by Sammy Roth, The Desert Sun
California Gov. Jerry Brown couldn’t get a 100 percent renewable energy mandate across the finish line in Sacramento this month, and the Trump administration is eyeing protectionist trade policies that critics say would drive up the price of solar panels.
But despite those headwinds, clean energy is still a hot commodity.
Modesto Irrigation District, which provides energy and water to farms and cities in California’s San Joaquin Valley, approved a $131-million contract this week to buy more than 2.5 million megawatt-hours of electricity over 20 years from a solar farm in eastern Riverside County, near the Arizona border. That’s enough electricity to supply roughly 18,000 average homes, or nearly one-fifth of Modesto’s residential customers.
The $131-million deal brings NextEra Energy Resources one step closer to finishing its Blythe solar project, which at 235 megawatts is already one of the country’s largest solar farms. The Florida-based developer says the solar project, outside the city of Blythe, will ultimately cover 4,000 acres of California desert with 485 megawatts of solar panels.
There could be tough times ahead for the American solar industry. Last week the U.S. International Trade Commission ruled that cheap solar panels imported from China and other countries had harmed domestic manufacturers, a decision that could clear the way for President Trump to slap tariffs on imported panels. That might boost U.S. manufacturing, but companies that build solar farms and install rooftop panels oppose tariffs, which they say would kill jobs and drive up costs for homes and businesses.
Whatever Trump decides, solar industry officials say the long-term outlook is strong, with prices continuing to fall as technology improves and companies get better at installation.
“Look at what’s been going on around the country for the last decade, through Democratic administrations and Republican administrations. All throughout that period, renewables have continued the trend of increasing capacity,” NextEra CEO Armando Pimentel told The Desert Sun last November following the commissioning ceremony for the first phase of the Blythe solar project, two days after Trump was elected president.
Modesto Irrigation District will pay $34.22 per megawatt-hour of electricity from the Blythe project. That’s almost certainly cheaper than the cost of a new natural gas plant, even without taking into account the public health and environmental damage caused by burning gas, a fossil fuel. Prices for the cheapest natural gas plants averaged between $48 and $78 per megawatt-hour last year, according to the investment bank Lazard.
Blythe’s price point is low even for solar. The same Lazard report pegged average large-scale solar prices between $43 and $60 per megawatt-hour. A more recent reportfrom the Solar Energy Industries Association and the consulting firm GTM Research said recently signed solar contracts have ranged in price from $35 to $50 per megawatt-hour.
The Blythe contract will help Modesto meet its state-mandated target of 40 percent renewable energy by 2024. Martin Caballero, Modesto’s resource planning and development manager, said Blythe “ticked off all the boxes” for the electric utility: a project in California, with a competitive price, built by an experienced developer.
The Golden State got 29 percent of its electricity from climate-friendly sources like solar and wind last year, according to the California Energy Commission. Utilities are required to reach 33 percent renewable energy by 2020 and 50 percent by 2030, under a 2015 law designed to reduce California’s emissions of planet-warming greenhouse gases.
Gov. Jerry Brown tried to increase those targets this year, to 60 percent climate-friendly energy by 2030 and 100 percent by 2045. But a bill from Senate leader Kevin de León, D-Los Angeles, was killed by a last-minute lobbying push from utilities and labor unions, who wanted provisions to assure continued union jobs building solar and wind farms. The bill easily cleared the Senate but never got a vote in the more moderate Assembly.
De León plans to bring the bill back to the Legislature next year. But regardless of whether it ultimately passes, there’s little question where the state is headed. California law requires the state to reduce its greenhouse gas emissions 40 percent below 1990 levels by 2030, and state regulators have set a goal of 80 percent by 2050. Meeting those targets will require a dramatic, accelerating transition away from fossil fuels, not to mention a dramatic shift from gasoline-powered cars to cleaner forms of transportation.
Some climate advocates say delaying de León’s 100 percent clean energy bill could prove costly to Californians. That’s because a federal tax credit for solar power is scheduled to decline starting in 2020, and a similar tax credit for wind power is already being phased out. De León’s bill also would have required utilities to buy additional solar and wind power over the next few years, in time to take advantage of those credits.
Now utilities may slow down their purchasing a bit, since they already have most of the contracts they need to meet their near-term clean energy targets, said Ed Smeloff, who manages regulatory affairs for the Oakland-based advocacy group Vote Solar. Solar and wind development should ramp back up in a few years to meet the state’s rising targets, but it’s unclear whether costs will have fallen enough to offset the loss of the tax credits.
It’s still possible Brown’s administration will find a way to take advantage of the tax credits. Smeloff said the California Public Utilities Commission is considering requiring utilities to buy additional renewable energy beyond the targets set by the Legislature.
“The expiration of the (tax credits) does offer a unique and fleeting opportunity for Californians to acquire very low-cost solar, and for that matter low-cost wind,” he said.
Energy jobs by sector: Solar beating coal, gas
The solar industry ranks second in total employment among energy industries, according to a January 2017 report from the federal Department of Energy. (Note: For the purposes of its report, the Department of Energy defined workers in each of these industries as people who spend “some portion” of their time supporting that industry. That’s why its employment figure for solar, 373,807, is higher than the Solar Foundation’s jobs number of 260,077. The Solar Foundation only counts workers who spend at least 50 percent of their time on solar-related work.)
Riverside County has become a hot bed of solar development, thanks to the region’s year-round sunlight and huge expanses of open desert. The county is already home to four big solar farms between the Coachella Valley and the Arizona border, one of which, NextEra’s 550-megawatt Desert Sunlight facility, was briefly the world’s largest solar farm when it opened last year. Several other solar projects are under development.
NextEra powered up the first 235 megawatts of its Blythe plant last year, with slightly more than half the output being sold to Southern California Edison and the rest going to the health care giant Kaiser Permanente, one of many businesses that have made voluntary commitments to fight global warming by reducing their use of fossil fuels. The Blythe project’s next phase, which hasn’t started construction yet, will be another 125 megawatts for Edison, NextEra spokesperson Steve Stengel told The Desert Sun.
Modesto’s 62.5-megawatt contract will be part of the Blythe project’s final 125-megawatt phase, which will likely start construction once NextEra sells the remaining megawatts, Stengel said. The contract calls for energy deliveries to begin in December 2020.
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