Building on the success of its 10MW feed-in tariff pilot scheme, the Los Angeles Department of Water and Power (LADWP) Board of Water and Power Commissioners has approved a 100MW FiT programme.
The solar FiT Set Pricing Program will allow customers, solar companies and other third parties to develop solar or other eligible renewable energy projects within LADWP’s service territory and sell the power to LADWP at a set price for distribution on the city’s power grid.
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LADWP will offer the first 20MW allocation of solar power capacity during the first quarter of 2013. Subsequent 20MW allocations will be made available every six months through 2016 until the full 100MW is subscribed. Projects can range in size from 30kW to 3MW, and each allocation will set aside a prescribed amount of capacity for small projects (30kW to 150kW).
For each project, LADWP will enter into a standard 20-year contract and purchase the solar power at a set price, starting at US$0.17/kWh for the first 20MW. The price will decline according to a tiered price structure that caps the amount of power that can be reserved at each price. When each tier reaches its limit of reserve capacity, the price will be reduced by US0.01/kWh and fall to the next tier.
A proposal for an additional 50MW FiT Program will be discussed with the Board in March, rounding out the full 150MW FiT program. The 100MW program will begin as soon as 1 February, pending City Council approval and continue through the end of 2016.
It is hoped the FiT will encourage renewable energy development within the Los Angeles Basin, helping to meet the 33% Renewable Portfolio Standard mandate by 2020.
“I’m proud of the LADWP Board of Water and Power Commissioners for moving Los Angeles forward to become the largest city in the nation to offer a feed-in tariff solar program,” said Mayor Antonio Villaraigosa. “The FiT program takes advantage of our abundant sunshine to spur new private sector investment that will create jobs and decrease our city’s reliance on dirty fossil fuels.
General Manager Ronald Nichols said expanding local solar power is an important part of the evolution of LADWP’s power supply from one heavily reliant on coal, to one with more energy efficiency and renewable energy balanced with natural gas.
“LADWP is replacing over 70% of its existing energy supply over the next 15 years,” Nichols said. “Local solar not only increases the level of renewable energy we provide to customers but also helps maintain power reliability as we transition away from coal power.”
“We learned from working with the business community, environmental leaders, and solar industry representatives, and based on lessons learned from other FiT programmes in California, that we needed to price the programme to be successful,” Nichols said. “If we did not buy solar locally through FiT, we would need to purchase other renewable energy from outside the city and bring it into Los Angeles to reach 25% renewables by 2016 and 33% by 2020,” Nichols said.
LADWP opted to set the initial price higher than what it would pay for other renewables to ensure the programme has a sufficient incentive to become solid and sustainable.