The California Public Utilities Commission’s (CPUC’s) approval on Thursday of Abengoa Solar’s 250-MW Mojave Solar concentrating solar power (CSP) parabolic trough facility in San Bernardino County—the second “overpriced renewable contract” approved by the CPUC in recent weeks—was disappointing, the regulatory commission’s Division of Ratepayer Advocates (DRA) said in a statement.
The project, proposed by Abengoa Solar subsidiary Mojave Solar LLC, calls for a 25-year contract with Pacific Gas & Electric (PG&E). The CPUC said that while the power purchase agreement was pending regulatory approval, Mojave Solar learned that the transmission network upgrades necessary for the project to provide resource adequacy to PG&E would not be completed until several years after the project was scheduled to achieve commercial operation.
“Because the power purchase agreement required that the facility provide resource adequacy, PG&E and Mojave Solar renegotiated the power purchase agreement in order to meet the requirements for a Department of Energy Federal Loan Guarantee and to maintain the value of the original power purchase agreement,” the CPUC said. “The contract is more costly than other procurement opportunities available to PG&E, but the CPUC determined that the value of adding the Mojave Solar project to California’s fleet of renewable energy generation capacity warranted approving the project.”
The commission in October also approved the North Star Solar project based in Fresno. But like Abengoa, “the North Star project is not price-competitive with other current in-state renewable options available to PG&E,” said the independent consumer advocacy division of the CPUC. “By approving these overpriced projects, the Commission is not allowing customers to benefit from decreased costs of a more favorable renewable energy market.”
The DRA also said the commission’s decision could keep rates for customers in California high for decades to come. In a February 2011 report titled "Green Rush," the DRA documented the unnecessary rise in renewable power project costs in California. “Senate Bill 2 (1X), which established the goal that 33% of the state’s electricity should come from renewable sources, also includes direction to the CPUC to contain costs,” it said.
“The Commission has the power to keep the cost of renewable energy reasonable,” said the DRA’s acting director, Joe Como. “Instead, with the Commission’s continued approval of projects like North Star and Abengoa, it is signaling to the market that California will accept overpriced renewable energy, and that it is willing to lock customers into higher rates for decades to come.”
CPUC President Michael R. Peevey , who pushed for approval of the project, said that “Mojave Solar is the furthest developed new utility-scale solar thermal project that the CPUC has encountered in our capacity of reviewing the utilities’ RPS power purchase agreements. It was “highly viable and the solar thermal facility will enhance the resource diversity of PG&E’s energy portfolio," he added.
Only one of the five commissioners, Mike Florio, voted against the contract. Florio said the new plant was not needed to meet the state’s renewable energy goals and would waste ratepayers’ money. He also said ratepayers would be burdened with $1.25 billion in above-market costs, which will be passed on to PG&E customers.
“I agree with Commissioner Florio who said that we should be getting twice the amount of renewable energy for the price of this contract,” Como said.
“The CPUC must get serious about reducing greenhouse gas emissions from power plants and it can’t do that by ignoring the costs. DRA strongly supports the state’s renewable energy goals, but fears that customer backlash against high energy bills will hurt the state’s efforts,” he added. “Sending a message to renewable energy developers and investors that the cost of renewables must be reasonable will support the effort to reach California’s goals to reduce greenhouse gas. We simply can’t afford to do otherwise.”
Sources: POWERnews, DRA, CPUC