Intersolar NA 2013: What comes next for California… 50% RPS?

  •   The Intersolar NA policy panel yesterday
    The Intersolar NA policy panel yesterday
  •   California distributed generation goals
    The goals for California's currently active distributed generation programmes total almost 6,000MW, half way to the state governor’s commitment to 12GW by 2020.
  •   Installations under NEM tariff
    The total amount installed under the NEM tariff, in addition to non-NEM distributed generation, is around 1,580MW.

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Felicity Carus
Felicity Carus
Felicity Carus is the only UK journalist to be regularly reporting on clean energy policy and finance from California for a global audience. Before arriving in San Francisco in 2010, Felicity was on the Guardian's environment desk in London after stints at the Sydney Morning Herald in Australia and Interfax in Russia. She first "broke" into the renewables industry with a commission in the mid-90s to write a book on how to install a solar water heating system with a rusty old radiator. The industry has come a long way since then, thankfully…

California's position as a leader in the US on solar installations and solar policies is not in dispute. Through a combination of its Renewable Portfolio Standard of 33% by 2020, the California Solar Initiative and programmes such as net energy metering, installed capacity in the state has soared to 3.75GW, 1.5GW of that from distributed commercial and residential rooftops.

But what next for the industry? Module price declines have helped crunch installed costs of residential solar to US$4.41, but that is still twice the cost in Germany. Policymakers, industry advocates, solar businesses and utilities still have their work cut out.

The CSI has delivered almost all of its 1,940MW target some six years ahead of schedule.

Sanjay Ranchod, director of government affairs and senior counsel at SolarCity, told delegates at the Intersolar NA conference in San Francisco yesterday: "The CSI has been the most cost effective incentive programme created in the United States. We've hit the megawatt goals for the most part well ahead of schedule in bringing the market to a place where it is self-sustaining without a significant state incentive on top of the federal Investment Tax Credit."

Cecilia Aguillon, director of marketing and government affairs at Kyocera Solar, pointed out that although the RPS has been a great success for the utility-scale market, "it has not done much for 1MW and below".

Incentives like the 1300MW Reverse Auction Mechanism and a feed-in tariff of sorts, which is worth 750MW for projects up to 3MW, were designed by utilities, said Gary Gerber, president and chief executive officer of Sun Light & Power.

"California's FiT is laughable. The California Solar Energy Industry Association supported it, but the way it was implemented was under the control of the utilities. Utilities essentially designed it and not people in the industry and therefore it's a large system programme."

But beyond the CSI and RPS, action does seem to be taking place at the local municipal level, said Aguillon.

Los Angeles' successful feed-in tariff began life thanks to an LA business council that hired UCLA to conduct a study on the most effective incentive to create a solar market because NEM had not worked so well.

"That they found it was a FiT wasn't a surprise to us," she said.

The FiT rolled out in March with 20MW worth of projects on offer and received more than 100MW of applications within 45 minutes. [http://www.pv-tech.org/news/la_utility_looks_to_large_developers_to_build_250mw_beacon_project]

San Diego's mayor is said to be looking at a similar programme, and thus may FiTs propagate in this way across California.

But what of that pesky 2016 date in the solar industry's diary when the ITC drops from 30% to 10%?

"I worry that post 2016, the ITC is going away and we need long-term policy for solar electric," said Gerber. "We should prepare for the worst – 10%. But what could the government do? Either maintain [the ITC] for further out or do a slower ramp down say to 2020. Good public policy would be to sculpt the ITC to a gradual ramp down, rather than just a sudden drop to 10%."

SolarCity's Sanjay Ranchod, who works for a company whose very existence relies on the ITC, shrugged off the impending 10% credit.

"We don't have that concern because we have visibility into the ITC dropping from 30% to 10%. Of course, we are preparing for it and our industry should be preparing for it.

"As an industry we have to grow up, we have get off incentives and be self-sufficient if we have reasonable fair policies such as NEM. But as an industry we need to scale, to continue to bring our costs down so we can be competitive even on a very unlevel playing field [with] the fossil fuel industry."

No discussion about California's solar policies would be complete without a bristling disagreement between advocates and utilities about net energy metering; and the second panel of the policy discussion did not disappoint.

Nancy Skinner, a member of the California state assembly, warned that the atmosphere for solar among legislators had changed.

"In the first part of the 2000s, solar was very much something every legislator wanted to carry a bill on. Right now it is not as popular. There is a sense that California's policies around solar have created rate pressures and cause electricity rates to go up, that NEM is a subsidy for rich people.

"And some of this is a result of our investor-owned utilities (IOUs) not being large fans of California's solar policies. If we were to have a bill right now in the legislature to modify the NEM cap, I'm not sure what its fate would be.

"There is a bill going through the legislature to give the California Public Utilities Commission (CPUC) the authority to relook at all of our rate structure. That's a wise move but there are some people whose motivation was to hope that the CPUC does rates so that there's not an incentive for solar."

It fell to David Rubin, director of service analysis at Pacific Gas & Electric, to explain the IOUs' motives.

PG&E currently has about 10,000MW of contracts under various stages of development – 4,500MW of that 10,000MW from solar, he said. By 2020 about 40% of its 33% RPS obligation will be in the form of solar power.

"Some 13.5% of our mix will be solar [by 2020], which is a lot and that doesn't include the rooftops. We have about 90,000 rooftop customers; that's growing by 1,500 by 2,000 a month – if you look across the entire US that represents about 25% to 30% of the total rooftops in the US. We serve 5% of the US population but have 25-30% of solar roofs.

"We do like solar. We want to continue to see it grow. But we are concerned about the upward pressure on rates. When you look at the difference between some of the ground-mount projects under the RPS and rooftop systems, there is a pretty big price difference – 10c/kWh or from a 10MW ground-mounted tracking system and 20c/kWh for a 4.5kW to 5kW system."

Later this year, the industry is banking on some impartial evidence to demonstrate the benefits of NEM when the CPUC releases its analysis on costs and benefits in October. But even that report may not capture all the benefits of solar.

"We've had a number of studies on the structure of NEM and its impact on rates," said Skinner. "The US monetary system doesn't have a good method of putting the price on the externalities. But I'm hoping that this study tries to do that more accurately than in the past.”

In many cases, commercial use is at the time of generation – less so in residential, Skinner said. But debates about NEM in the Capitol and between the utilities and the solar industry focuses on residential NEM, even though the commercial segment generates more power.

"As a legislature we have to think about rate pressures but we also have to think about the industry. Without the residential installations we wouldn't have seen the growth in solar companies. If we try to correct policies and err in relationship to how residential installations may increase rate pressure we may negatively impact the industry which then negatively impacts the public sector and commercial. When it comes to the legislature, this kind of nuance is not easy."

But even the assembly member, who is about as big a solar advocate as you are likely to find in Sacramento, said she would not be pushing for an increased RPS, to say 50% by 2030.

"To do a higher amount we need to be successful with this one and demonstrate its success and then put it through," she said. "If I were to put through a 50% or 60% [RPS] now there would be extractions from my colleagues that would I fear do things like allow for all hydro regardless of size, which would not make many renewable advocates happy. There have been numerous bills to try to add hydro back in to the RPS and I don't want to have that debate succeed."

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