Navigant Research Blog

In California, High-Speed Rail Takes Its Time Arriving

— August 5, 2014

California’s proposed high-speed rail (HSR) line between Los Angeles and San Francisco is stirring controversy – not surprisingly – for a $68 billion infrastructure project that will take until 2029 to complete.  The concerns over the project’s cost-to-benefit ratio cross party lines.  While California Republicans have lined up against Democratic Governor Jerry Brown’s proposal, so has his own lieutenant governor, Gavin Newsom.  The state successfully beat back a legal challenge to the project’s funding plan, but more legal challenges loom.

The HSR debate also ties into the broader question of whether the United States can accomplish big things anymore. Congress’ inability to find a serious, long-term solution to the dwindling Highway Trust Fund is just one example of this problem – one that also results in less money to support any state’s big idea.

Writing in support of the HSR, James Fallows of The Atlantic makes a key point: “Big infrastructure investments are usually under-valued and over-criticized while in the planning stage.”  One obvious comparison is Boston’s Big Dig. That was also enormously ambitious project with a huge price tag that took more than a decade to complete.  It had massive cost overruns, becoming the subject of constant complaints in Massachusetts.  Today, visiting Boston since the Big Dig’s completion, it’s clear why the expense and hassle was worth it.  The city was knit back together after having been split apart by a major road running through its heart.  In place of the old elevated highway is a greenway that invites pedestrians and connects with bike-sharing stations.

Easier Than Flying

It’s worth noting that the Big Dig was a huge infrastructure project designed to undo the effects of another ambitious infrastructure project, one that had unforeseen, and disastrous, consequences.  Moreover, the Big Dig plan was based on known demand, since it essentially took traffic from above ground and moved it into tunnels.  This central purpose removed much of the uncertainty about new infrastructure projects that can keep politicians and planners up at night.

That uncertainty lies at the heart of the debate over high-speed rail. A major new passenger rail project, in a country that has largely abandoned rail travel for cars and planes, is a leap of faith.  The most apt comparison for the California HSR is Amtrak’s Boston-New York-Washington corridor.  In 2012, Amtrak reported that it had captured 75% of commercial passenger travel between New York and Washington, D.C.  The success of the train is not due to its being cheaper – tickets can be as much as $145 one way – but more to the convenience and ease of trains compared to air travel.

HSR Plus Autonomous Vehicles

A key factor in that convenience is that, unlike airlines, the trains deposit passengers into the downtown of each city and connect to local transit services. This multimodal connectivity will be key to the success of the California HSR, whether it means connecting to public transit or to nearby carsharing services like City CarShare and DriveNow in downtown San Francisco.

The rise of autonomous vehicles is frequently cited by key opponents as evidence that the HSR is a 20th century idea whose time has passed.  While Navigant Research’s 2014 Autonomous Vehicles report suggests that long-distance, inter-city travel is a possible model for self-driving cars, it projects they’re most likely to be used for passenger travel in carsharing services as well as in fleets as an alternative to taxis for local travel within the city.  In this scenario, autonomous vehicles will actually support the high-speed rail line by making carsharing easier and ubiquitous in urban centers while the HSR meets city-to-city travel needs.

 

California Wrestles with Emerging Energy Business Models

— June 18, 2014

When it comes to energy policy, California is schizophrenic (or perhaps dyslexic).

On the one hand, recent energy storage mandates in the form of last year’s AB 2514 have created opportunities to test out how advanced batteries can help mitigate the frequency and voltage issues associated with high penetrations of variable renewable energy.  Utilities such as San Diego Gas & Electric (SDG&E) have suggested that these mandates plant the seeds for new microgrids, building upon the utility’s success with the Borrego Springs project, which SDG&E recently announced will be expanded.

On the other hand, this year’s AB 2145, derided by critics as the “Monopoly Protection Act,” would introduce a major kink in efforts for the San Francisco Bay Area to give local governments the authority to purchase bulk renewable energy to reduce carbon emissions.  The target of the legislation is a policy vehicle – known as community choice aggregation (CCA) – that was pioneered in states such as Ohio and Massachusetts but has fanned the flames of the controversy in California.

Come Together

Fueled by the poor track record of early retail deregulation pilot programs, CCA allows local governments to aggregate their constituents into a community bulk power purchase program in order to achieve higher economies of scale.  Residents can opt out, but the experience in Marin County reveals that 80% of the customer base chose the CCA preferred green energy program (resulting in a net reduction of greenhouse gas emissions of 19%).  Adjacent Sonoma County began serving customers under its CCA program in May, and San Francisco has been considering a similar CCA program for several years.

Fast forward to the present.  AB 2145, sponsored by a former utility executive, has cleared the Assembly and is up for its first vote in the Senate on June 23.  Ironically, Republicans are generally opposed to the measure (even though the status quo implies greater government intervention to reduce carbon emissions), while key support to this measure is being provided by Democrats (who are aligning with utility union workers).  Although Pacific Gas & Electric’s efforts to derail Marin County’s CCA via a statewide ballot measure failed in 2010, the utility is a key force behind the latest measure.  The opponents include local governments as well as Silicon Valley.

Interestingly enough, another bill designed to more directly pave the way for microgrids in California by modifying the so-called “over the fence” rule was killed.  A recent California Public Utilities Commission white paper identified this regulatory policy as one of the key impediments frustrating California’s efforts to become the world’s leading market for microgrids.

 

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