Local Governments Chart A Solar Energy Future
by Peter Asmus
California local government representatives gathered in Sacramento
on February 1 for the Local Government Commission’s “Photovoltaic
Forum For Local and State Government Leaders” to learn about
how they can plug into state initiatives designed to accelerate
reliance upon solar and other renewable energy sources. The forum
followed up with a two-day implementation meeting on February 25-26.
The forum was also sponsored by the Governor’s Office of Planning
and Research (OPR), a clear sign that Gov. Davis recognizes the
critical role local governments must play in pushing new and cleaner
power generation technologies.
“The ability of local communities to develop a substantial
local power generation program featuring green resources is very,
very important to the Governor’s efforts to diversify our power
supply portfolio in California,” said Woody Clark, the governor’s
senior advisor on energy reliability. “Gov. Davis wants to
empower cities and counties to take action at the local level by
developing renewable distributed generation facilities throughout
the entire state.”
“The key to becoming a sustainable energy state is sustainable
communities with diverse energy supplies,” he said. Clark also
noted that is why the Governor supports Senator Byron Sher’s
SB 532, which would require California to double the amount of renewable
energy consumed in California by 2010.
“The concept of sustainability takes many different forms,
including the maintenance of secure infrastructure,” Clark
said, referring to the strategic benefits renewable distributed
generation sources represent as additional security precautions
against terrorist attacks.
“Obviously, secure energy supply is a key aspect of the state’s
infrastructure. Here at the Governor’s Office, we are learning
as much as we can from municipalities such as Santa Monica, Sacramento,
San Francisco and Los Angeles when it comes to developing secure
power from solar and other renewable energy fuels,” said Clark.
Sacramento Success Story
Forum attendees learned about how the Sacramento Municipal Utility
District (SMUD), another forum sponsor, was able to recently surpass
the 10 MW milestone on rooftop solar PV installations ® the largest
distributed network of solar PV arrays in the world.
Over 1,000 installations of solar PV have taken place in Sacramento
since 1993 under a strategy Donald Osborn, SMUD’s superintendent
of renewable generation, described as “sustained orderly development.”
He noted that costs for solar PV were reduced by 50% due to volume
purchase discounts and leveraging of tax-exempt financing. If financed
with a 7% interest rate over 30 years, the cost of the electricity
from SMUD’s solar PV systems fall in the 8 to 10 cents per
kilowatt-hour range, which is just 10-20% above SMUD’s average
retail rates. These costs are well below industry averages as well
as the retail rates charged by Pacific Gas & Electric and other
investor-owned utilities.
“Distributed and renewable generation sources are the future
® and solar is both,” said Osborn. “Solar can shave peak
loads, provide grid support and provide a hedge against fossil fuel
price shocks. The public relations benefits [of solar] alone justify
the cost.” On top of that, solar technologies represent a future
profit making business venture for SMUD, he added. Last year, SMUD
invested less than 0.5% of its annual revenues on its solar program;
demand for the program represented a 10-fold increase beyond expectations,
Osborn said.
San Francisco and Vallejo Offer Novel New Approaches
Osborn warned that large-volume purchases backfire if done poorly
and can help dry up existing supply, which actually increases end-user
costs. The prime lesson, Osborn said, is not to develop too steep
a ramping up of PV purchases.
This fundamental lesson from Sacramento is shaping the implementation
strategy behind the City and County of San Francisco’s plan
to add 50 MW of solar PV authorized by the passage last November
of Prop. B, according to Ed Smeloff, Assistant General Manager on
Power Policy for the San Francisco Public Utilities Commission.
Described by Osborn as the “godfather” of SMUD’s
solar program, Smeloff served on the SMUD board in the ‘80s/early
‘90s, and proposed Sacramento commit to 10 MW of solar PV nine
years ago as one of his final acts as a SMUD director.
The 50 MW solar PV purchase for public buildings and land owned
by San Francisco would likely be phased-in over 12 years. The bid
solicitation will be out this summer.
“The language of Prop. B presents a challenge,” he said.
“The cost of solar energy, calculated over the life of the
PV system, can be no higher than the power supply it displaces.
The SFPUC is developing a screening tool to compare costs. Transmission
and distribution cost will be included in the avoided costs associated
with traditional centralized power generation facilities.”
Including these costs will make it easier for solar projects to
be deemed cost effective, Smeloff said, since distributed solar
PV avoids these so-called T&D expenses. The SFPUC will also
use a quantification of the environmental benefits of solar in its
screening tool.
Also passed last November was Prop. H, which allows for the installation
of solar PV on the rooftops of private businesses and residents.
Prop. U authorizes the issuance of additional revenue bonds above
the $100 million already approved by Prop. B. Smeloff noted this
additional bond financing will be needed to achieve the goal of
reaching the 50 MW solar PV goal for San Francisco.
Larry Asera, a former Solano County Supervisor and currently an
energy consultant for the City of Vallejo, described a different
approach for local governments: partnering with a private third
party who can take advantage of tax credits and other financial
benefits that public sector local governments cannot use. In exchange,
the local government gains specific expertise it does not have to
develop a solar PV or other type of renewable energy system.
Asera pioneered this approach in 1985 when he created a third-party,
limited partnership to place a 20 kW solar PV array on the Dixon
City Hall rooftop ® the first solar-powered City Hall in the state.
Vallejo is working with BP Solar, a major solar PV manufacturer
located in nearby Fairfield. Because the City of Vallejo is a chartered
city, it was allowed to award a solar source contract to BP Solar.
“A limited liability corporation owned by the City and BP
Solar was created to develop a 1 MW solar power plant on a brownfield
site,” said Asera.
The project site had to be moved to preserve a red-legged frog
habitat. However, a new site has been located and the project is
back on track. “Hopefully, we’ll be generating clean solar
electricity by the end of this year,” Asera said. Under this
arrangement, the limited liability corporation will sell electricity
to the City at a price no higher than 10 cents/kWh.
This large solar PV farm received $2.5 million in funding from
the California Energy Commission’s (CEC) buy-down rebate program.
Though there are no funds left in this account for such large-scale
systems, funding is still available through the California Public
Utilities Commission’s Self-Generation program.
Funds from both programs can cover up to half of a solar PV system’s
initial upfront costs. For more information, contact Don Schultz,
CPUC Office of Ratepayer Advocates, at DKS@cpuc.ca.gov.
Next Steps
Many forum participants expressed frustration with the seemingly
dizzying array of technical, financial and procedural challenges
of moving forward with solar PV and other renewable energy distributed
generation technologies.
“When you bring up solar PV and energy efficiency to developers
constructing new buildings, they typically say, ‘We can’t
do that because that costs too much,’” said Matt Sullivan,
a Pleasanton planning commissioner. “Even our own staff does
not yet know about how these measures and technologies can pay for
themselves. There is a vast void of information about what is currently
cost-effective. That information needs to be channeled to city councils
and city staffs.” When residents rejected a proposal for a
50 MW natural gas peaking power plant, the City Council set up an
energy committee to draft a sustainable energy policy for the community.
That plan, featuring a green building ordinance and renewable energy
and energy efficiency elements, is slated for adoption before summer.
“The notion of distributed generation is not new,” said
Tracy Saville, Assistant Director of Conservation and Distributed
Generation for the California Power Authority. “What is new
is the notion that the CPA, on behalf of the State of California
and in partnership with local governments, is coordinating policies,
leadership efforts, and financing/ project deployment resources
toward a ‘clean energy’ policy for California.”
“Local governments are one of the keys to education and outreach
to their citizens to promote solar PV and distributed generation,
to addressing local permitting and interconnections challenges,
and to creating local-level ‘green community’ policies,”
Saville said.
Funding for the forums came from the Energy Foundation, the Energy
Commission’s Renewable Energy Consumer Education program and
SMUD.
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