Everyone knows that the Los Angeles Basis is blessed with a near year-round abundance of sunshine. Everyone also knows that LA is a power-hungry region demanding between 4,000 to 5,000 megawatts peak power depending on the season (and anticipated to increase to 6,500 megawatts by 2020). Given that, the marriage of solar power to meet LA’s needs should be a no-brainer. So what’s the hold-up? Why are we so far behind?
A new joint study out from UCLA and USC titled “Empowering LA’s Solar Workforce” places the blame on a failure of policy leadership:
Unless civic leaders ramp up efforts to expand solar programs, the city and region face the prospect of being left behind, as other municipalities and other regions move forward on solar power and clean energy programs. In fact, while a recent study showed that one-quarter of all solar energy jobs in the nation are in California, there is a very real risk of those jobs (and others yet to be created) fleeing to other places. This report is, above all, a wake-up call to policymakers to make certain they are utilizing an important workforce segment – and creating policies that will put qualified people to work. In Los Angeles, the policy mandate is clear: the LA DWP must move forward swiftly on a comprehensive FiT [Feed-in Tariff] program.
By any measure, the region’s utilities are just not getting the job done. This table shows the status of statewide solar program targets and progress toward completion for the seven utilities in the area:
SCE and our own Pasadena Water & Power lead the way at 20% and 16% of SB1’s targets being achieved, with the rest falling far behind. But given its enormous size compared to all of the other munis, LADWP’s failure to lead at only 6% achieved is beyond disappointing.
Clearly the failing here is not for a lack of available human resources. The report correctly notes that Los Angeles has a substantial population of workers who have been trained - thanks to innovative programs from organizations like Homeboy Industries, LA IBEW11/NECA and community colleges - but not fully employed in the solar industry due to a lack of proper policies to spur the growth of local solar installations. While LADWP has focused on utility scale installations in remote areas, it has lagged behind on installations that could be done right now in communities all across the city. A greatly expanded FiT would allow solar developers to match up high solar potential project areas with high employment need areas.
Here’s another way to gauge progress - how much solar power per customer has each utility installed? Again, LADWP is lagging far behind:
Again, SCE leads the way with 119 Watts per customer installed. PWP is in the middle of the pack at 36.8 whereas LADWP has less than half that much (and not even a sixth of SCE’s total) at a measly 18.25 Watts per customer.
Faced with such dismal statistics, this is no time for short-sighted measures, but the timid, 6 MW demonstration program being presently contemplated by LADWP is far too meager to make a dent in this need. To the contrary, the report argues that a 600 MW FiT program should be implemented over the next ten years. According to the report, such a FiT must: “1) have a fixed price; 2) offer the program to participants on a first come, first serve basis; 3) have a simple application process; and 4) incur minimal administrative costs." Such a program would create good-paying local jobs and help the region meet its energy needs while protecting the environment.
We couldn’t agree more.
We previously wrote about how Congress could help grow the economy by extending the section 1603 Treasury Grant Program. Now there is a Coalition being formed to help get solar companies to sign on to a letter to Congress. Run on Sun is a signatory and we encourage our fellow solar participants to do so as well.
First some background. The section 1603 Treasury Grant program allows commercial solar power system owners to receive the 30% federal investment tax credit in the form of a grant. This has two grant advantages: first, not every commercial operation has a “tax appetite” that is big enough to fully utilize a tax credit of that size. The grant solves that by not being tied to the particular tax position of the receiving commercial owner. (Sadly, the grant program is not open to non-profit or government owners.) Second, because the grant is issued by the Treasury upon completion of the project, the 30% payment is received sooner than would the corresponding tax credit.
Unfortunately, the 1603 grant program is scheduled to expire at the end of this year - which is where the Coalition comes in. Organized by the folks at SEIA, the Coalition has a short letter that will be sent to members of Congress (the text of the letter is reproduced below and a pdf version is attached).
We urge all solar companies and organizations related to this field to join Run on Sun in signing on to the letter.
You can do so by following this link to the SEIA site.
The deadline to participate is November 23.
Here is the letter in full:
TEXT OF THE COALITION LETTER:
The undersigned companies, small businesses and organizations are writing to ask that you extend the highly effective Section 1603 Treasury Program before it expires on December 31, 2011. Extension of this program will create jobs, spur economic growth and promote private sector development of energy technologies.
The Internal Revenue Code provides a host of tax incentives designed to spur the development and use of domestic energy sources and technologies. Project developers commonly monetize these tax incentives by partnering with tax equity investors who have the liquidity and tax liability to utilize the credits.
The 2008 economic crisis and the economy’s subsequent downturn drastically reduced the availability of tax equity, severely limiting the financing available for energy projects. The Section 1603 Treasury Program, which was enacted in 2009 and extended in 2010, allows energy developers to receive a federal grant in lieu of taking an existing energy tax incentive they are otherwise entitled to claim. This is simply a change to the timing of when an energy incentive can be claimed. This change in timing, however, provides the liquidity needed for the further development of domestic energy projects.
The 1603 Treasury Program has been a resounding success. Since its enactment, the program has leveraged over $21.5 billion in private sector investment to support over 22,000 projects utilizing a wide range of energy technologies in all 50 states. This has resulted in thousands of new American jobs. The 1603 Treasury Program is an efficient finance mechanism that allows taxpayers and small businesses to maximize the return and value of existing energy tax incentives, and is technology neutral so it encourages the development of a wide variety of domestic energy technologies.
Lastly, there remains a need for the 1603 Treasury Program. The tax equity market modestly improved in 2010, but still has not recovered to pre-recession activity. A July 2011 survey of the major tax equity investors by the U.S. Partnership for Renewable Energy Finance estimates expiration of the program would shrink the total financing available for energy projects by 52 percent in 2012. This would stifle job creation and severely restrict the market’s ability to leverage private sector capital to finance new domestic energy projects.
Thank you in advance for your consideration. We look forward to working constructively with you to meet the nation’s economic and energy policy goals.
[Companies and organizations in alphabetical order]
Strange days in San Diego where solar is booming but a cynical move by the local utility, San Diego Gas & Electric (SDG&E), just might rain on their parade - and this despite record profits for the utility!
We came across two separate but related news stories today that raise red flags when it comes to how SDG&E views solar.
The first is a report from Solar Industry Magazine by Jessica Lillian titled, New Utility Rate Proposal in San Diego Could Hurt Booming PV Industry. Apparently, SDG&E is telling the California Public Utilities Commission (CPUC) that solar customers “do not pay their fare share of the costs that SDG&E incurs to provide them service, including costs associated with the export of the customer’s generation to the distribution system." What is their proposed solution? A “network use charge” so SDG&E can charge solar customers for every kWh they export out onto the grid! This despite the fact that SDG&E is essentially being subsidized by solar customers when they export energy that their neighbors can consume.
According to the article, when Daniel Sullivan of Sullivan Solar asked representatives of SDG&E what costs they had incurred to accommodate those exports, they admitted that the total was none.
As in zero, zilch, na da.
The CPUC will have the first crack at reining in this idiocy, but given how they handled the calculation of compensation under AB 920, it is hard to imagine that they will do better here in defending solar customers.
Of course, one might have some sympathy with SDG&E if they were bleeding money and needed to create additional revenue sources to stay afloat. Which brings us to today’s second news item. According to the Los Angeles Times (Business section, B5), the third quarter earnings of SDG&E’s parent company, Sempra Energy, more than doubled, “helped by higher revenue from [wait… for… it…] power generation." The company earned $296 million dollars in the third quarter alone with revenue increasing by 22% to $2.58 billion. Clearly, SDG&E needs to stick it to solar customers.
It gets better.
Existing law prohibits utilities from imposing new charges exclusively on solar customers. So apparently SDG&E is imposing the network use charge on all of its customers - except that only solar customers will be affected since only they actually export energy!
I know for a fact that some members of the California legislature read this blog (thank you very much) - are you really going to let SDG&E get away with this?
On Wednesday, November 2, 2011, the Los Angeles City Council debated the merits of LADWP’s so-called Feed-in Tariff program, specifically whether the demonstration program met SB 32 requirements. We attended and spoke (sorta) at the hearing and here is our report.
The FiT hearing was item 32 on the Council’s agenda which meant that an hour elapsed before the item was called. By that time, 21 people had submitted cards indicating that they wanted to be heard on the item. The Council’s response to this concrete demonstration of public interest in the topic was to cut the time for each commenter in half - to just one minute apiece. (Strangely, none of the Council members who spoke so limited their time - yet they are the ones being paid to attend the meeting. For all of the rest of us, this was time taken away from earning a living. But I digress.)
First up, however, LADWP spoke about the state of the program with brief presentations by Ron Nichols (DWP Head) and Mike Webster (Head of the FiT program). Priscila Castillo spoke on behalf of the City Attorney’s office to explain why she believed that LADWP had the discretion to use the proposed bidding scheme to set the price to be paid for energy produced instead of offering a fixed set price at the outset.
The speakers, including myself, were generally supportive of the FiT concept, but critical of the demonstration approach. (You can see my prepared comments - only half of which I had time to deliver - here. Note to self: must talk faster!)
The Council debate, such as it was, was largely muted and at times incoherent. (One Councilmember, particularly well known for being both ill-informed and arrogant at the same time, rambled at some length prompting the lady next to me to exclaim: “He really doesn’t know what he’s talking about, does he?")
Three members of the Council, however, really did seem to get it and pushed hard on the DWP representatives to move this process forward: Eric Garcetti, Tony Cardenas and Jan Perry. Garcetti cautioned DWP against letting the “perfect be the enemy of the good” and encouraged them to accelerate the process of getting the full-scale FiT program in place. Cardenas reminded relative newcomer Nichols of the problems the Council has had in the past in getting results out of DWP. (To which Nichols responded, “That was then and this is now.") It was also Cardenas who extracted from DWP a promise to come forward with their plan for full FiT implementation within the next 30 days.
Jan Perry wrapped up the debate by promising to take the matter back to the Energy & Environment Committee (which she Chairs) and will convene another meeting between DWP and interested Stakeholders (possibly to include those of us who were trying to make nuanced points in sixty seconds) most likely after Thanksgiving. (To her credit, Ms. Perry had her Aide, Mike Hernandez, come up to me after I spoke and encouraged me to forward my full comments to him so that he could provide them to the Councilmember - much appreciated.)
If and when that meeting is held, we will post again about any changes that might be put in place. A vote on the overall program is likely between now and the end of the year.
Tomorrow is the City Council debate on the LADWP’s proposal for a Feed-in Tariff pilot program. We will be there and our prepared remarks for the City Council follow the jump. We hope to see lots of solar supporters at the Council meeting and please come up and introduce yourself.