As part of a broad overview of the state's updated Energy Action Plan (EAP II), a San Francisco-based environmental leader who strongly endorses the plan's emphasis on giving first priority to energy efficiency and renewables threw his support to the need for new natural gas-fired power plants and eventually a coastal liquefied natural gas (LNG) facility.
Ralph Cavanagh, an energy leader with the Natural Resources Defense Council (NRDC), gave this assessment at the opening day of a two-day energy conference in San Francisco Monday.
"California will need new fossil fuel-based generation in large part because we have an aging existing fleet of power plants that need to be replaced," Cavanagh told the Law Seminars International conference on "California Energy Markets." He cited the official dedication of Calpine Corp.'s 600 MW Metcalf power plant in San Jose, CA, earlier this month as a good example.
And in this context, Cavanagh also said that an LNG facility will be sited somewhere along the California coast eventually "to make sure these very clean natural gas facilities [like Metcalf] have reasonable access to fuel at a price they can afford so they can displace vastly dirtier coal generation."
Although it is struggling to get a long-term power purchase contract with Pacific Gas and Electric Co., whose transmission infrastructure sits literally across the road, the Metcalf plant is an example of how California's energy policy is playing out in "exactly the right way," Cavanagh said. "The plant is nestled right into the PG&E transmission grid.
"This is a distributed resource located at exactly where it needs to be at the load source, and it is the cleanest fossil fuel power plant opened to date in North America."
While lauding Metcalf as one of the best plants built in what he called the "badly discredited merchant power plant sector," Cavanagh said he thinks Metcalf should have a long-term contract, but for the future the merchant sector is "so convincingly dead."
"If you're a certain California utility [PG&E], the incentive is to draw out the bargaining because you have them over a barrel," he added.
Cavanagh said that because California's action plan puts top priority on energy efficiency and renewables first, environmental groups like NRDC and the Sierra Club increasingly can support new fossil fuel projects, too.
California's updated action plan fully institutionalizes energy efficiency as the top priority in the private sector utilities future energy mix, he said. Even more important, Cavanagh said, is that this year's updated plan helps reinforce what he called "a new cooperative, integrated relationship" between the California Energy Commission and the California Public Utilities Commission, which historically have been an odds with one another. Overall, the new energy action statement gives its strongest emphasis to the demand side.
"We can now say that all the plausible alternatives are, in fact being exhausted" in embracing more conventional projects, Cavanagh said. "We can do that for generation, we can do that for grid infrastructure, and we can do that for the next LNG facility."
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