No one can really debate that the California Solar Initiative, a 3,000-MW solar program started in 2007, has been very successful. In fact, the utility customer portion of the program targeted 1,940 megawatts of solar by 2017 and we’re on track to cross that milestone later in 2013 or early 2014. This is really impressive and good news for Californians.
CSI is an incentive-based system of declining rebates, with a set rebate amount per “bucket” of megawatts in each step of the program. But the CSI’s system of declining rebates is, due to early achievement of the goals, about to go away entirely. This was always the plan: declining rebates were designed to bring the market to a point where it could thrive without any state help. (There is still a 30 percent federal investment tax credit through the end of 2016, as well as accelerated depreciation, which will continue to help the market grow).
As successful as the CSI has been in achieving its goals there is still a good debate over whether the goals were ambitious enough to begin with. California, a state of 40 million people and excellent solar resources, has installed a total of about 1,800 MW of solar over the last ten years, which includes CSI and other programs like the Renewable Portfolio Standard that is focused on utility-scale solar.
However, compare this to Germany’s over 30,000 MW, Italy’s 17,000 MW, or China’s 8,300 MW over the last ten years (with the majority of that installed in just the last two years). And Japan has vastly ramped up its solar programs since the Fukushima nuclear disaster, installing about 10,000 MW of solar over the last decade — with over 5,000 MW expected in 2013 alone.
Figure 1. Comparing solar installations in different localities over the last decade.
China is a much larger country with a vastly larger population, so it’s probably not a fair comparison. But Germany is a bit smaller in land area and has only twice the population of California. Italy is about 1.5 times our population and about 1/3 less land area than us. Of course, California has far better solar resources than either Germany or Italy.
It seems reasonable to think that California can and should be doing a lot more on the solar front, as well as on other renewables like wind and biomass.
The rest of this article will examine the two main options for replacing CSI: 1) a robust feed-in tariff program; 2) an expansion of net metering. My preference is a robust feed-in tariff, but I recognize that the debate is complex and fair minds can differ on these issues.
Germany set a record one day in June this year when wind and solar power combined served 60 percent of all of Germany’s electricity needs. That’s a truly remarkable transformation that has taken place in just fifteen years. Germany is the world’s fourth largest economy, so this transformation was no mean feat. Why is Germany so successful with renewables? Anyone who follows the renewable energy field knows it’s because of Germany’s aggressive feed-in tariff policies. Ditto for Italy. Ditto for China and ditto for Japan.
California, usually a leader on energy issues, has unfortunately dawdled on feed-in tariffs. It pioneered the feed-in tariff policy in the 1980s and 1990s before abandoning it for alternative policies. The policy provoked an “embarrassment of riches” because of such strong market response.
Since that earlier era, it’s had a very weak feed-in tariff for the last five years: the AB 1969 feed-in tariff for projects up to 1.5 MW. This program is open to any renewable energy technology but the payment provided is linked to the price of power from a new 500-MW natural gas plant — considered the default type of power in California. Known as the Market Price Referent, this payment was too low to work for 1.5-MW renewable energy projects for the first few years of the program and no new projects were built.
But a couple of years ago the cost of solar power equipment dropped so much that a veritable gold rush occurred with the small feed-in tariff program. Totaling only a few hundred MW state-wide (on a grid that is about 60,000 MW), the program filled up quickly with solar projects and it’s looking good for these projects actually being constructed.