This is a landmark decision to create the largest program of its kind in the nation. And just this week, as the LA Times reports, the LA City Council averted a bid to further study and potentially delay the program. LA City Councilperson Richard Alarcon said “We make these kinds of investments all the time in order to get a greater return in the future. Let’s get this thing going.”

We applaud this decision because it is time to “get this thing going.”

This size and model of this program is ideally suited for utility scale plants to be constructed on large rooftops, especially those atop commercial buildings and warehouses. That’s why Absolutely Solar is actively seeking property owners who would like to lease their rooftops for the 20-year term. ASI may also be able to extend roof life and provide roof warranties. There are also opportunities to invest and collaborate in the revenue-producing facility itself.

But time is of the essence. New applications will be accepted on a first-come, first-serve basis and space is very limited.

Americans are embracing the exciting possibilities – and challenges – of the new alternate energy economy. To manage the growing demand for rooftop solar, a program was needed to process applications and guide the development to help utilities efficiently embrace the connection of new solar systems safely and reliably in our area. This is the program and the time is now.

Read more about this decision in the KCET ReWire article, “LADWP Solar Program Clears Hurdle.”

There’s no solar gold rush or windfall profit.  Most solar developers and their projects are struggling.  The failure rate is extraordinarily high.  Financing and investment is hard to come by.  There are few viable programs and they all have small capacity and difficult requirements and limitations.  Interconnection processes are highly complex, costly, uncertain, and time consuming.  Land use entitlements, environmental approvals, zoning, planning, building and safety issues all add additional barriers to solar development.

These barriers INCREASE the cost of solar unnecessarily.  As a result, GERMANY, with the same sunshine as Anchorage, Alaska, INSTALLED FAR MORE SOLAR IN THE FOURTH QUARTER OF 2012 THAN CALIFORNIA HAS INSTALLED IN TOTAL (EVER).

The article focuses on the few giant projects that received government loans (which were only for very large projects and are no longer available), are very far from load centers and require huge transmission upgrades.  These projects make up a small part and definitely not the best opportunity for California solar development.  Even with government help, considering that they can take 5 to 10 years to permit and that most giant projects fail, their returns are probably not excessive.

Solar policy should be focused on smaller projects closer to load centers (called “distributed generation” or DG).  DG projects can connect quickly to the grid, do not require any transmission upgrades, can be developed and permitted and built fast and efficiently and cause no environmental damage.  DG is resilient and helps strengthen the grid and reduce blackouts and enhances energy security.  And like all solar, it will provide peak power; power at the time we need it most and by far the most valuable.

Almost all of Germany’s solar is DG—on farms and schools and warehouses and freeways, factories and homes.  Even though Germany gets very little sun compared to California, because their program is so robust, competition and increased expertise and experience have driven prices way down.  Germany has also dramatically reduced the paperwork and other administrative processes that raise costs and cause delays.  German banks are required to make reasonably priced loans for solar (essentially no risk loans secured by the long term contracts to purchase the power).  As a result, it costs HALF as much to build a solar project in Germany as it does in California.  In all, Germany’s solar program has cost ratepayers about the price of a loaf of bread each month.   Of course, even that cost is only a short term investment because these systems will SAVE money over their productive lives.

It’s true that solar PV costs more in the first few years than the cost of business as usual.  But, most responsible experts agree that it’s a good business decision, because the AVERAGE COST of solar, over the life of that 20 year fixed price contract, will actually be LOWER, NOT HIGHER, than the cost of power from conventional fuels.   Moreover, these solar PV plants are likely, with minor maintenance and upgrades, to produce ALMOST FREE power for a very long time beyond the original 20 year contract.

The article also makes comparisons between the cost of renewable energy and the cost of carbon based energy.  However, the prices quoted in the article for conventional power understate its true cost.  According to various studies that have been done by academics and non-profits, the value of widely distributed, renewable energy is at least 3 to 6 cents more a kWh than the value of central station produced, carbon based energy.  This added value of DG comes from avoiding transmission losses (which average 10 to 11% system wide); avoiding investment in transmission, generation and other new facilities; the hedge value of a fixed price for 20 years; providing peak power which is the most valuable, reducing greenhouse gasses and pollution, etc.  When this added value is considered, solar only costs a very small amount more.  AND, that cost is short term and should be seen as an investment.

Instead of characterizing solar as a boondoggle for developers and investors, the article should have carefully and thoughtfully analyzed and presented all sides of this complex topic.  Most people know very little about it and already suffer from serious misconceptions.  You should write another article and interview the people who are really knowledgeable about this field.  It’s too important to be poisoned by ignorance and inaccuracy.

Early Energy Subsidies Were Higher Than They Are Now

Adjusting for inflation, the earliest subsidies for the oil, gas and coal industries were significantly higher than the subsidies supporting renewable energies today.  In fact, research by Nancy Pfund and Ben Healey at Yale University found that the government spent an inflation-adjusted $1.8 billion annually on oil and gas subsidies in early years, while current subsidies for renewable energies amount to approximately $400 million, annually[i].  Accounting for 5 percent of the Federal budget, subsidy dollars for “traditional” energy sources poured significant capital into early research and development, leading to innovation and eventually to reduced costs in these industries.

What’s more, renewable energy subsidies have generated greater economic growth than earlier subsidies for oil and gas did.  To this point, Pfund and Healey found that the per-dollar increase in energy generation is ten times higher for current renewable energy subsidies than it was for early oil subsidies. [ii]

Renewables Drive Real Growth

The fact that renewable energy is driving more growth for the U.S. economy than oil and gas did in earlier years should be applauded.  However, commonly used metrics do not take into account the significant investment required to integrate such a new, sophisticated industry into the U.S. market.  Failure to effectively communicate progress in renewable energies therefore leads to misconceptions about the industry’s economic sustainability.

Policy makers should evaluate the renewable energies sector relative to traditional energies at similar periods in their development.  Decisions should be made based on the industry’s proven potential given the benchmarks it has surpassed, despite serious headwinds and lackluster support.  If we’re already generating more power, per subsidy dollar, than our competitors did during their formative years, think of how far innovation in the renewable energy sector could take America.

The best source of Goldilocks pricing for solar feed in tariffs is an examination of the actual costs of developing, building and financing the systems.

Absolutely Solar is currently working with owners of roofs that exceed 100,000 square feet, to install revenue-generating solar photovoltaic systems under SCE’s CREST feed-in-tariff program.  Unlike most solar programs, CREST’s feed-in-tariff is not related to on-site electricity use.  Instead, the solar photovoltaic systems are connected directly to the electrical grid, and all energy produced by the systems is sold to SCE on a fixed-price 20-year contract.

This opportunity, however, will end soon, when Power Purchase Agreements (PPA) for the remaining available capacity are signed or when the program ends by the end of this year or early in 2013.

Clearly, the opportunities available to property owners and solar developers alike will be seriously limited when the CREST program ends.  However, rooftop owners who collaborate with Absolutely Solar now, to take advantage of Southern California Edison’s current program, will benefit from steady, secure cash flows under a 20-year contract.

The amount of these cash flows is determined by the property owner’s level of ownership of the photovoltaic system.  For example, should the rooftop owner choose to own the system in part, he or she could participate in the system’s income stream and or/use the available tax benefits (30% immediate tax credit, plus accelerated depreciation).  Alternatively, the property owner could choose to own the system in full or to simply lease the rooftop space.

Solar Power has the potential to relieve our nation’s over-dependence on unsustainable energy sources, to make a positive impact on our environment, and to create countless jobs in America.  Property owners must recognize the opportunity that their open rooftop presents to not only generate significant cash flows over the next two decades, but to also make a statement in support of our country’s investment in renewable energy.

This solar cell panel tower is standing in a petrol station. This is one of 580 disaster prevention petrol stations in Japan. Each station has a power generator and a water tank so that they would continue to work in case of disaster. August 2011, Tokyo

Specifically, under this plan, power companies will be required to buy solar power at Y42 per kilowatt-hour (53 US cents) for twenty years. This is 4 times more than what we get in California. Its important to note that, due to our perpetually sunny climate, the irradiance is quite a bit less in Japan than in California.

Adjusting to allow for this difference in solar irradiance means that a 1 MW AC fixed-tilt system in Japan could produce approximately 1,000,000 kWh/ year and $530,000 dollars in revenue. Compare that to a similar system in California, that could generate about 1,700,000 kWh /year and, under the restrictive new RE-MAT (SB32) pricing, deliver $210,000.

Quite a very different scenario, don’t you think? Rosetta Stone’s “Japanese for Beginners” is on order!

In a nutshell, the proposed Japanese FIT encourages solar development to take hold in that country and companies are already lining up in this growing market. In the meantime, the failed policy in California that could have allowed significant solar development in or near urban areas, is only contributing to the solar stagnation in our nation.

California and the US need to jump on the bandwagon to remain competitive. We shouldn’t need an accident to wake us up!

Japan Unveils Boost for Clean Energy

By Michiyo Nakamoto in Tokyo (Financial Times, June 18, 2012)

The Japanese government has unveiled a plan to boost investment in clean energy sources, in a move that paves the way for the country to lower its dependence on fossil fuels and nuclear power and build up its fledgling renewable energy market.

Under the feed-in-tariff scheme approved on Monday, electric power companies will be required from July 1 to buy all renewable energy generated by qualifying suppliers, at a higher rate than initially expected, providing a strong incentive for businesses to invest in clean energy facilities.The government is abolishing the ceiling on the amount of energy from renewable sources power companies will be required to buy, in a move that will transform solar power generation from a side business for companies generating more electricity than they can consume to a viable business on its own. At present, electric power companies are only required to buy excess electricity generated by renewable sources and only up to a maximum of 500 kilowatt hours.

Read More.

Photocredit: The image associated with this entry was taken by Flickr contributor ykanazawa1999

California law provides for a cap equal to 5% of the utilities’ energy demand. The problem is that the methodology for computing the total energy demand was not sufficiently specified in the law and left some room for interpretation. The approach taken by the utilities resulted in the lowest possible capacity limit.

This is not surprising. The Investor Owned Utilities (IOUs) have consistently opposed the policies that would support distributed generation. If the IOU’s liked these programs, they’d be working to maximize capacity, minimize red tape and interconnection uncertainties, and ensure that prices were adequate to make DG development economically feasible. ≥≥ Read more

These developers are giving all developers a bad name. We don’t need fast track permitting from the government to push gigantic solar developments in environmental and historic areas. And we actually don’t need Federal loan guarantees. What we do need is an understanding that we are tied together with the same goal of respecting the world we live in. And, we need to come up with policies that will support the generation of renewable energy where we need it: close to load centers, in or near urban areas, on roof tops, parking lots, landfills and brown fields. We need generation close to where the power is to be used, in areas that are already developed, which aren’t ecologically, culturally or historically sensitive.

The article raises a false dichotomy, a Hobson’s choice, framing the question as if we can have renewable energy or be sensitive to Native American concerns or environmental concerns. By developing solar and other renewables in urban and suburban areas, we can have our renewable energy without sacrificing other important needs and interests.

Government, tribes and developers can and should work together to come up with the best solution …distributed renewable energy generation done with the least possible negative impacts.”

— Peter Weich, Absolutely Solar Inc.

Discovery of Indian Artifacts Complicates Genesis Solar Project by Louis Sahagun, Los Angeles Times

The Feb. 27 letter from the chairman of the Colorado River Indian Tribes was pleading and tough. It asked President Obama to slow the federal government’s “frantic pursuit” of massive solar energy projects in the Mojave Desert because of possible damage to Native American cultural resources.

The Obama administration didn’t respond. But four days after Chairman Eldred Enas sent the letter, the Indians say they found an answer, delivered by spirits of the desert.

Howling winds uncovered a human tooth and a handful of burned bone fragments the size of quarters on a sand dune in the shadow of new solar power transmission towers. Indians say the discovery is evidence of a Native American cremation site not detected in Southern California Edison’s archaeological survey before the towers were built.

Read more.

The negative environmental impacts of desert solar are mostly caused by very large solar farms.  Smaller, widely distributed PV on rooftops, landfills, parking lots and other wasteland CLOSE TO LOAD will bring all the benefits of distributed renewable energy without damaging our natural resources.”

— Peter Weich,  Absolutely Solar Inc. 

Environmentalists Feeling Burned by Rush to Build Solar Projects by Julie Cart, Los Angeles Times

April Sall gazed out at the Mojave Desert flashing past the car window and unreeled a story of frustration and backroom dealings.

Her small California group, the Wildlands Conservancy, wanted to preserve 600,000 acres of the Mojave. The group raised $45 million, bought the land and deeded it to the federal government.

The conservancy intended that the land be protected forever. Instead, 12 years after accepting the largest land gift in American history, the federal government is on the verge of opening 50,000 acres of that bequest to solar development.

Even worse, in Sall’s view, the nation’s largest environmental organizations are scarcely voicing opposition. Their silence leaves the conservancy and a smattering of other small environmental organizations nearly alone in opposing energy development across 33,000 square miles of desert land.

This Sacramento Bee article (March 26, 2012), “Gov. Jerry Brown’s solar power campaign,” highlights some important issues in California’s quest for renewable energy.

First and foremost, it confirms Governor Brown’s serious commitment to solar PV development and to providing a large percentage of California’s power needs from renewable, clean sources. He’s involved and active and seems to understand the importance of the goals and the difficulties that must be overcome.

The story emphasizes large projects and their high potential for failure (difficult permitting, often from multiple governmental agencies; very long and expensive development cycles; environmental impacts on desert ecosystems, flora and fauna; costly and lengthy transmission upgrades and grid interconnection issues; and the complexities of securing capital and financing).

What the article fails to point out is that smaller projects that provide widely distributed generation avoid most of these pitfalls, have a much higher success rate with less environmental impacts and greater benefit to the ratepayers. Smaller projects that are closer to load don’t require grid upgrades, don’t cause long distance transmission power losses, are faster to build and provide more opportunities for community benefits.