California Adopts Strongest U.S. Renewable Energy Requirement

First Solar Inc. is among the renewable-energy equipment makers that may gain after California regulators approved a rule that would require state utilities to get a third of their power from solar, wind and other renewable sources by 2020, the most ambitious standard in the U.S.

Demand for solar panels on rooftops and in fields as well as for wind turbines in the most populous U.S. state will get a boost from the new regulations, said Catharina Saponar, a renewable energy analyst at Nomura Holdings in London.

“It does send another positive signal that California is being aggressive,” she said today in a telephone interview. Companies that may also benefit include Vestas Wind Systems A/S, Trina Solar Ltd. and SMA Solar Technology AG, she said.

The California Air Resources Board voted yesterday in Sacramento to require PG&E Corp.’s Pacific Gas & Electric, Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric to meet the new standard. Thirty-three states and the District of Columbia have set renewable energy targets, all of which are lower than 33 percent, according to the Environmental Protection Agency.

“This standard is going to further diversify and secure our energy supply while also growing California’s leading green technology market, which will lead to cost savings for customers,” Mary Nichols, chairwoman of the board, said in a e- mail statement.

Republican Governor Arnold Schwarzenegger ordered the board last year to adopt regulations for the one-third target under the authority of the state’s 2006 greenhouse-gas reduction law. That law could be suspended if voters in November approve a measure backed by the oil industry.

Sun-Generated Power

Solar panel makers including First Solar and Trina Solar are scrambling to expand in California, Arizona and New Mexico, which have some of the best solar radiation in the world for generating electricity from the sun. Germany, the world’s biggest market for panels and about half as sunny on average as the U.S. Southwest, is trimming guaranteed rates for sun- generated power, forcing developers and manufacturers to look elsewhere for growth.

Demand for wind turbines will probably shrink this year in the U.S., Bloomberg New Energy Finance estimates. The U.S. is the world’s second-largest market for windmills after China.

Some business and consumer groups in California raised concerns that the ruling may lead to higher utility bills. “There must be a safety valve to protect retail customers,” Matthew Freedman, an attorney at the Utility Reform Network, said in a statement on the San Francisco-based consumer advocacy group’s website.

Deadline Delay

California law now requires utilities to get 20 percent of their electricity from renewable sources by the end of the year. The California Public Utilities Commission doesn’t expect that goal to be met and may push the deadline back as much as three years in cases where transmission lines are not available to connect new power plants.

The California legislature last month failed to vote on a bill that would have made the 33 percent target a state law after utilities, environmentalists and labor unions couldn’t agree on how much renewable power may come from out-of-state generators.

“Executive orders are ultimately not the right way to scale solar and renewables in California,” said David Hochschild, vice president of external relations for Freemont, California-based Solaria Corp., a solar-panel maker. “We need legislation to provide that market certainty.”

To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net Jeremy van Loon in Berlin at jvanloon@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Reed Landberg at landberg@bloomberg.net

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