Clean Energy Technology - Bay Area Market
Major forces affecting energy demand in the State of California include:
- Population growth and associated economic growth.
- Regulatory and policy drivers in response to this growing demand and an unprecedented energy crisis at the turn of the millennium. These drivers relate to energy supply, reliability, efficiency and to greenhouse gas (GHG) reductions.
- Public perception and attitudes towards climate change and environmental responsibility.
The Bay Area Economy and Perspective
Like the rest of the country, the Bay Area economy is impacted by the mortgage crisis, resulting in greatly reduced regional growth and increasing unemployment rates. New home construction rates are significantly lower than they were a year ago, foreclosure rates have more than doubled, and housing prices are dropping. Local and state government revenues are affected by downturns in the economy, with calls for reduced spending and/or elimination of programs.
The rising cost of energy is one of the factors in an economy whose growth has slowed. These costs and regulatory pressures are pushing organizations to adopt energy technologies that increase the efficiencies of production and reduce the GHG emissions associated with their production and ultimate use. Initiatives specific to the Bay Area include, but are not limited to:
- The Bay Area Air Quality Management District is proposing a greenhouse gas fee schedule to recover the costs associated with its Climate Protection Program activities related to stationary sources. These fees would apply to all stationary sources of GHGs that are subject to an air district permit. The proposed fee is $0.042 per metric ton of carbon dioxide equivalent, and would apply to all operations subject to air regulations, ranging from oil refineries to power plants, and landfills, factories and small businesses like restaurants and bakeries. Discussions about this fee began in February 2008 and are scheduled for decision making in May 2008.
- The City of San Francisco announced the implementation of a solar rebate program, to be implemented by the San Francisco Public Utilities Commission. Special incentives are available for solar installations by installers with offices in San Francisco.
- The Mayor of San Francisco, Gavin Newsom, issued an Executive Order in December 2007, ordering the Department of Environment to develop and pilot a Local Carbon Offset Program, to fund carbon offset activities within San Francisco boundaries.
- The State of California’s State and Consumer Services Agency is exploring solar thermal technologies for use at state prisons and anticipates an increased demand for this technology. They are cooperating with PG&E on the capture and combustion of methane from a dairy to power a fuel cell at Corcoran State Prison. The state is also looking at fuel cells for use by the California Department of Transportation (to be used as movable sources of energy) and for backup power at radio tower sites.
- The City of San Francisco also has proposed an ordinance requiring adherence to LEED standards in new construction and substantial renovations.
- In October 2007, Kaiser Permanente, California’s largest HMO, headquartered in Oakland, created the Global Health and Safety Initiative (GHSI,) a sector-wide partnership to green the health care industry and improve patient and worker health and safety. Through a partnership with World Energy Exchange, GHSI is planning a reverse auction process for the purchase of clean and renewable energy.
- Several Bay Area cities and counties are participants in the Cities for Climate Protection Campaign, including Berkeley, Cotati, Oakland, Petaluma, San Francisco, San Jose, Sebastopol, Sonoma, and Santa Clara and Sonoma Counties.
- The cities of Berkeley, Emeryville, Oakland, Sacramento, San Francisco and San Jose have all signed Urban Environmental Accords, pledging, among other actions, to reduce energy requirements and waste disposal. The original accord was signed on World Environment Day, 2005 in San Francisco, and includes more than 100 cities from across the world, including Vancouver and Montreal.
Current and Planned Activities
Not surprisingly, given outreach and public incentives for solar power, these projects were most evident among the organizations interviewed, both in the past and in future plans.
- The County of Sacramento has a 100 kW PV array coming on line in the near future. Google has installed 1.6 MW solar panels on rooftops and carports; these panels provide 30 percent of the energy required for peak energy demand on the buildings.
- The Port of Oakland has 1.5 MW in solar PV panels, .6 MW of which were financed through a Power Purchase Agreement (PPA). The City of Palo Alto has installed enough solar panels to power 75 homes. Alameda County has a 3 MW PV system, an 800,000 kW system for its new juvenile justice facility, a 1 MW PV array and office buildings outfitted with PV technology.
- Sierra Nevada, a beer production facility, has solar arrays on its parking structures that produce 580 kW AC and a 1.2 MW solar array on its rooftop. The City of Richmond has a PV system on the roof of the main library that powers the library operations. The panels were manufactured by Sun Power (a Richmond Company). The San Francisco Public Utilities Commission has recently issued an RFP for a 5 MW PPA solar array at Sunset Reservoir and in the past assisted with the installation of the several solar arrays.
See full report for several more examples
Upcoming solar projects:
- The City of San Jose has signed a PPA with SunPower to install PV panels at the Tech Museum of Innovation and is preparing to release a RFP for a 1 MW PPA at the San Jose Mineta International Airport. Furthermore, the city will be developing additional PPAs for other facilities and will work with the Department of Energy and the National Renewable Energy Laboratory on technical site evaluations of its large facilities.
- The West Valley Community College District is planning a $15 million modernization project that may include solar components. This will involve working with PG&E on available incentives and taking advantage of a three percent incentive offered by the State Office for Community College Districts, an incentive designed to offset the additional cost of alternative energy.
- UC Berkeley is issuing a public RFP to install solar panels across a number of its buildings. The Peralta Community College District, with 65 buildings and four campuses, is looking to supplement half of its energy demand with solar. Union City is building a new fire station and city officials are considering installing solar to provide 25 percent of its power - this project is in the development stage.
See full report for several more examples
Stationary Fuel Cells
Acceptance and use of stationary fuel cells is less evident among the organizations interviewed. The San Jose/Santa Clara Water Pollution Control Plant is preparing to install a 1 MW fuel cell. The City of Healdsburg is beginning research on the process for stripping hydrogen from wastewater to power a fuel cell. It has a wastewater treatment facility that generates 1 million gallons a day, a treatment challenge for the city.
- SMUD is conducting a feasibility study with the State of California for a 1 MW fuel cell at Folsom State Prison, with a pilot anaerobic digester for food waste, provided self generation incentives become available. The project would likely start off using natural gas, with plans to convert to biogas. PG&E’s Self-Generation Incentive Program provides distributed generation incentives for fuel cells and other renewable and co-generation systems 30 kW and larger. The company has witnessed a dramatic increase in applications for fuel cells powered by biogas, typically organic waste such as cow manure or vegetables.
The City of Sacramento has two methane plants at the local landfill. The plants produce enough methane to provide electricity to the equivalent of 9,000 homes. All cities are faced with the challenge of disposing of restaurant grease; some municipalities require the entrapment of grease and hauling to approved rendering facilities. Others capture the grease at wastewater treatment plants. In either case, disposal is a problem for all California municipalities. SMUD is developing two dairy digesters and is looking at using grease waste to power a cogeneration facility. In addition, they are conducting a study with the State of California for a 1 MW fuel cell, using a pilot anaerobic digester for food waste.
- The City of Sacramento has issued a RFP for a plasma gasification facility, the first of its kind in the area and subject to considerable oversight and scrutiny. Environmental organizations are opposing the project: some because they claim the city is not doing enough to divert waste from landfills and creating a sufficient dedicated waste stream to support the plasma arc system would deter further diversion efforts; and some who are concerned about air pollution impacts.
Barriers, Challenges, and Opportunities
Interviewees were asked to identify the barriers to introducing clean energy. The first barrier mentioned by most interviewees is cost. Other economic barriers included financing, long payback periods, unproven long-term cost effectiveness, and the slowdown in housing construction (with respect to solar installations.) Just one city mentioned a challenge in entering into an agreement with a Canadian firm, noting that it would need to have a U.S. address in order to conduct business with the city.
A second barrier is suspicion: buyers want a proven technology with a good track record and there is a “sit back and wait” syndrome for new technologies. Other barriers related to permitting and licensing - new technologies might need special permits and some technologies may need to overcome safety regulation hurdles. One interviewee noted that the challenge is still with reducing vehicle emissions and that this should be the priority.
The mechanism by which most entities in California are implementing clean energy projects is through power purchase agreements. This means that Canadian companies must be willing to negotiate full packages, including design, price-setting, installation and implementation.
Clearly, the solar market is well developed in the Northern California/Bay Area market and may not be the most open to new companies (e.g., the San Francisco Public Utilities Commission piloting a program to provide financial incentives to San Francisco residents and businesses to install PV systems, providing extra incentives if San Francisco-based installers are used). The Bay Area Air Quality Management District has participated in projects in the past that included Canadian companies, who partnered with others to demonstrate new technologies.
Extracts from: Canada’s Clean Energy Technology and the Bay Area Market:
A Needs Assessment, March 2008, Prepared for: The Canadian Consulate General, San Francisco, California And Industry Canada by: The Better World Group, Burbank, California And Ryerson, Master and Associates, Inc., Santa Barbara, California