Lisa Aliferis / KQED

Rooftop solar panels on a home in Oakland.

San Jose comes in third with more than 2,700 rooftop installations, while San Francisco comes in fourth with more than 2,400 (though it’s fifth in terms of overall capacity). San Diego leads with 4,500-plus installations producing almost 37 megawatts of electricity.

“I think the story with San Diego is that the city was an early and very consistent adopter of solar power,” says Michelle Kinman, clean energy advocate with Environment California Research & Policy Center. “San Diego also has a really well coordinated working relationship between the local elected officials, the utility, the solar industry and the advocacy community.”

Several of the top cities on the list have doubled their solar capacity in just the last two years. In 2000, California had fewer than 1,000 rooftop installations. That’s grown to 100,000 installations in 2011, which makes up more than one gigawatt of distributed energy. “Solar is really taking hold,” says Kinman. “The costs are coming down. We’ve had solar policies at the state and local level for several years and they’re proving themselves.”

Kinman says they’re seeing solar spread throughout the state to the “agricultural and industrial hubs of the Central Valley. Solar power is really taking hold in both rural and urban areas across the state.”

The solar industry has certainly had a boost from rapidly falling prices on solar photovoltaic panels, which dropped a whopping 50% in 2011 alone. Industry analysts say prices could keep falling. According to GTM Research, an oversupply of high purity silicon (a source material for solar panels) could drive down silicon prices this year, which means manufacturers could sell panels for even less.

Rooftop solar has also grown thanks to solar-leasing programs, where consumers realize cost-savings immediately, instead of buying the solar system themselves. Solar leasing has surged in Southern California, according to a recent report from the National Renewable Energy Laboratory. It grew from 9% of residential solar installations during the first quarter of 2009 to 36% during the first quarter of 2011 (among projects tracked by the California Solar Initiative database).

Solar leasing is also more popular with low-income households and in neighborhoods with younger families, according to the report. NREL study author Easan Drury says leasing options have attracted new solar customers in different demographics and has shown to be an even bigger draw than cheaper solar panels.

To maintain the growth in distributed solar, Kinman wants to see a lift on the net-metering cap for California utilities. Right now, utilities are only required to sign contracts with residential solar customers for up to 5% of their overall power load. She also supports a robust feed-in-tariff program. “Feed-in-tariffs have been used the world over and a really one of the most trusted policies for driving a solar market. “

Craig Miller/KQED

A rooftop solar array on a home in Vacaville.

SolarCity’s announcement this week that the company is moving forward with a massive military housing solar project, may be more than just a boost for one company. It’s another indication that despite a turbulent few months, the solar industry is alive and thriving.

By itself it’s a big deal that SolarCity and Bank of America Merill Lynch are teaming up without a government loan guarantee. That isn’t traditionally how it’s been done. Private investors usually like the security of a guarantee before they get into a big, risky investment. But in an interview with KQED’s Lauren Sommer, SolarCity’s CEO Lyndon Rive says this investment isn’t actually very risky, “We’re selling electricity; the consumer needs it. It’s not like you are financing a car where they can skip on their financing payments. It is a necessity.”

“It’s exactly what the program was intended for,” says Rive, who sees the deal as a sign that the federal loan guarantee program is doing its job. “The government came up with the loan guarantee program about two and half to three years ago with the intent to get private capital to the market, so that private capital would finance solar systems after the loan guarantee went away,” he told Sommer.

That model has panned out for SolarCity. Originally, the firm was angling for a federal loan guarantee, but the firestorm around Solyndra’s collapse made it impossible for them to meet the program’s September 30th deadline. Rive says he always believed they’d find the financing somehow.

“When we started in 2010 the only way I was getting this done was through the loan guarantee. Through the year of hard work and not getting the loan guarantee there was no doubt in my mind that we would do this privately,” he asserted.

Private investment comes at price. Originally, SolarCity wanted to install panels on 160,000 units instead of the 120,000 announced. But Rive says the loan from Merrill is going to cost them a bit more, so they had to scale back. He remains optimistic, saying that losing the federal guarantee wasn’t all bad news. “The loan guarantee comes with a lot of restrictions on it,” said Rive. “The plus is low cost of capital. The minus is all the restrictions,” he admitted.

The federal loan guarantee has been an important way for solar firms to attract investors. Another crucial tool that renewable energy companies have used to weather the recession — and the lack of liquidity and investment dollars that came with it — is a tax provision known as “1603” for the section of federal law that authorized it. It allows companies to take a cash grant instead of the 30% tax credit that they’re entitled to under tax law. The provision is set to expire at the end of the year. Without it, renewable energy companies say they’ll have a lot more trouble coming up with the cash they need to finance new projects. A coalition of 750 businesses and organizations sent a letter to Congress this week, asking them to extend the provision.

For now, SolarCity’s contract with private military housing companies represents a ray of hope for solar. Rive claims that only 180,000 solar systems have been installed across the country in the last 30 years. The 120,000 announced will almost double that in five years’ time. “Right now we are at less than one-percent penetration in the US, but that’s not even close to where it needs to be. We need to get to 10-20% penetration in the US. before we get true economies of scale. Once we get to that point we’ll be able to make solar work without incentives,” concluded Rive.

A gigawatt – or a thousand megawatts – is enough energy for about 600,000 homes. Only five nations — let alone states — including Germany and Japan, have reached that level. “Even in a bad economy, the solar industry has been growing exponentially by 40 percent per year,” says Michelle Kinman of Environment California.

The goal comes five years after California’s Million Solar Roofs Initiative began, which mandates three gigawatts of rooftop solar by 2016.

The report credits the rapidly falling prices of solar panels for the growth, as well as the California Solar Initiative, a $2 billion solar rebate program. In 2007, the program provided a rebate of up to $2.50 per watt. As demand has grown, the program is designed to reduce the incentive. Today, it’s between 25-65 cents per watt.

“The real goal of the program is to create a sustainable solar industry in California that will continue to thrive without continued ratepayer incentives,” Scott Murtishaw of the Public Utilities Commission. “And I think that we’re achieving that. The installed cost of solar has fallen by roughly a quarter since the program began.”

The report says California is on track to meet the three-gigawatt goal in 2016. Adam Browning of Vote Solar says the state’s net metering cap could get in the way. Solar customers sign up for net metering contracts with their utility, so they’re credited for the electricity they generate. Right now, California utilities are only required to sign contracts for up to 5% of their overall load.
“There are clouds on the horizon and we’re going to have to lift the cap again,” says Browning.

Still, he says it’s a good story. “We’ve hit that transformation point with solar. It’s like cell phones. They’re nowhere until they’re everywhere. Once they hit a sweet spot, you see an explosion and I think that’s what’s happening now.”

Rooftop Solar Panels in Vacaville. Photo: Craig Miller

1. MIT study finds IPCC underestimated Arctic ice melt

A forthcoming study by the Massachusetts Institute of Technology predicts that Arctic ice sheets are melting four times quicker than was forecast in the latest IPCC report. According to the study, the Arctic may be ice-free several decades sooner than 2100, which was predicted by the Fourth Assessment Report. Study authors say the IPCC data did not include forces such as wind and ocean currents that cause ice to break up.

The Journal of Geophysical Research – Oceans will publish the study next month, but you can read the full news release at MIT’s website.

2. Americans expect higher oil prices to impact economy and public health

More than two of out three Americans think oil prices will triple in the next five years, damaging the economy and public health. That’s according to a new study published in the American Journal of Public Health, which surveyed Americans about the risks of declining oil production.

This article by the survey’s director, American University professor Matthew Nisbet, explains more.

3. Electric cars with a side of solar panels

San Jose’s SunPower Corporation is serving up a discount on solar panels for Ford Focus Electric car buyers. According to the company, the bundled rooftop panels will provide 3,000 kilowatt hours annually, enough energy to charge the vehicles and provide a little extra for households. Total small-scale solar capacity installed in California is 924 megawatts, according to the California Public Utilities Commission.

Read more at the Contra Costa Times.

4. The latest in solar-power racing machines
Stanford engineering students unveiled the Xenith: the half-million dollar, solar-powered racing machine. Twenty-six solar panels are all that power the 375 pound aerodynamic vehicle, which clocks speeds up to 70 miles per hour. In October, the students will compete the World Solar Challenge, a ten-day, 1,800-mile race across Australia.

Check out the Stanford student’s blog as they prepare for the race.

Craig Miller

Governor Brown moves forward with plans to encourage more local solar generation in the state.

California has been on something of a solar frenzy recently, approving permits for more than 4,000 megawatts of new solar power in 2010 alone. Most of that is in the form of large, industrial-scale installations, which will provide lots of power, but also will require transmission infrastructure to get the clean energy from the desert sun to where its needed, primarily, the coastal cities.

This week Governor Jerry Brown is focusing on the other kind of renewable energy: the local kind that is smaller in scale and doesn’t require transmission to get where it’s needed. He’s hosting a conference at UCLA this week to promote his eight-point energy plan announced in June, and map out how the state can meet his goal of 12,000 megawatts of local, renewable energy by 2020. That goal would basically quadruple the state’s current supply of small-scale renewables, according to the non-profit Environment California. The Brown plan consists of specific goals but leaves creation of incentives to regulatory agencies such as the California Energy Commission.

In 2006, former Governor Arnold Schwarzenegger signed the Million Solar Roofs Initiative, which aims to build 3,000 megawatts of rooftop solar power by 2016.  As part of this program, the California Solar Initiative provides incentives for installations on homes and commercial buildings for customers of the state’s state’s three investor-owned utilities: Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E).  Currently, total small-scale installed capacity in California is 924 megawatts, including 194 megawatts that were installed in 2010, according to the California Public Utilities Commission.

This week representatives from the federal Department of Energy and Bureau of Land Management wrap up their California barnstorming swing, to gauge public opinion on the topic of siting solar projects. Throughout this often contentious debate, many have claimed that a potentially huge piece of the power solution is being overlooked; rooftop solar.

Acres of flat-roofed commercial buildings in California's Inland Empire. (Photo: Craig Miller)

Fly into Ontario airport in Southern California’s Inland Empire — or just zoom in on Google Earth — and you’ll see hundreds of block-long warehouses. There are acres — probably square miles — of flat, gray roofs sizzling in the San Bernardino County sun.  Soon, though, instead of merely soaking up the rays, hundreds of industrial rooftops in Southland cities will harness them to feed the local electrical grid.

Solar panels ready for installation on Ontario warehouse. (Photo: Ilsa Setziol)

Southern California Edison and independent power producers holding contracts with the utility are building 500 MW of solar panels on warehouses and, to a lesser extent, on the ground at other Southern California locations.

Together these projects are expected to produce enough energy to rival a traditional power plant, enough to serve about 325,000 homes.

Last fall, as the project was being ramped up, Edison’s rooftop solar manager Rudy Perez guided me through waves of deep blue panels—11,000 in all — atop an Ontario warehouse.  “They’re the same standard type of panel you’d get on a residential photovoltaic system,” he said, adding that the company will also deploy more efficient SunPower brand panels.

I was intrigued by the project because, for years, environmentalists have advocated this kind of energy, called “distributed generation,” as an alternative to the environmental concerns that often attend other power sources, including out-of-town solar farms.   The typical response from utilities has been, It’s just too expensive.

Hoisting panels onto warehouse roof. (Photo: Ilsa Setziol)

But the cost of solar panels has come down, and the sheer size of Edison’s project has allowed it to secure deep discounts, both on equipment and the installation costs. Plus, as the state’s solar industry has matured, there are more contractors with the experience to take on this kind of project. Perez estimates the installed cost for its portion of the project will be $3.50 a watt (conventional photovoltaic installations were running around $7 a watt when the project was launched).

That’s still more expensive than other power sources, including a large solar farm (plus transmission lines) in the Mojave desert.

But distributed solar has other advantages.  It can feed directly into neighborhood electrical circuits, alleviating the need for new transmission lines. And, with virtually no public opposition, no requirement for environmental review (just local building permits), distributed solar is basically a sure bet and relatively speedy. Although the entire project will take five years to complete, a single site can be up and running in nine months.

The company’s VP of Renewable and Alternative power, Marc Ulrich says the project will help diversify Edison’s renewable power portfolio: “You need multiple sources to ensure you don’t put all your eggs in one basket.”

For a broken-egg example, Ulrich points to a contract the company signed with Oakland-based BrightSource Energy for a solar thermal plant in the Mojave Desert. The project crumbled when Senator Dianne Feinstein placed new environmental restrictions on the land.

Still, V. John White, Executive Director of the Center for Energy Efficiency and Renewable Technologies, doesn’t expect distributed solar to obviate large solar farms. “We have to recognize the scale of the energy we have to displace,” he says, “the [vast] amount of [renewable] energy we have to have to get off coal, and fuel electrical cars.”

The renewable piece of Edison’s power pie (close to last year’s state-mandated 20% milestone) is mostly made up of geothermal (more than half) and wind. Cooking up more solar makes a lot of sense because the panels produce the most power at essentially the same time — hot summer afternoons — that Californians demand it most.

Although the solar panels on the Ontario warehouse look and perform like those on my San Gabriel home, the distributed solar project is something of an experiment.  Pointing out a row of large inverter boxes, Rudy Perez says it’s still unclear how much photovoltaic can be loaded into a typical neighborhood electrical circuit without causing power fluctuations.  “As clouds roll over you get into issues with intermittency that mean our output is going to be rising and falling fairly quickly.” The utility will study the issue in partnership with the National Renewable Energy Laboratory.  Edison’s preliminary testing suggests the problem may not be as significant as some fear, in part because of the size of the project. Perez explains,  “The nice thing about having so many buildings throughout an area is that as a cloud rolls over one building, it may be coming off another building, and the overall effect tends to balance itself out.”

New smart meters the company is installing on customers homes could also help respond to shifts in power production. The devices have met with with less resistance in Southern California than to the north, in regions largely served by Pacific Gas & Electric.