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California's Landmark Solar Deployment Program - the CA Solar Initiative - has Successfully Lifted the State's Distributed Solar Industry into Orbit

Pierre Bull

Posted June 20, 2014

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The CA Solar Initiative (CSI), which got underway in 2006, is nearing its full solar deployment goal for one of its major program components approximately two years ahead of schedule. Independent analysts recently reviewed the program’s market impacts, concluding that the CSI “was the primary catalyst for change that led to the positive business environment that they [e.g. the solar industry, investors and system owners] currently enjoy.”  I agree with this assessment, especially when considering the global context for which program has endured the last eight years -- global financial meltdown and resulting economic downturn, ongoing Chinese-U.S. solar trade disputes, federal-level incentives expiring, etc.

NRDC played a critical role in 2005-2006 to help create the initiative’s overall structure, goals and objectives, and made sure the policy vehicle housing all of these great ideas at the time, Senate Bill 1 (Murray), got enacted. The common understanding at the time was that solar PV was on the brink of something big - that of a global-sized, multi-billion dollar market - and the time was right for sunny California to take the next bold step to get this ever more affordable clean energy resource to the masses.

What is the CSI

The CSI is overseen by the California Public Utilities Commission (CPUC) and provides incentives for solar system installations to customers of the state’s three investor-owned utilities. The program budget is set at $2.367 billion over 10 years with a goal of reaching 1,940 MW of installed solar capacity by 2016. The CSI Program has five main components to round it out and make it more than just a solar incentive-only program. These components are:

The general market program provided the lion’s share of incentives that are driving the biggest piece of the 1,940 MW goal (the general market program share is 1,750 MW to be exact). The general market program’s key innovative design feature was that of a “declining megawatt block” incentive platform – see graphic below:

       CSI Declining MW Block

This novel program structure was the result of many months of open dialogue among a wide variety of stakeholders including environmental and clean energy advocates, utilities, solar industry investors and developers, consumer advocates and perhaps most important of all, state lawmakers and regulators. 

How Did the CSI Perform?

While no program structure is ever perfect, the CSI has excelled at providing three critical elements that all stakeholders agreed were most important in getting California’s distributed solar market into orbit. Those elements are: longevity, certainty and scale. The declining megawatt block structure has lowered the borrowing costs and due diligence efforts for developers, businesses and consumers to gain access to capital to purchase and build solar projects; it has helped build market confidence by educating consumers and investors on the merits of solar energy; created economies of scale in upstream supply chains and manufacturing; and made solar ever more visible with tens of thousands of new installations throughout the state.

CSI map of residential installations 2007-2012

The CSI has also led to a sustainable transformed marketplace whereby thousands of new solar installations – mostly residential – are installing solar without the need for incentives from the CSI. As much as a quarter of the market in PG&E territory and over 10% of SDG&E territory are now going up without CSI incentives.

          CA solar installations without CSI incentives

What’s Next for the CSI

The other four components of the program continue to ensure low-income customer participation and adoption, along with scaling the market for solar thermal and applied R&D. The analysts reviewing the CSI recommend that the general market program continue to provide publicly available “market data” and other consumer-oriented information so they can make an informed decision to see what types of solar products would fit their needs and goals, and which developers and installers they can trust to do a good and honest job.

The CSI is making waves well beyond the borders of California. Earlier this year the State of New York, through its greatly expanded NY-Sun Initiative, adopted a near identical megawatt-block type program that promises to take the New York solar market into orbit just as the CSI has done for distributed solar in California. And not to be outdone, Massachusetts has now introduced legislation that also calls for a great expansion for distributed solar through a declining megawatt block program.

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Daniel FerraJun 21 2014 08:23 PM

We need a California Residential and Commercial Feed in Tariff

Globally we are emitting 35 Billion tons of Green House Gases annually, here in California we emit 446 million tons of Carbon Dioxide a year, 1,222,000 Toxic Tons a Day, The California Public Utility Commission is thinking of replacing San Onofre and Hydro losses to generating with Natural Gas Power Plants condemning our kids and our planet to Heating UP and Burning UP, unless We start Changing and Fighting for real Sustainable Energy Policies.

The state currently produces about 71% of the electricity it consumes, while it imports 8% from the Pacific Northwest and 21% from the Southwest.

This is how we generate our electricity in 2011, natural gas was burned to make 45.3% of electrical power generated in-state. Nuclear power from Diablo Canyon in San Luis Obispo County accounted for 9.15%, large hydropower 18.3%, Renewable 16.6% and coal 1.6%.

There is 9% missing from San Onofre and with the current South Western drought, how long before the 18.3% hydro will be effected?

We have to change how we generate our electricity, with are current drought conditions and using our clean water for Fracking, there has to be a better way to generate electricity, and there is, a proven stimulating policy.

The Feed in Tariff is a policy mechanism designed to accelerate investment in Renewable Energy, the California FiT allows eligible customers generators to enter into 10- 15- 20- year contracts with their utility company to sell the electricity produced by renewable energy, and guarantees that anyone who generates electricity from R E source, whether Homeowner, small business, or large utility, is able to sell that electricity. It is mandated by the State to produce 33% R E by 2020.

FIT policies can be implemented to support all renewable technologies including:
Photovoltaics (PV)
Solar thermal
Fuel cells
Tidal and wave power.

There is currently 3 utilities using a Commercial Feed in Tariff in California Counties, Los Angeles, Palo Alto, and Sacramento, are paying their businesses 17 cents per kilowatt hour for the Renewable Energy they generate. We can get our Law makers and Regulators to implement a Residential Feed in Tariff, to help us weather Global Warming, insulate our communities from grid failures, generate a fair revenue stream for the Homeowners and protect our Water.

The 17 cents per kilowatt hour allows the Commercial Business owner and the Utility to make a profit.

Commercial Ca. rates are 17 - 24 cents per kilowatt hour.

Implementing a Residential Feed in Tariff at 13 cents per kilowatt hour for the first 2,300 MW, and then allow no more than 3-5 cents reduction in kilowatt per hour, for the first tier Residential rate in you area and for the remaining capacity of Residential Solar, there is a built in Fee for the Utility for using the Grid. A game changer for the Hard Working, Voting, Tax Paying, Home Owner and a Fair Profit for The Utility, a win for our Children, Utilities, and Our Planet.

We also need to change a current law, California law does not allow Homeowners to oversize their Renewable Energy systems.

Campaign to allow Californian residents to sell electricity obtained by renewable energy for a fair pro-business market price. Will you read, sign, and share this petition?

Roof top Solar is the new mantra for Solar Leasing Companies with Net-Metering which allows them to replace One Utility with Another, we need to change this policy with a Residential Feed in Tariff that will level the playing field and allow all of us to participate in the State mandated 33% Renewable Energy by 2020.

This petition will ask the California Regulators and Law makers to allocate Renewable Portfolio Standards to Ca. Home Owners for a Residential Feed in Tariff, the RPS is the allocation method that is used to set aside a certain percentage of electrical generation for Renewable Energy in the the State.

Do not exchange One Utility for Another (Solar Leasing Companies) "Solar is absolutely great as long as you stay away from leases and PPAs. Prices for solar have dropped so dramatically in the past year, that leasing a solar system makes absolutely no sense in today's market.

The typical household system is rated at about 4.75 kW. After subtracting the 30% federal tax credit, the cost would be $9,642 to own this system. The typical cost to lease that same 4.75 kW system would be $35,205 once you totaled up the 20 years worth of lease payments and the 30% federal tax credit that you'll have to forfeit when you lease a system. $9,642 to own or $35,205 to lease. Which would you rather choose?

If you need $0 down financing then there are much better options than a lease or PPA. FHA is offering through participating lenders, a $0 down solar loan with tax deductible interest and only a 650 credit score to qualify. Property Assessed Clean Energy loans are available throughout the state that require no FICO score checks, with tax deductible interest that allow you to make your payments through your property tax bill with no payment due until November 2014. Both of these programs allow you to keep the 30% federal tax credit as well as any applicable cash rebate. With a lease or PPA you'll have to forfeit the 30% tax credit and any cash rebate, and lease or PPA payments are not tax deductible.

Solar leases and PPA served their purpose two years ago when no other viable form of financing was available, but today solar leases and PPAs are two of the most expensive ways to keep a solar system on your roof." Ray Boggs

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