While not wavering in their long-term support, major California utilities such as Southern California Edison Co. (SCE) envision plenty of real-world challenges to the state’s increased renewable energy goal of 33%. Reaching that goal by 2020 holds major implications for the state’s transmission grid and existing fleet of natural gas-fired generation plants, according to Edison International CEO Ted Craver, who spoke last Friday on a third quarter earnings conference call.

Craver agreed with California Gov. Arnold Schwarzenegger’s conclusion that bills passed late last summer in the state legislature would have been counterproductive, establishing provisions for hitting the renewable target that would be what the utility holding company considered “overly restrictive and too costly.” In addition, the measures that were vetoed by Schwarzenegger in favor of a second executive order were considered too risky to grid reliability longer term.

“Achieving a 33% portfolio standard by 2020 is highly ambitious, given the magnitude of the infrastructure build out required and slow pace of the transmission permitting and approval,” said Craver, who quoted a transmission study recently completed by the California Public Utilities Commission saying the 33% goal will require $115 billion statewide, including about $12 billion in new transmission lines.

“We will strongly urge the state to study the renewable provisions in the [federal] Waxman-Markey bill and U.S. Senate energy proposals as they craft renewable energy provisions. We can get to 33%, but we need to do it in a thoughtful way that balances the need to transition to more renewables with the cost and reliability concerns of electric customers.”

In response to questions about how much back-up generation will be needed to support a 33% RPS goal, the California Independent System Operator has indicated that to support 20% renewables, all existing gas-fired generation in the state needs to stay online, and to get to 33% the state will need even more gas-fired generation, in addition to all its existing resources, according to SCE CEO Alan Fohrer, responding to questions from analysts.

“Exactly how much more [gas-fired generation] depends on where the renewable energy resources are ultimately located,” said Fohrer, adding that was why at one time policymakers and utilities were counting on relying on a lot of out-of-state generated renewable energy credits (REC). The RECs would make a huge difference, compared to talked-about requirements to have all the renewable generation come from inside the state.

“Those issues still need to be resolved to determine exactly how much more gas-fired generation will be required,” Fohrer said. “There will have to be substantial additional gas-fired generation, primarily peakers, available in the state to integrate the amount of additional renewables, but it depends on ultimately how much out-of-state resources are allowed and where the facilities are located in the relative mix…”

In response to a follow-up question, Fohrer said SCE primarily looks to the independent power market to provide the added resources, although it wants the utilities to have the flexibility to provide generation when it is in the best interest of their retail utility customers.

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