Report 2007-119 Summary - January 2008

Solar Energy: As the Cost of This Resource Becomes More Competitive With Other Renewable Resources, Applications to Construct New Solar Power Plants Should Increase

HIGHLIGHTS

Our review of the siting and permitting process for large solar power plants revealed the following:

RESULTS IN BRIEF

Electricity lights our homes; cooks our food; and powers our computers, television sets, and other electronic devices. However, on several occasions over the last five years, Californians curtailed their consumption of electricity to prevent larger outages. These curtailments are reminders of California's need to increase the supply of available electricity.

California's largest source of electricity is power plants burning natural gas. To help meet the State's need for electricity, as well as to reduce the harm that using fossil fuels such as natural gas can cause to the environment and to become less reliant on imported fuels, the State has enacted legislation to increase the amount of electricity generated from renewable sources, such as wind, geothermal, and solar energy.

Solar power offers an attractive approach to help meet peak demands for electricity, but the availability of other renewable sources that cost less, the need for large investments in land and infrastructure, and an unproductive incentive system designed to help firms that generate power from renewable sources meet their costs have contributed to a lack of development of solar power plants. However, the State and the changing energy market are beginning to address the negative effects of those three factors.

Steps have been taken that should result in more applications to develop large solar power plants, but the processes of obtaining the approvals necessary to construct a large solar power plant and transmit the electricity it will generate are complex. A developer wishing to build a large solar power plant generally will follow one of four possible approval tracks, depending on the type of plant proposed and the government agency that has jurisdiction over the land on which the new plant will be built. Each of the four approval tracks has three principal components: land use review, environmental review, and review of related infrastructure such as transmission lines or interconnection to the power grid. However, regardless of which track a developer uses, no single entity is responsible for providing all the approvals necessary to begin providing electricity generated by a large solar power plant to consumers.

To build a large solar power plant, a developer must ensure that the uses permitted in the federal or local land use plan include large solar power plants. If they do not, the developer must obtain approval of amendments or changes to the plan. Reviews of environmental impacts are also an integral piece of the approval process. These reviews require the involvement of the public and agencies with jurisdiction over the area. Besides land use and environmental reviews, a developer must obtain approval to interconnect the proposed power plant to the power grid and may need to build or upgrade long transmission lines from the power grid to the remote locations where solar energy is abundant.

Because no applications to build large solar power plants have been approved since 1990, the type of analysis we could perform was constrained. Moreover, environmental review is a process that varies based on the unique characteristics of the project and involves different agencies depending on those characteristics. Although project comparisons were limited, because the approval process is the same for applications for all large thermal power plants whether solar or not, we analyzed recent applications for large nonsolar thermal power plants that the State Energy Resources Conservation and Development Commission (energy commission) had approved.1 We also reviewed applications for new transmission lines related to other types of power generation, as well as applications to connect other types of power plants to the power grid.

For the 15 approved applications for nonsolar powerplants we reviewed, the approval process took an average of 674 days, 309 more than the established 365-day timeline. For two applications that we reviewed in more detail, delays in this process were largely the result of factors over which the energy commission has no control, such as applicants changing their applications or failing to provide information in a timely manner. Similarly, although the California Public Utilities Commission (utilities commission) has a 365-day timeline for approving applications for transmission lines, it took an average of 187 days longer, for an average total of 552 days, to approve the three applications we reviewed. Again, factors such as the opposition of a city through which a transmission line was to be routed and waiting for the environmental review from a federal agency caused the utilities commission to take longer than its established timeline. Finally, for the 10 applications to connect to the power grid that we reviewed, the approval process used by the California Independent System Operator (CAISO) took an average of seven months longer than its established two-year timeline. The CAISO only recently took over the responsibility, however.

Because some of the required approval processes can be performed concurrently, a delay in obtaining one approval may not necessarily delay the entire process, and although they sometimes contribute to the delays, the environmental reviews mandated by law are a significant aspect of the process. Although the approval processes used by the different agencies were established to accomplish certain goals, without applications for large solar power plants we did not determine if the costs of these processes were justified by the benefits the different processes provided.

AGENCY COMMENTS

The energy commission and the utilities commission responded in writing to our report. While not disputing any information we presented, the two commissions provided additional information related to specific topics we addressed. Further, the utilities commission provided information on recent events intended to address challenges for developing transmission infrastructure and for administering the interconnection queue. The CAISO opted not to respond formally to our report.

1 In our report, we refer to this commission as it is named in state law. However, on its Web site and letterhead, the commission refers to itself as the California Energy Commission.