California Utility Scales Back Rooftop Solar Program To Save Money

The California Public Utilities Commission approved the changes to the 500-megawatt PV program on Thursday, a year after Edison filed the request for modification. The original program called for Edison to own 250 megawatts of solar energy systems while buying power from another 250 megawatts from power producers. The size of each project was to be one to two megawatts, and the majority of projects would be located on the rooftops.

The new program will reduce the Edison-owned and third-party owned projects to 125 megawatts each. For this 250-megawatt portion, the commission upped the limit of the ground-mounted projects from 10 percent to 20 percent.  The remaining 250 megawatts will now fall the Renewable Auction Mechanism (RAM) that the commission approved in 2010 to also encourage the construction of smaller PV projects that could be located closer to where the solar electricity will be used. RAM allows each project to be as large as 20 megawatts.

Edison actually asked to put the remaining 250 megawatts in a new category it called “IPP revised.” It wanted the project size limit to go up to 20 megawatts and no limits on the number of ground-mounted systems. Edison said its version of the proposal could save the entire program $300 million. That’s a good chunk of change, considering that, back in 2009, the utility thought it thought it could build and own the 250-megawatt portion for $3.50 per watt, a cost that it said at the time was about half of the average in the state at the time. That installation cost translated into $875 million for the 250 megawatts (or $$962.5 million -- $3.85 per watt -- if you add the 10 percent contingency). 

The revised program should still save some money since the price of solar panels has fallen by 50 percent in 2011 alone. A glut of solar panels and changing government subsidies in key markets such as Germany and Italy contributed to the plummeting prices, which have forced several solar manufactures to file bankruptcies and many more to shutter factories and lay off workers.  Solar panel makers who have filed for bankruptcies over the past year include Solyndra, Energy Conversion Devices, SpectraWatt, Evergreen Solar and Solon.

But the utilities commission didn’t agree to change Edison’s PV program just because the prices of solar equipment have fallen so much. Apparently, there isn’t as much structurally-sound roofs for the program as initially anticipated, and the weak economy hasn’t helped.

“The weak economy, however, has diminished opportunities by reducing the amount of new large commercial and industrial construction with rooftop space available for solar PV installations,” the commission said.

The commission noted that, since its original approval of Edison’s program, it has created or changed other renewable energy generation programs that promote smaller rooftop projects. So there isn’t a big need to use Edison’s program to encourage projects in 1 to 2 megawatts, the commission said.