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5 Challenges for California Solar

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UPDATED: California has led the country in solar policy and solar rooftop installations, but keeping its lead won’t be easy. It will take more public money, for one thing, and that could be a tough pitch to make in light of the state’s big budget shortfall. The president of the California Public Utilities Commission, Michael Peevey, laid out some of the challenges the state faces this year during a talk at a SolarTech summit in Silicon Valley Tuesday.

1. RAM in limbo. Deploying the 1 GW Renewable Auction Mechanism (RAM) program, approved by the CPUC last December, has hit a snag as the CPUC deals with critics who filed protests against proposals from the three major utilities on how they would carry out the program. The CPUC issued a suspension order on Monday to halt the program’s implementation for up to 120 days. UPDATE: CPUC’s spokeswoman Terrie Prosper told us the suspension order is necessary because the commissioners need more than the alloted 30 days to consider and vote on the utilities’ implementation plans, but the order in itself doesn’t mean the program is in jeopardy.

RAM aims to boost mid-size renewable energy projects by requiring utilities to hold auctions twice a year and offer standardized contracts to buy power from projects that are 20 MW or less. The program is California’s answer to calls by some solar energy advocates for a feed-in tariff policy, in which the government would require utilities to buy renewable electricity and pay government-set prices. Peevey said feed-in tariffs have one major flaw, which is their dependence on the government to set prices. “RAM provides many of the same benefits of a feed-in tariff, such as standardized contract terms, but it will encourage competition.”

Peevey said the suspension shouldn’t seriously derail the program’s deployment and still believes the first auction will take place this year.

2. WWJD: What will Jerry do? The state assembly passed a bill on Tuesday that will require utilities to get 33 percent of their electricity from renewable sources by 2020. The state already had the 33-percent goal, created by an executive order from former Gov. Arnold Schwarzenegger, but the bill will make it tougher to change the mandate. The bill now heads to Gov. Jerry Brown’s desk. The new governor styled himself as a renewable energy advocate while campaigning last year, though he hasn’t said publicly whether he would sign the bill.

“I’ll be surprised if he doesn’t sign the bill,” Peevey said.

3. CSI running out of money. The California Solar Initiative program has played a key role in turning the state into the largest solar electricity market in the country. The program, which provides rebates for solar installations or pays for solar energy generated from installations, has been so popular it may run out of money sooner than expected. The state Legislature will likely consider whether to provide additional funding, Peevey said.

The CPUC launched the 10-year program in 2007 and aimed to spend $2.2 billion to add 1,940 MW of solar at homes, businesses, schools and government. By the end of June 2010, the state already had reached 42 percent of the goal, the CPUC said.

4. Simplifying CSI process. Peevey said his staff is working on streamlining the CSI application process because installers have been clamoring for ways to reduce the amount of paperwork and wait time to receive the incentives. The current process requires paper filings and applications that need to move through different levels, which are designed to ensure installers can reserve a spot in the queue to get favorable incentive rates. The rates fall over time when certain installation goals are met, so the reservation system lets you claim the current rate even if you don’t complete the installation until after the rate falls.

One idea is to cut the number of forms installers have to submit as a project moves through the process. They would submit a claim form only when they’ve completed the work. But they also won’t be able to reserve the rates, so they won’t know how much they will get until they get a check, Peevey said. Another idea is to provide that one-application process, but offer a reservation system to those who would pay a fee can make sure they get the best rates. The CPUC staff also is looking at allowing electronic signatures on CSI applications, Peevey said.

5. Virtual net metering. The CPUC is running a pilot program to allow apartment dwellers to benefit from net metering, which typically involves consumers selling any unused electricity from their solar electric systems to utilities. Apartment inhabitants have a hard time taking advantage of net metering incentives partly because their landlords might not see any benefits for allowing solar system construction and additional electrical wiring, which the landlords might have to pay for.

The pilot program, called Virtual Net Metering, allows a single solar electric system to be installed at each multifamily housing. The electricity from the system won’t go to any tenants but will instead be fed to the grid and sold to the utility, which then will give credits to the landlords’ and the tenants’ utility accounts. The program is currently available only to low-income housing, and Peevey would like to make it available to all residents of multifamily housing.

Photo courtesy of Richard Masoner via Flickr

5 Responses to “5 Challenges for California Solar”

  1. There’s a key counterpoint to the opening statement here that many people miss:
    “It will take more public money, for one thing, and that could be a tough pitch to make in light of the state’s big budget shortfall”

    The beauty of a CLEAN Program (the name that’s replacing feed-in tariff) is that it’s massively net positive to the budget. It requires a miniscule amount of public money for administration and would result in billions of additional tax revenue to the state. (Documented in a 2010 UC Berkeley report). No other clean energy program that’s been proposed (including the RPS) can expect to do as much to help the budget.

    • If you are talking about feed-in tariff, then the cost to the public will not be miniscule at all. In fact, the burden on consumers to subsidize feed-in tariff policies is one big reason why Germany, Spain and other European countries have cut the tariffs beyond the original rate schedule declines.

  2. 5 Challenges for California Solar…

    And at least one solution?

    Time of Use rates make PV more economic. PV generation offers a nice fit against the California load profile.

    California’s 30 yr trend of declining load factors, and increasing peak demand has actually been heightened by increased electrical efficiency measures. PV supplied electricity is one technology that can help, and TOU rates along with the new RPS increase will help PV adoption address a decades old problem.

    Regards, David

    A recent study of load profiles, rate structures and solar insolation for the three major California utilities underscores the beneficial match of PV generation and load demand

      • Hi Ucilia,

        Good question. I would be surprised if PV owners didn’t know about them, but do not know how well they are subscribed.

        Ultimately we may have to get data from each of the utilties on how many PV system owners have elected to go with the TOU rates. Moreover, it is not clear how well the beneficial financial structures are understood.

        The three investor-owned utilities do promote their ‘solar friendly’, but optional, TOU rates. Of the three, SDG&E does have a specific Time of Use rate for solar (DR-SES).

        Part of the opt-in challenge is trying to do compare the financial benefits. SDG&E’s SES rate structure is arguably the easiest of the three to model as it does not involve the tiered usage structure (e.g. baseline, 101%-130% of baseline… >300% of baseline)

        SDG&E’s SES TOU rate structure does drop the relatively complex baseline+ structures. As a result, it is much easier to calculate the potential financial benefit.

        SCE’s rates have the further complication of calculations based upon the mix of more expensive Utility Retained Generation (URG) and less expensive Department of Water Resources (DWR) supply. This ratio changes daily (reasonable estimates appear to be 20-25% DWR in the summer, and 25-30% range in the winter).

        Regards, David