North Coast Solar Stocks

July 9, 2009

Solar panel cap looms

Filed under: EIX, PCG — Tags: , , , , — Jason @ 12:45 pm

7/9/2009 12:45:11 PM

ESCONDIDO, CALIF.: The climate for switching to solar energy in California is sunny, with federal and state tax breaks covering half the installation cost and owners of rooftop panels earning credits against electric bills for the power they generate.

But those credits are forecast to run out in the next couple years.

And a San Francisco Bay Area lawmaker is sponsoring legislation to keep the credits going.

The legislation by Assemblywoman Nancy Skinner, D-Berkeley, took an important step forward Tuesday as her Assembly Bill 560 passed out of the Senate Energy, Utility and Communications Committee, 9-1. The bill next goes to the Senate Appropriations Committee, as early as next week. It passed the Assembly earlier.

The situation is this: When California established a policy allowing homeowners and business owners to receive credits for the power they produce on their roofs, the state set an upper limit for that incentive. Once rooftop power represents 2.5 percent of the electricity supply in particular utility service area, no more credits can be claimed for new installations.

Skinner has been trying to raise that cap to four times the amount, or to 10 percent. The proposal ran into some opposition in Tuesday’s committee hearing on the bill, and the panel changed the number to 5 percent.

That still is enough to keep credits going — and solar panels being installed — for the foreseeable future, she said.

A local homeowner who installed solar panels on his roof a couple years ago has been watching the bill. He says it has huge implications for the future of California’s electrical supply.

“Solar energy, in my opinion, is just going to absolutely explode,” said Peder Norby of Carlsbad, in a telephone interview Tuesday.

But while Norby figures sun power is destined to become bigger, it is unclear how much green energy will come from giant, remote desert solar farms as opposed to roofs of local homes, businesses and public office buildings.

If credits run out for rooftop panels, he said, that will stunt the growth of home-grown power.

“Once you reach the cap, the small guy’s out of the picture,” Norby said.

Similarly, if credits are discontinued, Riverside County’s Elsinore Valley Municipal Water District might reconsider a plan to add solar panels, said district spokesman Greg Morrison.

The existing panels on three buildings and the credits associated with those are helping the agency save 15 percent on annual electricity costs, Morrison said. And the district would like to put up more.

“It seems counterintuitive to not raise it (the cap).” he said. “If you want to reduce energy demand, and certainly peak energy demand, you would want to continue to encourage alternative energy sources like solar.”

The issue has come up because Pacific Gas & Electric Co. (PCG), the giant utility that serves much of northern and central California, is expected to reach the cap in its service territory sometime next year.

San Diego Gas & Electric Co., which serves 3.4 million people in San Diego County and southern Orange County, is a little farther behind, with rooftop solar accounting for 50 megawatts, or a little more than 1 percent of its power supply. In Southern California Edison’s (EIX) territory, which includes Riverside County, rooftop solar panels account for 0.5 percent of the total generating capacity.

A megawatt is the industry yardstick for measuring large amounts of electricity and is generally what is required to keep the lights on in 650 homes.

SDG&E opposes the bill.

“Obviously, we support allowing our solar customers to be able to fully offset their electric consumption,” said Jennifer Briscoe, a spokeswoman for SDG&E. “But we want to make sure that there is not an unfair level of cost sharing.”

The San Diego utility and other power providers argue that, because homeowners get a full retail-price credit for the energy they generate, they are relieved of the responsibility to pay costs associated with financing transmission lines and power plants.

And advocates for the poor contend that unfairly saddles other customers not wealthy enough to install panels with the burden of paying for plants and wires.

“That cost is just shifted to the other customers in the system.” said Sen. Roderick Wright, D-Inglewood, during Tuesday’s hearing.

And, he added, “There ain’t no rooftop solar panels in Watts.”

To a degree, critics have a point when it comes to residential customers, Skinner said. They tend to ramp up their electrical use after they return home from work, when the temperature outside is cooling down. But that’s not the case with the other customers that possess a large majority of panels, she said.

“We have lots of businesses now and public sector entities, whether they be schools, community colleges or city halls, that are making long-term investments in solar,” Skinner said by telephone, following the hearing.

And they use power during the heat of the day, during the very hours when peak demand occurs, she said. That means the power their panels generate is canceling out the need to build new power plants and transmission lines to handle growing peaks.

Forty-four states let customers claim credits for power they produce, and 18 have no limit on how many may take advantage of that arrangement. A limit is likely to survive for some time in California, Skinner said, but it is time to raise it.

“Why would you generate your own electricity if you couldn’t get any credit for that?” she asked.

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