Jerry Brown's state of the state address last week was warmly welcomed by many in California, particularly those in the solar industry. Two years ago, California was broke with a $25 million budget deficit. Brown confounded his critics with light tax hikes and shrewd spending cuts and has turned the deficit into a slight surplus. Claims that Brown has the Midas touch are overstretched, but the California Governor's tenures have helped the state to some golden years in the solar industry.
In 1977, during his first term, Brown sponsored a tax incentive for rooftop solar. As attorney, he had already confronted big oil companies. Later, as Attorney General, he sued mortgage company Fannie Mae and Freddie Mac over the popular Property Assessed Clean Energy (PACE) programme.
Since coming to office again for the third time as governor, Brown has been using up a lot of ink signing into law some of the most important policies for the solar industry.
Soon after coming to office this time, Brown signed the Renewable Portfolio Standard into law making the 33% target by 2020 mandatory when his Hollywood hero predecessor Arnold Schwarzenegger refused to man up to the electric utilities.
He also replenished funds for the California Solar Initiative and more recently signed SB1222, which caps permitting fees charged by local authorities for residential installations, and SB1409, which strengthens the clean energy partnership between California and the US military. The list goes on…
As with President Barack Obama's inaugural speech earlier in the week, Brown invoked the great hazards posed by climate change.
“When we think about California’s future, no long-term liability presents as great a danger to our wellbeing as the buildup of carbon dioxide and other greenhouse gases in the atmosphere.
“California is extremely vulnerable because of our Mediterranean climate, long coastline and reliance on snowpack for so much of our water supply.
“Tipping points can be reached before we even know we have passed them. This is a different kind of challenge than we ever faced. It requires acting now even though the worst consequences are perhaps decades in the future.”
Policies such as California's AB32 climate law to reduce carbon emissions to 1990 levels by 2020 and energy efficiency efforts, which Brown began in the 1970s, were just two ways to help mitigate some of the worst effects of climate change, he said.
“And we are not through yet… By 2020, we will get at least a third of our electricity from the sun and the wind and other renewable sources—and probably more.”
Brown has always said that the 33% goal should be a floor not a ceiling. But those previous three words – and probably more” – were what got the solar industry business leaders and advocates excited.
“Governor Brown has been at the forefront of renewable energy since his first term as governor. For decades, he has led the way in working to make the Golden State a leader in clean energy innovation,” Carrie Cullen Hitt, Senior Vice-president for State Affairs at the Solar Energy Industries Association.
The cost of a PV panel during Governor Brown's first term was $60/watt (see slide). But at the end of last year crystalline modules had declined to US$0.65 per watt at the end of 2012.
Steve Zuretti, SEIA's Legislative and Regulatory Affairs Manager for California, said that this precipitous decline of PV panel prices has allowed Brown to balance the books while staying firm friends with the solar industry.
“California has been a leader in solar in the US and the volume of utility, commercial and residential installations throughout the state continues to increase. In large part, that's because we've seen a rapid decline in prices.
“We see that as an opportunity to double down on the state's commitment to solar. Hearing the Governor's remarks on the RPS, we know he's committed from previous discussions with him. While we would like to see the RPS maybe be expanded certainly we're confident in the direction the Governor is headed with things.”
Brown kick started his latest gubernatorial race at Solaria, a San Francisco Bay Area solar company. One of his most notable commitments on the campaign trail was to push for 20GW of new distributed renewable generation, most of it probably solar, by 2020. Since then, Brown has re-stated his commitment, without any firm action. But that might change this year, said Zuretti.
“Based on discussions we've had, we do see that as very much on the radar,” he said. “Obviously, the state has had a number of other issues to attend to. But certainly there is real opportunity there and we do think that is something that will be brought to the forefront hopefully this year.”
But where could that new growth come from, besides an expansion of the RPS?
“Building upon existing programmes, we have the Renewable Auction Mechanism, the existing FIT programme, as well as what's forthcoming in an extended version of that through the passage of SB32 [feed in tariffs]. We'd like to see the state continue to empower utility customers through the future availability of net energy metering to newly installed systems.
“These procurement mechanisms are really all helping to get more DG energy systems of all sizes online.”
NEM was top of the list for Bryan Miller, Sunrun's Vice-President of Public Policy and Power Markets: “Governor Brown's leadership on renewable energy has helped grow the California economy while driving the transition to a cleaner electric grid. Critical to solar growth is net energy metering, which delivers a financial benefit to all Californians. Net metering protects homeowners’ basic right to generate their own energy, and it must remain in place if we are to meet the Governor's goal of generating at least a third of electricity from renewable sources by 2020.”
But these existing programmes aside, there are a couple of additional courses of action the state may pursue, he said. SEIA particularly supports the shared solar bill that allows businesses and residential customers to “opt in” to solar if they are renters or have unsuitable roofs.
SEIA is also particularly interested in expanding the newly introduced (Brown-supported) initiative called Proposition 39, which was passed by ballot in the last election. This will generate some $2.5 billion over five years and enable schools to save money with energy efficiency upgrades. Zuretti said that these upgrades could easily include solar installations.
“We believe that funding allocations should include consideration of on-site solar and help solar projects work in concert with energy efficiency upgrades.
“This approach provides a real path forward towards drastically reducing energy costs. That can help dampen the many budget cuts we've seen in recent years in school districts across the state.”