Tesla deal, geothermal bill fail to advance in Calif.

Green energy advocates across the desert had a lot to be disappointed about this weekend, as the state Legislature failed to strike a deal on Tesla's battery factory or vote on a bill that would have boosted geothermal energy production.

Heading into the Labor Day weekend, lawmakers were engaged in last-minute negotiations over a bill to incentivize Tesla to build its so-called Gigafactory in California. They also seemed poised to vote on SB 1139, which could have created thousands of jobs in geothermal energy development around the Salton Sea.

But the Legislature adjourned for the year with no vote on the geothermal bill — and no deal on Tesla.

It's still possible the electric automaker will choose California for its $5 billion battery factory, which would employ about 6,500 people. The company is expected to decide among five states — Arizona, California, Nevada, New Mexico, or Texas — by year's end.

But the odds of California winning that five-state competition seem much lower now that legislators have gone on recess without reaching an agreement. The company is looking for up to $500 million in state incentives to build the battery factory and had asked California officials for an expedited environmental review process under the California Environmental Quality Act.

Closed-door negotiations between Tesla officials and the Governor's Office of Business and Economic Development (GO-Biz) continued into the weekend, with state Sens. Ted Gaines, R-Roseville, and Darrell Steinberg, D-Sacramento, leading the charge in the Legislature. Gaines said that while the state was willing to give Tesla most of what it wanted — including investment tax credits in the $500 million range and expedited permitting and environmental review processes — there was "still a gap between what Tesla wanted and what California was willing to offer."

Gaines declined to say what else Tesla asked for, although he said it was clear the company is still trying to play the five Southwestern states off one another to get the best deal. He questioned whether the automaker ever intended to strike a deal with California before the legislative session ended.

"They were sending a variety of different messages," Gaines said. "Depending on what day you listened to what Tesla was saying, they were saying they'd like to get a deal done as soon as possible, or in six months, or by year's end.

"I don't think there are too many states in the nation that can put together such a good package, because it is a tall order," he added.

Mike Rossi, a senior advisor to Gov. Jerry Brown, said in a statement that "the Administration continues to engage in productive conversations with Tesla and remains optimistic that we can reach an agreement that meets our common goal of adding jobs in California." Asked whether the governor's office still sees any chance of Tesla building its battery factory in California, Go-BIZ spokesperson Brook Taylor said only, "It's a long game."

For Gaines, who is running for state insurance commissioner, damage control over the Tesla negotiations started late Friday afternoon. He implied then that Tesla was to blame for the lack of progress, saying the automaker "has to give the state a straightforward understanding of their intentions."

"I'm disappointed we haven't sealed the deal. California's effort is not to blame," Gaines said in a statement at the time. "When Tesla is ready to come to the table, we are ready to listen and will do all we can to bring the battery factory to our state."

Any chance of Tesla locating its battery factory by the Salton Sea is centered around Simbol Materials, which has developed an innovative process for extracting lithium from geothermal brine, a leftover of geothermal energy production at the sea. Lithium is a key ingredient in the batteries used by many electric automakers, and the prospect of abundant lithium — which is now largely produced overseas — could lure Tesla to the Imperial Valley.

Simbol is moving forward with the construction of a large-scale extraction facility in Calipatria, a venture that is likely to succeed even if Tesla builds its Gigafactory elsewhere. Tesla could buy its lithium from Simbol regardless of the location of its battery factory, and Simbol's vice president for business development, Tracy Sizemore, told The Desert Sun last week the company has talked to dozens of electric automakers and battery manufacturers.

Desert opportunities lost

While losing the competition for the Gigafactory could cost the state thousands of jobs and billions of dollars in economic activity, the failure of SB 1139 — which would require utilities to buy 500 megawatts of electricity from new geothermal plants by 2024 — could prove even more costly for the the Imperial and Coachella valleys. While the bill wouldn't have required that any geothermal power come from the Salton Sea specifically, it's likely that developers would have jumped to take advantage of the sea's huge untapped energy potential.

IID has estimated that geothermal and other green technology development at the Salton Sea could generate more than $4 billion over 30 years, with much of that money going toward restoring the receding body of water. Ramping up geothermal development would also create thousands of jobs in Imperial County, which has a 22 percent unemployment rate — the highest in the state.

It's unclear why SB 1139's sponsors — state Sen. Ben Hueso, D-San Diego, and Assemblyman V. Manuel Pérez, D-Coachella — decided not to bring the bill to a vote in the Assembly, following its 21-11 passage in the Senate earlier this year. Hueso's office had indicated last month it was only a matter of time before the bill came up for a vote in the Assembly, but it's possible he simply didn't have enough votes to secure its passage.

Hueso spokesperson Lourdes Jimenez declined to say whether Hueso pulled the bill because he thought it wouldn't pass. She said there is "a likelihood" he will introduce another version of the bill next year.

"As we moved through the process, Sen. Hueso realized that this bill needed to be more comprehensive to include existing geothermal and other baseload resources," Jimenez said in a statement. "To do this, the bill needed to be developed further and the legislative process simply did not give him the time to enrich this bill as needed."

Asked why Pérez hadn't brought the bill to the floor of the Assembly, Pérez spokesperson Amy Wilson referred all questions to Hueso's office, noting that he was the lead author on the bill. Pérez is leaving the Assembly at the end of this term and plans to run for a seat on Coachella's city council.

Imperial Irrigation District General Manager Kevin Kelley said that while he's "obviously disappointed" the bill didn't get a vote, he's grateful to Hueso and Pérez for drawing attention to the state's geothermal resources.

"I think that geothermal energy is now part of the conversation, and it wasn't before," he said. "I think it's clear that California's moving toward a de-carbonized future, and geothermal is uniquely positioned to take advantage of that."

For Kelley, the best path forward for funding the restoration of the Salton Sea continues to be geothermal development. If and when the industry takes off, however — most of the geothermal plants surrounding the Salton Sea were built more than two decades ago — is anyone's guess.

"This was always going to be a marathon, and while it would have been a quick jumpstart to have had 500 megawatts of new procurement, the environmental problem — the environmental dilemma at the Salton Sea — is unchanged," Kelley said. "And the greenhouse gas reductions — the aggressive air quality standards that the state of California has set for itself — pretty much demand that this important baseload energy be brought back into the renewable portfolio mix."

Energy Reporter Sammy Roth can be reached at Sammy.Roth@desertsun.com, (760) 778-4622, and @Sammy_Roth.