‘Some Sort of Subsidy’

Reader San Marcos says II wrote:

“There are innovations in the solar market. What do you think of each of them ? If solar were affordable, so many of us would add solar to our homes and businesses, but as it now stands, solar is only for the rich – and they are the ones that don’t need solar. It would seem that San Diego County is absolutely perfect for solar, since we have so few cloudy days. What can be done to make solar obtainable ? It sure would cause a reduction in greenhouse gasses and be sustainable. Why doesn’t SDG&E pay for excess solar-generated power ? It would seem logical that they would have to pay for it, so can you explain why they are allowed to get power from a consumer at no cost to them ?”

Solar PV is affordable with the existing mix of incentives and tax credits, in the sense these incentives and credits result in the PV system generating power for less than that the owner of the system would pay SDG&E for the same power. A case in point is the city of San Diego Alvarado Water Treatment Plant 965 kW solar PV array. The array is owned and maintained by a private company, SunEdison. SunEdison sells the PV power to San Diego under a long-term power purchase agreement for $0.12/kilowatt-hour. The retail rate SDG&E would charge for the same power is $0.16 to $0.17/kilowatt-hour, so the city is saving money by purchasing the solar power. The power purchase agreement is an excellent model for large-scale deployment of solar systems in the San Diego area, as the provider does all the work and owns the system. The customer’s responsibility is limited to paying for the power.

Keeping the price of PV at or below the utility retail electricity rate still requires some level of subsidy. In the case of San Diego, a $700 million incentive subsidy for PV would allow the installation of over 900 MW of PV. Most of this PV would be in the form of larger-scale commercial installations to take advantage of economies of scale, like the Alvarado Water Treatment Plant 965 kW array, the Qualcomm 250 kW array (Sorrento Valley), or the Kyocera parking lot 235 kW system (Kearny Mesa).

The major obstacle to large-scale deployment of PV arrays locally is the “net metering” cap which obligates the utility to pay attractive retail rates only for the PV that is necessary to meet onsite power needs, and then low wholesale rates for any additional PV generated. For example, a 20-acre airport parking lot could generate 2,000 kW of PV power. Yet if the only electricity demand at the site is one 100-watt bulb being used in the attendant’s booth, then the site would exceed the net metering cap with a PV generation capacity of only about 400 watts, 1/5000th the potential of the site. A major challenge is assuring that the utility pays a fair rate for all the PV, one that reflects the reduced burden on transmission and distribution systems, the benefit of producing power when it is most needed and of highest value (daytime), and the environmental benefits of CO2-free power production. If the utility is required to accept all PV available at fair rates, and a modest PV incentive budget is available (relative to a $7 billion transmission line subsidy), we can readily add 1,000 to 2,000 MW of PV over the next decade.

— BILL POWERS