California has the world’s eighth-largest economy and a population that is projected to grow from 39 million today to 50 million by 2050. Providing enough energy to meet the state’s power needs would be a major challenge under stable conditions, but climate change will make it even more difficult. Notably, rising temperatures are projected to increase energy demand for summer cooling. And changing precipitation patterns will reduce spring snowpack in the Sierra Nevada Mountains, decreasing hydropower generation, which produced up to 15 percent of the state’s electricity supply before the current multi-year drought.
Over the past several decades, California has staked out a leadership position in addressing climate change. It has one of the most ambitious renewable portfolio standards in the nation, and it has adopted a goal of cutting greenhouse gas emissions 80 percent below 1990 levels by 2050. To meet these targets, state agencies are spending billions of dollars and using many policy tools to promote clean energy development. One result is a fast-growing solar industry that currently employs about 55,000 people statewide—more than the state’s five largest utilities combined. At the end of March 2015, California had more than 10,000 megawatts of installed solar generating capacity, far more than any other state.
California has achieved these results through a sustained, long-term commitment to solar development. Measures such as ten-year frameworks with dedicated funding streams have created certainty for the industry. The state has sited utility-scale solar projects on large expanses of desert land, but also has aggressively supported residential PV projects with rebates and favorable net metering rules.
Escalating Clean Energy Targets
California made an official commitment to fostering solar power and other renewables in 1996 as part of its legislation deregulating electric utilities. A year later, the state launched its Emerging Renewables Program, which provided rebates to homes and businesses that installed grid-connected solar PV systems under 30 kilowatts. The California Public Utilities Commission (CPUC) funded larger projects for businesses. From 1997 through 2006, more than 150 megawatts of solar generating capacity was installed through these programs.
In 2002, the state legislature enacted a bill establishing a renewable portfolio standard goal of 20 percent by 2017, which was accelerated by subsequent legislation in 2006 to 20 percent by 2010. Three years later, Governor Arnold Schwarzenegger issued an executive order calling for California to reduce its greenhouse gas emissions to 1990 levels by 2020—about 15 percent below a business-as-usual trajectory —and 80 percent below 1990 levels by 2050. Schwarzenegger also proposed a “Million Solar Roofs” initiative that would offer rebates for a decade to promote residential solar projects. In 2006, the California legislature enacted AB 32, which codified the 2020 goal into law, and SB 1, which codified the Million Solar Roofs initiative and expanded on the state’s existing solar energy programs.
These targets increased the urgency of scaling up solar development. In 2007, CPUC launched a new ten-year statewide effort called the California Solar Initiative (CSI), with a $3.3 billion budget and a goal of 3,000 megawatts of new solar capacity. Various elements of the program are administrated by state agencies and utilities, as shown in the table below.
The largest component of the overall CPUC CSI program provided rebates to customers in the territories of the state’s large utilities for installing PV and other solar generating technologies, and solar hot water systems on existing homes, commercial, agricultural, government and nonprofit buildings. Incentives were awarded based on project performance for commercial systems over 100 kilowatts and expected performance for smaller systems.
The CSI program also offered special rebate programs for low-income homeowners and for multifamily affordable housing. In 2013, the legislature authorized $108 million in new funding, setting a goal of 50 megawatts of installed capacity across both single-family and multifamily programs, and extending the programs until 2021 or until the new funding is exhausted, whichever occurs first.
Under the CSI, rebates for solar projects declined in value as the cumulative amount of installed solar generating capacity statewide increased. By early 2015, nearly all of the available rebates had been awarded, but the pace of solar development remained strong. This trend indicates that the California solar market has matured: developers have reduced their costs and continue to install new solar projects without relying on state subsidies. The chart below shows how solar projects through the CSI, combined with utility-scale solar development in the state, account for a large share of the nation’s additions to solar capacity, including the majority in 2014.
“The guiding philosophy behind all of California’s renewable energy programs over the past decade has been that long-term, stable policies signal to the market and investors that renewable energy is here to stay and is going to grow. The three things that will help grow solar and reduce prices are innovation, automation, and scale, and California’s approach to solar development has fostered all of those processes,” says Commissioner David Hochschild of the California Energy Commission.
Facilitating Sustainable Growth
Large energy projects often are hard to site, and solar power is no exception—especially in California, where many environmental advocates raised concerns about the impacts of utility-scale projects on fragile desert lands. To address those concerns, the California Energy Commission, the Bureau of Land Management, the U.S. Fish and Wildlife Service, and the California Department of Fish and Wildlife launched an initiative in 2009 called the Desert Renewable Energy Conservation Plan (DRECP), which focused on 22.5 million acres in the Colorado and Mojave deserts. The plan identified areas where solar, wind, and geothermal development poses relatively little risk of significant environmental impacts, as well as areas that should be protected for habitat conservation. The goal was to help the state balance conservation and renewable energy development in the deserts.
“A lot of this land is pristine. We knew we couldn’t let developers throw projects up wherever they wanted,” says Kevin Barker, an adviser to California Energy Commission Chair Robert Weisenmiller.
The DRECP created a partnership between multiple state, local, and federal government agencies, environmental organizations, and renewable energy development groups that will use landscape-scale planning to designate some areas for conservation and recommend others for development. To make those decisions, participating agencies determined that they needed more information about where animals and plants existed, how vulnerable they were to climate change and development, and what could be done to protect them from the impacts of energy development. The commission developed and funded research projects on species including the California desert tortoise, desert kit fox, golden eagle, and Mohave ground squirrel, and mapped vegetation in the target areas. The draft plan and programmatic environmental analysis was released in September 2014. A public comment period closed in February 2015 and, based on comments received, the plan will be completed in phases.
“This kind of proactive land use planning process can and should be replicated in other places,” says Barker.
This blog post was written by Jenny Weeks and Warren Leon, and was originally published in the Clean Energy States Alliance (CESA)’s 2015 report “Clean Energy Champions: The Importance of State Policies and Programs.” This report provides the first-ever comprehensive look at the ways states are advancing clean energy and suggests how to further encourage clean energy growth. For more information about CESA, please visit www.cesa.org.