California's $15.7 billion power problem

The Golden State has, of late, lost considerable luster, what with prison riots, budget problems, and massive wildfires started by Mexican drug cartels. Add to these woes a whopping price tag for Governor Arnold Schwarzenegger's ambitious renewable energy program. The Guvernator's plan has California grabbing 33 percent of its power from renewable sources by 2020.

Getting the power capacity in place might actually be the easy part. Federal subsidies and plunging prices of solar cell and wind power equipment make that part easy. Instead, it's getting the needed power lines in place that will likely provide the biggest obstacle. An August 2009 report from the Renewable Energy Transmission Initiative put the price tag at roughly $15.7 billion, according to this post by tech blog Venture Beat. Putting more power lines in place has all the sex appeal of an Al Franken skin flick so the costs could make it far more difficult hit those lofty energy goals.

The transmission wire situation in California is far from unusual. The Golden State has significant renewable power resources including blazing hot deserts perfect for solar farms (both thermal and photovoltaic types). Wind-swept mountain ridges are good for capturing the power of the breeze. Geothermal activity near geysers and places of subterranean volcanic activity is a third viable source.

Alas, all of these renewable energy sources are located far from the major urban and suburban corridors on the coast and near-coastal areas. Many are located in remote, inaccessible spots in the desert or in the mountains. That means getting power form the source to the consumer requires new lines of some sort, at a minimum from the power generation point to a place where the power can tap into existing transmission lines.

Far more likely, according to the RETI report, is that California will need to build not only these feeder lines but also some major new transmission lines. Building such lines tends to be not only expensive, costing $1 million per mile, but also a regulatory nightmare. Environmental groups, nearby communities, farmers and landowners all have a sat in the permitting process. And 180-foot tall transmission towers are no ones idea of eye candy.

According to the REPI report, California needs two new major power lines running the length of the state in order to hit those goals. Most of the transmission wires would be placed in the Central Valley, the agricultural hub for California. However, REPI states that California could significantly reduce its needs for adding massive transmission and big energy production capacities by simply encouraging more distributed energy generation with renewable sources.

In other words, more homeowners and small business and landowners should be putting solar panels on their roofs, digging geothermal wells, or attaching windmill poles on their properties. Present-levels of tax subsidies make payback time from some of these investments (which are generally five-figures and above) roughly five to ten years, a small enough window to make the prospect interesting.

Other remedies could also reduce the end cost of improving California's transmission infrastructure. Bill Gross of Idealab talked about co-locating his concentrated solar power (CSP) plants next to existing transmission towers. CSP plants harvest thermal energy by using arrays of mirror to concentrate solar beams and heat up water or oil, which then can be used to generate power. (We talked to Gross about this here.).

Another real possibility on the conservation side could be rooftop CSP troughs from Honolulu (HI) company Sopogy. Those troughs, which are easy to ship and install based on flat-pack production techniques, can be used to generate high heat that is used in many industrial processes. (Generating heat can comprise 60% of energy costs). It's also considerably more efficient than using the heat to generate power because its a direct conversion.

In both cases, sources of power or power saving technology are located where demand is greatest. This would take a lot of pressure off creating new transmission capabilities. Regardless, California is going to need at least some big new towers and thick power lines to meet its energy goals. Whether the flat broke Golden State can afford to pay for more steel in the air and wires in the sky is entirely another issue.

Read Full Story


DJIA 21,394.71 -2.58 -0.01%
NASDAQ 6,263.15 26.46 0.42%
S&P 500 2,439.18 4.68 0.19%
NIKKEI 225 20,132.67 22.16 0.11%
HANG SENG 25,670.05 -4.48 -0.02%
DAX 12,733.41 -60.59 -0.47%
USD (per EUR) 1.12 0.00 0.44%
USD (per CHF) 0.97 0.00 -0.28%
JPY (per USD) 111.29 0.00 0.00%
GBP (per USD) 1.27 0.00 0.36%

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.