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California Mandates 50% Renewable Energy by 2030

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On Wednesday, California Governor Jerry Brown signed Senate Bill 350 (SB 350), the Clean Energy and Pollution Reduction Act of 2015. 

The legislation — which was authored by Senate Leader Kevin de León (D-Los Angeles) — increases renewable energy and efficiency goals for California, requiring the state to generate 50 percent of its electricity from renewable sources, such as solar and wind, by 2030. The new requirement marks an increase from the current requirement of 33 percent, with the new target beginning in 2021 and fully phased-in by 2030. 

In addition to the new renewable requirement, SB 350 also requires California to double the current rate of energy efficiency savings in California buildings by 2030. The legislation codifies goals Governor Brown laid out in his inaugural address in January to further cut global warming pollution in California. The original bill proposed also included an aggressive requirement to significantly reduce gasoline use in California, but the provision was dropped due to a lack of political support.

Direct Energy Business is an Electric Service Provider (ESP) in California that provides competitive electricity products and services that help California businesses meet their energy and sustainability needs. As an ESP that serves customers on direct access — which is electricity deregulation in California — Direct Energy Business will tailor specific products and services to help California businesses cost effectively meet or exceed the new targets. Meeting the SB 350's requirements will require coordination across the electric industry to reliably and cost effectively integrate renewable resources on the electricity grid. 

However, we are concerned that SB 350 unduly imposes a 65 percent long-term contracting (contracts of ten years or more) requirement for renewable energy beginning in 2021 on ESPs. Long-term contracting requirements are inefficient mandates that are unnecessary in meeting the new renewable goal. The focus should not be on length of contracting, but rather customers' best interests to determine the most appropriate and cost-effective procurement strategy for their business to meet or exceed the new requirements. Direct Energy Business hopes that the California Legislature will pass legislation to specifically remove or revise the long-term contracting requirement in 2016. 

If you are a Direct Energy Business customer on direct access and are concerned about the long-term contracting requirement, please contact your Direct Energy Business representative for more information on how to get involved. 

Also, be sure to check out our four-part series on the history of direct access in California

Posted: October 09, 2015