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Keeping the Sizzle in California Solar

Pacific sunset by Reed Galin

Photo: Pacific sunset by Reed Galin

California, as I noted last fall as part of the series “Solar Realities,” has more solar self-generation than any other state in the nation by far. Now, if you ask the folks in the solar division of the California Public Utilities Commission, this state of affairs has a lot to do with three policies:

  1. The California Solar Initiative (CSI) provides rebates to cover about a fifth of the cost of installing solar systems.
  2. Simplified Interconnection exempts solar customers from interconnection fees and the cost of the studies required to connect their equipment to the electricity grid.
  3. Net Energy Metering allows solar power generators, who run the meter backwards as well as forwards, a credit on their power bills at “full retail electricity rates”–as opposed to the wholesale power price.

The policies were designed to encourage civilians to install solar for their own use; not necessarily to create an incentive for thousands of home power plants to serve the grid (depending on the size and location of your home, you may not be able to meet all your own electricity needs, let alone deliver surplus to the grid).

But if you can generate more solar power than you need, why not?

Adam Browning of the Vote Solar initiative, put it this way to the San Jose Mercury News: “Why are we talking about stamping on the brakes when we should be talking about pushing on the accelerator?”

Enter Assembly Bill 560. Net metering is currently capped at 2.5 % of the system’s peak energy demand or “load.” Once the stream of solar electrons coming onto the grid reaches that level,  the utility is not obligated to sign more net-metering contracts. AB 560, courtesy of Assemblywoman Nancy Skinner (D-Oakland), would provide some more headroom for that program by raising the cap to 10%.

AB 560 has passed the Assembly. Tomorrow, it comes up before the state Senate Energy, Utilities, and Communications Committee.  No doubt, a staff report due out the same day from the CPUC on the status of the California Solar Initiative will give the discussion some extra “juice.”

Meanwhile another bill, AB 920, from Assemblyman Jared Huffman (D-San Rafael), would change the way customers with solar installations are paid for surplus power. As I noted, they now get credited on their monthly bill at the full retail rate. Some of that credit is offset by “regular” power the solar customer uses at night or on cloudy days. Then, at the end of the year, leftover credits are zeroed out. AB 920 would require utilities to pay for credits left over at year-end, albeit at a lower rate–or allow the extra to be rolled over to the next year.

The CPUC, by the way, has come out in support of AB 560, but not AB 920.

The state’s three investor owned utilities dislike both bills; especially Pacific Gas & Electric, which is closest to approaching that 2.5% cap. About 30,000 of PG&E’s 6 million customers have solar systems.

PG&E contends that expanding its home solar program would burden the rest of its customers, who bankroll the state rebates for solar installations. And because solar customers buy less electricity from the utility, PG&E argues they don’t contribute as much as others to cover the costs of transmission and generation.

PG&E has said it would support raising the net-metering cap to 3%–but wants to see a cost-benefit analysis from the CPUC before supporting any further home solar expansion. That report’s due out in January.

There are those outside the industry who share PG&E’s concerns. Framing it as a class issue, the non-profit Utility Reform Network opposes raising the cap unless changes are made to allow non-solar ratepayers to share in the benefits.  Even with the current subsidies, going solar requires an often daunting up-front investment. As green becomes the color du jour for businesses and politicians, an increasing number of projects pair solar with low-income housing. But more often than not, your typical solar-powered household in California is likely to be well heeled.

As utilities enthusiastically pursue their own large scale solar projects, some solar advocates suspect that the companies are really worried that wide-scale residential solar would cut into their income. PG&E counters that state regulations eliminate the financial incentive for investor-owned utilities to simply sell more power to make more money.

All this raises a key question: Without lifting the cap on net metering, can California achieve its goal of 3,000 solar megawatts by 2016?

Rachael Myrow is host of The California Report, produced by KQED and heard on public radio stations throughout the state.

Editor’s Update: The CPUC’s latest report shows a near doubling in the rate of  installed capacity, from 2007 to 2008, and so far, data would seem to indicate a continuing trend this year. Installed  capacity to date puts the CSI at 13 percent of the total program goal, with another eight percent pending.

Renewables Meet NIMBY…Everywhere

Suddenly, everywhere you look nowadays, prospects for clean, green energy are being muddied by NIMBY* syndrome.

Windmills dwarf a dairy farm in upstate New York. Photo: Craig Miller

Wind farm: Windmills dwarf a dairy barn in upstate New York. Photo: Craig Miller

We saw it first-hand in Rob Schmitz’s series on “green gridlock” in California’s southeastern deserts. Trepidation there turns more on the transmission lines that would have to go up, to connect solar, wind and geothermal fields to population centers where the power is needed.

We’ve seen it at work in efforts to license wave power projects along the West Coast.

In Marin County, it took the McEvoy Ranch nine years from concept to completion, to get one 150-foot windmill up and running, to power the olive operation. Objections from the neighbors forced them to move the site more than a half-mile, and downsize the turbine to three quarters the proposed height and one third the power output (more about this in the next Quest/Climate Watch special, to premiere on August 25).

Now, as James Glanz reports in the New York Times, seismic fears are causing tremors in geothermal fields north of San Francisco.

Glanz writes that with venture funding from Kleiner Perkins Caufield & Byers and Google, Sausalito-based AltaRock Energy is deploying “enhanced” geothermal technology to wrest more steam from the earth. But fears over the potential for unleashing earthquakes in the process are not enhancing their prospects.

*For the truly uninitiated: “Not in My Back Yard”

Can There Be This Much Climate News?

"Reports to the Contrary" by Chester Arnold

"Reports to the Contrary" by Chester Arnold

Some weeks it seems like KQED could fill up its entire “news hole” with climate-related stories (thank goodness we don’t). Last week was a prime example.

Monday: A keynote speaker at U.C. Berkeley’s annual Energy Symposium said that we need a “Fed” for energy policy. John Hofmeister, a former executive at Shell Oil and founder of Citizens for Affordable Energy, told the lunch crowd that the only way to overcome the current two-year “policy cycle” (the length of a congressional term) is with an autonomous policy group like the Federal Reserve Board, which can take a longer view.

Tuesday: PG&E announced a massive new solar power initiative (it was brought to my attention this week that no news story is complete these days without the word “massive”–at least when there’s no opportunity to use “deadly”). If approved by state regulators, the project will provide 500 megawatts of photovoltaic energy by 2015. Perhaps the most interesting aspect of the plan is that instead of, say, taking over huge tracts of the Mojave, the project will rely heavily on “solar infill;” making use of property already owned by the company, where they can conveniently access the grid.

Wednesday: Senator Barbara Boxer chaired a hearing of the Energy and Public Works Committee to update members on the latest climate science. They heard testimony from four experts, including Christopher Field of Stanford, who essentially said things are worse than you think. Ranking minority member James Inhofe of Oklahoma seized the moment to decry a $6.7 trillion “climate bailout,” a reference to upcoming federal climate legislation and costs associated with an aggressive plan to fight global warming. You can watch the entire two-and-a-half hour webcast for the gory details.

And of course also on Wednesday, the Coen Brothers rolled out their TV ad for The Reality Coalition, assailing the concept of “clean coal.”

Thursday: The California Air Resources Control Board rolled out new regulations to control some of the lesser known (but highly potent) greenhouse gases, including sulfur hexaflouride, used in the manufacture of computer chips. CARB says a pound of it has the same atmospheric warming potential as ten metric tons of CO2. The board also unveiled a new drought page on its website.

Friday: The Governor issued the latest in a series of drought declarations, this one proclaiming a state of emergency and called on cities to reduce their water use by 20%.

And this week wasn’t all that unusual.

Monday, another week begins with the winter’s third survey of the Sierra snowpack. While recent storms will no doubt have raised the water content from last month’s 61% of normal, it should be something of an anticlimax, especially given that the Governor didn’t wait for the numbers to make his drought declaration last week.

PG&E Proposes New Solar Initiative

PG&E plans to produce up to 500 megawatts of new solar power over the next five years according to a plan announced by the California utility on Tuesday.  The project will focus on northern and central California and by 2015 is expected to deliver more than 1,000 gigawatt hours of power each year, equal to the annual consumption of about 150,000 average homes, according to the company. solar-panel

The proposal, which needs approval from the state Public Utilities Commission, calls for half of the new solar power to be generated by PG&E and the other half and to be built and owned by independent developers.

Rather than establishing a giant solar array in the desert and then having to transmit the energy huge distances before it can be used, this project takes a “solar infill” approach, which uses small or mid-sized installations located within PG&E’s service area to minimize the cost and delays of connecting them to the grid.

PG&E estimates that the project will meet 1.3 percent of the utility’s energy demand and will add $.32 to each PG&E customer’s monthly electricity bill.

For more, see this in-depth article from Greentech Media.

Methane Sources and the “Dark Side” of Solar

plants.jpgPlants don’t produce methane after all, a new study out of the UK contends.  The results refute a 2006 report that suggested plants could account for almost half the world’s production of this potent greenhouse gas. But according to authors of the latest study, plants are more like little methane pipelines; they convey methane from the soil to the air, but they don’t actually produce it.

No one said that climate change was simple.

Neither are the solutions, apparently.  An article in the LA Times reports on the “dark side” of solar, outlining the toxic materials used in cells, the difficulty of recycling some components, and the fossil fuels burned in the production and transportation process of cells and panels.

And don’t let this weird weather confuse you either.  As the Thin Green Line reports, this week’s freezing temperatures in the Midwest don’t mean climate change isn’t happening.

Seizing the Moment

All the hand-wringing about seized-up capital markets hasn’t stopped environmental visionaries from promoting their scenarios for a clean, green–and robust–economy. Indeed, many have seized  the moment to suggest that an all-out attack on climate change and pollution could be just what the doctor ordered.

They’re being egged on by the President-elect, who offered this nugget in a recent pre-election interview with Time magazine:

“…we are just going to completely revamp how we use energy in a way that deals with climate change, deals with national security and drives our economy, that’s going to be my number one priority when I get into office, assuming, obviously, that we have done enough to just stabilize the immediate economic situation.”

That’s a whopping assumption. Nevertheless the advocacy group Environment California has released its own vision, asserting that clean energy is “the foundation of America’s economic future.” The group’s Blueprint for Economic Recovery and Environmental Protection Through Clean Energy Solutions is not groundbreaking but rather an aggregation of ideas and studies that have been put forth already, leading to the same general conclusion.

imgp2085.JPG

The report attempts to bundle the potential of renewable energy sources such as solar, wind and geothermal, coupled with aggressive conservation measures, which it says could alone cut the nation’s electric use by a quarter.

For example, Environment California suggests that we might set aside 9% of Nevada (that’s about 10,000 square miles–imagine Massachusetts covered border-to-border with solar panels) for solar-thermal installations or harness the wind potential of five interior states (the Dakotas, Kansas, Montana and Texas), either one could cover the nation’s entire electric bill. Of course, either of these approaches would require massive, intrusive distribution networks to get the power where it’s needed, so I these ideas may be intended as inspirational, not literal.

Another idea, which requires very little distribution infrastructure, is carpeting the nation’s rooftops with photovoltaic solar panels. The group says that would provide about 70% of our energy needs.

The report also advocates for cutting our oil consumption in half, though it does not specify by when.

How does all this translate to economic redemption? By creating “millions of jobs.” According to the report:

“…repowering America will plant the seeds of economic growth and revitalization across the country. And by creating the world’s largest market for renewable energy and energy efficient technology, we will give American companies a leg up in the most important economic competition of the 21st century – the race to supply environmentally sound technologies to the rest of the world.”

The report cites several studies to support this conclusion. Some were done several years ago and may contain assumptions that don’t quite hold up in today’s recessionary, capital-constrained environment. The more recent work includes a University of Tennessee study from 2006, which projected that converting a quarter of U.S. electric production and transportation fuels would, over about 20 years, yield more than five million jobs.

You are guaranteed to hear a great deal more on this theme, as a new administration takes charge with it’s “number one priority.” Still unanswered is who will provide the capital–and the incentives to steer capital–into the clean, green economy of our dreams.

Photo: Installing solar panels on the roof at KQED.

Renewable Energy Tax Credits Extended

In today’s historic passage of the $700 bailout package for the financial industry, Congess also managed to finally extend the alternative energy tax credits that have been held up for months in legislative wrangling.  The Senate approved incentives last week, and yesterday lawmakers included them as part of a $150.5 billion add-on package to the so-called “bail out bill” in efforts to gain more House votes for the financial rescue plan.  The move will extend the existing tax incentives for the wind and solar industries for that were set to expire at the end of the year.

An article from investment research firm Morningstar reports some of the details:

“The bill extends production tax credits for wind energy projects for one year, and for geothermal, biomass, and other renewable sources for two years. 

The solar energy industry won an eight-year extension of the investment tax credit for commercial and utility-scale solar projects, and an eight-year extension of tax credits for residential solar power installations.”

Passage of these incentives is good news for alternative energy advocates who feared the expiration of these credits might harm fledgling wind and solar businesses and initiatives.

Last month, David Gorn reported a story for Climate Watch about what’s going on with large-scale solar installations in California as the state pushes to meet a plan requiring that 1/3 of California’s energy come from renewable sources.  

 Stay tuned for Monday’s radio report on Quest exploring California’s Proposition 7, which would require more wind and solar energy use in the state.

Wind and Solar Incentives Pass Senate

And speaking of solar power…  After months of roadblocks, the extension on tax credits for renewable energy is one step closer to reality after the Senate yesterday approved the $17 billion package with a 93-2 vote. The credits for wind, solar, and energy efficiency projects are part of “The Renewable Energy and Jobs Creation Act of 2008,” a larger tax bill (HR 6049) that has been stalled in Congress as legislators wrangled over how to fund the credits. If they are not renewed, the incentives will expire at the end of this year, undoubtably having a negative impact on future solar and wind innovation and expansion in the United States. 

You can read more about of the current situation in a piece by Ben Gemen at E&E Daily, but to access the article directly, you must be a subscriber.  For the rest of us, Climate Progess has posted the story here.

Solar Incentives May Be Uneven Across State

In response to our Solar Realities series, a Northern California listener raised an interesting point and sent us the following email, though he asked that we withhold his name: 

As you likely already know, the CA Public Utility Commission‘s “California Solar Initiative” provides some very good rebates to give citizens, businesses, and public agencies an incentive to install grid-tied PV generating systems. However, one thing that might be worth noting is that the far northern portion of CA that is served by Pacific Power is not eligible for any of these rebates. The Pacific Power service area is all or part of Modoc, Siskiyou & Del Norte counties. So citizens in these counties cannot participate in the CA Solar Initiative! Apparently, the CA Public Utilities Commission has not yet gotten around to require Pacific Power to charge a fee to its CA customers to fund the rebate program. …2/3 of this of this area is prime territory for PV installations with a very high number of clear sky sunny days per year.

In Tuesday’s Climate Watch piece, reporter Rachael Myrow explains how California’s solar rebates and credits work for utilities customers in most of the state.

Solar Realities for the Rest of Us

These are Gold Rush days for solar advocates in the US.  Molly Sterkel, who supervises the California Solar Initiative for the Public Utilities Commission, jokes that she lives in fear that private industry is looking to poach her staff:

There’s a lot of people going to solar companies to work because it’s a really exciting industry. It’s growing so much in California, so it’s attracting some of the best and brightest. I’ve told all of my staff that they have to sign 10-year contracts to work for me but so far most of them have stayed because it’s a really exciting time to be in government, to be able to run the largest solar program in the country.

In 2002, California established its Renewable Portfolio Standard Program “…with the goal of increasing the percentage of renewable energy in the state’s electricity mix to 20 percent by 2017.” Then the Energy Commission bumped the deadline up to 2010, and the 2004 Energy Report Update further recommended increasing the target to 33 percent by 2020.

Whatever the deadline, numerous incentives and rebate programs funded by the state and utility ratepayers are fueling an explosion of solar.  Sterkel says it’s growing at a rate of 40-50% a year.

But installing solar is still not cheap. Even now, all the solar in California adds up to 350 MW (one big power plant generates about 500 MW).

In part, that’s because most of the people taking advantage of the subsidies are residential utility customers, and most of those are installing systems of 4 KWs. That’s not a bad thing, per se.  Any kilowatt that home doesn’t siphon off of the grid is a kilowatt that can be used elsewhere. But slow and steady is a little too slow and a little to steady for some. Never mind that California is way ahead of other US states.  That just makes it easier to compare us to other countries, like Germany and Spain, that have invested even more in solar.

There’s no argument it takes subsidies to make solar financial feasible.  The question for advocates and regulators alike is how much subsidy helps solar thrive without spurring a ratepayer revolt? And how long should those subsidies last?  A report from McKinsey & Co. concludes:

“…regulators must adjust incentive structures over time and phase them out when grid parity is reached.”

Grid parity is the point at which there’s no difference between the price of solar and the market price for (less environmentally preferable) “brown power.”
Sterkel says:

(That) is the point at which everybody gets solar. Just like there was a moment when everyone got a cell phone and everyone got a car. And this year, we’ve already installed more megawatts than we did in all of 2007, and we’re not even all the way through the year. The policies are all pushing towards solar. The businesses are growing. The venture capital is here. You know, all signs point to “yes” for solar here in California.

That’s even though incentive levels in California have been dropping.
Where’s it all going?  Some say we could see a repeat of the 1980s, when oil prices tanked after spiking and green energy projects went “poof.”  It took them well over a decade to begin the long, slow climb back to economic and political viability.  Oil prices appeared to be sliding after a long, hot summer in 2008–until yesterday, anyway.  But green advocates say they won’t be caught out in the cold this time around. That’s because renewable energy advocates can point public attention to something that goes well beyond consumer price protection: climate change.

Rachael Myrow hosts The California Report. She reported on rooftop solar installations for Climate Watch on September 23, 2008. Listen to her story here.