California Legislature: Green tech gets green light

September 14, 2015

Despite a testy and drawn-out political battle, the new green mandates just approved by state lawmakers — higher efficiency standards for buildings, more reliance on renewable energy — signal good news for the state’s clean-energy industry.

The guidelines are expected to draw new investment and jump-start wind and solar projects, benefiting many Bay Area companies. But industry insiders also say the burgeoning market still faces regulatory challenges ahead.

“The most important thing the businesses need is a market signal,” said Steve Chadima, director of California initiatives for the industry group Advanced Energy Economy. The new standards send a clear message to the sector, he said: “Continue hiring. Continue growing.”

Lawmakers last week fought over the measure, SB 350, and stripped out controversial requirements for higher efficiency standards for gas vehicles. Still, clean energy advocates say the altered proposal provides a boost for long-term projects, research and development and jobs. The bill passed the state Assembly and Senate late Friday night and is expected to be signed by Gov. Jerry Brown.

The mandate requires the share of electricity drawn from renewable sources by the state’s utilities to increase from 33 to 50 percent by 2030. It also calls for doubling the efficiency of existing buildings. It’s designed to dramatically decrease the state’s reliance on fossil fuels and combat climate change.

While the new standards are expected to primarily benefit large projects — electricity generated from residential rooftop solar is not included — the bill is expected to drive future demand for green products and technologies.

Randy Zechman started Clean Solar, a commercial and residential solar installation company, in San Jose around 2005. He has grown his business from two employees to 45, serving the Bay Area. Even though the state mandate does not directly benefit installers, Zechman said, it creates a good business environment for solar energy. Increased standards, he believes, have “been very good for our industry as a whole.”

Cisco DeVries left government to start his company, Renew Financial. Based in Oakland, the company offers financing to lower upfront costs for energy efficiency renovations and solar installations. DeVries, a former chief of staff to Berkeley’s mayor, said the state is an important market for his business.

“California has been an incredible leader in solar and renewables,” said DeVries. He sees the new standards as part of a system that supports the clean tech industry. “It’s really critical that the traffic signals all stay green.”

Nancy Rader, executive director of California Wind Energy Association, said the requirements will encourage companies investing in expensive, long-term developments such as wind farms and transmission infrastructure. A typical lead time for major projects is seven to 10 years, she said.

California solar advocates also see more stability and lower risks for long-term investments. Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association, said the market for large-scale solar projects has slowed as utilities approach meeting the state’s earlier standard of getting one-third of their electricity from renewable sources. “The wheels start turning again” for developing big projects, she said. The last 21/2 years have seen explosive growth in the state’s solar industry, she said.

“We want it to be as commonplace as a cellphone,” she said.

The clean-energy sector employs about 431,800 in California, with about one-quarter of those jobs related to energy generation, fuels and grid technologies, according to a 2014 survey by the Advanced Energy Economy Institute. The Bay Area has about 104,000 clean tech workers, second only to Southern California in the state. The advanced energy sector, which includes energy efficiency and wind and solar power, was projected to grow by more than 70,000 jobs in 2015.

But even as state lawmakers offer another endorsement of the industry, other regulations may curb potential growth. Del Chiaro cautioned that other state and federal policies could create “a tremendous amount of uncertainty.”

Solar advocates are concerned about state energy rate proposals that could dramatically change the cost and payback time for installing rooftop panels. A potential loss of federal tax credits for solar installation next year would also be a blow to the industry. The solar industry added 7,500 jobs statewide in 2013-14, according to the industry survey. The bulk of clean energy jobs, about 300,000, come from energy efficiency contracting.

Rader said federal rulings on public land could limit turbines from vast stretches of the California desert, some of the best remaining land for wind farms in the state. Elected officials in Los Angeles and San Diego have also fought to keep turbines from being erected in their counties.

Still, clean energy industry officials see the latest round as a victory. The mandate section of the bill was largely uncontroversial. Rader said it’s a marked difference from a decade ago, when the phrase “climate change” was too radical to mention. Del Chiaro called the legislative journey a unique, bipartisan success story for the state.

“Government intervention,” she said, “has actually worked.”

Originally published on San Jose Mercury News.