California's New Renewable Energy Portfolio Standard - Good News For BC's Green Energy Exports
On Saturday, California's aggressive renewable energy standard passed in the State Legislature. Governor Schwarzenegger will veto the Bill (SB 14) and instead signed an executive order on Tuesday this week which will require California utilities to obtain 33% of their electricity from renewable sources by 2020 (the most stringent standard in the US). The long awaited and much debated Bill failed to gain the Governor's signature for a number of reasons, but most importantly to those of us outside the State, because of the so-called "buy California" provisions contained in the Bill, which would have prohibited California utilities from purchasing out-of-state power from such places as British Columbia.
With the executive order, the Governor, among other things, eliminated from the Bill the so-called "protectionist policies" which in essence allows California utilities to purchase electricity from outside the state. This is extremely positive news to renewable energy industry in BC as the Governor's executive order follows quite nicely with the BC government's recent throne speech which highlighted the province's export potential for renewable energy generated within British Columbia. Now it appears that BC will have a willing buyer for its surplus green energy in the California state utilities. Next up, signing some EPA's with the California utilities and building the transmission infrastructure.
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But assuming that there is transmission capacity from the border to california, how is an IPP going to get past Powerex/BCTC? Powerex is known to demand a huge cut, making exports lossful. BCTC is known to ask for a huge fee just to allow a wire to connect to their grid (even at IPP's cost).
Unless these instances of restraint on trade is addressed, there will be no exports.
With these two monpolies against exporting power, will there be any meaningful IPP exports (other than of course Fortis and Teck which are not really IPPs)?
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Megawatt comment: With the Government's recent throne speech, electricity exports are now in play. Having California needing huge amounts of green energy only helps BC IPP's and BC Hydro find a market for the surplus green power. Of course, who gets to export the power and how it does it remains to be seen.
The government seems to be unreasonably dragging its feet. Will it tell BC Hydro to get on with power acquisition? Will it discipline Powerex? Will it discipline BCTC?
The way the government is going, it will not have many friends. Tens of millions of dollars are being wasted every month that BC Hydro delays the Call, or throws new restraints at the IPP community (e.g. First Nation veto power required by BC Hydro).
Why this paralysis in the government? The environmental community is solidly behind green and sustainable energy. Power prices are inching up and dirty coal power in Alberta has reached $62. Add another $40 to that for green and clean renewability (based on the carbon tax). So the price for green energy is $102 a MWh. And then the Standing Offer is only $80 - a good $20 below market prices!