California Utility Scales Back Rooftop Solar Program To Save Money

Ucilia Wang, Contributing Editor
February 17, 2012 | 6 Comments

Southern California Edison has won approval to modify a photovoltaic program that won praise for its intent to promote distributed, rooftop generation when it received the initial thumbs-up from state regulators in 2009. With the changes, though, the utility will look for larger and more ground-mounted projects and scale back the plan to build some of the projects on its own.

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.

6 Comments

Lawrence Carroll
February 22, 2012

dave-fisher, you said, "Jajagabor, Australia's
solar energy program must be far ahead of most of the world's from what I've gathered from you."

Certainly it is much better, at least compared to say, Alabama, where I live! :) And it is probably much further along that many other places, at least in the USA.

I've seen some of the giant wind turbines (farms) in Pennsylvania that seemed to be right in the center of "coal country," so I wouldn't be too skeptical about of having an effect, however.

In addition,while Australia is doing well compared to us, it could still have quite a few more solar installations. I walked frequently in an area near the Brisbane airport and would see a solar installation maybe every half mile to a mile. In other areas, such as the freeway from Brisbane to Byron Bay, I saw cluster after cluster of installations almost over the whole route. But that still leaves a tremendous number of places without solar installations - even if it is a lot better than what you see here, even in places with a lot of sunlight. (For example, I've been to Florida and have not seen even one installation for miles and miles and miles in places like Tarpon Springs, or Panama City - which is pathetic. Whether this is typical of the whole state, I don't know, but I would guess it is).

Good luck!

Lawrence Carroll
February 21, 2012

These comments about the utilities make sense.

It reminds me of my recent 2 and a half month stay in Australia. My GF and I noticed in Sydney and Brisbane that many of the houses and businesses had water catchment systems. It fact, it was extremely widespread (and apparently has been for some time due to the lack of rainfall). From living and talking with the Australians during this time, the systems seem to be seamlessly intergrated with the utility water - one didn't notice any difference.

But here's the catch - we were told (with a lot of humor) many times how the water utilities were complaining because they weren't making enough money due to widespread use of these systems! It sounds like the electrical utilties spreading fear here somewhat. Though I wouldn't say the parallels are exact, there are strikingly similar.

We also noticed how many solar thermal and photovoltaic systems there were.

On the bad side, there was a major scandal regarding two solar companies that had paid a lot of money sponsering sports events but had failed to actually install many systems that homeowners had paid for months and months prior. The owners of the two companies were also caught on video getting drunk at parties with some of these sports stars/institutional owners.

I can see how Rupert Murdoch must have come from the 'bad seed' of the Aussies . . .

ANONYMOUS
February 21, 2012

comment #2 is on target.
Utilities in MA are currently choking out developers and imposing as high a cost burden on the rate base as possible by refusing to sign SREC contracts of any length--drives spot prices up--note that ALL compliance costs are FULLY recoverable by the utilities.
In a year or so, these utilities will complain about the hardship imposed on the rate base by the solar carve out and ask for it to be reduced.
It is the game being played out right now.

ANONYMOUS
February 21, 2012

pretty funny that JUST NOW it occurred to SCE that there isn't enough roof space -- lack of space is primarily due to seismic code issues for buildings built before 199[x]--late nineties but forgot the exact cutoff year.

ANONYMOUS
February 21, 2012

The last thing the solar industry needs is Utilities in control. At every turn, they undermine / circumvent their own solar programs to meet internal business goals. Once the green marketing buzz around CSI diminished, they (in this case SDGE) try to retroactivley force feed a Network Use Charge to Solar Netmetering Ratepayers, effectively sticking it to every business and consumer who made the investment in PV-later thankfully struck down by the PUC. Case in point: The 2010 SCE RFO had LA Developers jumping through hoops to tee up the most favorable rooftops in SCE jurisdiction. 300 tigers crammed in a room with one steak. This was simply an excercise in free market analysis. Next step? Buy 40MW+ from Trina and cherry pick the newly identified So Cal portfolio. Now, they claim there are too few viable rooftops to meet the goal and throttle back on the program entirely. The truth is SCE has not been able to lock up every REIT with holdings in so Cal. Take a look at the '11 Mile Smile' along the north side of the 60 freeway between the 57 and the 605 and exlain why there are too few viable rooftops in SCE jurisdiction. The Company who owns those facilities (a family-owned LA institution)refused to fall for the SCE roof rental stupidity test. Judge Utilities by their actions and you come away with a very bad taste.

Jigar Shah
February 21, 2012

This is amazing. There are many misguided solar advocates (see SEPA) that is pushing for the utility to take over solar in the United States. This shows that the Utilities job is to run the program (if even that) and for the real private sector to actually put in and finance the solar PV. The utility is just a quasi-government entity that clearly can't even find the quality rooftops to install solar on at $3.85/Wdc. . . so sad.

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Ucilia Wang

Ucilia Wang is a California-based freelance journalist who writes about renewable energy. She previously was the associate editor at Greentech Media and a staff writer covering the semiconductor industry at Red Herring. In addition to Renewable...