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With 10 days left for California lawmakers to pass bills this year, renewable energy companies are rallying around legislation that could jump-start geothermal energy development by the Salton Sea — and also give a boost to solar, wind and bioenergy.

The bill from Assemblymember Eduardo Garcia, a Coachella Democrat, still faces an uphill battle. It’s opposed by the state’s major investor-owned utilities and the California Chamber of Commerce, which are worried about the costs to homes and businesses.

But if Assembly Bill 893 passes in the next 10 days, it could have a more dramatic immediate impact than several higher-profile pieces of energy legislation being debated in Sacramento. The other bills include SB 100, which would require California to get 100 percent of its electricity from climate-friendly sources by 2045, and AB 813, which would start the process of California expanding its power grid across the western U.S.

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Garcia’s bill, AB 893, would require California utility companies to buy more energy from geothermal power plants, which, unlike solar and wind farms, can generate climate-friendly electricity 24 hours a day, 7 days a week. The bill would almost certainly lead to new geothermal plants being built by the southern shore of the Salton Sea in Imperial County, which is home to one of the world’s most powerful geothermal reservoirs.

Garcia’s predecessor V. Manuel Perez, who is now a Riverside County supervisor, tried and failed to get a geothermal mandate through the legislature in 2014. But Garcia’s bill, unlike Perez’s, has won last-minute support from other parts of the renewable energy industry. That’s because Garcia plans to amend the bill to require new contracts over the next few years for solar and wind projects, before federal tax credits begin to decrease.

“Historically, the efforts to try to bring geothermal to the forefront have been very divisive among the other renewable energy groups. And today we are working in collaboration,” Garcia said in an interview Tuesday.

Garcia, who represents Imperial County and the eastern Coachella Valley in Riverside County, said the bill would advance California’s fight against climate change in a way that spurs economic development in one of the poorest parts of the state. He sees geothermal, as well as solar, wind and bioenergy, as key to his region’s economic future.

“This is extremely important as it relates to economic development, jobs and more importantly, continuing on the path of meeting our 2030 goals,” Garcia said, referring to California’s goal of reducing planet-warming emissions 40 percent below 1990 levels.

The current version of AB 893 would require California utilities to buy 3,000 megawatts of new geothermal power by 2030 — far more than the 400 megawatts of geothermal that have been built by the Salton Sea thus far. While changes to the bill are still being hammered out, Garcia said the 3,000-megawatt figure will drop. He estimated the bill could ultimately require between 4,000 and 5,000 megawatts of new and extended contracts for geothermal, solar, wind and bioenergy facilities across the state.

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For the solar and wind industries, the bill represents an opportunity to get new projects built before federal tax credits begin to drop. Solar projects that start construction in 2019 can still qualify for a full 30 percent investment tax credit. Similarly, a production tax credit for wind disappears entirely for projects that start construction after 2019.

“This is the best and probably last opportunity for California (utilities) to buy solar energy at a 30 percent discount. And it’s great for the ratepayers,” said Shannon Eddy, executive director of the Large-scale Solar Association, a state trade group.

Utilities, local governments and big corporations have continued to sign contracts for renewable energy facilities in California. Just last month, for instance, the developer EDF Renewable Energy announced a deal for its upcoming Riverside County solar farms that involves the cities of Anaheim, Burbank and Vernon. Also last month, the developer BayWa r.e. announced a long-term contract with Marin Clean Energy, a Bay Area power provider, for its 101-megawatt Strauss wind farm in San Bernardino County.

But renewable energy firms say fewer long-term contracts are being signed than earlier this decade, despite the falling costs of solar and wind power and the availability of federal tax credits. They cite several reasons for the slowdown, including the fact that California’s investor-owned utilities — Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric — have already lined up most of the power they need to meet the state’s renewable energy mandate, which is currently 50 percent by 2030.

Another factor is the rise of locally run “community choice” programs, in which cities and counties ditch the investor-owned utilities and buy their own electricity. So far, those local energy providers have mostly signed short-term contracts that haven’t led to the development of new solar and wind projects. The investor-owned utilities, meanwhile, have had trouble forecasting their long-term energy needs as more customers depart.

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Danielle Mills, director of the American Wind Energy Association’s California Caucus, said some community choice programs are starting to sign long-term contracts. But overall, she said, “We’re just not seeing the levels of procurement that we have seen in the past in California. And that’s a shame, because renewable prices are really low.”

“AB 893 is an effort to make sure there is some certainty and some settling of who is going to be doing the procurement going forward, because we just haven’t been seeing some of these larger (renewable energy) projects getting contracts,” Mills said.

The bill’s supporters include several companies that stand to benefit, including Controlled Thermal Resources, which wants to build a massive geothermal plant by the Salton Sea; EnergySource, which runs one of the Salton Sea area’s 11 existing geothermal plants; and Calpine Corporation, which owns and operates 13 geothermal plants at the Geysers, another geothermal hot spot in Northern California. The Imperial Irrigation District, Imperial County and several local labor unions support AB 893 as well.

Garcia said the amended legislation will also require utilities to buy power from biomass facilities that convert organic matter, such as dead trees, into electricity. Bioenergy advocates say the technology could help California reduce the damage from wildfires by creating an economic incentive to cut down dead trees that might otherwise burn.

Critics say Garcia’s bill would lead to higher electricity costs for homes and businesses. Those arguments are based largely on the fact that it’s more expensive to build a geothermal plant than a solar or wind farm — an economic reality that has largely stalled development of the Salton Sea’s geothermal resource over the last two decades. 

A coalition of groups and companies including the California Chamber of Commerce, the International Council of Shopping Centers and Shell Energy North America is circulating a letter in Sacramento this week urging lawmakers to oppose AB 893. The letter, which was written before amendments focused on solar and wind were added to the bill, says a geothermal mandate “will significantly increase costs to selected California ratepayers by requiring the utilities to invest in as-yet unbuilt and unplanned geothermal projects.”

“Electricity rates in California are already among the highest in the nation. Without competitive bidding and cost containment, both of which are impeded by AB 893, utilities will be forced to purchase more expensive power and pass the increased rates along to California ratepayers,” the letter says.

The investor-owned utilities are opposed to AB 893, as are publicly owned utilities like the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District. In another letter being circulated this week — which was also written before the bill was changed to expand its scope beyond geothermal — a coalition of utilities says AB 893 “would significantly increase costs for customers by billions of dollars.” The letter is also signed by CalCCA, a trade group for locally run community choice programs.

“While California leads the nation in clean, environmentally-sustainable electricity generation, setting unnecessary procurement mandates will not advance the state’s ambitious clean energy goals,” the letter says.

Asked about the cost argument, Garcia pointed to a benefit of geothermal energy that he said isn’t reflected in its high up-front costs: the ability of geothermal plants to generate climate-friendly electricity around the clock. As California continues its shift away from fossil fuels to cleaner energy sources, the state will need to deal with the fact that solar and wind farms only generate energy when the sun shines or the wind blows. Garcia said geothermal can play a key role in getting fossil fuels off the grid entirely.

“It’s critically important to look at what needs to be done when it comes to balancing the grid,” he said. “We need to make sure that we truly put forward a balanced portfolio.”

Stephen Berberich is president of the California Independent System Operator, which runs the power grid for most of the state. In a recent interview, he expressed mixed feelings about Garcia’s geothermal mandate. On the one hand, Berberich said, he sees geothermal as “part of the solution” to California’s energy future. But on the other hand, he said he’s “a little hesitant” about state lawmakers requiring utilities to buy geothermal, rather than utility regulators making the decision about when geothermal is needed.

The Senate’s appropriations committee passed AB 893 in a 5-2 vote last week, but Garcia said the bill will go back to the Senate’s energy and utilities committee once the amendments are finalized. AB 893 would then go to the Assembly floor before being advanced to the Senate, where its co-author is Henry Stern, a Canoga Park Democrat.

Sammy Roth writes about energy and the environment for The Desert Sun. He can be reached at sammy.roth@desertsun.com, (760) 778-4622 and @Sammy_Roth.

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Mumbai: Small to mid-sized renewable energy companies in India are starting to look like attractive takeover targets as lenders and investors withhold funds, worried by the stiff competition, weak bond markets, low tariffs and high debt besetting the sector.

The small companies’ difficulty in raising cash is keeping them away from government power project auctions, restricting their growth and crippling their ability to refinance loans, said a consultant from a top global consultancy firm.

With many smaller operators being gobbled up or offering themselves for sale, the number of projects being developed could fall, potentially keeping India from its renewable energy targets, said the consultant, who did not wish to be named as he is directly involved with a company that cancelled a bond issue.

“India’s solar industry is becoming a big boys’ club,” said Rahul Goswami, managing director of Greenstone Energy Advisors.

In a few years, there may be only a few big companies and a few regional firms active in India’s renewable sector, he said.

The trend goes back at least to 2016, when Tata Power bought solar and wind company Welspun Renewable Energy, but the pace is expected to pick up.

“Smaller players are being squeezed out … due to two main factors: cost of equipment and … financing”, said Alok Verma, executive director at Kotak Investment Banking, an arm of Kotak Mahindra Bank.

One of India’s largest renewables companies, Greenko Group, said in June that it was buying 750 megawatts (MWs) of solar and wind assets from Orange Renewables, because the Singapore-based company saw few opportunities for growth. The deal has yet to be closed.

Essel Infra, with a renewable power capacity of 685 MWs, and Shapoorji Pallonji Group’s 400-MW solar arm are also in talks to sell off their assets, one firm and two banks doing the due diligence for these companies have said.

Besides loans, other funding options have also been dead ends for the smaller companies, further limiting growth opportunities.

ACME Solar postponed an initial public offering (IPO) announced in September last year as the proposed share issue did not generate enough interest from investors, confirmed a banker who was directly involved in the listing attempt.

Mytrah Energy, a major mid-sized renewables company, called off a $300 million to $500 million bond issue earlier this year as that option also went dry for the sector, and it canned IPO plans as well, said a separate banker directly involved there.

The companies have all declined to comment.

This dearth of financing and trend towards consolidation could be a significant threat to India’s target of 175 gigawatts (GWs) of renewables capacity by 2022, up from 71 GWs now, some analysts said.

Others said a concentration of bigger players, with more cash and better financing, could mean things move faster.

“Consolidation in the renewable energy industry augurs well for the overall success of the programme … Large players have access to required capital at reasonable rates and can procure the latest technology,” said Debasish Mishra, head of Energy, Resources and Industrials at Deloitte Touche Tohmatsu India.

Tata Power, one of India’s largest power generators, said in May it plans to invest $5 billion to increase its renewable capacity in India fourfold over the next decade to 12 GWs.

More than doubling India’s renewables capacity by 2022 will require $76 billion, including debt of $53 billion, the Ministry of New and Renewable Energy said in July.

Threat to growth?

Another problem in India’s renewable sector is debt.

“Many mid-sized firms have taken debt to fund their equity,” the partner of an investment firm said, adding that many such companies will need financial restructuring or have to put themselves up for auction.

This model of financing debt through equity is called mezzanine financing and high interest rates and an option to convert debt to equity in future.

Both ACME and Mytrah are funded by Piramal Finance Ltd via mezzanine financing, according to statements by the companies at the time of funding.

For lending banks, this quasi-equity is seen as debt, making the liabilities of these companies look higher than usual, said the partner, who asked not to be named. The investment firm handles all kinds of financing, including mezzanine.

When companies with mezzanine financing go to banks for funds for upcoming projects, banks ask them for higher collateral or offer less cash in loan, said Kotak’s Verma.

Fitch Solutions said in a note last week that India would likely miss its renewable capacity targets due to “risks stemming from bureaucratic, financing and logistical delays.”

BELCHERTOWN — Reacting to a number of solar projects proposed in town, residents at a special Town Meeting Monday night discussed many of the issues surrounding the proposals.

Hundreds attended the meeting at the high school, which was called by a citizen petition circulated by the Belchertown Citizens for Responsible Land Use regarding three warrant articles.

By a margin of just nine votes, residents voted 162-153 not to rescind the Select Board’s authority to negotiate a “payment in lieu of taxes” (PILOT) agreement with Syncarpha Community Solar.

After much debate, neighbors made their opposition to the project known while town officials stressed the need for new sources of revenue.

“You’re already counting the money,” Belchertown resident Jim Hunt said to applause. “Some of us here don’t like this project for a lot of good reasons. We don’t want to count the money yet.”

Syncarpha Community Solar has proposed two solar arrays on six parcels of land, covering 101 acres along North Street in the Pelham Hills.

Those opposed to the PILOT agreement said they hoped a “Yes” vote would at least slow the project down, while town officials said the vote would have no effect on the project’s ability to move forward.

“It’s hard to vote against solar. It’s just one of those up-and-coming things,” said Andrew Chalfant, a 20-year-old resident studying computer science at the University of Maryland. “It feels bad.”

Resident Bryce Fifield said he voted “pro-solar” — against exiting the PILOT agreement — and was frustrated the town would hold a special Town Meeting for something it already voted on.

“It’s annoying that this can happen,” Fifield said, with his young children in tow, unable to find a baby sitter for the evening. “It makes me want to get rid of Town Meeting.”

Finance Committee Chairwoman Lynne Raymer urged residents to keep the PILOT in place, while fellow member Steven Rose warned of increasing pressure on the town to pay out post-employment benefits to public officials.

“This is going to have a direct and dramatic effect,” Rose said of the post-employment benefits problem. “This is going to have a direct impact on our budgets gradually, sort of like a cancer, every year for the next 20 years.”

Town Administrator Gary Brougham said the town is currently looking at seven proposals for solar arrays, with three already operational with their own PILOT agreements.

“The projects described tonight are not so much about being for or against solar or the PILOT agreement or lack thereof, so much as the location,” Brougham said.

Brougham said the seven megawatts of solar power from the Syncarpha arrays would provide the town $125,000 in revenue annually.

Another company, Borrego Solar Systems, does not have a PILOT agreement yet, but plans to pursue one, town officials said.

Zoning amendments

Although no change to the PILOT agreement was approved, Town Meeting voted in favor of sending two proposals to the Planning Board to change zoning bylaws regarding future projects.

The Planning Board will now hold a public hearing on the bylaws that “under no circumstances” would permit solar installations if they require more than 4 acres of cleared trees or are within 2 miles of an existing or proposed solar site.

During the discussion, Brougham informed voters that W.D. Cowls Co. Inc. of Amherst last week filed subdivision plans for all its Belchertown property, effectively making the company immune to any future changes in the zoning bylaws. Several solar projects are proposed for Cowls land.

“It’s a cynical move designed to get around the will of the democratically elected officials of this town,” said Ken Elstein, a member of the Belchertown Citizens for Responsible Land Use, in an interview.

By submitting the plans, the Syncarpha and BlueWave projects among them, Cowls land is immune from any zoning bylaw changes for the next seven months.

Brougham explained that Belchertown being a “Right to Farm” community gives landowners the right to cut trees and develop alternative energy on their land. The state of Massachusetts recognizes solar energy as an agricultural function, too, he said.

Sarah Robertson can be reached at srobertson.media36@gmail.com.