"This has been a long and contentious issue," said Arthur O'Donnell, CRS executive director. "But it's been clear for some time that California was unable to meet its short-term 20% RPS goals without employing T-RECs. While still taking a cautious approach to this market for environmental commodities, the CPUC has at least eliminated an unnecessary market barrier for renewable energy."
California's largest utilities and other non-public-power sellers have been lagging in their ability to meet their RPS requirements by the end of 2010. Current statistics show a big gap for the three big investor-owned utilities, which served just 15% of their electricity deliveries in 2009 with eligible renewable energy despite signing many contracts for in-state generation resources that could take years to build.
According to the CPUC, this is how the utilities fared last year:
Pacific Gas and Electric (PG&E) - 14.4%
Southern California Edison (SCE) - 16.8%
San Diego Gas & Electric (SDG&E) - 10.5%
T-RECs, which represent the positive environmental attributes of renewable energy generation, have been an accepted denomination in energy markets for over a decade, O'Donnell pointed out. T-RECs have transformed the use of renewable energy by large commercial and governmental purchasers—including the U.S. Environmental Protection Agency—by breaking down market barriers, such as eliminating the need to schedule energy during times of high transmission line congestion and expanding deliverability options for renewable generators.
Of the 30 states with RPS mandates, California is among the very last to allow use of unbundled T-RECs for compliance. Today's decision will help spur new construction of clean technologies throughout the West, as California continues to resolve internal barriers to new construction of renewable energy projects that lack transmission access, or face cumbersome and contentious siting and licensing processes.
Looking ahead, as the California Air Resources Board develops its rules to achieve a 33% Renewable Energy Standard (RES) by all load-serving entities in the state by 2020, less restricted use of Western-generated T-RECs will play an important role in keeping costs to California consumers reasonable and optimizing the regional transmission system.
O'Donnell noted that a recent report from the Lawrence Berkeley National Laboratory and consultant Black & Veatch found that free trade in T-RECs can reduce the costs of building transmission lines otherwise needed to enact a higher penetration of wind, solar and geothermal projects throughout the West. "With today's decision, California is finally taking the steps needed to realize its RES goals, to reduce greenhouse gas emission from the power system, and capture such potential savings," O'Donnell said.
About Center for Resource Solutions
Center for Resource Solutions (CRS) is a national nonprofit with global impact. CRS brings forth expert responses to climate change issues with the speed and effectiveness necessary to provide real-time solutions. Its leadership through collaboration and environmental innovation builds policies and consumer-protection mechanisms in renewable energy, greenhouse gas reductions, and energy efficiency that foster healthy and sustained growth in national and international markets. For more information about its programs, including Green-e, visit www.resource-solutions.org and www.green-e.org.
CRS Executive Director