Posted by Jim Baak

This past Saturday, Nevada Governor Jim Gibbons signed Assembly Bill 522 into law, extending and improving tax abatements for large-scale solar and other renewables. It was a major priority for our utility-scale campaign this spring, and we are happy to see the legislative session end with Nevada taking steps to tap its enormous solar potential.

With the market for large-scale solar heating up across the sunny southwest, tax incentives can tip the scale when it comes time to decide where to locate these new hubs of renewable energy generation. The tax abatements contained in AB 522 give Nevada a solid competitive advantage. That means critical savings for large-scale renewable energy projects and new economic opportunity for Nevadans.

For those who want to dive deep: The bill extends the sales and property tax abatements for wholesale renewable generators larger than 10 MW until June 30, 2049. Property tax abatements were increased from 50% to 55% and the duration of the abatements was extended from 10 years to 20 years. In recognition of the current fiscal situation facing the state, there was a slight decrease in the level of sales tax abatements (going from a 2% maximum tax rate to a 2.6% rate), although the abatement is now available for three years instead of two. Overall, this is an improvement in the level and duration of tax abatements offered for large-scale solar and renewable development.

Looking to ensure economic benefits pass through to Nevadans, the bill requires that developers taking advantage of the incentives make a minimum capital investment in the state, create a minimum number of jobs, establish a minimum average hourly wage, and requires a minimum level of benefits, including health insurance to be provided to workers. The abatements will be overseen by a new Energy Commissioner appointed by the Governor to head the newly created Renewable Energy and Energy Efficiency Authority.

In these tough times of strained state budgets, the Nevada legislature and Governor Gibbons are to be congratulated for their foresight in passing AB 522. As our own recent economic and environmental impact analysis showed, these tax abatements will help lead Nevada back on the path to prosperity while combating global warming – all in one fell swoop.

Some news from California. Last Friday, after an eight month process, the Energy Division of the CPUC issued a proposed decision (pdf) in its inquiry to expand the state’s feed-in tariff program.

Upshot: on top of current FiT (500 MW for projects up to 1.5 MW), the decision proposes an additional 1000 MW for systems 1.5 to 10 MW, and a standard offer (but not must-take) for systems 10 to 20 MW.

Combined with the California Solar Initiative, RPS, and major utility PV programs from SCE, PG&E, SDG&E, and LADWP, there is a tremendous amount of new solar generation due to come on line in the state in the next few years.

We will have some comments and recommendations in reply to the proposal, but the program’s general approach treats solar as if it were a resource that can be the foundation for California’s renewable energy future: it integrates solar into the long term renewable planning process, and looks to provide a framework that provides security for solar project developers, utility planners, and regulators.

The decision does not address price; this key element will be the subject of a subsequent effort (which we expect shortly).

The proposed decision also establishes some guiding principles for the program that generally reflect the maturation of solar policy in the state.  Some key items:

• “Provide sufficient payment to stimulate untapped markets and build new projects, but not overpay or reduce the ability of competitive solicitations to put downward pressure on price.”

• “Provide some market certainty for project development, but also avoid creating a ‘boom and bust’ market for renewable energy that brings many projects online quickly, but does not create a long-term sustainable marketplace for renewable energy”

• “Compliment, but not impede or replace existing programs, especially the California Solar Initiative and the existing Renewable Portfolio Standard programs, which are both aimed at achieving the state’s energy policy and climate change goals.”

Our view is that there is no single silver bullet policy solution for developing solar. But it is important to keep in mind that unlike many other technologies, there are two possible markets for solar: a retail market, where generation serves on-site load and the price benchmark is retail electricity rates, and a wholesale market, in which generation is sold to utilities for further distribution and re-sale to utility customers. The path forward will be one of adding-and fine-tuning-the avenues for solar to express its value in all of the markets. We see a future with an RPS for large, central station plants, a feed-in tariff for smaller systems (likely at the distribution level, where they have the most value) selling wholesale power, and net metering for systems that serve on-site load and reduce retail utility purchases for hosts.  The proposed program is one step closer to a mature, sustainable, comprehensive solar market.

Despite rumors to the contrary, solar is not dead in LA. Not only is the outcome of Measure B still undecided, but Measure B is only a third of the larger LA solar plan. And, frankly, the vote is irrelevant. Yesterday Mayor Villaraigosa said:

“I can tell you, regardless of what happens, we’re moving ahead on our solar initiative”

It was clear from listening to the discussion that both supporters and opponents to the measure all supported solar power. This was not a referendum on solar, this was a referendum on process. People were pissed with how the measure got on the ballot. Some unions were rightfully pissed that the measure cut them out in favor of other unions. And so on.

LADWP, as a municipally owned utility, has elected to exempt itself from the rules that other utilities in the state must follow. They have their own processes, and we wish them luck. They have a lot of work to do.

Posted by Adam

On March 3, Angelenos will be asked to vote on Measure B, a ballot measure that would enable the Los Angeles Department of Water and Power to develop 400 MW of solar on land and rooftops within the city. The Los Angeles Times asked us for an assessment, which you can read here.

The short version is that there are both benefits and drawbacks to utility-owned solar generation, and the drawbacks can be significantly ameliorated by a commitment to keeping all solar markets open.  That means supporting and growing a local installer industry–at a minimum, we’d like to see LADWP promise they won’t try, for the second time, to raid the California rebate program that’s intended to help customers go solar on their own.

If you agree, no need to be a Hamlet–you can take action here.

A couple more details that didn’t make it into the LA Times story due to space constraints.  The bill referenced in the story that would have allowed LADWP to use SB1 funds for wholesale power is AB 2269.  The letter we wrote to the Governor asking for his veto can be found here (pdf).  And here’s the Governor’s veto statement (pdf).

A little more on the desireability of growing a solar industry outside of a utility payroll.  Arizona was one of the first states to institute a renewable portfolio standard–in their case it was called the Environmental Portfolio Standard, and unsurprisingly the requirement was heavy on solar energy.  In its implementation of the requirement, Tucson Electric Power decided to keep everything in-house, and used the appropriated ratepayer funds to build a large photovoltaic installation to pump groundwater at the Springerville coal-fired power plant.  Their installed costs were remarkably low–something like $5.15/W, if memory serves–but after the plant was built and the requirements were met, that was it.  No more solar.  Anyone else in Tucson that wanted to go solar couldn’t take advantage of the solar expertise gained–TEP kept it all in house, and, well, they didn’t want to do any more solar.  Momentum ground to a halt. So, it was back to the regulatory drawingboard, and the next version of the state’s renewable requirement contained specific provisions for growing a local solar industry.  Now, according to a new report out of the Lawrence Berkeley National Lab, Tracking the Sun (pdf), the AZ solar industry has one of the lowest average installed-costs in the country. This year is the first year of full implementation, and with ~$100 million in available incentive funds for solar, we expect great things.