While Northern California utilities do not expect to have trouble with meeting demand for electricity created by future growth in the data center sector, Pacific Gas and Electric (biggest in the region) is having a hard time reaching targets Gov. Arnold Schwarzenegger has set for the amount of energy that has to come from renewable sources.

While it is too early to tell what effects PG&E’s possible failure to meet the governor’s deadline will have on the utility and its customers exactly, a rate hike may very well end up being one of them. Renewable-energy prices remain higher than energy generated by fossil-fuel plants and PG&E has only fulfilled slightly more than one-third of the mandate’s total requirement.

In an executive order issued in November 2008, Schwarzenegger set in law goals of generating 20 percent of all electricity from renewable sources by 2010 and 33 percent by 2020.

“We’re at something like 12 or 13 percent right now,” said Mark Bramfitt, principal manger for PG&E’s Energy Savings and Rebates program. “That last seven or eight percent is proving really difficult to get.”

The utility delivers power to its customers from a combination of sources, including nuclear, fossil-fuel and various renewable generation methods. It buys a portion of its capacity from Californian and out-of-state independent generators.

Last resort: fossil fuel
Because of the renewable energy requirements and because of the state’s legislated carbon-reduction targets, PG&E recently completed what may end up being the last fossil-fuel power plant in Northern California. The utility acquired the unfinished 600 MW combined-cycle natural gas plant near Antioch in 2006, finished construction and brought the facility online early this year.

PG&E is preparing for a 1.5-2 percent annual demand growth rate. Instead of building another plant, the utility has to first try and meet that growing demand with incentives for clients to increase energy efficiency (the program Bramfitt runs). PG&E’s second resort is to use demand response to offset higher grid loads.

“Third: I get it from renewable,” Bramfitt said. “And last – only if I can’t get it from the first three – do I talk about building a new fossil plant.”

Downtown San Francisco at capacity
Still, Bramfitt does not expect the supplier to turn down any future large data center projects in its coverage area. Currently, the only place where there is not enough capacity for a new build of something like a large colocation facility is the desired downtown San Francisco.

PG&E’s own data center at its San Francisco headquarters has “hit the wall.” The utility’s IT needs are growing and there is not enough power coming from the street to accommodate that growth in the 55,000-square-foot facility downtown.

Bramfitt: “There are four circuits, serving downtown (San Francisco), that are essentially at their maximum.”

Downtown capacity constraints will be relieved, once PG&E brings online a new transmission line that is currently under construction. The sub-marine line will cross San Francisco Bay, carrying power from the Gateway plant and from several merchant generators. The company expects to plug it into downtown in 2010.

A smoother experience with renewable-energy goals
PG&E supplies power to a large portion of Silicon Valley. The other portion is served by the City of Santa Clara, through a city-owned utility called Silicon Valley Power.

Like PG&E, SVP does not expect to have to turn down any new data center customers in the future. And – unlike PG&E – the much smaller public utility does not expect having any trouble with reaching the state’s renewable-energy mandates.

“We’re a 500 MW utility,” said SVP’s Manager for Customer Services Larry Owens. “In order for us to add one percent (into the) power mix, we need a 1 MW unit.” PG&E’s peak load, in contrast, can approach 22,000 MW, according to Bramfitt.

But it was not its small size alone that allowed SVP to have an easier time reaching the targets. The utility anticipated Schwarzenegger’s renewable-energy mandate by creating its own policy that mirrored the state law, Owens said. “We’ve set milestones along the way. We are way ahead of schedule on those milestones.” In 2008, 30.1 percent of SVP’s electricity came from renewable sources.

The provider also began investing into renewable energy sources much earlier in the game. “We started with an early history of implementing renewable power, starting with the first oil embargo,” Owens said. “We worked to acquire some non-fossil fuel resources because we were afraid of the volatility (of the fossil-fuel market).”

SVP’s renewable portfolio
In 2008, about 15 percent of SVP energy was geothermal and about 3.5 percent came from small hydroelectric plants (energy from large hydroelectric plants does not qualify as renewable in California). The utility got about 12 percent from wind farms.

Using only half of its 1,000 MW capacity, SVP does not expect any future capacity constraints. On the contrary, the utility expects the economic downturn to cause a lowered demand growth rate.

“Our load (growth) expectations before the downturn were in the 1-3 percent for the whole system,” Owens said. The utility is now expecting yearly demand to drop by 1-4 percent over the course of the recession.

“We have data center projects and other corporate projects that are just waiting a little bit more for the economy to turn around.”

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