Thoughts on Solar by Run on Sun's Founder & CEO, Jim Jenal

LADWP’s Board of Commissioners voted today to approve the Solar Feed-in Tariff (FiT) Demonstration program. The vote clears the way for the program to begin immediately and workshops explaining the application process are taking place this week and next.

Here is the full text of LADWP’s press release issued today:

FOR IMMEDIATE RELEASE    DATE: April 17, 2012 3:38:42 PM PDT

Board of Water and Power Commissioners Approve LADWP Solar Feed-in-Tariff Demonstration Program

New Program Expands Ability to Tap into City’s Abundant Sunshine

The Los Angeles Department of Water and Power (LADWP) Board of Water and Power Commissioners today approved the creation of a Solar Feed-in Tariff (FiT) Demonstration Program for 10 megawatts (MW) of solar power, further opening up solar power generation to a broad array of customers and solar developers in Los Angeles.

A workshop is scheduled tonight at LADWP’s downtown headquarters to ensure that interested participants understand how the new program will work. Additional workshops are slated for Thursday afternoon at the Century Plaza Towers and April 24 in Bishop for those interested in developing solar in LADWP’s Owens Valley service area.

The FiT Demonstration Program will allow solar power to be developed by third-parties and then sold to LADWP for distribution on the city’s power grid. Once the initial 10 MW of solar has been deployed, LADWP will roll out a program of between 75 MW and 150 MW based on information learned from the demonstration phase, rate support and stakeholder input.

“We are blessed with sunshine nearly year-round here in Los Angeles so starting this program has been a priority for this Board and the Department,” said Board President Thomas S. Sayles. “Tapping into local solar power is the right approach for Los Angeles as we increase green energy in our power mix and work to comply with state mandates that set renewable energy levels.”

The Los Angeles City Council previously gave its blessing of LADWP’s FiT Demonstration Program by adopting an ordinance that gives LADWP’s Board of Water and Power Commissioners administrative discretion to enter into the many long-term standard contracts that previously required a more lengthy process of Council approval. The action also permits the Board to delegate that authority to LADWP General Manager Ronald O. Nichols. Mayor Antonio Villaraigosa signed the ordinance last Thursday.

The LADWP Board today approved the FiT Demonstration Program Guidelines, along with the standard purchase agreement and interconnection agreement that will be required of FiT projects. The Board’s action also delegated authority for General Manager Nichols to approve the FiT contracts.

The FiT Demonstration Program will allow third-parties to generate solar from small and medium-scale projects, and sell the power to LADWP for distribution on the electric grid. Projects will be selected based on competitive bids, which will determine a set contract price per kilowatt-hour, for up to 20 years. The program will set aside a prescribed amount of smaller and larger solar generation projects.

The new program will complement LADWP’s existing Solar Incentive Program, an incentive-based, net-meter program. Through the net-meter program, customers displace energy that would otherwise be supplied by LADWP and receive a credit on their bill for solar generation that exceeds the amount of energy they consume.

“In addition to residential customers, the FiT program will open up local solar development to rooftop real estate, such as warehouses, multi-family developments and other large rooftop structures beyond those that currently benefit from our Solar Incentive Program,” said Aram Benyamin, Senior Assistant General Manager, LADWP Power System.

“The fact that we’ve received a tremendous amount of interest from folks wanting to attend the workshops confirms just how vital this program is for Los Angeles,” Mr. Benyamin added.

In developing the FiT Demonstration Program, LADWP incorporated key feedback received during a series of public workshops over the past year. LADWP also took from lessons learned by other national and international FiT programs.

The FiT workshops are designed for interested persons and prospective bidders to explain the bidding and contracting process prior to accepting project proposals/bids in May. Dates and locations of the workshops are as follows:

Downtown Los Angeles
Tuesday, April 17 – 6:30 p.m.
LADWP Headquarters
111 North Hope Street
A-Level Auditorium
Los Angeles, CA 90012

West Los Angeles
Thursday, April 19 – 2:00 p.m.
Century Plaza Towers
2049 Century Park East
Concourse Level, Conference Room A/B
Los Angeles, CA 90067
RSVP closed - meeting at capacity

Owens Valley
Tuesday, April 24, 2012 - 6:30 p.m.
First United Methodist Church
205 North Fowler Street
Bishop, CA 93514
RSVP Owens Valley Workshop

For additional information on solar power in the City of Los Angeles, please click the following links:

The Department’s solar webpage, www.LADWP.com/solar
More about the FiT program, www.LADWP.com/FiT

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UPDATE - LADWP has made available a webinar hook-up for this meeting so you can participate without the hassle of driving into downtown LA.

To access the webinar, click here: LADWP FiT Workshop Webinar.

It is official - LADWP is formally launching its Feed-in Tariff Demo Program with a series of workshops to be held over the next two weeks.

We have written at length about the work that has been done to develop a feed-in tariff program at LADWP.  Last week the Los Angeles City Council approved the demonstration phase of the program and the workshops next week are designed to give potential participants the information that they will need to submit program applications.  We will be attending the first of these meetings and we will report back afterwards.

Here’s the schedule and contact information:

Tuesday, April 17, 2012

 6:30 p.m.

LADWP Headquarters

111 North Hope Street

A-Level Auditorium

Los Angeles, CA 90012

RSVP Downtown LA Area Workshop

(200 guests maximum)

Thursday, April 19, 2012

 2:00 p.m.

Century Plaza Towers

2049 Century Park East

Concourse Level

Conference Room A/B

Los Angeles, CA  90067

RSVP Century City Workshop

(100 guests maximum)

Tuesday, April 24, 2012

 6:30 p.m.

United Methodist Church

205 North Fowler Street

Bishop, CA 93514

RSVP Owens Valley Area Workshop

Will you be attending?  Let us know your thoughts in the comments.

Back in October, we wrote about some early trends from LADWP’s restart of their Solar Incentive Program and we thought it would be worthwhile to see how things have fared in the months since. LADWP had some flaws in the dataset issued in December so we decided to wait until the next revision which came out last week. (You can access the dataset here.)  As before, when reporting on project costs/Watt, we used the reported cost and the CSI AC Watts as we believe that is a more reasonable reflection of the value of the projects being proposed.

Prediction Update

In our previous post, we predicted that the Residential rebate program would drop from Step 5 (paid at $2.20/Watt) down to Step 6 (paid at $1.62/Watt) on or about November 26, 2011.  The last confirmed rebate reservation to be paid under Step 5 was #1120 and it was submitted on December 12 and confirmed on December 30.  So our November 26 prediction was not too far off, and a complete application that was submitted by then should have received a Step 5 rebate.

We also previously predicted that the residential sector would run out of rebate funds around April 3 of this year.  How has that prediction held up?  The chart below summarizes requested rebate amounts by week starting with the program restart on September 1, 2011 up through last week.  Also shown is the cumulative amount requested and a linear trendline.

As of the last day in the data, the total rebate amounts requested was $11.2 million out of the available $20 million.  It is also apparent from the graph that there has been a significant decline in the requested amounts following week 15 (starting December 8, 2011).  Our revised prediction is that the residential sector will run out of money around May 7, 2012.

Who’s Hot?

A program of this size provides some interesting insights into which manufacturers have the “go-to products” in terms of number of projects and total Watts.  Here is the data from the Residential sector:

Yingli leads the way thanks to their heavy use by SolarCity which accounted for 144 of the 188 projects using the Chinese panel.  Kyocera was a strong second, again benefiting from their use by SolarCity in 137 of their 155 projects.  Verengo Solar drove the demand for Suntech panels, accounting for 75 of their 99 projects.  Canadian Solar is the true democratic player in this field, its 80 projects were distributed amongst 31 different installers!

Not surprisingly, different panels demand different prices, but the results are not as clear as they might be due in part to how SolarCity includes its accounting/financing costs into its reported costs.  As a result, both Yingli and Kyocera are substantially higher on average in the data than one would otherwise expect.  For example, Yingli comes in at $8.91/Watt on average whereas Suntech is a mere $6.17/Watt - with both of these being top-tier Chinese panels.  The two manufacturers renowned for their high-efficiency, high-cost products - SunPower and Sanyo - came in at $7.60/Watt and $8.07/Watt respectively.  No one in the industry believes that Yingli panels outperform those produced by SunPower and Sanyo.

Similarly, it is interesting to see what the distribution looks like in the realm of inverters.

No surprise that SMA leads the way; after all, SMA is the largest manufacturer of solar inverters in the world.  Their popularity is driven not only by major players like SolarCity (65 projects with SMA) and Verengo (89), but collectively by 55 different installers.  Contrast that with Fronius, which achieved its #2 ranking almost entirely thanks to SolarCity which accounted for 206 of the 231 projects (89.2%).

Coming in at a respectable third place was Enphase Energy with its 74 projects being distributed amongst 31 different installers - clearly the most broadly distributed installer base in the list.  None of the Enphase installs were performed by SolarCity or Verengo.  Given the sheer volume of installs done by those two companies, surely some of those sites would have benefited from micro-inverters but the leasing giants were not making that technology available to their customers.

Finally, potential clients often ask about the difference in cost between a string inverter system, such as one using SMA inverters, and a micro-inverter system, such as one using Enphase.  The average installed cost for the 334 SMA projects was $7.15/W.  The average installed cost for the 74 Enphase projects was $7.32/W.  That is a negligible difference and given that the two largest players in the data - SolarCity and Verengo - had none of the Enphase projects, we would expect the SMA projects to have a volume pricing advantage from those two companies alone.  Bottom line: in the real world, there is very little cost difference between these two technologies.

Outlier Update - A.S.E.S. Electrical - Still Out There!

One of the more disturbing things that we uncovered in our previous analysis was the degree to which some companies were apparently overcharging their customers.  In particular, we singled out A.S.E.S Electrical Group (aka American Solar Energy Solutions) for being particularly egregious in this regard.  So, after an additional three months of data, how have things changed?

Once again, we restricted the data to only residential projects where the system owner is also listed as residential - a total of 846 projects.  Our previous size filter was 20kW; for this expanded data set we increased the size filter to 45kW, meaning that only companies with at least 45kW of projects in the data would be included. As a result, the chart below accounts for 560 out of the 846 projects described in the data.

Sadly, our results are as disappointing as last time - check it out:

What is going on here?  While the average system price declined from $8.91/Watt back in September to $8.24 over the entire dataset, the disparity between the most cost-effective performers and the least is as great as it ever was!  Indeed, our repeat failure as the biggest gouger of solar consumers in Los Angeles is once again, A.S.E.S. but now their cost is more than three times the cost of the lowest price company, Ronco Solar.

Indeed, while A.S.E.S. did lower their cost somewhat, they apparently did it by replacing the Schuco brand solar panels that they were using before with third-tier Chinese panels from Sopray Energy.  (In contrast, Ronco consistently uses Canadian Solar panels, a top-tier Chinese solar panel.)

Certainly caveat emptor applies when purchasing a solar power system, but at some point it seems like the utility should step in and warn its customers about predatory practices.  So how about it, LADWP, isn’t it time to give your customers a heads-up about what is going on?

Put another way, if you are considering going solar and your installer proposes a system that is more than $8.24/Watt - and indeed, that is a very high number for installations today - we have one word of advice: RUN!

Next Tuesday, December 6th at 11:30 a.m., the LADWP Board of Commissioners will host a special meeting to discuss the LADWP’s Renewables Portfolio Standard (RPS) Policy and Enforcement. The meeting is open to the public and will be held at LADWP Headquarters in downtown LA (111 N Hill Street) in Room 1555-H.

Some in the renewable energy community are viewing this meeting as one of the last, best chances to modify the proposed LADWP Feed-in Tariff program that has been under consideration now for months.  As Michelle Garakian of the LA Business Council put it in an email to FiT supporters, “This is another crucial opportunity to make sure we have a real meaningful Solar feed-in tariff here in Los Angeles.”

The meeting comes after LADWP received substantial criticism of its proposed FiT demonstration program as being too timid and inconsistent with the state’s legal mandates, as well as the release of a major study from UCLA and USC that found that a greatly expanded FiT would find a ready workforce in the area.  State Senator Gloria McLeod (D-32SD), author of SB 32 which creates the statewide FiT mandate, has also been critical of the LADWP approach, noting that it “ignores the intent behind the legislation and diminishes its potential."  (The lawyer in me cannot fail to note that when a legislator says an action “ignores the intent” of the law, they are effectively conceding that the proposed action is legal.)

We have noted previously that LADWP staff appears completely committed to pursuing its demonstration phase as proposed regardless of the pushback from the community.  Armed with a legal opinion that says that their “price exploration process” is consistent with SB 32, it is hard to imagine them changing course at this point.  It will be interesting to see if Tuesday’s meeting shows any softening in that position.

We will report back after the meeting.  If you are attending, please take a moment to come up and say hello.

A bit off-topic, but given the wide-spread existence of downed power lines throughout the LA Basin, we thought it would make sense to include this timely advice from LADWP:

LADWP strongly encourages the public to stay away from any downed power lines and poles as well as downed trees and limbs, and protect children home from school today from the same. Beware of traffic signals that may be affected by power outage and proceed with extreme caution. Allow access for uniformed LADWP crews, all of whom carry Department-issued identification cards, so they may service infrastructure in need of repair.

In the event of a power outage:

•Stay calm.

•Have a flashlight and extra batteries nearby. Don’t use candles in a power outage.

•Turn off lights but leave one light turned on so you will know when your service is restored.

•Turn off and unplug appliances and other electrical equipment. Unplug heat-producing items like irons and space heaters. This helps prevent circuit overloading, which could delay restoration of service.

•Call us and report your outage at 1-800-DIAL DWP (1-800-342-5397). If you encounter a downed power line:

•Report any downed power lines immediately by calling the LADWP at 1-800-DIAL-DWP (1-800-342-5397). If you or someone else is in danger, call 911.

•Do not touch a downed or dangling wire or anyone or anything in contact with it. Always assume a downed line is still energized.

•If a power line falls on your car, stay in the car and wait for help. If you must get out, make sure you do not touch the metal parts of the car and the ground at the same time. The safest exit method is to open the door, stand on the door sill and jump free without touching the car.

•Stay away from metal fences, such as chain link fence, as there may be a power line down and touching the fence somewhere beyond your sight.

•If there is damage to the connection from the power pole to your house, you should go to the electrical box and turn off the main switch or shut off the fuse switch. Again, always assume electric lines are live.

•In case of an electrical emergency, stay calm and think before you act. Don’t become a victim while trying to help others. Call 911.

•If someone is shocked or not breathing, apply cardio-pulmonary resuscitation (CPR.) Then cover the victim with a blanket, keep their head low and get medical attention.

The public and members of the media are encouraged to check the Department’s news site at www.ladwpnews.com and Twitter page, @LADWP, for updates.

For folks not served by LADWP, you can report downed power lines by calling:

• Pasadena Water & Power (PWP): (626) 564-0199 or  (626) 564-0299
• Glendale Water & Power (GWP): 818-548-2011
• Southern California Edison (SCE): 911 and report an “electrical emergency” - see their safety tip sheet.