Raising concerns of infrastructure and costs regarding the state's 33% renewable portfolio standard (RPS) goal for 2020, Edison International CEO Ted Craver said Monday his company's utility is focusing on building new transmission and resolving the current uncertainty surrounding the state's fleet of 20 coastal natural gas-fired generation plants. Craver made the comments in a first quarter earnings conference call with financial analysts.
The Rosemead, CA-based holding company reported lower first quarter earnings quarter over quarter due to an $18 million loss (compared with profits of $71 million in 1Q2010) at its independent power generation unit, Edison Mission Energy (EMG). Southern California Edison Co. (SCE) reported earnings of $222 million in 1Q2011 compared with $164 million in 1Q2010. Craver indicated that the loss at EMG was expected.
"[The 33% RPS] should be an achievable goal, but one that is challenging and comparatively expensive," said Craver. "Meeting this new goal requires policies that support the integration of these new technologies into the electric grid, recognizing the realities of the intermittency of renewables, resource locations and the need for increasing transmission in a timely manner."
A big question mark regarding dealing with the intermittency issues of solar and wind power sources ties to California's heavy dependence on natural gas-fired generation plants and the state's new coastal water regulations phasing out the use of once-through cooling (OTC) at the many gas-fired plants along the state's coast over the next decade.
"Transmission is SCE's top priority in meeting the 33% renewable requirement because the vast majority of the untapped renewable resources are within its service territory and transmission remains a bottleneck to delivering 33% renewable power," Craver said. "Planning for implementation will be complicated by California's OTC water policy, which is more stringent than the recently released U.S. Environmental Protection Agency rules."
Craver noted that California's OTC rules by 2020 could impact up to 7,000 MW of independent power producer gas-fired generation in the state that he called "important for managing renewables' intermittency in SCE's territory. Maintaining grid reliability will probably require repowering some of these sites or building new generation."
Craver confirmed that SCE is not planning to build and own a lot of renewable projects, preferring instead to focus transmission needs, for which it is in a better position to make a significant contribution.
"A lot of things have to come together and work together in order to achieve the 33%," and managing transmission and gas-fired generation issues are part of that mix, Craver said. "If we end up taking out a number megawatts of gas-fired generation, it makes the integration of a much higher renewables level all the more difficult. That's the part we need to make sure that policymakers and the general public fully understand.
"[The California grid] is an integrated and engineered system; it is not simply a one-dimensional system. We need to be able to ensure the reliability of the grid and that is going to be a very complex undertaking. Also, if you are taking out fossil fuel-powered generation and replacing it with renewables, that also is going to be more expensive."
While Edison's utility has the expertise to design, get permitted and build the added transmission, Craver said the renewable generation development is best left to that sector, which he called "fairly robust and competitive" right now.
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