Economists urge state to invest in renewable energy sources

JENNIFER COLEMAN, Associated Press Writer
Wednesday, September 5, 2001
Associated Press

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/09/05/state1857EDT0138.DTL

SACRAMENTO (AP) -- Expanding California's energy sources to include more solar, wind and other "green" electricity sources will help stabilize the
state's volatile wholesale power market, several economists said Wednesday.

The seven economists were brought together for a panel discussion by the California Public Interest Research Group and the League of Woman Voters
of California. They urged lawmakers to consider requiring utilities to get at least 20 percent of the electricity they sell from renewable energy by 2010.

About half the state's electricity comes from natural gas-fired plants. State power traders, purchasing electricity for customers of three utilities, recently
locked in 10 years' worth of electricity, most from natural gas-fired plants.

Many of those contracts are tied to natural gas prices, and if they rise, as they did earlier this year, so too will the price the state pays for electricity.

"We need a portfolio like a stock portfolio, where we don't put all our eggs in one basket," said Mark Bernstein, an energy analyst with RAND Corp.,
a think tank in Santa Monica.

Sen. Byron Sher, D-Stanford, has introduced a bill to create a standard for renewable energy. Assemblyman Fred Keeley, D-Boulder Creek, has also
incorporated a similar standard into a bill to rescue Southern California Edison from bankruptcy.

Currently, the state's energy mix includes 12 percent "green" energy sources, including wind, solar, geothermal and biomass. Geothermal is tapping into
the hot steam or water underground and using it to spin power-producing turbines. Biomass is the burning of woodwaste to produce heat that boils
water to turn turbines.

California has been a leader in using and encouraging renewable energy, Sher said, but low energy prices in the late 1990s and the expiration of federal
incentives caused a decline in the use of renewable power.

But the state's ongoing energy crisis makes it's time to revive "California's commitment to renewable energy resources," Sher said.

His bill would let utilities selling more than 20 percent renewable power then sell credits for renewable energy to utilities unable to reach the goal.

Raising the state's percentage of green power to 20 percent would also help air quality, said Deborah Donovan, a staff analyst with the Union of
Concerned Scientists in Boston. That mix of green power would equal removing 3.7 million cars from California roads.

Economist Dan Kammen, a professor at University of California, Berkeley, and director of the Renewable and Appropriate Energy Laboratory, said
the state could replace a reduced federal role in renewable energy research.

Inventors have slowed their work because of reduced research money, Kammen said, but a state mandate would stimulate the green technology
industry.

Kammen, and Ron Pernick, of the consulting firm Clean Edge, Inc., said the renewable technology industry could be an economic boon to the state.

Clean energy, Pernick said, represents about 2 percent of total venture capital investments in California.

Wind power is one of the most promising renewable technologies available now in California, as the price has dropped to below the cost for power
from plants fired by natural gas and coal, said Mark Jacobson, an associate professor of civil and environmental engineering at Stanford University.

Because natural gas isn't much cleaner than coal, Jacobson said, there is little reason to use gas instead of wind.

Wind generates only 2 percent of the state's electricity today, he said. But by installing wind farms in gusty areas around the state, Jacobson said the
state could generate 10 percent of its power needs. The turbines' cost would be recouped over 20 years by selling the electricity.

On the Net:

Read Sher's bill, SB532, at www.senate.ca.gov