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Remote Solar Plants Come with Added Costs

Solar panel installation
Solar panel installation
New transmission lines will be needed to carry power from the desert to the Bay Area

On a desolate stretch of the Mojave Desert, twenty miles northeast of Barstow, construction workers recently began laying the foundation for a 2.8 square mile solar power plant. By 2014, electricity will flow from the facility into nearby power lines to homes and businesses throughout Northern California.

The plant will help PG&E meet a state mandate requiring utilities to provide 33 percent of their power from renewable resources by 2020. The utility has agreed to purchase power from the facility for about $1.25 billion — a price above the market rate — for at least 25 years.

Last year, when the California Public Utilities Commission (CPUC) approved PG&E’s contract with the Mojave Solar Project, consumer advocates raised questions about the terms of the deal, which won’t become public until 2017, three years after the plant goes online.

The contract does not include the cost to expand and upgrade transmission lines that will carry power from the desert to Northern California. The CPUC has approved contracts for 51 solar energy generating projects in remote locations throughout the state, like the Mojave. Those projects and other renewable projects still in development will require more than $12 billion in transmission line expansions and upgrades over the next decade, the CPUC estimates.

Most of those costs will be divided proportionally among California ratepayers, with PG&E’s ratepayers picking up approximately $5.2 billion — or 43% — of the tab. The California Independent System Operator, which controls the lines and monitors capacity, estimates utilities will need to spend billions more to reinforce their transmission infrastructures.

But some environmentalists argue that the state is unnecessarily burdening ratepayers with the costs of upgrading and expanding transmission lines. They say California is ignoring a less expensive and more environmentally-friendly alternative: putting solar projects on rooftops and landfills closer to urban centers, where energy can flow directly into local grids.

“The train is rolling down the track of putting almost all of our energy in the boonies,” said Bill Powers, who outlined a “smart energy plan” in a recent report for Pacific Environment, a nonprofit environmental advocacy organization. “Does that make sense or is it just an artifact of an inappropriate financial incentive framework?”

Powers, a San Diego-based mechanical engineer, argues that his plan would save the state’s ratepayers billions of dollars. He says that utility companies reap the benefits of desert solar projects, because they can profit from expanding and upgrading their transmission lines. Regulators often allow utilities to earn a 12 percent rate of return on transmission investments.

Edward Randolph, the CPUC’s energy policy director, disputes Power’s assertion that localized projects would be more cost-effective.

“There are some projects that we have approved that may be more expensive,” Randolph said in an interview. “But if you look at all of the projects, the average cost is lower,” he said, adding that the commission is still studying the cost of improvements to local grids.

The Mojave Solar Project will require a Southern California Edison investment of $352 million into upgrades and construction of at least 63 miles of new transmission lines. Any profits from the upgrades will go to Southern California Edison, but all of the state’s ratepayers will pay for the construction.

Joe Como, the director of the CPUC's Division of Ratepayer Advocates, believes locating solar projects closer to urban areas could save ratepayers money.

"There's definitely local benefits to locating renewable projects near the existing transmission infrastructure," Como said. "You reduce that interconnection cost."

PG&E projects its rates will rise 45 percent over the next decade, while its renewable energy investments will only lead to a two percent decrease in greenhouse gas emissions. Powers contends that a more localized approach to distributing power could reduce emissions by up to 60 percent.

PG&E has considered locating projects closer to urban load centers, but the company has come across several barriers, according to its spokesman, Denny Boyles.

First, the sun shines with greater intensity in desert areas outside its service area. According to the National Renewable Energy Laboratory’s solar calculator, the difference in energy outputs from solar panels near the Mojave and those stationed near San Francisco is approximately 18 percent. Powers claims the high cost of the transmission lines coupled with the energy lost over those lines — about 7.5 percent of electricity transmitted on an average day and up to 14 percent on peak load summer days — makes that difference negligible.

Opposition from residents would also make it difficult for the utility to locate a photovoltaic plant near the Bay Area, Boyles said. PG&E has “never been able” to consider putting a plant “right next to a city,” he said.

But Powers argues the the company could find closed landfills or invest more heavily in rooftop and parking lot solar expansion, which he said could circumvent neighbors’ concerns.

"We need to get more competitive and smart on the investments that we’re making and if we do that, we could throw in a lot more solar in the city because it eliminates unnecessary fluff," he said.

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