The WSJ reports that the hard push for renewable power in California could produce near-term power shortages, particularly in the even the California economy rebounds any time soon.
California's utilities are barreling ahead to try to meet a state mandate to garner 33% of their power from renewable sources by 2020, and some officials are concerned the effort might push up electricity prices and crimp supplies.One particular problem is that some popular forms of renewable power, such as solar and wind, are insufficiently reliable to provide base load power because they can be intermittent. They are also not yet cost-competitive with traditional power sources, which is why they are both subsidized and mandated.
The state auditor warned this week that the electricity sector poses a "high risk" to the state economy. A staff report from the state energy commission also warns that California could find itself uncomfortably tight on power by 2011 if problems continue to pile up.
Utilities complain that the ambitious renewable-energy mandates, combined with tougher environmental regulations on conventional plants, are compromising their ability to deliver adequate power. . . .
The stresses being felt in California could be a harbinger of problems to come in other states. The federal Waxman-Markey climate-change bill, passed by the House of Representatives on June 26, would require states to obtain about 15% of their electricity from renewable sources by 2020. Currently, about 4% of U.S. electricity comes from renewables, excluding hydropower.
California's 33% renewable-energy target is so ambitious that it is likely to miss the goal by five years or more, energy officials now concur.
State energy agencies recently concluded it could cost $114 billion or more to meet the 33% mandate, more than double what it might have cost to achieve an earlier 20% requirement. Consumers will bear those costs, one way or another.
Agencies also identified problems with constructing sufficient transmission capacity to move renewable-based energy to cities.
If the goal is to encourage cost-effective renewable energy, without bankrupting consumers or creating supply problems, a revenue-neutral carbon tax would make more sense than the current mix of regulations and subsidies. It would create space for renewables as they become more cost-effective and encourage conservation without creating additional distortions in energy markets or prejudging what percentage of what sort of power source is the "right" amount. It would also be less prone to rent-seeking than massive bureaucratic regimes (a la Waxman Markey).