3 Secret Ingredients for California's Renewables Recipe

California brought new meaning to its "green" reputation this summer when renewables electricity generation hit an all-time high. Here are the top three ingredients in the state's recipe for renewables.

1. Regulation
It's no coincidence that our country's most regulated state is also the furthest ahead in ramping up renewables. Regulation can provide the push that local governments, companies, and consumers need to question the status quo.

An aggressive renewable portfolio standard, grants, and a greenhouse gas emissions cap-and-trade program have all helped propel this state's energy portfolio beyond traditional fuels. Combine these local efforts with extended production tax credits for wind and solar, and you're left with a strong foundation for a renewables ramp-up.

2. Neglected nuclear
There are two ways to increase renewables generation as a percentage of total generation: expand renewables and/or remove other energy sources. In California's case, the latter has also played a poignant role, and is a main reason renewables hit a record 26% of total generation on May 26.


Edison International's (NYSE: EIX  ) decision to retire its faulty Southern California nuclear plant left producers scrambling for alternative energies. The solutions aren't perfect, and power prices clocked in 12% higher than Northern California's for more than a year following the original announcement.

But even as the state frantically searched for a new source, higher prices paved the way for renewables to make their mark. Sempra Energy (NYSE: SE  ) may be best known for its natural gas notions, but the utility stepped in last year to build 800 MW of transmission capacity to rocket solar, wind, and geothermal power through regional grids to where it's needed most.


Other urban areas are taking the hint and developing local power producers of their own. Duke Energy (NYSE: DUK  ) acquired a 4.5 MW San Francisco urban solar farm in August, a major addition for the utility's 100 MW national solar portfolio. Duke already owns a 21 MW project pushing power to Los Angeles, and even has a 50% stake in a 1 MW rooftop project with Integrys (UNKNOWN: TEG.DL  )

With Cali cleared for rooftop solar projects, the Golden State will increasingly be on SolarCity's (NASDAQ: SCTY  ) radar as its new Paramount Solar acquisition puts it one step closer to its goal of a million rooftop installations over the next five years. SolarCity's website touts itself as "California's #1 solar installer" with over 7,200 additions to date.

3. The right place at the right time
Not every state is set up for renewables, and it should be noted that California has an "unfair" innate advantage when it comes to many alternative energies. Hydropower poured in over the spring, and a particularly windy season helped renewables generation soar. Sunny weather also makes it a perfect spot for solar farms, with NRG Energy looking to the sky for projects ranging in size from hospital rooftops to a 250 MW SunPower produced farm, the second largest  in the nation.

Source: NRG 

Ramping up renewables
California's renewables may have hit record highs, but its energy issues are far from solved. Without a windy summer, nuclear plant retirements could've spelled disaster for local power capacity and prices . But with a strong regulatory backbone, a green-friendly local environment, and an increasingly connected grid, California has emphatically embraced renewables as an important part of its recipe for success.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 02, 2013, at 5:54 PM, delm31 wrote:

    California is its own planet. What works there is not necessarily practical elsewhere. One size does not fit all.

  • Report this Comment On October 02, 2013, at 7:41 PM, 8James38 wrote:

    The following sentence contains a major danger to the economy and even to the survival of many people - a danger that is being widely ignored or is simply unknown to many in the public and the power industry:

    "...the utility stepped in last year to build 800 MW of transmission capacity to rocket solar, wind, and geothermal power through regional grids to where it's needed most."

    The grid is becoming ever more susceptible to massive damage due to a Solar Flare, which would among other things burn out the huge transformers that are necessary to jump the voltage of electric power to a high enough level to transmit efficiently - and to drop the voltage back to a usable level at the receiving end.

    These transformers are very large, very expensive, and under normal circumstances are very durable. Therefore there are few spares on hand. To replace them after a flare would take months to years depending on the size of the area affected, which could include the factory area where they are manufactured. During this time, there would be no power in the affected areas. Imagine the chaos. Refineries and hospitals would be among the facilities completely or partially shut down. Food storage from home refrigerators to major distribution points would be impossible for months to years.

    There is a viable and essential alternative. The public and the Power Industry must study the LFTR (Liquid Fluoride Thorium Reactor). This is a totally different form of Nuclear Reactor that is totally fail-safe, cannot melt down or explode, and cannot disperse radioactive material over a wide area no matter what damage it might suffer. The fuel is a molten salt mixture that simply solidifies into a rock-like solid if there is a leak. These reactors can also be used to burn the present stockpiles of "nuclear waste" as fuel, thus eliminating the storage problem.

    The LFTR/MSR (Liquid Fluoride Thorium Reactor/Molten Salt Reactor) is one of the non-polluting, grid ready, 24/7 power sources, and is far less expensive to build than Coal, Solar, or Wind power plants. There is also a limit to Solar and Wind power. The grid can absorb only so much power from these sources before the storage or backup problem becomes critical. Until now no economically viable solution for the variability of wind and solar has been found, and when the limit is reached, adding more solar and wind potential costs more than coal or natural gas plants because you need additional coal or gas plants equal to the capacity of the wind and solar - as backup when the wind or solar is not producing power.

    LFTR technology is proven and can be developed and ready for widespread use in a short time.

    We need to insist on an immediate re-start of the LFTR/MSR research and development program by the US Government, and an equally immediate push to get the Nuclear Industry to drop its narrow focus on new types of solid fuel reactors. While they are safer than the older solid fuel reactors, all solid fuel reactors are much more expensive, and all of them generate "nuclear waste" that must be reprocessed or stored. The LFTR uses presently stored waste as fuel and leaves behind less than 1/100th of material for storage - and this material is far less radioactive and becomes harmless in 200 - 300 years, instead of the 20,000 years of storage needed with solid fuel reactor waste.

    Read "Super Fuel - Thorium, the Green Energy Source for the Future" by Richard Martin

    "Thorium - Energy Cheaper Than Coal" by Robert Hargraves


    Also see this presentation by Kirk Sorenson of Flibe Energy: A long lecture that will reward you greatly:

    Thorium: An energy solution - THORIUM REMIX 2011 - YouTube

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