Last Minute Measure Saves Solar Funding

In the twilight hours of last Friday’s final legislative session, the California Legislature passed a critical “stop gap” measure to keep funds flowing to the California Energy Commission’s (CEC) rebate program. At the same time, lawmakers failed to approve a solar homes bill authored by Senator Kevin Murray and supported by Governor Schwarzenegger, the solar industry and numerous environmental organizations.

Sacramento, California – August 31, 2004 [] The “stop gap” bill, AB 135 authored by Assemblywoman Sarah Reyes (D-Fresno), and Assemblyman John Campbell (R-Irvine), gives the CEC permission to spend US$60 million, to be collected between 2007 and 2012, for solar system rebates for homes and businesses in either new construction or retrofits on existing facilities. The Commission would otherwise not have access to the money until 2007, leaving a two year gap in rebates. After the California energy crisis, the demand for solar power has increased ten-fold depleting funds expected to last another two years. “It’s extraordinarily important that it (AB 135) went through, otherwise there would be nothing for solar,” said Juliette Anthony, legislative consultant for Sun Power & Geothermal Energy, who helped throughout the final minutes to push forward the critical legislation. “Basically what we did was give ourselves a little breathing room.” AB 135 passed at 12:30 AM on Saturday with a strong showing of 75 votes. Only two-thirds, or 53 votes were needed to pass the bill. The stop-gap bill’s passage however, came after the demise of SB 199, authored by Senator Kevin Murray. SB 199 was designed to advance the highly-publicized “Million Solar Homes” plan, a legislative proposal put forth by the Schwarzenegger Administration less than two weeks before last Friday’s closing of the legislative session. The Administration’s plan had a goal of putting a solar photovoltaic (PV) panels on a million homes, and making solar PV more cost-effective, through rebates of 100 million per year over the next ten years. The bill however, was killed late in Assembly Utilities Committee over concerns of its potential cost to ratepayers and after a weaker version of the same bill was introduced by Senator Debra Bowen (D-Redondo Beach). The silver lining to the “Million Solar Homes” bill’s failure is that it opens up the opportunity for improvement. While Schwarzenegger’s “Million Solar Homes” proposal (SB 199) was an ambitious and well-meaning bill – pumping as much as a billion dollars into solar PV over the next ten years – it could have been a stronger bill in a few critical ways, according to Anthony. CalSEIA, and others in the solar industry offered their strong support for the bill well into its final hours, but now see its demise as an opportunity to work with the Governor to improve the bill in a few crucial ways. In its final form, the bill provided rebates to solar PV systems only up to 3 kW in size, a relatively small system size; It offered nothing to promote increased use of solar thermal hot water systems; and its focus was on homes alone, leaving out businesses that would be interested in solar projects. Currently, there are two funding structures for solar PV in California, the CEC “Emerging Renewables” rebates that provide funding for systems up to 30 kW, then separate funds for large commercial systems above 30 kW under the Public Utilities Commission’s “Self Generation” incentive. If the Governor’s “Million Solar Homes” proposal had passed, in two years CEC funding would have dried up for systems sized between 3 kW and 30 kW – the bulk of the solar industry’s installations in the state. Limiting funding for systems of 3 kW or less would likely not generate the total volume of solar PV capacity that is needed to lower rebates. The whole point of providing rebate incentives for solar in the state is that by employing economies of scale – large volumes of solar PV – the price for PV would gradually turn down, eventually negating the need for rebates altogether. “We want the Governor’s plan to work, but in order for it to do so, we need the whole industry,” Anthony said. “Without the volume, the Governor’s plan is not going to succeed.” Anthony also questioned the wisdom of limiting solar PV installations to 3 kW when so many of California’s homes, particularly the news ones, are overly large, and include wasteful and energy intensive items such as central air-conditioning and sub-zero refrigerators. Grid-connected solar PV systems are cited for their ability to send energy back into the electric grid when a particular PV system is creating more energy than can be used by the building or home on which it is installed. Small 3 kW systems would have a negligible effect on the electric grid – particularly when installed on large, energy-intensive homes. The Governor’s plan did include an energy efficiency measure that would double the PV rebate if the particular home was “zero energy,” not using up more power than it generated. While that may be a strong incentive for energy efficiency, the 3 kW cap would not offer much flexibility for homeowners to achieve these zero energy homes. Lastly, the solar thermal industry would have been left behind entirely. Not only is solar thermal a major component of California’s solar industry, but the simpler technology is a very cost effective renewable energy technology. For these reasons, Anthony felt the Governor’s proposal in its final form could have been disruptive and counterproductive to both the solar industry and the Governor’s goals of increasing solar use in the state – but still offered a good legislative base to build upon. “An inadequate solar bill is not the answer, we have to do it right, we need a comprehensive bill that includes all parts of the equation,” Anthony said. Despite the bill’s shortcomings, Anthony along with CalSEIA were in support of Schwarzenegger’s “Million Solar Homes” proposal (SB 199) largely because it would give the solar PV industry two years of CEC funding at 200 million. This would then have bought two years of time for them to push work with Schwarzenegger’s Administration to pass a more comprehensive bill. “We tried to be team players and be cooperative to make something really good happen,” Anthony said.” We felt we could work with the Governor’s office to help them understand it needed to be a comprehensive bill.” Regardless, the Governor’s proposal was voted down, and now it’s back to the drawing board for CalSEIA and others who intend to pursue a comprehensive package of legislation that accounts for the entire solar industry. The California legislature is out of session until December, when it reconvenes for a short period and then resumes again in 2005.