Tag Archives: Solar Industry

California’s Distributed Energy Future

GTM Research has established itself as the premier source of information on solar industry trends and developments in the United States. It’s instructive that from that perspective, they chose to organize a conference focusing on a single state, California.

We who participate in the solar industry here have recognized the state as a leader, but the less patronizing among us also recognize that the magnitude of this lead is only temporary. If solar is to realize its potential as one means of reducing environmental damage while reducing future customer utility costs, then other parts of the United States need to catch up (and as GTM’s latest data for 2015 shows, they are).

Nonetheless, as GTM Research Senior Vice President Shayle Kann observed in his opening keynote at GTM’s California Distributed Energy Future conference in San Francisco, California remains the epicenter of next generation distributed energy (DE) regulation and is at the forefront of the shift toward distributed energy in the U.S. And (I would add) what happens in California doesn’t always stay in California. Hence the conference to examine California’s transition to a distributed energy future and consider what’s working and what isn’t.

The discussions at the conference covered a variety of issues confronting the state. Here is an overview of the key themes coming out of the discussions, and the insights shared by the different speakers:

The strongest and most frequently recurring theme was that of the interaction of Distributed Energy Resources (DERs, essentially distributed solar PV) and the electrical grid. This issue has numerous dimensions, and subsequent “fireside chats” helped highlight some of these.

Appropriately the first discussion was with a Senior Vice President from Pacific Gas & Electric (PG&E), California’s largest investor-owned utility (IOU) and the utility with more connected PV capacity than any other in the United States. Issues were fairly raised: e.g., how should rates be structured to fairly compensate the value of Grid access received by the customer, how does PG&E envision an environment of growing Community Choice Aggregation (CCA) systems and how is the Grid managed for reliability. Unfortunately, the moderator for this session let the PG&E representative off with the stock, PR answers: “we have to make changes in our rate structures”, “they can work, note how long Marin (Clean Energy, 2010) and Sonoma (Clean Power, 2014) have been in service”, and “we need to build in robustness.”

Ah well, at least subsequent chats returned to DER issues in more depth. DERs can lower costs for Grid operators / managers; experiments were cited by both Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) involving combinations of storage and DERs. Time of Use (TOU) pricing is coming, and 150 studies worldwide on this issue indicate that customers like this. But there is just too little experience with California’s residential customers while the customers themselves have too little information on which to make decisions as to costs versus savings.

Questions were also raised about Grid planning, to which respondents appeared to agree that too much is moving to identify a “right” strategy, especially as there isn’t even agreement on how to weigh technical issues such as reliability against other social goals we “should” be pursuing. The underlying complexity raised by these superficially straightforward questions was well-highlighted.

Michael Picker, President of the California Public Utility Commission (CPUC) noted that despite all the issues the CPUC addresses, DE issues are of significant importance. CPUC needs to consider even the framework for its decision making processes going forward. A system designed to regulate railroads in the 1890’s may not provide the responsiveness and flexibility for regulating changes to utilities in a rapidly evolving technological, economic and social environment. The “adversarial” approach used in CPUC proceedings may not be the best approach—why is the current process more dependent on legal skills than on engineering skills? The desire is to move forward not too fast, not too slow in opening the market to competition while allowing utilities to remain viable business entities. These are issues that could keep one up at night.

Michael Picker (CPUC, left) and Shayle Kann (GTM, right) during their “Fireside Chat”

GTM California's Distributed Energy Future Conference

The second, albeit lesser, recurring theme I heard at the conference was that of CCA developments. Until this year, there have been only three of these organized in California: Marin (with subsequent geographic extensions) and Sonoma were cited above, and Lancaster Choice Energy was launched in 2015. San Francisco’s Clean Power SF, Silicon Valley Clean Energy and Peninsula Clean Energy (San Mateo County) are in the process of launching this year.

As Mark Ferron, CAISO Board of Governors, cited, in 5 years 60% of the state’s eligible population could potentially be served by CCA’s if all programs now in discussion came to completion in that time. He provided a link in later discussion which I repeat here for those who want to follow up on the tally he reported: climateprotection.tumblr.com/tagged/Community-Choice

CCA’s make solar available to those in multi-family dwellings or who own a home not situated with a solar-favorable orientation or location. Expansion of solar power to these customers is required if solar-based power is to expand. Yet as Michael Picker observed, CCA “forced collectivization is a coup against the traditional utility model, challenging utilities and eroding the role of the PUC.” We don’t know yet where this takes existing suppliers and industry participants.

The challenges of the new, evolving energy infrastructure are actively being addressed by the states of California and New York. Conferences such as this provide an excellent opportunity to reflect on the issues and the difficulty this transition poses for firms competing in the market, regulators and the state legislatures who will eventually need to rewrite the rules for structuring state energy markets.

Yikes! Is California’s interest in Solar Energy Collapsing?

GTM Research and the Solar Energy Industries Association (SEIA) released their US Solar Market Insight 2015 Year in Review on Wednesday, March 9. We’ve been tracking their PV capacity reports for the past several years, and in the figure below we plot the 2015 capacity increases reported in their Executive Summary.

While there was strong national growth in installation capacity this past year, California’s capacity additions were less than in 2014. After a couple years of providing over half the annual capacity additions in the country (57% last year), California’s share has fallen to a mere 45%.

 Annual PV Installations: California and U.S. Total (2010-2015)

Annual PV Installations: California & U.S. Total (2010-2015)

We picked ourselves up off the floor and asked “What is happening; is this for real?” So we called GTM Research and checked other sources to find out what in the world was going on. Turns out that despite the disastrous looking change, solar growth in California remains alive and well.
Turns out the primary reason for the downturn is a sharp decline in Utility-scale PV projects. According to GTM, these additions fell to the vicinity of 1800 MW last year. [I wish we could afford the $2000 – $6000 for the full report that our SEIA Membership entitles us to so that we could access all the GTM data. But we live in lean times and use information from diverse public sources such as US Energy Information Agency (EIA) and California Energy Commission (CEC) as well as GTM’s summaries to inform our understanding.]

According to EIA information published in late February, it appears that Utility-scale solar PV expanded by 2000 MW in 2014, but only 1100 MW (preliminary) in 2015. Data from diverse sources rarely match-up year-to-year, but the trends are identical—California’s utility-scale PV installations experienced a sharp reduction in 2015.

After checking the CEC’s most recent Tracking Progress, Renewable Energy-Overview, we can see why—the utility industry is ahead of target for meeting the state’s 2016 Renewable Portfolio Standard (RPS) 25% goal. The industry achieved almost 25% renewables in 2014! The state added approximately 4000 MW of utility scale PV capacity between 2013 and 2015. Utilities are meeting their target early; the apparent slowdown is a temporary pause while utilities work on the installations that will get the state to 33% renewable electricity by 2020.

Distributed generation activity remains strong in California, both in the Residential and Non-Residential segments. The state’s residential customers generated demand for approximately 1000 MW of installations—almost half the national total of 2100 MW. And other distributed generation customers (eg, commercial rooftops) account for about another 300 MW.

So for the first time in years, California’s share of new solar PV installation is now less than half the national total. Good news! The rest of the country is waking up to the benefits of solar energy with capacity increasing in numerous states. The Utility sector is leading this expansion, while the residential sector growth is accelerating. We’re pleased to see this expansion.

Smug About Your Solar Roof? Not So Fast

By Severin Borenstein (Professor, UC Berkeley), The Los Angeles Times

If you’ve installed solar panels on your roof and feel aglow with environmental virtue, you may be in for a rude awakening. There’s a good chance someone else has purchased your halo and is wearing it right now.

In most states (including California), rooftop solar panels earn Renewable Energy Certificates, which quantify how much clean electricity they produce. But if panels are leased or installed under a power purchase agreement, it’s the “third-party owner” — not the homeowner — who gets those certificates. Most then turn around and sell the RECs, a process that magically turns brown electrons green.

Here’s how it works: Joe’s Solar puts panels on your roof that produce 7,500 kilowatt-hours a year, and Joe sells you the electricity under a power purchase agreement. Because Joe still owns the panels, he gets credit — in the form of RECs — for that renewable electricity. Meanwhile, Bob’s all-fossil utility wants to “green up” so it buys RECs from Joe. That allows Bob to relabel 7,500 kilowatt-hours of his coal- or gas-fired power generation as “renewable energy.”

It may sound strange, but a market to sell or trade RECs can be extremely useful. California, for instance, has a mandate for its utilities to generate 33% renewable power by 2020, but some parts of the state have little sun or wind resources. Still, utilities in sunny or windy spots can produce more than their requirement and then sell the extra RECs to areas where it would be much more costly, or impossible, to hit the target. Thus, the RECs market allows a utility in one region to finance additional green energy production in another where it is cheaper, supporting more carbon reduction at a lower cost to consumers.

That seems sensible enough. But something’s wrong if the buying and selling utility companies both claim that green power as their own. And that’s essentially what’s been going on with solar rooftops.

Read full op-ed in the Los Angeles Times

 

A Sunny Future for Utility-Scale Solar

By John Finnigan, The Energy Collective

Utility-scale solar and distributed solar both have an important role to play in reducing greenhouse emissions, and both have made great strides in the past year.

Utility-scale solar, the focus of this article, is reaching “grid parity” (i.e., cost equivalency) with traditional generation in more areas across the country. And solar received a major boost when the federal tax incentive was recently extended through 2021. The amount of the incentive decreases over time, but the solar industry may be able to offset the lower tax incentive if costs continue to decline. New changes in policy and technology may further boost its prospects.

Some of the world’s largest solar plants came on-line in the U.S. during the past year, such as the 550-megawatt (MW) Topaz Solar plant in San Luis Obispo County, California and the 550MW Desert Sunlight plant in Desert Center, California. Last year saw a record increase in the amount of new utility-scale solar photovoltaic generation installed – about four gigawatts (GW), a whopping 38 percent increase over 2013, and enough solar power to supply electricity to 1.2 million homes. This number is expected to increase in 2015 when the final numbers are in.

Read complete article from The Energy Collective

U.S. solar industry battles ‘white privilege’ image problem

By Nichola Groom, Reuters

Solar power companies have an image problem—and they are beginning to do something about it.

Despite a sharp drop in the price of solar panels and innovative financing plans that have brought the technology to many middle income households over the past decade, it is still seen as a luxury only rich, mostly white, consumers can afford. That perception both hampers solar expansion in less affluent communities and drives political opposition to initiatives promoting greater use of solar power as a renewable alternative to gas, oil and coal.

Though it has grown dramatically in recent years, solar power still makes up less than 1 percent of U.S. energy supplies and relies heavily on government incentives to compete with traditional energy sources. Those incentives help companies such as SolarCity, Sunrun and others market solar power contracts that offer customers 20 percent savings on their energy bills. However, the schemes come with certain credit requirements and are ill-suited for apartment dwellers, homes with low monthly bills or low-income households that qualify for reduced power rates.

Since minorities make up a disproportionate number of low-income households, some advocacy groups have opposed certain solar power initiatives arguing that they deepen social and racial inequality. Solar companies are now trying to tackle both the perceptions and the economics by pushing to diversify their workforce, forging alliances with minority groups, and making solar power more suitable for multi-family housing.

The stakes are particularly high in California, by far the top U.S. solar market where solar power is expected to make up more than 10 percent of the state’s power generation in 2015, according to IHS. Communities with median household incomes below $40,000 account for just 5 percent of installations in the state even though a third of California households fall into that category. That share has not changed over the past seven years even as solar installations in communities in the $55,000-$70,000 income bracket have risen to more than half of the total market.

Read full article from Reuters

The Silicon Valley Idea That’s Driving Solar Use Worldwide

By Mark Chediak & Christopher Martin, Bloomberg News

Silicon Valley has something to offer the world in the drive toward a clean energy economy. And it’s not technology.

It’s a financing formula. In a region that spawned tech giants Apple Inc. and Google and is famous for innovators and entrepreneurs like Steve Jobs, a handful of startups began offering to install solar panels on the homes of middle-class families in return for no-money down and monthly payments cheaper than a utility bill. This third-party leasing method — which made expensive clean energy gear affordable — ignited a rooftop solar revolution with annual U.S. home installations increasing 16-fold since 2008, according to the Solar Energy Industries Association and GTM Research.

“There is a reason why California is a tech Mecca for the world because the infrastructure is here to attract that talent,” said SolarCity Corp.’s Chief Executive Officer Lyndon Rive, whose company popularized third-party solar leases for homeowners starting in 2008. “All the major innovation is going to occur in California. One of the innovations is the financing of solar assets.”

SolarCity took the leasing model that SunEdison Inc. first developed for the solar industry by a graduate student named Jigar Shah. SolarCity adapted that model for residential consumers in 2008 and many more offered similar arrangements including Sunrun Inc., which developed the first one in September 2007, and Vivint Solar Inc. And now the idea is spreading to other industries trying to sell expensive capital equipment that reduce pollution and fossil fuel consumption.

Read full article from Bloomberg News

SunPower Plans to Sell Rooftop Solar Electricity in California

By Mark Chediak, Bloomberg Business

SunPower Corp., the second-biggest U.S. solar manufacturer, is developing a plan to sell electricity in California.

As the company combines its rooftop solar, energy storage and management systems, it will tap those resources to sell into the California bulk-power marketplace, Chief Executive Officer Tom Werner said in an interview Tuesday at the Edison Electric Institute Financial Conference in Hollywood, Florida.

“Participating in the wholesale markets is definitely where we will go,” Werner said. The company will initially focus on selling batteries along with its solar systems for backup power and reduction of power use during peak demand hours. “Walk before you run,” he said.

The move would represent a shift for SunPower, which has focused on making panels and developing solar farms. It comes after the California Independent System Operator Corp. approved in July rules that would allow aggregated distributed energy resources such as rooftop solar and batteries to participate for the first time in the state’s wholesale power market.

Read full article from Bloomberg Business

Big Energy’s Solar Grab Protested in California

Despite California Gov. Jerry Brown’s ceaseless tour of publicizing climate change and renewable-energy reforms, regulators are mulling expansive changes to the state’s solar-energy policy that critics claim could decimate a booming solar industry.

Ahead of a Dec. 31 deadline, the California Public Utilities Commission is considering proposals from the state’s largest utilities that would drastically alter how solar users pay for access to electricity grids. The utilities’ proposals could eliminate or weaken a popular state program that reimburses homeowners for their extra solar energy while increasing fees for accessing the grid.

At a rally Thursday at the state capital, executive director of the California Solar Energy Industries Association Bernadette Del Chiaro told a crowd that the utilities are attempting to stifle residential solar systems in California and their proposals are aimed at increasing profits.

“The utilities are threatened by consumers generating their own electricity; it threatens their bottom lines,” Del Chiaro said, with dozens of solar-industry representatives clad in teal blue shirts behind her. “They make money off building big expensive infrastructure projects.”

At stake is a tariff program known as net metering, which allows homeowners with solar panels to send back excess energy to the electricity grid in exchange for compensation from the utility. Advocates credit net metering with making California the largest solar power producer in the nation and contributing more than 54,000 solar industry jobs statewide.

Read full article from Courthouse News Service

Brown signs climate law mandating 50% renewable power by 2030

By David R. Baker, The San Francisco Chronicle

By the end of 2030, half of California’s electricity will come from the wind, the sun and other renewable sources under a new law that sets one of the country’s most ambitious clean-energy targets. The legislation, SB 350, signed into law Wednesday by Gov. Jerry Brown, accelerates California’s shift away from fossil fuels as its dominant source of energy and marks another milestone in the state’s fight against climate change.

The law expands a transformation already well under way. For more than a decade, California has required its electrical utility companies to use more renewable power, with the Legislature repeatedly raising the goal. The requirement led to a construction boom for solar power plants and wind farms. But the activity slowed in recent years as developers waited to see whether the Legislature would once again set a higher target. The new law eases that uncertainty, ensuring that California remains a major market for companies that design and build renewable power facilities.

While some business groups have complained that California’s aggressive climate and energy policies could burden local companies with higher costs, the same policies have helped create a thriving clean-technology industry in the state. Supporters of the new law say it sends those companies a signal that the state won’t back off its goals.

Read full article in the San Francisco Chronicle

California Leads a Quiet Revolution

By Beth Gardiner, The New York Times

California is cruising toward its 2020 goal for increasing renewable energy and is setting far more ambitious targets for the future. Its large-scale solar arrays produced more energy in 2014 than those in all other states combined. Half the nation’s solar home rooftops are in the state, and thousands more are added each week.

With its progressive politics, high-tech bent and abundant sunshine, California is fast ramping up its production of clean electricity, setting an example its leaders hope the rest of the country, and other nations, will follow as they seek to cut emissions of climate-warming carbon dioxide. “It’s hard to overstate the importance of California in terms of renewables,” said William Nelson, head of North American analysis at Bloomberg New Energy Finance. “It’s like an experiment in terms of how quickly we can add solar to the grid.”

Fifteen years after an energy crisis, caused partly by deregulation and market manipulation, brought blackouts and price spikes, the shift has been remarkably smooth, many analysts say. Even without counting the big contribution from home solar generation, 26 percent of the state’s power this year will come from clean sources like the sun and wind, Bloomberg New Energy Finance estimates. The national average is about 10 percent. “It’s kind of a quiet revolution,” said Daniel Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley. “Nothing weird or strange has happened, electricity prices haven’t shot up or down.”

Read full article in the New York Times