California companies trapped in brown power, yearning to go green

As Gov. Jerry Brown and the Legislature draw up an action strategy for their new election mandate, one of their toughest challenges will be to keep California on track with its long-term plan to reduce greenhouse gas emissions.

A wide range of potential low-carbon policies is on the table, but one of the most effective options has long been overlooked: allowing businesses and universities to switch fully to renewable sources of electricity.

Despite California’s role as a national leader in climate policy, outdated state laws severely limit the ability of large electricity users to buy renewable power. Solving this paradox could accelerate the transition to clean energy and help policymakers build support for a new set of emissions cuts beyond the interim goals for 2020.

Under existing law, large electricity buyers are limited to three main options for sourcing their power. They can take service from their local utility, which only needs to meet the state’s minimum requirement for renewable energy, currently about 22 percent. Or they can try to find room on their own properties for solar panels or wind turbines, a solution that is impractical for many users and typically only meets a small portion of their power needs.

Alternately, a business can participate in the state’s Direct Access program, which allows commercial customers to buy directly from competing non-utility power suppliers. The catch, however, is that the volume of power available under Direct Access is rigidly capped at the equivalent of 13 percent of private utilities’ statewide load, with no exception made for renewable power suppliers.

So what can a well-meaning company do to green its power?

Among those facing this dilemma is Kaiser Permanente, which has committed to cutting emissions 30 percent by 2020 at its 32 medical centers and scores of other facilities in California. It already has installed 11 megawatts of rooftop solar arrays. Kaiser says it also would like to buy electricity from 100 percent renewable sources but is blocked by the cap on Direct Access and the absence of green supply.

The 23-campus California State University system is in a similar bind. CSU uses a lot of electricity for its 425,000 students and has taken significant efforts to switch to renewable energy. Like Kaiser, CSU already buys some of its power from conventional Direct Access suppliers but has been hamstrung by the lack of all-renewable options.

Then there is Tesla, the state’s electric car champion. Although Tesla’s much-heralded new battery factory outside Reno is projected to be fully powered by renewables, that’s not the case for the company’s existing factory in Fremont. Blocked by the cap from adding renewable electricity, the Fremont factory makes do with Direct Access power that is no greener than the mix currently available on the utility grid.

Other Silicon Valley brand names are in a similar position – free to go green in other states but stuck with brown power at home in California. For example, Facebook has taken steps to reduce the carbon footprint of its operations in states such as Iowa, where its new data center will be powered entirely by local wind energy suppliers. But its sprawling Menlo Park campus still must depend on the mostly nonrenewable mix delivered by the local utility. Ditto for Yahoo, which is moving to switch its out-of-state data centers to renewable energy but in California has no viable options to brown power from the grid.

The same dilemma confronts hundreds of other companies across the state, all of which are denied a genuinely green choice when it comes to electricity. It’s time for a change.

A new all-renewables Direct Access program would drive innovation, investment and job creation in the power sector. Raising the cap on Direct Access from its current 13 percent of the market to at least 20 percent, with renewable power comprising all the added supply, could lead to more than 6,000 megawatts in new geothermal, wind and solar output across the state. Properly crafted, such a program also would promote grid stability and protect nonparticipating electricity consumers from rate impacts.

Looking toward California’s climate legacy after 2020, Brown and the Legislature need to harness the full potential of every sector to cut emissions. California’s corporations and universities have the resources, talent and ambition to help make that happen.

Gregory Staple is CEO of the nonprofit American Clean Skies Foundation. Robert Collier is a Berkeley-based energy policy consultant.