Another subsidy, another dead end
Even a subsequent subsidy didn't foster the growth of California's biomass capacity above half a gigawatt. Thanks to concerted lobbying by the state industry's trade association—the California Biomass Energy Alliance (CBEA)—the legislature and regulators in Sacramento slowly came to recognize that biomass power plants benefit the agriculture, forestry, and solid waste sectors, too.
Between 2002 and 2006, customers of California IOUs paid a small fee on their electric bills called the "Public Goods Charge." The California Energy Commission (CEC) was charged with distributing the funds to promote and support various aspects of the state's renewable energy industry. Some of these funds were given to owners of biomass power plants as a subsidy of up to 1.5¢/kWh for power produced during the first five years of the program.
The CEC realized that during "off-peak" hours, the biomass plants would probably shut down or curtail their output because the subsidy wasn't sufficient to cover their marginal production costs. But it also recognized the benefits of having the biomass plants running full-time. By consuming as much waste wood as possible, less would be injected into the state's conventional waste processing and disposal streams. This was a laudable objective, and it was achieved to some extent.
However, the California PTC expired on December 31, 2006, and the CEC has not determined if, or at what level, it will be reinstated. Yet collection of the Public Goods Charge from ratepayers will continue to the end of 2011. This uncertainty is of great concern to the California biomass power industry, and clouds its future outlook substantially.
Race to the bottom
Yet another state regulatory mandate hasn't benefited the biomass power industry nearly as much as the PTC or the agricultural waste subsidy. On January 1, 2003, California's Renewable Portfolio Standard (RPS) law went into effect. It requires the state's regulated IOUs to get 20% of their retail supplies from renewable sources by 2017. In 2006, the deadline for meeting this requirement was advanced to 2010.
Unfortunately for biomass, the RPS does not distinguish renewable fuel–fired capacity by technology or deliverability. But in the free-market competition among renewables, low price will always win. So against wind farms, whose fuel is free and which are subsidized by a large federal PTC of 1.8¢/kWh, biomass plants don't fare well.
Although more than a dozen new contracts have so far been signed with biomass plants during the RPS era, only one new project has broken ground, and it was not due to the RPS. What's more, no idled plants have been restarted.
4. Wood-fired CFB. Colmac Energy's 49-MW Mecca Power Plant, located southeast of Palm Springs, Calif. The plant's two circulating fluidized-bed boilers drive a single ABB turbine-generator. The boilers are fueled largely by urban wood waste collected from various sites across southern California's Inland Empire. Some agricultural waste is used as well. The plant entered commercial service in February 1992. Courtesy: Colmac Energy Inc.
The jury is still out on the effectiveness of California's RPS process, which many consider the most complex in the nation. Most in the biomass industry believe that of the recent contracts signed as a result of winning RPS bids, most do not have terms that are attractive enough to warrant building a new plant or restarting an existing one. As mentioned, biomass projects also are disadvantaged in head-to-head competition against projects fueled by other renewable energy technologies that enjoy larger tax credits and subsidies.
A policy, but not a mandate
The latest chapter in the history of California biomass power began in late 2005, when Governor Schwarzenegger assembled a state Interagency Biomass Working Group composed of virtually every regulatory agency in his administration, including the California Public Utilities Commission (CPUC). He charged the group with identifying how to improve the state's biomass-to-energy situation. The CBEA considers this action a definite acknowledgement of the industry's societal and environmental benefits.
In April 2006, the governor issued an executive order that calls for biomass-fueled electricity production to constitute 20% of California's RPS. Because the overall RPS targets 20% of all electricity supplies, biomass would now seem set to contribute 4% of California's future electricity supply, which will require a doubling of existing capacity. In July 2006, the Working Group issued the "Bioenergy Action Plan for California" to support the executive order.
Challenges to full implementation of the executive order remain, however. An executive order issued by the governor may represent state policy, but it is not a law, regulation, or mandate. At press time, the CPUC was still trying to figure out how (and if) to implement this policy. Many oppose a biomass set-aside within the RPS. Sadly, what seemed like a watershed event for returning the California biomass industry to respectability has only made its future less certain.
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