level of the renewable energy credit is contentious because utilities have argued their solar PV customers don’t pay their fair share for grid costs and upkeep and because of what the utilities think are too high renewable credit payments. 
The California Public Utilities Commission (CPUC) didn’t buy that argument and preserved the credit for existing net energy metering (NEM) customers for 20 years after their interconnection. Other states, like Nevada, have accepted the utilities’ position about NEM credits. In Dec 2015 the Nevada PUC lowered the state’s renewable NEM credits for all solar PV customers. After this decision, installers like SolarCity quickly closed up shop and left Nevada holding the bag, not even a pair of deuces. Nevada’s rooftop solar installations dropped precipitously.
Others have argued that California actually has too much solar and wind power because the California ISO is actually curtailing (solar and wind facilities are told by the ISO to not operate) increasing amounts of renewable energy because no one can use it at the time it's being produced. Last year over 305,000 megawatt hours of solar and wind electricity were curtailed. 

Another part of this cost comes from complying with the RPS. California must retire perfectly fine natural gas power plants before their operating lifetime is completed and not sell available, low-cost hydropower. There is now a lot of hydropower available in California and the Pacific Northwest.

The unexpectedly large amount of rain that California, Oregon and Washington State received this season has made hydroelectric power abundantly obtainable. But because hydropower generated from large dams is not sanctioned in California’s RPS, its sale to customers won’t qualify towards meeting the RPS requirement. Thus, it’s likely the reservoirs’ water will head towards the dams’ spillways rather than through its turbines.

Technological resolutions for dealing with the Duck’s shape include adding electricity storage capacity and smart grid capabilities, both of which have and will increase system costs, perhaps dramatically.

In blue-green states like California there’s little dispute about the value of improving our environmental quality. Nevertheless, increases in states’ renewable energy mandates unsurprisingly coincide with significant changes in who is buying and selling electricity (and when during each day). In this milieu it’s become clear that people, stakeholders and interest groups affected often disagree about how to allocate the costs associated with RPS. One possible remedy could be that over time the markets that now offer commoditized kWh could evolve into ones where customers are paying for varying levels of secured energy services.

Finally, the issue of political opportunism surrounds California’s RPS. There’s little real resistance when politicians set ever-more stringent objectives – like RPS – as long as they are sufficiently far into the unknown future. Perhaps so they won’t be in office on the due date? For example, last month a leading California legislator introduced legislation – SB-584 – that would require California to get all (100%) of its electricity from solar, wind and other renewable sources by 2045. [As of May 1, the SB# for this bill is now SB-100.] If state senator Kevin de León was hoping to receive a greener-than-anyone award with SB-584 he failed. Hawaii’s existing RPS is the highest, 100% by 2045. This year in the future seems like a long way off – and for most considerations it is. But for energy infrastructure, energy usage and energy technology, 28 years in the future is a lot closer than any term-limited politician can fathom.

Perhaps he’s playing the “me-too” game and simply copying the Aloha State’s idealistic RPS. Taking nothing away from beautiful Hawaii, but California’s economy is 30 times larger than Hawaii’s and has 27 times more residents. Getting to a perfect 100% of any collective activity is that much more of a supreme challenge when the system – California – is large and complex. And realizing 100% achievement requires not just now unavailable technological advances, but wholesale behavioral modifications by every energy user and producer in California. Changing ingrained habits is always a big-time challenge.

Here for example is another praiseworthy public goal that has taken far, far longer to not completely attain, eliminating tobacco smoking. It's been over 50 years since the first US Surgeon General's report on smoking was published. This widely-discussed report directly linked smoking to disease and shorter life spans. Substantial taxes have since been imposed on tobacco products as well as performing widespread, multi-media anti-smoking advertising and-public service campaigns. But a recent CDC report states that despite ever-higher taxes and other broad, long-term efforts 36.5M American adults still smoke tobacco, representing 15.1% of our adult population. That’s 36.5M people away from 100% elimination of tobacco smoking during 53 years of effort. 

I’m not saying that renewable energy goals are comparable to eliminating tobacco smoking. I am asserting that achieving an unconditional 100% of any worthy public objective is a fiction that may offer some momentary political appeal, but no real expectation of attainment even with significant public effort and expense.

Senator de León your heart is likely in the right place, but your head isn’t. So by all means you should consider raising California’s RPS and lengthening the target date, but don’t use 100%. I suggest 65% by 2055. It may not provide as big a headline (or solar spotlight) senator, but it makes far more sense and eventually can make a real difference. I hope that’s good enough for you; it will be for California.