The Bay Area Air Quality Management District granted the Houston-based utility its final air quality permit today, allowing the company to proceed with the planned construction of a 600-megawatt natural gas-fired Russell City Energy Center. The 15-acre project site is in Hayward, just east of the San Francisco Bay.
The Russell City plant will produce 50 percent fewer greenhouse gas emissions than even the most advanced coal-fired plants, Calpine said, and will emit 25 percent fewer heat-trapping gases than the California Public Utilities Commission's standard. Construction on the facility plant is expected to begin later this year.
"We applaud the BAAQMD and Calpine for going beyond existing federal law and being the first in the nation to require an enforceable greenhouse gas limit," said Linda Adams, secretary of the California EPA. "This action furthers efforts at a statewide level to balance our economic needs while meeting our environmental challenges."
The Prevention of Significant Deterioration, or PSD, permit was issued with an eye on greenhouse gas restrictions set to be implemented in California in less than two years. The state's Air Resources Board is still in the process of putting together rules for a cap-and-trade market intended to help cut greenhouse gases to 1990 levels by 2020; that market goes live Jan. 1, 2012.
Utilities like Calpine will most likely be participants in that market, though it is unclear how permits issued before the advent of the market might be counted under a regulated regime. Calpine is also promoting the project as a means to help achieve the state’s 33 percent renewable power standard by 2020, claiming gas-fired plants would back up intermittent sources like wind and solar. So-called peaker plants, which only run when demand is highest, are often older and powered by coal.
Calpine spokeswoman Norma Dunn said the company intends to run the Russell plant as baseload generation, selling its power to Pacific Gas & Electric Co. Terms of that deal were not disclosed.
When asked how a baseload plant could be considered "backup" power to wind and solar, Dunn said PG&E will retain the ability to use gas-fired generation when solar and wind are unavailable.
"They have dispatching rights, and they will balance the supply from Russell City with all of their other energy sources, including power from our own geothermal assets," Dunn said. "When they have contracts for wind or solar, they will need other supply sources to fill in during periods when their renewable supplies are not available."
The Calpine permit is coming against the backdrop of rising political pressure to suspend California's climate law, A.B. 32. Voters will most likely get to decide for themselves this fall whether climate regulations should go forward, as opponents of A.B. 32 are in the process of gathering signatures to place on the November ballot a measure that would tie the law to high unemployment levels. If the measure makes it onto the ballot, and voters approve it, California could see its climate law delayed until unemployment dips below 5.5 percent.