Cleantech News – California’s $3 Billion Solar Initiative Broken Down

California PUC has made a huge splash with its solar rebate program. The pizzazz angle is quite good.

“The goal is to install solar energy on 1 million buildings statewide by 2017, generating 3,000 megawatts of electricity — the equivalent of six large power plants, or enough to serve 2.3 million people. By comparison, all the solar power installed in all 50 states today has a capacity of about 400 megawatts.” – San Jose Mercury News

CPUC Solar Initiative Page

But when we calm down the rhetoric, there are a couple of things to consider.

  1. On the surface, the global solar industry is roughly $3.5 Billion/ year, so a c. $3 Billion bill by California looks great. But consider it over the 11 year time program life, and let’s see how it looks. By 2017 at a 20% per year growth rate, around its current historical pace, the industry will be roughly $26 Billion per year, and will have installed $138 Billion worth of solar panels. That makes this PUC program not an enabler of the solar industry, but a 2.5% drop in the bucket. And since we already spend $300 million or so a year in California subsidizing solar, it’s really just confirming more of the same the long-term. Nothing to shout about.
  2. And keep in mind, that $3 Billion dollars is not the whole cost. At $2.80/watt subsidy, the California consumer will still pay 2x that again out of its own pocket to put solar on their roofs. We’re still buying solar panels mind you, which are a 2-3x more expensive source of electricity than we currently use. We are definitely not saving money here for years if ever.
  3. Is the rationale reducing our greenhouse gas emissions? Not a very good argument. We already get a lot of our power from other states, either coal power dirtying their skies, or hydro with very little greenhouse gas impact. And besides, the quickest way to impact our greenhouse gas emissions is to deal with automotive emissions, 3,000 MW of solar 11 years out is barely a ripple in our power emissions over that time. Bottom line, there are better ways to reduce greenhouse gases.
  4. Now, I will accept the argument that we are building a local solar industry. Japan did it very successfully with long-term subsidy programs. But I’m not certain the state should be subsidizing it at this point. American investors have probably sunk on the order of $1 Billion in private capital into solar investments over the past few years and the industry is rapidly increasing capacity, all without the PUC making a move. The solar industry is the biggest bright spot in the cleantech sector. What we are really doing here is providing long term stability for a subsidized market, and guaranteeing that the IPO market for solar stays hot up so the venture capital investors who got in the last few years make a bundle.
  5. But the big issue from my perspective is this: last year the California “million solar roofs bill”, was defeated in the legislature. Partly because California’s finances are in such a messy state that legislators couldn’t agree that we could afford it, partly from partisan infighting. Now by a 3-1 vote, 4 unelected people on the PUC have enacted roughly the same program, at the same cost to the state (and us), by taxing us through our electric bill. And we never had a say. The amount may be small per household ($0.55 to $1.10 per month per household were among the range of estimates I found), but it is very definitely taxation by unelected officials. And I don’t care for that one bit.

Don’t get me wrong, I’m all for solar power, and I think this is a good program and a fair use of dollars long term for the industry and the state, I just don’t like the way it’s been done.

Personally, I’d just as soon let Germany continue to subsidize solar programs and soak up our exports until the price comes down, then after they’ve paid the cost, roll out a massive solar program for a fraction of the cost.

11 replies
  1. Greg Chang
    Greg Chang says:

    Neal, in relation to your comments about GHG emissions, California has published an interesting 104 page document on meeting the Governor's emission reduction targets at http://www.climatechange.ca.gov The state is targeting a reduction of 67 Mln tons CO2 equivalent by 2020. Only 3 million are targeted to come from the Solar Initiative. So that data really does back up what you say about the impact being minimal. The major contributor to GHG reduction will be vehicle climate change standards which will contribute 30 mln tons by 2020.

  2. chris wirth
    chris wirth says:

    I thought the real reason for the PUC solar initiative was to empower the citizens to be proactive in using renewable energy as a reinforcement against power failure. Are we forgetting the reports written on the deterioting distribution system? Ref., Enron cycling up energy cost, when the Modesto distribution meltdown happened that cascaded into the *Enron* debacle, which sparked our state financial firestorm. May I remind you that it was "elected officals" that shoved the Modesto (weak) distribution link under the carpet,(due diligence feasibility studies and all the consultant fees that went into Cali's energy dereg did not point this out?) with no market limits put into place for check and balance.Who was in office when all those docs where signed? Was it Pete Wilson….

  3. Neal Dikeman
    Neal Dikeman says:

    RE: Chris Wirth's comments:Chris, Your point is well taken. Relieving T&D issues and providing a point of use competitive solution is to my mind a very valid strategic argument for backing solar. I'm still not sure I want the PUC effecivetly overriding the legislature on this, but I'll buy your argument as a sound one for why to subsidize solar. Thx. Neal

  4. Neal Dikeman
    Neal Dikeman says:

    RE: Anonymous post.I do encourage everyone to do their own research, that’s why I run a collaborative blog with a wide range of viewpoints, and why I include links to several other articles and the PUC’s own site in the discussion. It’s always disappointing, however, to see someone attack an article anonymously without providing any analysis, reasoning, or original thought, on the grounds that they “don’t have time”. I generally remove these when it is done to one of my other bloggers.Neal

  5. Anonymous
    Anonymous says:

    If you look at the annual rise in energy usage over the past 10 years in California, the solar initiative will not even cover the increasesd energy needs due just to population growth over the next 10 years.

  6. PV system seller
    PV system seller says:

    CPUC’s plan to use these fundings in two programs. CEC will run the small residential and business that is under 30KW applicantions, but allowing the energy companies to run the SGIP program that give away funding for business PV side that is over 30KW? Take Edison for example, they are giving our money(the funding is from 1-3% out of our energy bills) to build PV systems! And they are the energy provider? This is like saying I don’t want to pay utility bill, so I will ask Edison to give me money to build my own PV system! If you actually were applying from them, you will notice the problem. Edison may give funding to remote area that they didn’t want to spend money to build power lines. (Kern County) Or slash your size or picking on your papers/certificates that you filed for the funding.It’s a much logical idea to allow CEC to run the bigger over 30KW systems, because they are neutral. Carrying out a government policy to build more PV systems. Ask CEC to run the small residental application from all over California, how many more staffs they will need to add to handle the applications? CPUC should give this portion to the municipal governments to dispense funding for residential and business system under 30KW!There is another benefit of giving the funding dispension to the local government, the PV funding will be more eventually distributed. Now because city like Santa Monica that pump in additonal $1/watt for residents to build PV, so there are more PV in this city while the funding should be for everybody!How could CPUC ask energy company especially SCE to run the SGIP program? Totally against the rule “Conflict of Interests”! The 3 billion funding in two programs, both of them should be run by government offices because of their neutrality! Energy company to run solar funding is against their own business interests! What was CPUC been thinking? It’s very unwise decision.

  7. PV system seller
    PV system seller says:

    Also the CA solar initiative passed by the CPUC had other flaws!1. CPUC had suspended Power license since 2001! Why? They can break into several classes, Class A/B and CIf the mega wattage license like Edison has which was suspended, there is no reason given. But how about Class B for rental property owner to build PV then submeter their renters?Or Class C for buying/selling electricity at PV Electric stations for electric vehicles? Not everybody is WalMart or Costco that can give free EV chargers? So the small business owners also need a power license as incentive to build their PV systems to be able to qualify to get a license to sell their clean power?2. Canada and Wisconsin already approved selling back self generation PV power back to the energy companies for about $0.22/KWH, however CPUC had not passed similar plan yet. Why? If you could build your PV and then sell excessive power back to energy company, it’s better for the power supply structure for the state of California? Governor wants to build two more power plants in AZ for the possible power shortage. The shortage happens during the peak 4 hours in the PM. California has plenty power capability enough for the other off-peak 18 hours. It happen to be perfectly complimentary that the busy 4 hours are also the peak generation hours for PV! If we had more PV systems, we can make up for the shortage and no need to build additional power plants. FYI, according to EV activist, if EV drivers charges their EV at night. We can entirely rid of import oil. Details to read from this link: http://baltimorechronicle.com/2005/083005Korthof.html

  8. PV system seller
    PV system seller says:

    I had posted two comments criticizing CPUC, they fully aware of the complains. Executive Director Steve Larson replied our iquiry and supported Edison's decision but skipped the inquiry on power licenses anc changing office to run the SGIP program. Another appeal sent to Commissioner Rachelle Chung(who was an energy attorney and appointed by incubent government) in April and had not received a reply yet! FYI: 2 out of the 5 commissioners are CEO or executives from big Energy corporation appointed by previous governor! We have energy companies running the highest state office that run Californian Power policy! Do you think that is right? No wonder we have endless problems and even with the biggest PV funding plan, there is no siganificant change of landscap. You don't see a lot of PV in commercial zone or increse visibility! CPUC must start to issue power licenses again, when you can buy and sell your own power generated from your PV systems. It's a needed incentive to get business owners, rental property owners to get involved. To invest money to build concrete PV systems. CPUC needs some major shake-up!

  9. Cleantech News
    Cleantech News says:

    What concerns me the most about this that the Californian consumer still ends up paying for more than what they would get without solar. Also, how many years do home solar panels last? If its not too long this makes it even less cost effective.

  10. the Dark Knight
    the Dark Knight says:

    Ok, I've read some of what is posted here, My problem is the local Utility says the Solar Rebate is something I will not qualify for, Why? Simple I'm sub metered and SCE doesn't own the meters on the sub panels(Yet I receive their power and pay for the bill to SCE with My Space Rent/Lease payment), I only lease the land under My mobile home, My house as It were is mine as I own It outright, The ESP may be either the Park or the company that does the billing to the park for the electricity used and somebody has to do be able to do the netmetering of the electricity that says It comes from Edison, I'm entitled to that solar energy rebate of $2,500.00 for an installed PV system and I feel this is something the California Legislature needs to fix. For this sounds like Separate and Unequal treatment which isn't right, It's either everyone who builds a PV system gets a solar rebate or nobody should.

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