This Week's Solution...

California has found the latest solution to its energy problems: “nega-watts.” Essentially a market arbitrage strategy that inventivizes producers to create energy efficiencies instead of building new generation capacity—a MW saved is as good as a MW generated.

Todd Woody at the blog Green Wombat describes a ruling by utilities commissioner Dian Grueneich and administrative law Judge Meg Gottstein thusly:

"In a mind-numbingly complex 212-page ruling that has kept legions of lawyers and analysts employed, regulators laid out a formula for determining how PG&E (PCG), Southern California Edison (EIX) and San Diego Gas & Electric’s (SRE) energy efficiency programs will count toward meeting targets. If a utility meets 85 percent of the energy efficiency goals, for instance, it will earn a 9 percent rate of return on its investment, ratcheting up to 12 percent if all the targets are met. If the Big Three utilities' energy efficiency performance falls below 50 percent of the target, then they would be penalized a collective $238.5 million, according to the plan."

Woody goes on to conclude that by focusing on energy efficiency, “utilities could avoid financing and capital costs associated with constructing new power plants, and California consumers would save an estimated $2.7 billion between by 2008.”

I’m not sure where the $2.7 billion figure came from but, hey, at this point it’s as good as any other projection, right?

California's Green Energy Solution: "Nega-Watts" [Green Wombat]

San Francsico Heding Its Bet On Green Energy.

Supporters call it a necessary back-up to San Francisco’s existing transmission line; detractors call it “pouring money down a transmission rathole.” Either way you look at it, San Francisco is now one step closer to a 53 mile, $500 million, 400 MW transmission line form Pittsburg to the city, as the Board of Supervisors voted 9-2 to give it the go-ahead.

The Trans Bay Cable still needs regulatory approval from various state agencies and its cost will be borne by ratepayers.

Opponents of the measure fear that the project will undermine San Francisco’s much-publicized efforts to rely entirely on renewable energy because the cable will transmit power from fossil fuel plants in the East Bay. Supporters argue that, by 2011, demand for electricity in San Francisco is projected to be 988 MW during peak hours, and the capacity is needed.

Keep in mind that this is San Francisco we’re talking about. No doubt, the Supes were sensitive to environmental impacts of a 53 mile cable through ecologically sensitive parts of the bay, and they certainly were aware of the blow this would deal to the city’s quest to go green, yet they voted overwhelmingly in favor of the project. That speaks volumes about the current state of viability of renewable energy.

Supes approve 53-mile Trans Bay power cable [San Francisco Chronicle]

Lake Elsinore Hyrdroelectric Project Gets Cash Infusion.

CNN is reporting that Nevada Hydro has secured $1.1 billion in private financing from Morgan Stanley for the LEAPS hydroelectric project at Lake Elsinore.

The money will be used to form LEAPS Hydro, LLC, the company that will build, own, and operate the project once it is permitted. The report didn't specify how the equity in the new company will be allocated between Morgan Stanley and Nevada Hydro.

According to the write-up:

"Having already completed federal environmental documents, the project is pending final federal license approval by the Federal Energy Regulatory Commission. Once final approvals are granted by the State of California and FERC, it will be possible to begin construction and come on line as soon as possible."

The likelihood of a favorable ruling from FERC, notwithstanding, the project still needs to go through regulatory channels in California and that promises to a bumpy road.

Stiff opposition to project remains based on economic and environmental concerns, and, as has been demonstrated repeatedly in California, that could be insurmountable.

LEAPS Secures Major Financial Backing [Press Release via CNNMoney.com]

Low Carbon Fuel Standard is Doable (supposedly).

Professors Dan Sperling (UC Davis) and Alex Farrell (UC Berkeley) have come out with Part II of their report on the Low Carbon Fuel Standard.

According to Sperling and Farrell, it will go down like this:

- Smaller carbon intensity reductions in early years; larger ones in later years. This will take advantage of techologicall innovations that will hit the marketplace.

- Fueling infrastructure will evolve to include E85 filling stations for the ethanol blend, dedicated electric vehicle charging stations and meters in residences, and hydrogen delivery systems

- Petrofuel providers reduce their greenhouse gas emissions by blending more biofuel with gasoline and diesel; buying low-carbon fuels and emissions credits from other producers; making refineries more efficient, and using lower carbon sources of energy to run refineries.

For all of the details of what sounds like a series of best case scenarios, Environmental News Service has a detailed write-up.

Woodside Marshalling Allies For LNG Fight.

The offshore LNG project proposed by Australian Energy Company, Woodside, has a new strategic wrinkle—union support.

The Woodside project, called OceanWay, bills itself as more environmentally friendly than the Cabrillo Port project which earlier this year died an ugly death at the hands of environmentalists and Hollywood movie stars. Also, Woodside has proposed a system of buoys in lieu of the massive, potentially-view-impairing platform that was the hallmark of Cabrillo Port. And now, by announcing that it will only use US-flagged ships and American crews, Woodside has the support of the unions.

This is significant because the unions and the environmentalists tend to have a lot of the same politicians and regulators in their rolodexes and have the potential to neutralize each other’s effectiveness, a scenario that clearly benefits Woodside.

If Woodside can fight this public policy battle to a tie, there’s a good chance that the jobs and energy supply arguments will carry the day. It gives regulators and politicians an easy out because they can say, “We torpedoed Cabrillo Port and held out for a much more ecologically friendly project that will create jobs and lower energy prices for all Californians…”—the sound bite practically writes itself.

Public hearings are due to start in September and if you’ve never seen a labor union hijack a public hearing before (with legions of color-coordinated T-shirt wearing, sign-waving members), then you’re in for a show!

Woodside sweetens LA LNG deal [The Australian]

Regulatory Exemptions for New Power Plants.

The California Energy Commission said on Wednesday it will review two applications for exemptions from a regular review process to build small power plants in the San Francisco and San Diego areas.

Chevron Corp. plans to build a $100 million, 60-megawatt addition to the power plant at its Richmond oil refinery across the bay from San Francisco to serve a higher electrical load and to produce steam to replace a boiler plant.

Construction is planned to start in the second quarter next year.

Orange Grove Energy L.P. plans an $85 million 96-megawatt peaker plant near Fallbrook, California, to generate power for San Diego Gas & Electric Co., a unit of Sempra Energy.

Construction would begin by next January, the energy commission said.
Since each plant is less than 100 megawatts, the commission may excuse each from the usual review under a small power plant exemption.

Chevron and Orange Grove Energy would each be responsible for getting all necessary permits to build and run the plants.

[Reuters]