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.
