Air Date: Week of January 26, 2001

Transcript

CURWOOD: It's Living on Earth. I'm Steve Curwood. In California's power crunch, folks caught by stalled elevators and darkened traffic lights aren't the only casualties. Small green power companies that sell a mix of traditional and renewable sources, such as wind and solar energy, are shutting down, too, even though the renewable energy they broker is now cheaper than what's being offered by the major suppliers. Daniel Kammen directs the Renewable and Appropriate Energy Lab at the University of California at Berkeley. He says the problems come from the tangled economics of buying and selling in California's deregulated electric power market.

KAMMEN: The bids are rolling bids. They happen every day, every hour. And you're bidding for what you're going to sell in the market 24 hours hence. Now that's a bad thing in general, but it's critical for some of these independent power producers. If you're a big producer like Southern Energy Company, and you've got billions of dollars to play with, you can afford to buy and sell in this market that's going through these fluctuations. But if you're a small power producer, one of these new green IPPs, independent power producers, then you might be providing your customers with some energy from photovoltaics, which you control. But you might have to buy some gas on the market to make up the rest. Well, to buy that gas you need to make up your total mix, so you can supply your customers. You've got to buy that on this roller coaster market. Little startups don't have the kind of cash to suddenly pay 40 cents a kilowatt hour, one hour, for the rates.

CURWOOD: So, is this the end of the line for renewable energy companies in California, this utility crisis? Or is there a chance these firms could come back?

KAMMEN: No, I think that it's not the end at all. In fact, the companies that were really solidly green, the ones that are almost entirely based on clean energy and are generating new customers all the time, they're going to make it through this fine. So at some level, there's a weeding out effect. But the problem is that this crisis, instead of just weeding out some, should have just provided a huge incentive for many more companies to get involved in the market. And if we had any sound energy policy to help them out, we could have seen renewable energy generation in the state go from less than a percent, where it is now, to ten, 15, 20 percent. And this crisis is an opportunity to have pushed that forward, and that's what we haven't stepped up to do.

CURWOOD: There is new legislation in California that makes it easier to get a power plant online, up and running. How do these new regulations affect the cleanliness of the energy that's going to be produced? Is it tilted toward what you call brown, or more polluting, forms of power? Or tilted more toward the green side?

KAMMEN: Unfortunately, the crisis is being used as a way to tilt it toward not only brown but black power. What's going on is that environmental regulations, the siting requirements, the requirements to do environmental quality analysis, all those things are being bypassed because legislators are saying we've got to have more capacity, we've got to find new generating facilities, we've got to get them online. And that's a problem both in the immediate term -- it does, it takes away the green market, so it pollutes things in the short term. But every time you put a power plant in, you're stuck with that decision for decades. Because power plants are expensive. When you put them in you want to get the full lifetime out of them. So every bit of brown power we install now hurts the market for green power down the road.

CURWOOD: What do you see as environmentally appropriate solutions to the California energy crisis? How can California get out of this mess?

KAMMEN: The problem right now is that we have a deficit of power being generated in the state. So what the state and what cities, municipalities around the state should be doing is getting federal money, state money, and bond measures to install renewable energy generation facilities in their areas. And the neat thing about those technologies is that they're small and modular, meaning you can install exactly how much you want, unlike big, fossil fuel power plants where you've got to almost take them as they come, often in big sizes. And you can put them in fast. And they would cost some now, but we could pay for it now; the economy is still quite strong. We can put them in, generate energy that was controlled by the municipalities, sell it to the utilities just like these out of state robber barons are doing, and help that to alleviate the crisis in the short term. The neat long-term feature is that, one, we've generated larger markets for green power that will make more people buy and install green power. But also, the municipalities around the state would then have power plants which they could then use for base load power. Also, they could sell the power when the price peaks. In the late afternoon when everyone comes home and turns on their appliances, their air conditioners and things, the price of power can almost double, even before the current crisis. The cities would then be in the position to be generating power and gathering those revenues. And that would be a neat short-term and long-term solution that no one is pushing hard enough for.

CURWOOD: Daniel Kammen is Associate Professor of Energy and Society in the Energy Resources Group at UC-Berkeley. Thank you for joining us.

KAMMEN: Thanks a lot.