Economists' Report Boosts California's Case for Solar

SB 1, the "Million Solar Roofs Initiative" is scheduled to be before the state's Senate Energy Committee on April 26 for its first test on the way to possible adoption later this summer. The momentum and energy behind the legislative initiative has now also opened up a second complementary track through the California Public Utilities Commission (CPUC), the regulatory body that would ultimately implement the SB 1 directive.

And to back up both efforts, a group of expert solar advocates and outside economists compiled what's arguably one of the most comprehensive analyses of the many, often unseen, benefits of solar electric energy.

The report, spearheaded by Americans for Solar Power (ASPv), specifically articulates and quantifies 14 key areas where solar photovoltaic (PV) power provides added value to ratepayers, the electric grid and even to utilities, which are typically hostile to solar. From solar PV's ability to add electricity to the grid when it is most stressed, to avoiding transmission and distribution losses, the report provides a detailed and defensible analysis of solar benefits. And while the solar industry has largely known about these added values of PV, many experts feel it's an area that hasn't been well addressed.

"I don't think the industry has been focused on quantifying the full range of values", said Shirley Neff, an energy economist and adjunct professor at Columbia University who contributed to the report. "What we did was to fully elaborate the value elements to distributed PV to highlight all the aspects of PV as in terms of peak-power needs, distribution and transmission, customer-sited power and avoided externalities."

Experts involved in the study believe filling in this gap could be the key to the successful passage of an unprecedented solar program for California.

"The gut of this effort is that the state wants to promote solar, the Governor wants the promote solar, the California Public Utilities Commission (CPUC) will likely support it at some level," said Glenn Hamer, director of Government Affairs for First Solar and president of ASPv. "But to get that support is just not going to happen without the industry making a very effective case."

The 14 key areas where PV brings value by offsetting both infrastructure and environmental costs are backed up by pages of detailed calculations and analyses, but are succintly summarized in a one-page "waterfall" chart that breaks down the benefits in ranges of price per kWh.

For example, solar PV is worth an additional 3.24 to 9.71 cents / kWh when factoring in the avoided generation cost of natural gas -- the increasingly expensive fuel that is primarily used in California's peak demand, or "peaker", power plants. Also, the value that PV helps utilities avoid for operations and maintenance of their traditional generation is in the range of 0.19 to 0.44 cents / kWh. All 14 value figures equal a total range of additional PV value between 7.8 to 22.4 cents / kWh (see link below for more details).

Solar-hostile utilities like to point out their markedly lower wholesale electricity prices when compared to the initial per / kWh price of solar. But the 14 value figures help to level the playing field using terms the traditional electricity industry and regulatory agencies can understand.

The ASPv study of solar PV benefits is designed to support the Million Solar Roofs Initiative, which is scheduled for a legislative hearing next week. This study provides the hard facts and data for both the legislature and the CPUC to justify a large solar program for California.

Passing the Million Solar Roofs Initiative requires a level of support and consensus among a majority of California's lawmakers, which did not happen last year. This year, ASPv hopes their new analysis of PV values can increase the odds of the bill passing. This same information will also be used to make the case for solar with the CPUC which, should SB 1 pass, be set to the task of implementing the Million Solar Roofs Initiative.

And with 80 percent of the U.S. solar market based in California and thriving on finite rebates and incentives, establishment of a longer term program is paramount for the solar industry's future health in the U.S.

"When you look at the importance of the California program, there is no way that I can see the U.S. market being a meaningful market without California coming out the right way," Hamer said.

Hamer said that passage of the Million Solar Roofs Initiative will lead the way for a meaningful distributed solar electric market in California and the United States.

"The Governor and the authors of the implementing legislation, Senators Kevin Murray and John Campbell, have crafted a comprehensive approach, which will result in solar electricity becoming a mainstream energy option for electricity consumers," Hamer said. "This is easily the most important, serious effort to promote solar electricity ever offered in the United States."