The California biomass industry prepares itself for a world of competition

Responding to burgeoning environmental concerns and a pair of oil crises during the 1970s, California developed a strong program to promote the development of its renewable energy sources. By the early 1990s California led the world in the production of power using a variety of renewable resources, including biomass. However, world energy markets had also undergone radical change, and California was awash in cheap natural gas. With deregulation of the California electricity industry looming on the horizon, the future commercial viability of renewable energy production in general, and biomass production in particular, are in doubt. Renewable energy generators provide important benefits to the state's power system that are not reflected in the market price for wholesale electricity. These benefits include environmental advantages, rural employment and economic development, and resource diversity. In order to preserve these benefits, the biomass industry has proposed initiatives including the renewable portfolio standard and cost shifting strategies. Cost shifting transfers some of the costs of biomass power production away from the electric ratepayer and onto the beneficiaries of the services it provides. (author)