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California Mandates 100 Percent Renewable Energy By 2045

The state's top-down approach to energy issues will only raise rates on consumers.

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Dmitrii Melnikov/Dreamstime.com

Never ones to shy away from sweeping regulatory mandates, California politicians are now demanding that the state adopt 100 percent renewable energy before mid-century.

On Tuesday, the state legislature passed S.B. 100, which requires that all retail electricity consumed in the state come from renewable sources—meaning solar, wind, geothermal, and small hydroelectric plants—by the end of 2045. California's shorter-term renewable energy targets are also ratcheted up, with the state's utilities now required to hit 60 percent renewable energy by 2030. The previous target for that year had been 50 percent.

These are ambitious goals to say the least, and ones that the state's utilities, agricultural interests, and large power consumers argue will drive up the state's energy prices—already some of the highest in the nation. (Californian pay on average 15.23 cents per kilowatt of power, well above the U.S. average of 10.27 cents per kilowatt.)

Proponents however have insisted the 100 percent renewable target is necessary to combat climate change.

"When it comes to fighting climate change and reducing our reliance on fossil fuels, California won't back down. We have taken another great stride toward a 100% clean energy future," said bill sponsor Sen. Kevin De Leon (D–Los Angeles) in a statement to the Sacramento Bee. De Leon—currently running to replace current California Sen. Diane Feinstein (D)—has even suggested taking these targets national as part of a Green New Deal.

Fighting climate change is a laudable goal, says Devin Hartman of the R Street Institute, a free market think tank. Unfortunately, California has picked the most expensive way to do it.

"The top down planning approach to renewable expansion is going to be really expensive, and is going to be a lot more than the per unit costs we have seen to date," says Hartman. "That is going to happen despite the fact that the per unit costs of producing energy from renewables will continue to go down."

The problem says Hartman is that energy grids require demand and supply to be balanced instantaneously, something renewables like solar and wind—whose energy production is based on when the sun is shining or the breeze is blowing—have difficulty doing.

As the state government has mandated an increasing use of these power sources, this mismatch between demand and supply, particularly in the afternoons when demand is lower but solar production is at its peak, has become more difficult, and costlier to manage.

The state's electricity grid operator, CAISO, reports that it is increasingly having to curtail solar production, either through charging solar producers to send electricity to the grid (as opposed to buying it from them) or ordering solar plants to reduce output.

CAISO warns that these curtailments will only increase as California mandates more renewable energy in the years ahead, meaning solar and wind producers will be forced to sell more and more power at below market rates, or otherwise build expensive, uneconomical power storage, all of which will raise costs. Hitting the state's renewable energy targets, says CAISO, will also require overbuilding renewable energy plants—essentially adding more power generating capacity than the system is able to absord—a practice it warns "is not financially sound."

Forging ahead with this approach will not only rebound on California ratepayers, it could also undercut the goals of California's politicians in spurring proactive approaches to climate change around the world.

"When other countries are going to look at California and see they're decarbonizing, but they're driving out industry, there's huge political turmoil because their rates are going up so much. That's not really climate leadership," says Hartman.

He points to places like Texas which have taken a lighter-touch approach to energy regulation, instead leaving it mostly up to private investors responding to price signals to determine when and where renewable energy investments get made.

The result has been the Lone Star state now gets nearly 20 percent of its power from wind and solar (the vast majority of that being wind) while also seeing its electricity costs decline in real terms.

This, Hartman says, is both more economically sound and ultimately more politically sustainable solution to cutting carbon emissions.

"If we can demonstrate, as the Texas model is, that we can drive pollution reductions in a way that benefits our economic self-interest, that's a model that the world is more likely to follow. That's what climate leadership is about."