Solar Energy Still Unsettled in California

During the California Legislature’s holiday break, Governor Schwarzenegger and members of the Senate and Assembly were encouraged to pass legislation that would create the next California Solar Program through 2017. Instead, Governor Schwarzenegger concluded it would be best to implement the California Solar Initiative (CSI) through the California Public Utilities Commission, (CPUC). Besides the additional legislation needed to make up for all of the shortfalls within the CSI, Governor Schwarzenegger has put this important and well funded program in the hands of CPUC staff who are either “new to the show” or do not have the experience or technical data needed. Additionally, within the industry, there is no unity or one group stepping up in a leadership role stating, “This is what we need, why we need it; and how we implement it within the timeframe required.”

California has had the mindset of building PV systems that maximize incentives instead of production. The California Energy Commission (CEC) and the Self Generation Incentive Program (SGIP) have had no accountability to what comes out the back-end as long as capacity systems were built. The result of this mindset is a lack of production data and program information needed to create a fair and equitable program meeting long-term mandated renewable goals. On March 16, 2006, a CPUC Workshop regarding the implementation of a Performance Based Incentive, (PBI), was held. As a participant in the eight-member panel, it was apparent to me that a successful program emerging from this process will be highly challenging. It was clear through comments and questions, this mindset remains the same; how to maximize incentives while ignoring production issues and standards. Until questions regarding production standards and output begin to be answered, a successful performance based program will be difficult to create and implement in the timeframe required. Associations represented had their own agendas that revolve around trying to create a program that maximizes profits for companies they represent. Because of current market pricing and initial capital investment while utilizing ratepayer subsidies, today’s technology is still a disposable income purchase. Manufacturing sees the increase cost of today’s technologies as an opportunity to bring to market tomorrow’s products at higher acceptable costs while still receiving subsidies from ratepayer or taxpayer funds. The CPUC Staff creating and implementing the CSI need to be extremely careful not to produce a separation between California and the global market. While California is the largest market in the U.S., it could certainly see an immediate and severe decline in market status if current assumptions remain. Issues regarding tax credits and revenue reporting, increasing Utilities’ net metering requirements, as well as many other issues can have large effects on market pricing. California is in a global market that is determined by International corporations whose locale and origin dictate different behaviors in regards to the use and conservation of power. Thus, when these manufacturers are deciding supply allotments, decisions are based on how to maximize profits in a global arena. California seems to be operating on the assumption that manufacturers will react in large strides to the implementation of the CSI. This is an extremely dangerous assumption. California once had an opportunity to be a “leader” in the industry. That time has not passed. The old adage, “don’t confuse efforts with results” applies to the past seven years. California has developed a renewable program that has “install a-lot that produces a-little”. The SGIP and CEC programs have been poorly financed and administered while allowing a small group of corporations to take advantage of agencies and working staff to benefit their own profitability. This continues today with the behavior of the SGIP Administrators and reactionary decisions they make while ignoring real market indicators taking place at the CEC. These individuals and corporations have years invested and have seen an opportunity to reap the rewards of their longevity and commitment. For this industry to move from being a disposable income product to an everyday household item sold incentive free, California will need to develop a program that will react to the global market and allow for long term investment in developing supply infrastructure. With legislation trumping the implementation of any program put into play by the CPUC, Governor Schwarzenegger has set himself up for failure. The Governor is playing with a team who will have a challenge just making the show. This will allow the Legislature to come in and save the day by implementing its own program, such as SB1. What the Governor might see as a light at the end of the tunnel could certainly be a freight train coming his way. About the author… Mark Johnson, is CEO & President of Golden Sierra Power located in Northern California. Mr. Johnson has been actively building commercial photovoltaic systems while also providing information and business models to both the California Energy Commission (CEC) and the California Public Utilities Commission (CPUC) regarding the development and implementation of Performance Based Incentive Programs and proposed cost-benefit methodologies.
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