On March 5, the Palo Alto (California) City Council will vote on a proposed new solar program–a solar feed-in tariff for the city’s municipal utility.
Some relevant facts:
- 4 MW of total contract capacity available for wholesale power.
- Minimum project size is 100 kW.
- Price: $0.14/kWh for 20 years.
- If there is more interest in the program than available contract capacity, then potential participants will be asked to bid, and contract winners will be selected by best price. That’s a better way than a lottery.
- The city estimates that the ‘green premium’ (i.e. above-market costs) for this program, if fully subscribed, would be $0.02/kWh, or 0.2% rate increase (see pages 5 + 6 of attachment E, at the link below)
- If fully subscribed, it would provide electricity sufficient to power the equivalent of 1,000 homes, and provide 0.6% of the city’s annual electricity usage.
- Rebates are still available for home and business owners that want to go solar to lower utility bills.
You can get the details here (big-ish file)
Fourteen cents per kWh for a peaking resource (solar produces most when electricity is the most expensive) is a price that can scale. But will it be enough to work? Sacramento Municipal Utility District offered 100 MW at that price, and sold out instantly–but the winning projects were all around 5 MW in size. That’s ~25 acres per project, and with the price of land in Palo Alto–well, that’s an entirely different ballgame. Some developers tell us its too thin, other think they can make it work. Seems to us that it is worth finding out.
We think this is a program worth supporting…and if you live in Palo Alto and think so too, how about sending the City Council a note to that effect? Their website is here, or by email, here. We pre-filled the form a bit for you, but should really just use your own words.
[more: see GTM's great piece, here]
[more: new details on a new dedicated page -- http://www.cityofpaloalto.org/renewablefit -- includes a summary of the program rules, an application package, and maps. The City Council date is March 5, 2012, and if the program documents are approved they will begin accepting applications on April 2, 2012. The first contracts would then be awarded on May 1, 2012 ]
For the green premium, I’d imagine that a 0.2% rate increase is a lot smaller than $0.02 per kWh, right? Unless ratepayers are paying more than $2 per kWh?
look at pages 5 and 6 of attachment e
http://www.cityofpaloalto.org/civica/filebank/blobdload.asp?BlobID=30132
I think they should go with a lottery. If this offering is oversubscribed (which it will be by a mile) they know they’re offering a high enough FiT and they can simply lower the rate for the next group. Part of the point of this program is for the city to learn about how the permitting processes will work and how the payments will work and so on. If they did a lottery they’d get a healthy cross section of projects and more learning would occur.
Strangely this program is set up such that operators are forced to sell all their production at the FiT rate. This is odd? They should make this part of the program flexible and allow operators to make a choice between gross and net generation payments. A gross payment structure (the status quo) would pay the 14 cents/kWh for all generation. The net payment structure would subtract out production that was consumed on-site at the time of production. This arrangement would provide system owners with another source of potential revenue (retail electricity savings).
I’m also surprised this program excludes residential. Fits have driven plenty of residential PV in the U.K., Germany and Italy. Baby steps I guess.
Thanks for weighing in. I’d have to disagree on the lottery suggestion, though. A lottery is just no way to build a real industry….
We can have a friendly bet Adam. I say their offering is going to be oversubscribed which means they’ll go to a bidding process. How long is the bidding process going to take? What kind of complications, pains and biases are going to enter into the equation once things go to a bidding process? Next time around they’ll go with a lottery – quick, easy and fair.
Pretend you are a businessman. Would you rather that your ability to secure a contract be determined by:
A) Getting your name picked out of a hat, or
B) Your ability to provide the better service and the best value to a customer?
Goes both ways in your example Adam.
It’s like a pool game. In any given situation you have several shots. The pool player picks the best shot that sets the next shot. If you want to be fancy you can make a long odds shot that gets the crowd’s attention. Rah rah… great shot. But it’s a short victory if you don’t have the next shot.
We’re talking about strategy. Short term vs. long term. I want to play the long term game.
This is about system mechanics. I’m good at picturing things and I know you are too. We can take this offline. I’ll send an email.