The California Public Utilities Commission approved the use of tradable credits for renewable energy in a ruling that should promote new solar and wind farms in the state.
The decision allows utilities to buy and sell credits for renewable power – a step that will necessary if they are to meet state’s 20-percent renewable energy goal by this year and the 33 percent goal by 2020.
Out-of-state credits can only make up 25% of a utility's renewable power, so more in-state plants will be needed
The credits allow utilities to pay for out-of-state renewable power – such as from a wind farm in Montana – that will be delivered to California at some point in the future, though not immediately. The commission says the scheme, which has been adopted by 30 others states, will provide utilities with the flexibility they need to meet ambitious targets that otherwise might not be reached.
But in contrast to other states, it drew a line in the sand. It ruled that only 25 percent of a utility’s renewable power can come from credits, putting pressure on the state’s energy sector to build more in-state plants. In recent years, California has lagged other states in adding renewable generation.
Some observers said the decision, released largely unnoticed late last week, could create an environment for more rapid development.
“It lends some certainty to the markets in California,” says Seth Hilton, a partner at the law firm Stoel Rives. “It’s helpful in that sense.”
But it ultimately may prove to be unrealistic. Utilities may need to buy renewable power from where ever they can find it and in whatever quantities available to meet the 33-percent target. So if the 25 percent limit remains in place and citing new plants in state continues to plod along, credits may only contribute to failure.
