In the land of tech entrepreneurs, renewable energy is making strong headways, so it’s not surprising to learn that California has been among the top U.S. states for renewable energy for years, and recently reached a full 25% of its electricity production from these sources.
Now, the Clean Power Plan (CPP) is set to come into effect soon. By this time next year, states are required to submit plans on how they will reach the newly estimated goals.
Now, these goals are unique to each state; the exact number depends on the state’s current energy mix. Emissions heavy states will have higher requirements than those with cleaner energy sources.
So one would think that under these circumstances, California and its 25% renewable achievement would have very little to worry about in the clean energy department.
But the state seems determined to push its renewable capacity further, with or without the CPP.
On October 7, 2015, the state passed a bill — S.B. 350 — which requires state utilities to procure 50% of their energy from renewable sources such as solar, wind, and hydropower.
And, in line with the country-wide CPP, this will have to be done by 2030.
In order to reach the 50% clean energy goal, California utilities will have to install 4,600 gigawatt hours of electrical capacity in the next 15 years.
This will likely come in large part from power purchase agreements, wherein those utilities will pay a premium to existing solar, wind, and hydropower farms for the use of that clean energy.
Of course, the down side to this will likely be higher prices for consumers. However, higher prices may not last too long when considering the technological advancements being made to lower costs.
In fact, power purchase agreements help fund some of that innovation. And with reliable funding behind them, renewable technology companies can more easily secure loans from major banks.
This sounds pretty fantastical, but keep in mind the time frame here. Even with such an ambitious goal in such an ambitious state, renewables will only be able to offer half of the energy demand.
Don’t get me wrong, it’s an excellent goal, but it’s also a clear reminder that renewables aren’t taking over the world just yet.
The capacity just isn’t where we need it to be to cover all of our energy needs. This program will surely help speed up the progress, though.
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Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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