The renewable movement has gotten the green light. Now it's a matter of crafting the right policies to ensure that projects get built in a cost-effective and consumer-friendly way. Californians think they have the answer.

After getting tested by their domestic utilities, the California Public Utility Commission has come up with a "marketplace tariff" that fits with national laws. Basically, California's utilities have to buy green energy to meet the states renewable portfolio standards. But they don't have to do it at state-controlled prices. Instead, producers will bid into a system -- one that requires those utilities to buy at the lowest cost.

"The United States is taking a different tack from what we are seeing in Europe," says Julie Blunden, executive vice president for public policy and corporate communications at SunPower Corp. in San Jose, Calif. "Here, we are establishing a market-based pricing mechanism that will ensure compliance with federal law and a sustainable market. In the U.S., regulators are precluded from setting fixed prices as is done with feed-in-tariffs in Europe."

Utilities in California are required to meet the state's renewable portfolio standard, which has been set at 20 percent by 2010. That is expected to rise 33 percent by 2020.

Under California's plan, utilities would be required to buy electricity from green energy developers, which will bid twice annually for that business. Setting such a standard guarantees the expansion of sustainable energy sources. Requiring those power companies to buy from low-cost suppliers will allow consumers to pay fair prices.

Southern California Edison, for example, sought clarification from the Federal Energy Regulatory Commission as to whether states could regulate prices for energy contracts. Federal regulators said administratively-set prices are not allowed under national law but went on to add that the state could help create a green energy market there.

The utility then proceeded to put 60 megawatts worth of wholesale solar rooftop contracts out for bid. This is the first move in its march to achieve 500 megawatts of distributed solar power. Of that amount, half will be owned Southern California Edison and half will be contracted to independent power producers.

"These contracts make significant strides toward distributed renewable generation for one of the most innovative solar programs in the country," says Marc Ulrich, vice president, renewable and alternative power for the utility. "We're working to help California meet its Million Solar Roofs goal and supply even more renewable energy to our customers where and when it's most needed, without the added time and expense to construct major new transmission facilities."

Market Forces

Southern California Edison says that the project will be a boon to the solar industry, creating economies of scale and bringing down the cost of solar parts. The resulting growth will benefit consumers in the form of reduced prices.

That's the outcome that California's solar activists are seeking. By contrast, knowledgeable sources such as SunPower's Blunden say that the global leader in solar development, Germany, is reliant on federally-mandated pricing plans. That fact, along with the current federal subsidy program there is reflected in the rates.

The growth in Germany's solar industry, for example, has been supported through an assessment on consumers' bills. While those surcharges have allowed Germany to become a solar powerhouse, the government there realizes that, without additional evolution, such policies are not sustainable, says Blunden. She adds that the German system would only apply to publicly-owned utilities here, as well as other markets not subject to the Federal Powers Act.

Likewise, she credits Japan for taking the solar industry from the research and development stage to the cusp of commercialization. But it dropped its federal program in 2005, and Germany then led the crusade to mass commercialization. Now, though, with global prices falling, Japan is getting back in the game by using a feed-in tariff as well as "net metering" so that consumers can sell net-excess power back into to the grid.

With the globally-installed solar base rising 50 percent from 2009 to 2010, the question then becomes what rules and regulations will facilitate that growth while keeping electricity prices reasonable. Germany has one answer and Japan another. In this country, solar advocates want the states to pursue their own course in a way that complies with existing federal laws and that can't be shuttered in the legal system.

California is out front. Beyond Southern California Edison's forays, Pacific Gas and Electric is taking its own steps. It has asked regulators there to approve a 500 megawatt rooftop solar program. It would build half of the capacity over five years while securing the other half from independent power producers in the form of competitive bids.

"This program opens an exciting new market opportunity for quick and cost-effective growth in the solar sector, creating new jobs and eliminating carbon emissions," says Adam Browning, executive director of the grassroots organization Vote Solar. "We believe this is just the tip of the iceberg -- we are working to expand similar programs, targeted to solar wholesale distributed generation, throughout California and in other states as well."

Some would argue that even requiring green power thresholds is anathema to free markets. But with global and domestic energy markets trending green, the more pertinent issue is how best to implement public policies that promote growth. Collectively, Californians say that they have built a structure that could be emulated across this nation and one that uses market forces.



 

Copyright © 1996-2010 by CyberTech, Inc. All rights reserved.

To subscribe or visit go to:  http://www.energycentral.com