Bottlenecks of Utility Scale Renewable Energy

 Renewable energy still has a long way to go to be our de facto utility energy source, especially in a state like California. Environmentally speaking, wouldn’t it be great if we could snap our fingers and suddenly make fossil fuels disappear, making renewables the default?  We don’t have those magic powers, yet there are companies trying to make utility scale renewables happen as fast a humanly possible. But is it fast enough? What bottlenecks are keeping us from a renewable energy future?

A panel at VerdeXchange Conference 2012 (VX2012), in Los Angeles, made up of key players in the renewable energy industry shared the challenges they are facing as they try to create “Utility Scale Renewable Energy in California.”

One such challenge is not necessarily the generating the energy itself, but transmitting that energy.  “Can’t love renewables and hate transmission,” says Jonathan Weisgall of MidAmerica Energy Holdings, “[We] need to address transmission bottlenecks.”

Renewables, just like fossil and conventional energy, are produced hundreds, if not thousands of miles away.  Often times, these energy plants are not even close to each other, thus requiring the construction of a new transmission infrastructure.

Furthermore, renewables, specifically wind and solar, do not have a consistent flow of energy generation.  Wind energy only works when it is windy.  Solar energy only works when the sun is out.  This may present problems with the current infrastructure.

As Tom Georgis of Solar Reserve suggests, one of the challenges is “intergrating intermittent renewables and the impact on system costs and operations.”  Too much wind or too much sun, and you can create more energy than the system can handle.

The regulatory process
Another challenge in building a renewable energy generation plant is the regulatory process.  Instead of a transmission bottleneck, it’s a regulatory bottleneck.

This process is “painful, long, and expensive,” says Mark Fillinger of First Solar.  Companies need an abundance of capital to get them through the multi-year interagency process ranging from local, state, and the federal level.  And that is just securing the permits to build, not even building the facility itself.

“[It is] still a very time-consuming, and costly process.  [It is] more and more challenging in the state of California to get anything done,” says Georgis.  He further says that with the regulatory burden in California, many companies are choosing to build facilities outside of California, only to transmit the energy back to California.  Strangely enough, this brings us back to square one with the transmission bottleneck.

To invest, or not?
With the uncertainty and expanded time frame due to regulation, investors are not so keen to invest in renewables but seek out other forms of investment.  “Absent regulatory, incentive, and procurement certainty, capital providers will seek other sectors both at the corporate and project level, dramatically impacting technological innovation, cost reductions, job creation, and GHG abatement,” says Georgis.  This is the capital bottleneck.

So, what are the solutions to these bottlenecks of transmission, regulation, and investment?  As a regulator, how would you ease regulations to quicken the process?  As an investor, what would make you invest in renewables despite regulatory uncertainty?

Jonathan Mariano is an MBA candidate with the Presidio Graduate School in San Francisco, CA. His interests include the convergence between lean & green and pursuing free-market based sustainable solutions.

One response

  1. Much of the transmission issue related to distributed generation by green electricity generators are stalwarted at a local electrical cooperative level.  I have found for my project that the local cooperatives stand in the way of progress.I have fought this battle for nearly 7 years now.  During initial meetings with  the cooperatives they are quick to point out they support “green generators” efforts as long as there is no impact to their customer base.  However when discussions turn to customers being in a position of going”off the grid” the supportive attitude is quickly abandoned.
    Many if not all of the cooperatives purchase electricity from large generators on a “take or pay” contract. 

    Without a federal or state mandate requiring local cooperatives to purchase electricity from green generators for something greater than the avoided cost its virtually impossible to make a project cashflow.  Here in Texas local cooperatives are required to net meter no more than 50 Kw…which is nothing.  Unless the limit is raised to greater than 50kW no substantial amount of electricity will be produced because they wont cashflow with the capital expenditures required to build a utility sized project. The large electricity generators have most of the politicians in their pocketbooks so new projects are difficult to bring out of the ground due to inability of small generators to influence legislation.  To my knowledge no green cooperatives exist at this point.    

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