Palo Alto solar takes on star quality

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Sundrenched streets, gleaming offices, exponential brainpower from Stanford University and generator of world changing startups: Silicon Valley's foremost city, Palo Alto, has a reputation that is world renowned. As the cradle of civilisation for the semi-conductor industry and also in many ways its first cousin, the PV industry, it's gratifying to know that the city is also big on solar.

Jim Stack, senior resource planner at the City of Palo Alto, said: “Palo Alto has a long track record of taking aggressive action on environmental issues and it's not because we're trying to save the world all by ourselves – although that would be nice – but rather we're hoping to lead the way and have others follow us.

“Why are we doing this? I'm not sure if it's because there's something in the water, or we're so close to the Bay but the city has taken an aggressive approach to solving environmental problems for quite a long time.”

Palo Alto has a population of 68,000, a number that swells during the day to 80,000, creating the conditions for a perfect load curve from commercial and industrial customers who make up 85% of power demand.

The city council this year launched its Carbon Neutral Electric Portfolio Plan, which aims to phase out the procurement of market power and the Renewable Energy Certificates (RECS) and replace it with solar [see slide 1]. Last year, it launched a feed-in tariff (Palo Alto Clean) and this year the city has announced four solar power purchase agreements (PPAs) – three of them at 20MW and one at 40MW due for completion in 2014 and 2016.

This will help the city meet its Renewable Portfolio Standards – 33% renewables by 2015 – an even more aggressive target than California's. Stack told the Vote Solar webinar that Palo Alto will exceed its targets [see slide 2].

“In the early years, we were signing mostly wind contracts and landfill gas contracts, but in the later years, you [will] see a lot of solar [see slide 3],” he said. “Assuming those four projects come online in 2014 and 2016 our RPS level will be 48% in 2017. We'll be achieving a carbon neutral supply portfolio entirely through long-term contracts for renewable power and hydro.”

Contracts came through at a weighted average of US$70.40/MWh, partly thanks to an request for proposal process that gave developers an incentive to compete on price restricting the price premium for customers to .01c/kWh, said Stack.

“Our bottom line message is that it's possible to go big on solar and renewables and energy efficiency without breaking the bank and we hope some other folks out there will follow our lead,” he said.

In 1999, the city launched PV Partners Rebates for Net Metered PV. Funds were refreshed in 2007 to meet a target of 6.5MW by 2017. Programme funds are now at 50% and current rebates are attractive at US$1/W for residential systems and non-residential systems at 0.25c/kWh.

“Especially now that PG&E's [Pacific Gas & Electric] funding for the California Solar Initiative is closed, we're seeing some greater activity as contractors come searching for more projects in our territory,” said Lindsay Joye, solar marketing engineer at the City of Palo Alto.

But not all of Palo Alto's solar programmes have been a Google-like success. Palo Alto's city council liked the idea of more distributed generation. After all, with average home prices at US$1.8 million, there can't be much slack on the ground.

“In addition to customer-owned systems we were looking to increase our distributed generation and because we import all of our power in Palo Alto we can avoid transmission and capacity costs of around US$30/MWh by siting generation in town,” Joye said.

“However, Palo Alto is an extremely built-out city; we really have no space for ground-mount systems, so any solar PV has to be either on a roof or parking lots.”

So far, Palo Alto's feed-in tariff has failed to hit the mark even after an increase from last year of 14c/kWh to 16c/kWh this year.

“We had a lot of meetings and outreach with developers and our large commercial industrial customers, but that price just wasn't high enough to accomplish any projects,” she said. “We redesigned the programme for 2013 and raised the price to 16.5c/kWh – so we're willing to take a very small rate impact to see if we can get projects. We felt that price was reachable. We said there would be no minimum projects size but expected they would be larger scale – 100kW and up. We do have a 2MW limit.”

As of the end of July, there were still no projects.

The reason for this failure so far is that the NEM tariff offers customers a much better deal, said Joye. Palo Alto's FiTs are for a 20-year term interconnected on the utility side of the meter – so the city buys all the electricity, the RECs and capacity attributes to meet its RPS.

“PA Clean requires you to sell all of the electricity and its attributes to the utility so that we can claim it,” she said. “[From a customer] perspective, they're better off with a NEM system because of the rebates that we have today.”

But when the performance-based tariffs wind down, FiTs might finally have their day in the sun.

“We may reach a stage by the end of the year when we have depleted the funds for large commercial NEM solar and the PV Partners programme may go to zero for large commercial projects and then the FiT will be the only incentive in town.”

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8 March 2022
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