Demand for Salton Sea Geothermal Power continues to grow

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Cal Energy Geothermal Plant1

As Southern California Edison scrambles to replace the 2,200 megawatts of critical power it lost with the closure of the San Onofre nuclear power plant, the utility appears to be cutting another source from its energy mix — geothermal power from the Salton Sea.

Edison’s existing contracts for 286 megawatts of geothermal power from eight plants at the state’s largest lake are set to expire over a 10-year period between 2016 and 2026, said officials at CalEnergy Operating Corp., the company that owns the plants.

So far, the utility has made no move to renew any of the agreements, said Randy Keller, CalEnergy’s director of development, transmission and land assets, and the Calipatria-based company isn’t waiting to sign up new buyers.

At least 50 megawatts will go out of state, to the Salt River Project, a public utility serving the Phoenix area. The City of Riverside Public Utilities, which currently gets 46 megawatts of power from CalEnergy, is extending and increasing its contracts to 86 megawatts over the next six years, said Steve Badgett, interim general manager.

Riverside is a co-owner of San Onofre with Edison and San Diego Gas & Electric. The plant first closed in January 2012, after unexpected wear on tubes in the generator caused leaks of radioactive water. Edison announced the plant would close permanently in June.

Riverside had a small share in San Onofre — less than 2 percent, Badgett said — and while it only received about 38 megawatts of power from the plant, that represents 14 percent of its electricity supply that needs to be replaced.

“We love geothermal,” he said. “For one, it’s in the Salton Sea and it’s close to our service territory. It’s a baseload product; that’s something that’s very valuable. We like that 24/7.”

Co-owned by Warren Buffett’s MidAmerican Energy Holdings Company and a Canadian firm, TransAlta Corp., CalEnergy has 10 plants at the Salton Sea, with a total capacity of 342 megawatts, Keller said. In addition to Edison and Riverside, Arizona Public Service, Arizona’s largest utility, also has a contract for power from the plants.

One megawatt of power provides enough electricity for 750-1,000 California homes, according to figures from the state’s Energy Commission.

While its original, 20-year contracts with Edison covered power from particular plants, Cal­Energy will use a “portfolio” approach as it looks for new contracts, selling a certain amount of power rather than the power from a specific plant, company officials said.

CalEnergy is also planning more than $1 billion in facility upgrades to extend the life of the plants by about 30 years, company officials said.

Exactly what triggered Edison’s move to cool its interest in geothermal energy or whether the company might yet decide to renew some of its contracts with CalEnergy remains unclear. Edison officials declined to discuss either topic or be interviewed for this article. They did, however, issue a statement.

“SCE is scheduling its next large renewable solicitation either at the end of this year or early next year,” Edison said in an email to The Desert Sun. “SCE’s solicitations are open to any renewable supplier (greater than 20 megawatts in most locations and any size in targeted areas) and SCE encourages CalEnergy to participate.”

Edison and California’s other large utilities — Pacific Gas & Electric and San Diego Gas & Electric — periodically solicit contract bids from renewable energy developers as part of their efforts to meet the state mandate to produce 33 percent of its power from renewable sources by 2020. Keller said Cal­Energy has bid into Edison’s past solicitations with no success, but will likely try again.

“If you have an asset, you have to be sure it produces revenue,” he said. “We have to find someone to take that power.”

V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies in Sacramento, a nonprofit group that advocates for renewable energy, said Edison’s lack of interest in geothermal reflects a larger pattern of hostility to the power source among all the state’s private utilities.

“I think the utilities have divided their procurement into their little silos,” he said. “They procured resources based almost entirely on price. You see that 80 percent of new renewable megawatts added under the Renewable Portfolio Standards are going to end up being photovoltaic or wind.”

“The renewable energy development market is beginning to freeze up. Utilities are opting out for the cheapest resources,” added Assemblyman V. Manuel Pérez, D-Coachella, who earlier this year introduced a bill that would raise the state’s renewable energy target to 51 percent by 2030 and encourage utilities to consider greenhouse gas emissions as well as cost in buying green power.

Another generation

The expiration of the Edison contracts come at a pivotal time for geothermal development at the Salton Sea. The CalEnergy plants represent the first generation of power plants running on steam from the superheated brine pulled up from under the sea and the surrounding area — a resource that some geothermal advocates say could replace most of the power lost from San Onofre.

A second generation of plants is underway. EnergySource, a geothermal developer based in El Centro, opened its Featherstone 49.9-megawatt plant near Calipatria last year, but the power is again headed out of state.

The Salt River Project has a 30-year contract for the power from Featherstone as well as from EnergySource’s next project, called Hudson Ranch 2, another 49.9-megawatt plant scheduled to come online in 2015, according to the company’s website.

Barry Petrey, manager of resource acquisition and analysis at Salt River, said geothermal fits in well with the utility’s target of producing 20 percent of its power from renewables by 2020 and having a varied mix of green power. Snapping up extra geothermal from the contracts Edison is letting expire was a smart move too good to pass up, he said.

“CalEnergy had this large portfolio of geothermal with a proven track record of performance so there’s no development risk,” he said. “The geothermal resource should be sufficient for another 30 years. It was an opportunity that made sense.”