You'd think that a company like GreenVolts Inc. would be supportive of Proposition 7, a ballot initiative that would require utilities to generate 50% of their energy from renewable sources by 2025. If approved by voters in November the measure would likely spur large-scale renewable energy installations throughout the state.

The bill would seem to be a natural fit for GreenVolts, a capital-backed San Francisco startup that produces large-scale photovoltaic systems that adjust with the rotation of the earth and concentrate solar energy through the use of mirrors.

Despite that, Craig Lewis, GreenVolts' vice president of government relations, says the company opposes Proposition 7 as do many other renewable energy companies, large utilities, labor unions and even some high-profile environmental groups.

"I think this whole proposition is so silly that it would die under its own weight even if it passed," says Lewis.

Current law requires utilities to provide 20% of their energy from wind, solar, geothermal and other renewable sources by 2010. The ballot initiative would up the ante to half of all energy produced by 2025, while creating incentives for utilities and penalties for non-compliance.

Lewis says the biggest problem with Prop. 7 is that it fails to adequately address bottlenecks in transmission lines. Opponents also say the measure would result in higher electricity costs, provides too much wiggle room for utilities to get out of their obligations and favors large-scale projects while ignoring smaller installations. It would also put an undue burden on existing transmission lines.

Opponents say the measure was so poorly written that it might ultimately hurt development of renewable energy in California.

Backers of the ballot initiative dismiss such complaints and see it as a bold step in weaning California utilities from their addiction to carbon-based energy sources such as coal and natural gas.

A Step in the Right Direction?

Gradual increases in the amount of juice coming from renewable energy plants would not burden transmission lines, according to John Thiella, senior counsel for the Yes on 7 campaign. He does admit that transmission lines are overdue for an upgrade, but he says Prop. 7 would create incentives to improve the lines while phasing in new energy sources over time.

Still, Prop. 7 might confuse matters by abruptly switching the regulatory process and increasing the amount of energy that will need to be delivered to California's population centers from so-called solar parks and wind farms, says Ralph Cavanagh, San Francisco-based energy program co-director for the Natural Resources Defense Counsel. The environmental group opposes Prop. 7.

Opponents also say there is no infrastructure in place to accommodate large-scale wind and solar plants, which have to have to be located where the resources are. For example, large solar arrays would be built in sparsely populated desert areas far away from urban centers.

"One of the biggest problems that holds them back is that they do not currently have the transmission capacity to get the energy to urban population centers," says San Francisco attorney Todd Glass, shareholder with Heller Ehrman LLP and co-chair of the firms Energy & Clean Technologies Practice.

Also, the California Chamber of Commerce and other business advocacy groups say the measure would drive up electricity costs for everyone. Meanwhile, fossil fuels are becoming more costly as well, but Prop. 7 would require utilities to purchase a mix of renewable energy (20% by 2010 and 50% by 2025) as long as it is no more than 10% more expensive than traditional sources. Southern California Edison, in a statement to the press, says Prop. 7 would "significantly" raise electricity costs.

If passed, it very well may increase electricity prices, but that alone is not a reason to abandon Prop. 7's goals, says David Lee, CEO of Santa Clarita-based BioSolar Inc. and a supporter of the initiative. BioSolar produces a component used by silicon-based photovoltaic manufacturers.
Environmentalists say the proposition does not have an effective penalty mechanism in place, which would allow utilities to simply pay the fine and ignore the mandate.

"We believe the initiative would expand the range of excuses for not complying with this. All of them become part of California law, if passed, and none can be changed except for through a 2/3 vote," says Cavanagh, who applauds the spirit of the measure but believes it will have poor results if it passes as written.     

Thiella insists the penalties for non-compliance are severe and that a utility that tries to avoid the renewable energy requirements could experience penalties totaling tens of millions of dollars.
"It is highly unlikely that an investor-owned utility would refuse to buy renewable energy and pay the penalty," Thiella says. "I believe that would trigger a raft of shareholder lawsuits."
Bad For Small Businesses?

As written, Proposition 7 excludes power from renewable energy plants producing less than 30 kilowatts, says Betty Jo Tocolli, president of the California Small Business Association. Since a 1-megawatt (1,000 kilowatts) power plant generates enough energy for roughly 1,000 homes, installations producing less than 30-kilowatts are typically limited to individual setups in homes and offices.

Tocolli believes any renewable energy mandate should also include incentives for these small-scale installations, which are typically handled by small businesses.

"It looks like we're cut out of this, so small businesses will not get contracts and will go out of business," Tocolli says. "I think closer to 60% of today's contracts are from these small providers."
And by locating the power plants in specific locations - typically where there is plenty of sun and wind, but not too many people - Tocolli says the benefits of such large-scale power generation won't be shared across the state.

Attorney, author and land-use expert Robert Freilich supports Prop. 7 but also agrees that energy must be generated on a house-by-house, office-by-office basis.

"People believe that in order to generate alternative energy, you have to build giant energy installations; but that's not exactly true," Freilich says. "So right away, if every new home [comes installed with solar panels] - and if we also reconvert existing homes, high rises, commercial shopping centers - the savings will far more than amortize the cost of putting in the system."
Freilich believes jump-starting the state's renewable energy generation is too important to argue over details, which is why he supports the controversial measure, although he says he would like to see better incentives for developers to put photovoltaic panels on the roofs of new homes and commercial buildings.

Like Tocolli, NRDC's Cavanagh also expresses concern that Prop. 7 does not include small-scale renewable energy generation as part of the mix, saying, "You don't want to put the burden onto the people who own the roofs."

Public support for Prop. 7 is currently 63%, according to the most recent polls. But since the opposition has invested literally millions into defeating the measure, along with support from some environmental groups and from some within the solar industry itself, it is not clear what will happen on Nov. 4.

"The message is that there is a better way," Cavanagh says. "We have to educate the public that if you want to vote for renewables, you need to vote no."      
   
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