DAVID R. BAKER, The San Francisco Chronicle, February 15, 2008
The utility is expected to announce today that it has signed an agreement with Calpine Corp. to buy more electricity from The Geysers geothermal field north of Calistoga, where steam heated deep underground powers electric generators on the surface.
San Francisco’s PG&E already buys power from The Geysers, and the amount added under the new contract isn’t much – roughly enough for 42,750 homes. But with it, 20 percent of PG&E’s contracts for future energy supplies will come from renewable resources.
And for California utilities, 20% is the magic number.
The state has ordered its investor-owned utilities to ensure that 20% of the power they sell comes from sources such as the sun, the wind, the earth or the ocean. PG&E, Southern California Edison and San Diego Gas & Electric all have until the end of 2010 to meet that requirement.
Getting there hasn’t been easy, and PG&E appears to be the first to do it.<
Southern California Edison has enough contracts to reach 16 or 17%, one of the utility’s spokesmen said Thursday. San Diego Gas & Electric did not respond to a request for information Thursday, but company officials warned last year that they would probably miss the state deadline.
“We’re proud to have reached this milestone, and we’re going to continue to add renewable energy to our power mix,” PG&E spokesman Keely Wachs said.
Even PG&E’s achievement comes with a caveat. The company now has enough power contracts to hit 20%, but some of those contracts won’t kick in until after the state deadline passes, delivering power to PG&E customers in 2011. That isn’t a legal problem. If a utility falls just short of 20% by the end of 2010, it can still comply with the law by overshooting the 20% goal the following year.
But that caveat underscores the difficulty utilities have had in meeting California’s ambitious renewable-energy goals. Simply put, the state does not have enough geothermal generators, wind farms and solar power plants to produce as much clean energy as California’s politicians and citizens want. More renewable-power projects have been proposed, but it’s an open question how many will get built.
“The state still faces some very real obstacles to bringing more renewable energy online,” Wachs said.
Many of the companies proposing large solar arrays or innovative ways to tap the power of ocean waves are relatively young, don’t have long track records of success and run into trouble finding financing for their projects.
It doesn’t help that government rules and incentives keep changing. For example, Congress still hasn’t decided whether to extend a tax credit that renewable-energy developers consider crucial. The credit expires at the end of this year.
“There has been a boom-and-bust cycle in renewable energy, in part created by Congress,” said Craig Kline, a partner at the Troutman Sanders law firm who specializes in alternative-energy financing. “If you want to do a project that won’t enter service until January ’09, right now you do it at your own risk.”
Even when a project has financing, the utilities can’t count it as a sure thing until it starts delivering power. A Canadian company last week backed out of a contract to sell PG&E electricity from a power plant under development in another corner of The Geysers geothermal field. Energy analysts speculate that Western GeoPower wants more money for the electricity than it would have received under the PG&E contract. The company’s president could not be reached for comment Thursday.
Calpine’s operations at The Geysers, in contrast, are a much safer bet.
Calpine, based in San Jose, owns 19 power plants at the geothermal field, which straddles the border of Lake and Sonoma counties. The field has generated electricity without interruption since 1960. PG&E used to own power plants there and stills buys power from the field, which is dotted with wells that bring subterranean steam to the surface.
Calpine recently started a $200 million effort to squeeze more energy from the field by upgrading old equipment and reboring some of the wells. The company also wants to tap areas of The Geysers that haven’t yet been drilled.
Calpine has endured its own financial problems, emerging from bankruptcy late last month. But the facilities that will supply PG&E with extra power already exist. Calpine also sells some of its power from The Geysers to Southern California Edison and the Sacramento Municipal Utility District.
“We certainly look at it as a very valuable resource,” Calpine spokesman Mel Scott said.