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December 14, 2005 The proposed plan's declining rebate structure for solar shows the breakdown between CEC and CPUC funding. Photo: Joint PUC / CEC Staff Presentation |
"The bottom line is that about three billion
dollars over ten years will be the biggest solar incentive in the country and
second biggest in the world behind Germany."
-- David Hochschild, Vote Solar Initiative director of policy
Los Angeles, California [RenewableEnergyAccess.com; UPDATE: 8:34 a.m. EST] The California Public Utilities Commission (CPUC) released a major proposal that will effectively act as a replacement for the ill-fated SB1, or Million Solar Roofs Initiative. And like the SB-1 bill it supplants, the CPUC plan, called the California Solar Initiative (CSI), will be the largest solar energy bill in U.S. history.
According to solar industry sources and the draft plan
released by the CPUC, the plan will be noteworthy in a few major ways: it will
establish an 11-year solar rebate program running from 2006 through the end of
2016 for new and retrofit installations of solar photovoltaic (PV) systems. It
will also provide substantial funding of $3.2 billion with $2.8 billion of that
coming from the CPUC and $400 million coming from the CEC.
Initial rebate levels in the plan for solar photovoltaics and concentrated solar
(up to one MW) will be set at $2.80 per watt in 2006 and are scheduled to be
dropped by 10 percent each year thereafter. Rebates funds for next year alone
will be replenished with $300 million while the PUC and CEC work out the plan's
official launch in 2007.
The PUC plans to have the program funded by directing electric utilities to use
their revenues from gas and electric distribution rates. The plan also leaves
open the option that utilities recover associated revenues through the
ratemaking process. Environment California, an environmental organization
supporting the plan, expects any new surcharge on monthly bills to be in the
range of 60 cents per month. Either way, low-income households will be exempted
from any additional payments. Plus, 10 percent of the fund will be set aside for
low-income and affordable housing projects.
While the exact nature of plan will be determined between now and 2007, the
rebate structure is expected to move from California's current capacity-based
approach to a performance-based incentive (PBI). For example, instead of
awarding a project in one lump sum for the total capacity of installed PV, as
current incentives are structured, a PBI plan would reward the project on a per
kWh basis of energy output from the system. The PUC says these PBI plans may
motivate better investments in and maintenance of solar projects, a point many
industry experts generally agree with.
Additionally, rebates for solar heating and cooling, and concentrating solar
(solar thermal electric) will be developed in 2006, according to a joint PUC and
CEC staff presentation publicized Monday. The draft release of the plan added
that solar water heating incentives should be provided only as part of a closely
monitored pilot program.
The PUC's public release of the plan marks the beginning of the official
one-month public comment phase, with a final vote among the five CPUC
commissioners expected on January 12, 2006.
Industry experts say since the solar energy plan is being put forward through
the CPUC, there are much higher expectations of its success than the former SB-1
bill introduced in the state's legislature.
A similarly ambitious policy goal came very close to passing for the past two
years in the State Assembly. With Governor Schwarzenegger leading the charge,
two versions of the SB1 bill failed after competing interests and amendments
eroded essential bipartisan support.
Unlike the state legislature, however, the CPUC is widely considered to be in a
much better position to make this broad solar policy a reality.
"It still has to be out for public comment but we fully expect it to pass," said
David Hochschild, Director of Policy at the Vote Solar Initiative in California.
"The PUC Commissioners are a lot more independent than the legislature. They are
not running for re-election, cannot be removed, and don't have to resist
campaign re-election dollars."
"What the PUC is doing is really producing the most important piece of the
puzzle: the incentive dollars and the long-term policy, those elements are most
important," Hochschild said. "The bottom line is that about three billion
dollars over ten years will be the biggest solar incentive in the country and
second biggest in the world behind Germany."
Bernadette Del Chiaro, Clean Energy Advocate Environment California, agrees that
the odds for this becoming a reality in California are much higher than previous
efforts in the legislature.
"I've learned my lesson peering into crystal balls but I would say this is
absolutely different than the State Legislature," Del Chiaro said. "We're
talking five people, and we just need three of those five people to vote for
this. Three of those commissioners were appointed by the Governor. It's safe to
say that four of the five are in lockstep with this plan."
Both Del Chiaro and Hochschild said the Governor's support has provided a
tremendous level of public support. They each cited numbers between 45,000 and
50,000 of people who have written to the PUC in support of a major solar
program.
"It has broken the record on any issue the PUC has received on any issue
including the energy crisis," Hochschild said. "We're finally seeing the
popularity of solar translate into real dollars."
Those real dollars are at just the right level, said Barry Cinnamon, President
of Akeena Solar, and the new President of the California Solar Energy Industries
Association (CALSEIA).
"What's important is that they seem to have done a good economic analysis to
what it would cost and they're looking at funding it adequately in the
neighborhood of three billion dollars," Cinnamon said.
Cinnamon is also pleased with the approach through the PUC, which insulates the
plan from bitter conflicts that arose with SB1 in the legislature, much of these
stemming from differences between what union interests and the solar industry
wanted. While he won't bet on it, he doesn't expect the same union frictions to
vocalize during this one-month public comment period.
"We're not seeing the same antagonisms between unions and the solar industry,"
Cinnamon said. "Everyone was a little burned during the legislative process and
since then there have been olive branch gestures between the two groups."
Should the plan pass, as many are expecting it to, it won't be a one-stop-shop
for rebates but rather will be administered through both the PUC and the CEC.
The PUC will administer the solar program rebates for all existing residential
buildings, commercial buildings, industrial and agricultural facilities.
The CEC will work specifically with the new buildings market, which is likely to
benefit from a different approach. And unlike some versions of SB1, there is no
mandate that builders use solar, an item that proved very contentious the first
time around with builders and the legislature.
Energy efficiency audits will be required for certain structures to be eligible
for the rebates while new construction rebates will require participation in the
local utility's energy efficiency program. Advance meters and time-varying rates
will be provided for solar.
The rebates won't be available for all Californians either. Since the PUC only
has power over investor-owned utilities (IOUs), which provide power for
approximately 80 percent of California, the plan will initially exempt
municipalities like the Sacramento Municipal Utility District (SMUD) and the Los
Angeles Department of Water and Power (LADWP), for example. Del Chiaro, however,
expects the establishment of this program for IOUs will offer new leverage and
pressure for municipalities to come up with similar programs.
For now though, even without municipalities, Del Chiaro said she will be more
than pleased to see this battle finally won for solar in California.
"This is the motherload," she added. "This is where you start."
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