4.8 kW Solar Photovoltaic system in
Tiburon, CA
Courtesy of Cooperative Community Energy Corp.
Courtesy of Cooperative Community Energy Corp.
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4.8 kW Solar Photovoltaic system in
Tiburon, CA Courtesy of Cooperative Community Energy Corp. |
As of this writing, California has more solar photovoltaic (electric) power installed than the rest of the nation combined. We have had the good fortune of not only being home to many of the off-grid early adopters (largely in Humboldt and Mendocino) who were the first market outside the private sector, but also California has been the first state to adopt as large and effective a rebate program as we have.
The first silicon solar cell was produced in 1953 at Bell Labs, but the high production cost of the first production cells (relative to fossil fuel energy) kept them from being more than a novelty item used to power toys and radios. The industry's first large scale customer was the US military for use in orbital satellites. It wasn't until the early 1970's that solar cells were made inexpensive enough to be significantly utilized planetside, but were still only economically viable in remote off-grid applications. The most significant use was, ironically enough, for off-shore oil rigs, though a few early adopters began using them in rural residential applications as well.1
Fast forward about 30 years: prices have slowly come down significantly, as more and more industries found applications for solar to power remote sites (coast guard buoys, rail switching, telecom repeaters, et cetera).1 In 1997 California passed Senate Bill 90, establishing the "Renewable Resources Trust Fund" the coffers of which would be filled from the already mandated public goods surcharge collected by the power utilities from ratepayers (pursuant to Assembly Bill 1890 which passed the previous year). This charge appears for example on a PG&E bill as the line item: "Public Purpose Programs" and was to fund rebates for grid-connected renewables through 2001.2
The California Energy Commission began administering the Emerging Renewable Resources Account rebates in 1998 in the amount of $3 per installed watt of peak generation capacity for grid-tied solar photovoltaic systems, and completely changed the game. Suddenly solar was cost-competitive with fossil fuel energy, making it possible for consumers to actually save money by going solar, even when already connected to the grid. Two additional pieces of legislation in 2000 (AB995 and SB1194) ensured ongoing collection of said surcharge through 2012. The California Energy Commission (CEC) adopted an investment plan for allocation of these resources in June, 2001, at which point the rebate jumped to $4.50/watt (or 50% of total system cost, whichever was less).2 , 3 , 4 , 5
As panel prices continued to drop, many retailers began to take advantage of the 50% rebate by keeping prices artificially high. A restructuring of the program proposed in Senate Bill 530 promised to fix this. Unfortunately, SB530 died in part due to pressure from the utilities, but the language of the bill finally became law under Senate Bill 1038 in 2002.This established the 'buydown program' still in place to this day. The new program began in March 2003 at $4 per watt, and was to decline by $0.20/watt every July 1st and January 1st through 2006. The declining schedule was designed to give the industry a boost, but then wean it off subsidies slowly as economies of scale came to bear (figure 1). The program gained so much momentum that by the end of 2003, half the four-year fund had already been depleted. The difficult decision was made to reduce the rebate on January 1st, 2004 from $3.80/watt to $3.20/watt ($3/watt was strongly considered!). The program has held at $2.80/watt since Jan 1st 2005 (figure 2) and is expected to continue to do so until the program is replaced by the "Million Solar Roofs" plan currently being hatched at the Public Utilities Commission.3 , 4 , 5
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figure 1: cost per watt by year - pre vs post rebate |
figure 2: CEC rebate applications recieved vs rebate level |
From a fall 2005 presentation by Bill Blackburn, Emerging Renewables Program Lead at the California Energy Commission |
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In the past, most solar photovoltaic systems required batteries, and were intended for use where there was no convenient access to a power grid. The buydown program, however, was designed to incentivize distributed renewables actually feeding into the existing utility power grid. This meant connecting panels to an inverter, changing their DC output (direct current: what you get from a battery) into AC (alternating current: what you get from the outlet in your wall) power to match what is provided by the grid, and actually turning the meter in reverse (thus accruing credit with the utility) whenever production exceeds on-site use. This arrangement, known as 'net metering', is required to be allowed by California utilities per AB58 (2002).4
The flat rate electric bills most of us recieve can be a bit misleading: the true cost of energy generation varies over the course of the year, and even more so over the course of each day. During hot summer weekdays when air conditioning use is high, utilities need to use what are known as "peaker plants" to keep up with demand. Most peaker plants are old, dirty, inefficient diesel generators, and are always the most costly to run, since they do so only when absolutely necessary. As a result, there are rate schedules available which incentivize off peak use known as "time of use" rates. More sun means not only more air-conditioning, but also better energy generation from solar photovoltaics, hence grid tied PV systems are perfect for offsetting peak usage in California. Switching to time of use metering plans allows consumers to generate credit at peak rates when their production is also at its peak, so a system that only offsets about 2/3 of the energy used at a site will typically all but eliminate the electricity bill.
Further motivation for grid tied solar has also been provided in the form of income tax credits. The Energy Policy Act of 1992 provided a Federal tax credit to businesses in the amount of 10% of the net cost of an installed system (after rebates) which sunsets at the end of this year (2005). California further sweetened the deal to its residents with the "Solar or Wind Energy System Credit" for systems placed in service after January 1, 2001, and before January 1, 2006. Although both these incentives will have disappeared by January 2006, the recent federal energy plan has established a 30% federal tax credit availale to both businesses and residential projects, though residential is capped at $2000 per project.6
Between rebates and TOU metering, residential system payback finally dropped to less than 15 years, making it possible for homeowners to achieve energy independance with equity loans, and spend less each month servicing a loan than they would otherwise spend on grid power: a net savings immediately on commissioning the system. For businesses, who could depreciate the systems and claim the federal tax credit, payback fell below 10 years, a key threshold for business loan viability. Essentialy, this made it possible to "buy" power rather than "rent" it, and spend less each month in the process. It's no wonder that the rebates have been constantly oversubscribed, and funding for the programs has worn thin.
The future of this industry is bright indeed, though the increase in demand has changed the face of it radically. Many other states have followed California's lead in implementing generous rebate programs, as have many nations throughout the world (most notably in Germany and Italy). The overwhelming demand has caused a global shortage, an increase in prices, and even a shortage of the high grade silicon required to manufacture solar cells; the recent resurgance of the semiconductor industry has also played a large part in the silicon shortage. Many of the smaller businesses are no longer in business for want of panels.
A few technologies on the horizon may offer hope for the long term. The high cost and low availability of silicon has created an opportunity for those who can make increasingly thinner cells. In the past, many innovations have been lauded as "about to change the industry" but have never made it out of the lab, but there are a couple recent candidates that have actually developed fabrication processes. Perhaps the most noteworthy of these is Nanosolar, who has developed a process of coating a surface with nanocrystaline silicon, a layer 10,000 times thinnner than conventional silicon cells. If this makes it to market, both cost and availability promise to improve drastically.
As to the rebates in California, the well is all but dry; they are still available, but wont last long without additional funding. Two years in a row now, the "Million Solar Roofs" program, which promised to pick up where the current programs left off, died in legislature due to the inclusion of provisions which would arguably have had a negative impact on the industry (SB1652 in 2004, and SB1 in 2005). This year, these provisions actually showed up as a last minute rider, in spite of the fact that constituents had expressed strong opposition to them, killing the bill in the 11th hour, and even causing one of the bill's original authors (Senator Campbel) to ask that his name be removed from it. The Public Utilities Commission, working with the Governor, is currently working to implement a similar program, even without legislation to back it. Little is yet known about what this program will look like, but it is expected to take effect by June 2006 and would merge the SGIP (Self Generation Incentive Program for 30kW and larger systems) with the CEC program (under 30 kW) and raise the cap to one megawatt.7
1. Evolution of Photovoltaics by
John Perlin:
http://www.californiasolarcenter.org/history_pv.html
2. California Energy Commission - Renewable Energy Program:
http://www.energy.ca.gov/renewables/overview.html
3. Per conversation with Brandon Rose, Energy Analyst at the California Energy Commission
4. Cooperative Community Energy - "Keeping Current" Newsletter (article on Assembly Bill 58):
http://www.cooperativecommunityenergy.com/newsletter/CCEnergy_Winter2002_Newsletter.pdf
5. California Energy Commission archive:
http://www.energy.ca.gov/renewables/documents/old_guidebooks.html
6. California Energy Commission -
Solar and Wind Energy System Credit (SB17x2 Tax Credit):
http://www.consumerenergycenter.org/renewable/tax_credit.html
7. Cooperative Community Energy Corp - Summary of the "Million Solar Homes Program"
http://www.ccenergy.com/news/CAsolarpolicy.html
River Hume is the Humboldt representative for Cooperative Community Energy, a buyer's cooperative for solar and energy efficiency systems, and is currently pursuing a degree in Environmental Resource Engineering at Humboldt State University. River is also a founder of Holistechnology, and of Sustainable Hosting, LLC. offering wind powered internet hosting services. You can contact him via email: river@savemyenergy.com