News in the ongoing effort to restore PACE, the promising clean energy financing program that ran into hurdles put up by FHFA.

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The California Solar Initiative requires that solar systems that receive an incentive be sized to meet on-site load.  However, what if you install a solar system, then your kids go off to college?  Suddenly, without the hairdryers, radios, and extra computers, you may find yourself with extra solar generation at the end of the year. Previously, any excess generation, after the annual net metering true-up, was gifted to utilities. AB 920 (Huffman; sponsored by Environment California) passed in 2009, required California Investor-Owned Utilities to purchase net surplus generation at a rate set by the Commission, under some very specific parameters.  » Read the rest of this entry «

We are writing with good news. Remember PACE, the innovative local energy retrofit program that ran into a roadblock in the form of Fannie, Freddie and their regulators at the Federal Housing Finance Agency? Well, next week Congress will introduce new BIPARTISAN legislation to fix the situation and get these money saving efficiency and renewable programs back on track. And that means, it’s time to shout your support from the (weatherized) rooftops!

The “PACE Assessment Protection Act of 2011,” to be introduced shortly by Congresspersons Nan Hayworth (R-NY), Daniel Lungren (R-CA) and Mike Thompson (D-CA . . . see, bi-partisan!), addresses three key issues: » Read the rest of this entry «

On July 15th, the interstate electricity regulators at the Federal Energy Regulatory Commission (FERC) issued a ruling with ramifications for feed-in tariffs in the United States. In an Aug 4 article for Greentech Media, Vote Solar’s Adam Browning discussed options for designing state wholesale DG solar programs that comply with the FERC ruling. We have reprinted the text below.

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A feed-in tariff, in its common form, is a requirement for utilities to buy wholesale electricity under a fixed-price contract. That’s electricity delivered to the grid for resale to other utility customers, as opposed to retail electricity that is used on-site; this approach lowers the consumer’s utility bill through mechanisms like net metering. This market mechanism is popular in Europe; FERC’s recent ruling provides clarity regarding just what states can and can’t do when it comes to feed-in tariffs here in the U.S.

The history behind FERC’s recent decision starts in 2007, when the California Legislature passed AB 1613, which established a feed-in tariff program for small combined heat and power systems in the state.  As the California Public Utilities Commission began implementing the new law, some investor owned utilities objected on the basis that the state does not have the jurisdiction to mandate this kind of program.  Their argument: the Federal Power Act gives FERC exclusive authority over wholesale electricity sales in interstate commerce, and states are pre-empted from setting wholesale power rates that exceed utility avoided cost.  This is not a new issue — energy practitioners have been confronting it for a long time.

The CPUC then petitioned FERC for a Declaratory Order to clarify the subject, and the utilities responded with a petition of their own.  Multiple organizations, including the Interstate Renewable Energy Council, SEIA, CalSEIA, the Solar Alliance and Vote Solar, intervened with arguments for more flexibility.

The decision? From the summary:

“FERC affirmed in its order that its authority under the FPA includes the exclusive jurisdiction to regulate the rates, terms and conditions of sales for resale of electric energy in interstate commerce by public utilities. FERC also explained that the role of States in setting wholesale rates is limited to determining “avoided cost” rates for qualifying facilities pursuant to PURPA.

FERC thus found that the CPUC’s decision under AB 1613, including the CPUC-set price, would be consistent with these federal laws as long as it satisfies certain requirements:

●     The CHP generators must be QFs pursuant to PURPA.

●     The CPUC-set price must not exceed the avoided cost of the purchasing utility.”

In other words, state legislatures and regulators are restricted in their ability to mandate premium, fixed-price requirements.

What does this mean going forward? While this decision clearly limits feed-in tariff options, it does not preclude effective wholesale distributed generation programs. When the issue came up in a recent, similar proceeding — the CPUC’s effort to expand the renewable feed-in tariff program under AB 1969 (R.08-08-009) — parties were required to file legal briefs on this subject. Here are a few policy approaches that fall within state’s price-setting authority:

●     Set the feed-in tariff price at utilities’ avoided cost

●     Establish a more targeted requirement (e.g., solar PV systems from 1MW to 10 MW) and let the market set the price

●     Set a price at avoided cost, and cover the marginal gap to a workable price with a tax benefit or renewable energy credit from a public benefit fund.

There are a few real-world examples of feed-in tariffs that use this approach.  The Sacramento Municipal Utilities District recently issued a feed-in tariff priced on their time-differentiated avoided cost of generation (modeled on expected PV output, it comes out to a levelized rate of about 14 cents per kWh).  All 100 MW of the available contract capacity was immediately sold out, principally in 5 MW chunks (note that similar programs eligible for only smaller sytems have proven less effective).

Another take on this approach comes from California’s SB 32. Passed in 2009, it is a fixed-price feed-in tariff that attempts to raise the ‘avoided cost’ by capturing as much value associated with distributed generation as possible (avoided transmission and distribution upgrades, etc.).

The downside to using the avoided cost approach, of course, is that these costs can vary widely, are the subject of much contention, and there is no guarantee that the final price will be sufficient to deploy renewables.

Which brings us to another option: mandate the desired outcome, and let the market set the price.  The CPUC has proposed a 1 GW pilot program, called the ‘reverse auction mechanism’ (RAM), which elegantly deals with the problem by guaranteeing a market instead of guaranteeing a price.  Utilities would be required to do multiple annual solicitations for systems from 1MW to 10 MW in size, and the best price wins.  All parties to the proceeding seem to agree that this approach is jurisdictionally compliant.  We are currently waiting on the Administrative Law Judge assigned to the matter to issue his proposed decision.

We have some real-world examples of logic behind this market approach. For the past several years, Southern California Edison has had a voluntary Renewable Standard Offer program, consisting of a fixed-price offer to buy renewable energy from systems under 20 MW in size, with the price set at the Market Price Referent (‘MPR’ is calculated annually by the CPUC; it’s the 20-year levelized cost of energy of a combined-cycle natural gas plant, meant to represent the next marginal unit of generation).  In 2009, SCE contracted for 140 MW of PV.  It’s a great story — here are significant amounts of solar purchased below the cost of fossil fuels.

The big question, though, is whether this pricing will work in the future. Natural gas prices have plummeted, and the MPR went down about 20% this year.  Is the new ‘avoided cost’ price enough to deploy solar?  This could pose a significant problem.

To address this concern, SCE recently announced that it will change its pricing approach going forward.  Instead of pricing solar based on the cost of natural gas, they will price solar based on the cost of solar as bid.  In order to make sure that the bids are viable and not aspirational phantom projects, the program requires development security of $20/kW and project development timelines.  To reduce parasitic transactional costs and help developers line-up financing ahead of time, the program uses standard, non-negotiable contracts.  In order to drive projects that can come on-line quickly and don’t need new transmission, this policy is only applicable to projects under 20 MW.  (Note that SCE also has a similar program for rooftop PV systems that are 1MW to 2 MW in size.  On July 27, it released the results of the first solicitation: 60 MW of projects throughout its service territory.)

This market-based approach is FERC-compliant, captures the latest in solar’s cost reductions and delivers that value to ratepayers, and helps drive down solar’s costs by sending helpful market signals throughout the solar value chain. Think of it as the next generation of the feed-in tariff: FIT 2.0.

So, even though the FERC decision clearly restricts states’ feed-in tariff authority, it is important to recognize that there are still ways of designing successful programs for procuring wholesale distributed generation.

On Monday, I gave a presentation at the NARUC summer meeting in Sacramento.  For energy wonks, it’s kind of like getting invited to the all-star game.

I was invited to speak on the panel “Feed-in Tariffs and other Tariff Designs as the Tools for Ramping Up Renewable Resource Development.”  The invite came based on presentations we’ve given and work we have done on the subject before the California Public Utilities Commission, the Arizona Corporation Commission, and the Nevada Public Utilities Commission – bodies that regulate the electric utilities in their respective states.

If you will forgive the self-serving aside, Commissioner Wagner of Nevada introduced the segment by saying “Colleagues, if Vote Solar is not working in your jurisdiction, you should ask them to come.  They provided timely and accurate data, analysis and policy expertise, and were instrumental in helping us with our renewable energy agenda.”  Or words to that effect. The validation of Jim and Annie’s work last year was much appreciated, especially since NV was one of the very few wins in a brutal year for solar.  Let me return the favor by celebrating Commissioner Wagner as a fierce and effective champion for renewable energy and NV ratepayers.

Here’s the presentation (4 MB ppt).  It’s much better with the soundtrack, but in short, given the national nature of the audience, the goal was to:

1. Make the case that solar deserves consideration as a scalable resource, especially as it is now much cheaper than many believe
2. Clarify that there are two markets: retail and wholesale, each with their own benefits from both the customer and regulatory perspective, and therefore each deserving of their own separate policy support
3. Identify the series of decisions that have to be made when designing successful wholesale distributed generation markets (ie: small-to-mid size solar energy systems delivering power to utilities for resale)
4. Walk through the range of policy solutions to effectively drive solar growth given those considerations
5. Briefly discuss the approaches taken by different existing programs across the U.S., and the lessons that should be drawn from the results

This discussion is especially pertinent given the recent FERC decision, which defined the federal vs state jurisdiction over price-setting in Feed-in Tariff type incentive programs.  California and Arizona are pioneering approaches to successful wholesale distributed generation that meet key criteria for sustainable solar market growth:

1. Legal (ie: jursidictionally compliant with the Federal Power act – see FERC decision above)
2. Scalable (ie: are achievable at politically palatable price points)
3. Provide the flexibility and responsiveness to expand the market as price reduces
4. Build strong installer capacity by providing continual market opportunity and avoiding boom-bust cycles

There is a lot more work to be done, but these initial efforts in are on track to bring gigawatts of wholsale distributed solar generation online as we speak.

We’ll put together a webinar on this shortly.

- Adam

What do the SF Chronicle, the LA Times, the Sacramento Bee, and the San Diego Union Tribune have in common with this blog?

All are not fans of Prop. 16, a California ballot initiative that would, in the words of the official analysis, place “new voter approval requirements on local governments before they can use ‘public funds’—defined broadly in the measure to include tax revenues, various forms of debt, and ratepayer funds—to start up electricity service, expand electricity service into a new territory, or implement a CCA.”

Public power may or may not be more renewable-friendly–for every Sacramento Municipal Utilities District, famously solar-centric, there’s a Los Angeles Department of Water and Power, which currently has the dirtiest portfolio in the state.

But while we like the choice of taking energy issues to the ballot, we don’t believe it should be a requirement.  And a 2/3 hurdle is punitively high.

Official proposition details here.

A list of opposition (and newspaper editorials) here.

Renewable energy policy is moving at breakneck speed all around the country. So we teamed up with Clean Power Finance to give state-by-state policy updates from the regions that are keeping us busiest. Did you miss the live webinars? Never fear, we have them recorded for posterity here . . .

Webinar I: East Coast Policy Update from Vote Solar on Vimeo.

Vote Solar’s Director of East Coast Campaigns Shaun Chapman discussed the latest policy developments from the coast where the sun rises first. In this webinar, Shaun provides an overview of the regional policy landscape and dives deep into developments in CT, MA, ME, NH, NJ, NY, OA and VT.

Webinar II: Midwest Policy Update from Vote Solar on Vimeo.

This webinar featured Vote Solar’s Claudia Eyzaguirre discussing the midwestern solar policy landscape. Thanks to new renewable energy targets, Missouri, Illinois, Ohio and Michigan are poised for tremendous solar growth. Listen in as Claudia explores the opportunities and remaining policy hurdles facing these emerging solar markets.

Webinar III: Southwest Policy Update from Vote Solar on Vimeo.

In this final installment of our regional policy webinar trilogy, Adam Browning and Annie Carmichael tag team to bring you insights from the solar powerhouses of Arizona, Colorado, Nevada and New Mexico.

The San Francisco Public Utilities Commission is installing  5 MW of PV on the Sunset Reservoir (technically, under a PPA with Recurrent Energy).  The mayor held a press event today to celebrate…well, to celebrate the fact that construction is underway.  About a quarter done–5,000 Suntech 210 w panels on Sunlink racks, another ~20,000 to go.

This is just one plank in SF’s clean energy efforts.  In addition to this wholesale solar project, the city offers incentives for self-generation with solar, and is launching a major financing program for energy efficiency, water conservation, and clean energy retrofits.

And lest anyone not get that clean tech leadership means jobs, lets highlight the fact that Recurrent (a SF-based company) subbed the install to the local Bass Electric (top-notch, having had the experience with a lot of large-scale installs under their belt), who agreed to hire 30% of the install crew from the 7 most-disadvantaged zip codes in the city, including graduates from the SF CityBuild training program.  Suntech is providing the panels (North American HQ in SF, 60 + employees), and Sunlink is providing the racking system (based across the bay in Richmond).

It’s really a beautiful site–see more pics here.

A view as iconic as the Golden Gate

On Friday, February 26, the solar industry in California took a big leap forward. On the roof of a solar-powered Macy’s in Culver City, Governor Schwarzenegger signed AB 510, a bill to raise the cap on net metering in California from 2.5% to 5%.  Thanks, Governor, and thanks Assemblymember Skinner for carrying the bill over the finish line.  It was way harder than any of us thought it would be.

The bill establishes the right for customers to use solar to reduce utility purchases–at least until we get to about 3,000 MW of customer-sided installs statewide, enough to see us through the California Solar Initiative program.

As solar gets cheaper and utility bills get higher, net metering becomes increasingly valuable.  Right now, the clearing price for wholesale solar generation in the state seems to be somewhere between 10 and 16 cents/kWh.  Most customers’ retail electricity rates are higher than that, meaning that if you have load to serve, your solar generation is much more valuable offsetting utility bills than selling to the utility.

As the state secures a longer-term visibility for the customer-sided rooftop solar market, it is also establishing new programs for wholesale generation.   Both the SCE and PG&E DG PV programs are close to launch (500 MW each), and we expect a Proposed Decision out of the Administrative Law Judge overseeing the proposed 1 GW market-based feed-in tariff any day now.  This diversity of approach, I believe, makes for a more robust and resilient market.

The event itself was actually a lot of fun.  After the signing, the Governor took the 4 signed copies, looked at the 5 advocates on the podium, and handled a potentially awkward situation with grace.  Ladies first, he said, handing out copies to Assemblymember Skinner,  Sara Birmingham of the Solar Alliance, Julie Blunden of Sunpower, and Bernadette Del Chiaro of Environment California.  Bernadette graciously gave me her copy, which is now framed and hanging on the wall behind Rosalind’s desk (the real rainmaker in the campaign).

Celebrating the passage of California's new net metering law.

My colleagues thought that making a viral valentine (two words, by the way, that really shouldn’t go together) would be a great idea. Something campy, something funny, something that also makes the point that a relationship with solar — like one with a special Valentine — can have a lot of benefits.

This YouTube classic was the inspiration. Note to self: taking cues from YouTube can be hazardous to your dignity.

I can’t even watch the result. But, for the cause, I post it here:

A Video Valentine from Vote Solar from Vote Solar on Vimeo.