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Tam Hunt: California’s Energy Future Should Include Distributed Generation

Feed-in tariffs can fuel an abundance of renewable projects and immediate results

California, by sheer weight of its populace and its ambition, often leads the nation on environmental issues, as well as technology (think Google, Apple, etc.) and entertainment.

Tam Hunt
Tam Hunt

On renewable energy, however, it’s a bit of a mixed bag. California was indeed the birthplace of the modern wind power industry, with many small companies developing the early prototypes and deploying them in the state’s windiest areas — Altamont Pass, Tehachapi — in the late 1970s and ‘80s. Since then, European countries have taken the lead. Today, Vestas, a Danish company, is the market leader in wind turbine production.

Similarly, solar technology was developed originally by Bell Labs back in the 1950s, in New Jersey, and mass-produced by what is now SolarWorld in Camarillo and other companies in the 1970s. The industry has since gone overseas in many ways. Japan, China and Germany now produce far more solar panels than the United States does. Our consolation is that as of 2009 the single largest producer of solar panels is First Solar, an Arizona-based thin-film manufacturer.

It’s clear that California has fallen behind on manufacturing of renewable energy technologies, but how about deployment in our fair state? Similarly, California led the way in the 1980s and ‘90s but has since fallen far behind. Texas is now the unchallenged leader in wind power, with about four times the installed capacity of California (10,000 megawatts versus 2,500 megawatts). We’re still the leader on geothermal power, which produces about 5 percent of California’s electricity, but that leadership position may not last as other states kick-start their deployment.

More generally, it’s a sad and little-known fact that California had more renewables deployed in 1990 than we do today (Figure 1). We received a mere 11 percent of our power from renewables in 2008, the latest year data is available. This is down from about 16 percent in 1990. In fact, just about every year since Californai’s primary law for renewables, the Renewable Portfolio Standard, came into force in 2002 the state has gone backward on renewables.

So why does California have such a reputation as leading the way on renewables? The reality is that we’ve been resting on our laurels since the early 1990s. We need a major change if we’re to achieve the ambitious greenhouse gas reductions required by state law, and the even larger reductions climate scientists tell us we need to achieve by 2050 or sooner.

It’s not all bad news, however. There is one area in which California remains the undisputed leader in the United States: distributed generation. The California Solar Initiative, or CSI, was created in 2006, with a goal of 3,000 megawatts of new distributed solar by 2017. As a result of this program, California accounts for more than 60 percent of the U.S. solar market — far more than any other state.

But there’s always a catch. As good as these numbers sound, 3,000 megawatts of solar will constitute only about 2 percent of total demand in California by 2017. Also, when we look internationally, we see that Germany and other European countries are deploying far more distributed solar than we are. Germany installed about 10 times the solar that California installed in 2009. Why? Because of better policies.

Germany took a U.S. idea — known as a “feed-in tariff” — and perfected it. Any utility customer in Germany can build solar facilities and get paid for power produced at a rate that makes it highly profitable. Studies have found that this subsidy — yes, it is a subsidy — is highly cost-effective because of its overall effect on the economy. Many other European states have followed suit. Some U.S. states and municipalities have also followed suit, but at a very modest level so far.

For California to really kick-start its renewable energy deployment, we need a robust feed-in tariff that incentivizes distributed generation of all scales. Distributed generation is not just the traditional small roof-top solar system. It also consists of hundreds of megawatt-scale solar systems, which require about five to eight acres of roof or open space. It also consists of “wholesale distributed generation,” or what is also known as “community-scale renewables.”

The “wholesale” refers to the fact that solar, wind or geothermal facilities can connect on the utility side of the meter and sell power directly into the grid, rather than connecting on the retail side and offsetting on-site demand, as is the case with CSI solar systems. And the “distributed” refers to the fact that these systems are closer to load than utility-scale systems and can be dotted around California where they’re needed.

Wholesale distributed generation represents an enormous source of new renewable generation in California. A recent study by the state’s energy agencies found the potential for about 27,000 megawatts of new 20-megawatt solar projects that can connect to existing transmission and distribution lines — nine times the CSI goal (Figure 2). These projects require about 160 acres and cost about $80 million each. The power they produce is very valuable because it occurs “on peak,” when Californians need it most. And at 160 acres, these types of projects can be permitted relatively easily, in contrast with the many utility-scale solar projects proposed for California’s deserts. These utility-scale projects face many hurdles because of their sheer size — with many proposed projects requiring five or more square miles each — and the need for major new transmission lines that can take up to a decade to complete.

The first substantial demonstration of the wholesale distributed generation model came online last year in California: First Solar’s Blythe Solar Plant. But this project wasn’t easy to complete and it’s not clear under current policies how many more like it will come online. California needs to put in place a predictable and long-term feed-in tariff, similar to Germany’s, that will lead to many hundreds of similar projects popping up like wildflowers after a spring storm.

Wholesale distributed generation could help California regain its lead in renewable energy deployment and lead to more energy-secure communities, job creation, and significant greenhouse gas reductions.

— Tam Hunt is president of Community Renewable Solutions LLC, a company focused on community-scale renewable energies, and a policy adviser to the Feed-in Tariff Coalition, a California-based advocacy group. He is also a lecturer on climate change law and policy at UCSB’s Bren School of Environmental Science & Management.

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