Alternative energy becomes more attractive as crisis looms

SAN FRANCISCO - With the state in the throes of an energy crisis, alternative energy glows like a solar-powered beacon of relief for Californians beset by soaring gas prices and imminent rate hikes.

But the energy generated by nature, or ''green power,'' constitutes only 12 percent of California's power usage, and it won't help bail out the state during this energy crisis for one important reason - it's still too costly.

Existing alternative power plants do not satisfy the state's appetite for power. Windmills in Tehachapi and Altamont, solar energy farms in the desert, and the world's largest geothermal field near Santa Rosa do not produce enough energy to meet the demand.

And a major obstacle to expanding alternative energy is the startup cost. With gas costing just $2 to $3 per 1,000 Btu last winter, it simply didn't make sense for utilities to build systems that use renewable sources. But last month, the price soared to $30.

''We would like to increase the amount of generation from renewable resources in the state,'' said Marwan Masri, manager of the California Energy Commission's renewable energy program. ''But the cost is high at first.''

The state program offers incentives, such as payment of part of the startup costs, to get more companies and even homeowners to use renewable resources. The program is building up steam.

''Today, market prices have been really high and these renewables are a bargain,'' Masri said. ''The question is not to lose momentum.''

California uses, on average, about 34,000 megawatts of power a day, with 12 percent of that coming from renewable sources, such as wind, sun and the Earth's own heat. Over the past three years, the amount of energy from alternative sources has increased by almost 4,000 gigawatt/hours - enough to power 600,000 homes for a full year.

The rising gas prices and tight supplies have buffeted Pacific Gas and Electric Co., Southern California Edison and San Diego Gas and Electric. PG&E and SoCal Edison blame $8 billion in losses since May on rising wholesale costs and frozen customer rates.

San Diego customers are not covered by the rate freeze and have seen their bills double or triple. Customers of the other two utilities will likely see their rates increase as early as next month, after the Public Utilities Commission said Thursday customers should pay more to keep the companies from going bankrupt.

''If the gas prices stay where they are, this stuff looks a whole lot better,'' said Rich Ferguson, research director of the Center for Energy Efficiency and Renewable Technology.

Still, natural gas remains the favorite because of the price. Until this year, gas has been among the cheapest sources, and utilities use it to generate almost 90 percent of the state's energy.

Alternative energy sources are expensive to set up, but once established, the fuel is fairly cheap. Natural gas plants, on the other hand, are cheaper to set up, but must continually spend money to buy fuel.

Although alternative energy took off in the 1980s, it has been around since the turn of the 20th century, when small hydroelectric plants were scattered throughout the state. Large hydroelectric plants are not considered alternative energy.

In the 1960s came geothermal energy, which harnesses heat from the Earth to generate steam and turn a turbine. Biomass, which comes from burning plant material; landfill gas, which can be harvested to drive generators; and other renewable sources grew in popularity in the 1980s.

Right now, the cost of wind and geothermal energies are on par with natural gas, with wind averaging 5 cents a kilowatt hour and geothermal averaging 7 cents a kilowatt hour. Solar is among the most expensive, at 20 to 40 cents a kilowatt hour.

Masri thinks the costs will eventually come down significantly, making alternative energies consistently competitive with natural gas.

''The one trend we know is renewable energy gets cheaper and cheaper over time. The cost has been dropping,'' he said. ''It hasn't dropped far enough, but it is declining.''

Still, the price of electricity is tied to the cost of natural gas, because even alternative energy sources feed the same power grid, which is dominated by natural gas. So higher natural gas prices raise the cost of all electricity, no matter how it's generated.

That price is passed on to consumers of both traditional and alternative energy sources, but retailers of renewable energy often negotiate flat rates for their customers, which can keep them from being affected too much by rising prices.

All seem to agree that with gas prices rising, renewable energies are more attractive, and to meet the need, new alternative energy plants are expected to generate 471 megawatts of power by the end of next year. That's enough to power 471,000 homes for an hour.

Those plants will be used to replace gas-fired plants or generate additional electricity, said Steven Kelly, policy director of the Independent Energy Producers Association.

But Kelly said the way many gas-powered plants are designed makes it too hard to convert them to alternative energy plants, and that it would be easier to start over rather than to switch over.

Kari Smith, manager of green power resources for PowerLight Corp., a Berkeley company that sells and installs solar panels, sees alternative energy expanding in the future.

''The economics are changing. The price of natural gas has doubled in the last year, where the price of wind and solar is coming down,'' Smith said. ''We see it as a real promising sector.''