Balancing California's Energy Needs and Its Environmental Goals

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That was the topic of a talk by Stanford Professor Frank Wolak at the UCSD Economics Roundtable on Tuesday.

Among the initiatives on the November 4 ballot for California voters is Proposition 7, which would require all utilities to obtain 20% of their power from renewable energy by 2010, with this fraction increasing to 40% by 2020 and 50% by 2025. Investor-owned (as opposed to government-owned) California utilities are already subject under existing law to the 20% goal for 2010 and 33% by 2020. Frank noted that the investor-owned utilities have so far made little progress toward that goal.

Source: Frank Wolak.

One of the challenges with meeting these goals with wind power is that available wind resources are located far from California's population centers,

Wind power density at 70 meter height. Source: ESRI.

and indeed the most promising resources are out of state:

Potential wind generation in the western United States in gigawatts. Source: Frank Wolak.

Frank's point was that meeting these goals requires not just generation facilities but also a significant investment in transmission facilities and easing of siting requirements for the latter. Another challenge is that the generation of wind power from a given location is extremely variable from day to day. This means that more reliance on wind power also requires extensive fossil fuel capabilities to smooth out the variation over time in generation and an infrastructure that encourages storage of the power and/or shifting of demand.

Daily electricity production from Tehachapi wind facilities in June 2006: average (blue) and individual days. Source: Frank Wolak.

Frank argued that a key tool for achieving the latter objectives is peak-load pricing. He described a way to make this politically more palatable based on the Anaheim critical-peak pricing experiment, which rewarded customers for conserving during system-stress hours rather than charge them extra for use at those times.

His bottom line was that, in addition to such alternatives, nuclear and coal with carbon sequestration deserved to be given more emphasis in trying to meet California's long-run energy needs.