Wednesday, May 09, 2007

California Solar Incentives...Revisited

Gov. Schwartznegger today announced sponsorship of legislation to fix the California Solar Incentive program in Southern California.

For months now, there has been a flaw in the program that virtually shut down the solar industry in Southern California Edison (SCE) territory. An article in the LA Times yesterday gives background on the issue. Interestingly, the announcement from Schwartznegger's office came late this afternoon, but actually advocacy groups (CalSEIA, PV Now and Vote Solar) have been working behind the scenes since January.

This is a major serving of humble pie the the California Public Utilities Commission (CPUC), who really should not have launched a program with such a glaring flaw.

The problem, basically, is that SCE required PV customers to go on time-of-use (TOU) rates. TOU basically means that you pay significanylu more for electricity in times of peak demand. In theory, this actually works quite well with solar as rates are generally highest when PV systems put out the most energy. However, SCE's rates stayed high until relatively late in the afternoon, when output would start to trail off. This made PV uneconomical unless you could put in a large enough array to ensure electricity usage in the late afternoon was adequately offset by generation. Unfortunately this proved impossible for most small customers, who were constrained either by space or available capital.

Schwartznegger's bill will immediately and retroactively allow PV customers to go back onto the standard rate.

It is good to see this problem resolved. However, it could just be the tip of the iceburg for issues in the CSI program. Many of the concerns raised previously about the New Homes program have yet to be resolved. Since no systems applied for under the program have been fully signed off on to date, the system has yet to be fully tested. There are also a number of inconsistancies between, and hiccups within, the performance modeling packages used in the New Homes and retrofit programs. Meanwhile, in the large commercial program the performance-based incentive program seems to be going more smoothly, even as installers adjust their product mix to best take advantge of it's structure.

The hope was that the CSI program would be a shining example of an optimized incentive program, but unfortunately it's rollout was rushed due to a legislated start date of January 1, 2007. Meanwhile, the understaffed PUC and CEC, were heavily dependent on consultants who worked with limited oversight. Some of these were not actually PV experts and others brought their own agendas to the table. Additionally, the PUC and CEC efforts were not well coordinated (if they were coordinated at all). All in all, the concept was good but the execution and details rather half baked. Now everyone is trying to sort out how these programs will actually operate in an ad-hoc manner, and the PV industry will pay the price for the CEC's and PUC's bungled rollout. The added overhead and churn effectively reduces the incentives by increasing the costs incurred by the industry to comply.

Schwartznegger's bill is a step in the right direction. It will hopefully resolve this one major problem, but it seems likely that other issues will shake out of the woodwork as the year goes on.

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