On August 21, 2006, Governor Schwarzenegger signed Senate Bill 1, known as SB1, changing the definition of energy infrastructure in California forever. SB1 (AKA the “Million Solar Roofs Initiative”) earmarked roughly $3.3 billion for incentives, and set a goal to create 3,000 megawatts of solar-produced electricity by 2017. If successful, the new law will result in placement of solar energy generators on top of half of all new homes constructed in California by 2017. That, combined with incentives to put solar energy generators on existing buildings, promises a revolutionary shift of energy production from massive power plants to the roofs of individual homes and businesses. We’re still awaiting information on the program’s 2008 progress, but we do have numbers from 2007. So, how bright is SB1′s future?
If initial reports are accurate, SB1 is off to a good start. According to the Solar Energy Industries Association (a trade group), and the New York Times, 100 megawatts of solar generating capacity was installed in California in 2007. (Matt Richtel and John Markoff, A Green Energy Industry Takes Root Under the California Sun, N.Y. Times, Feb. 1, 2008). That’s a 50% increase over 2006, and momentum indicates the number of installations will rise quickly in 2008. But, it is important to note that not all of the new power results from the passage of S B 1.
Incentives, under the new law, are divided into three components with the biggest incentives falling under the purview of the California Public Utilities Commission (“CPUC”). According to the CPUC, demand in 2007 for CPUC-administered incentives exceeded California’s total installed solar systems from all of the previous 26 years! But, these numbers just reflect demand for installations. The vast majority of actual installations in 2007, and thus the 100 megawatts referred to in the New York Times article, is from pre-SB1 incentives. Of all installations in 2007, only 17.9 megawatts of roughly 188 megawatts have been installed, inspected, and put into operation as a result of SBl.
This lag is a reflection of publicly owned utility inefficiencies in processing residential incentive requests, inherent project delivery time requirements, and a dearth of qualified solar system installers. Some utilities have addressed delay issues by providing additional staff to review applications. The project delivery time requirements will shorten as installers and designers gain experience and increase efficiency, but the dearth of qualified installers will only be fixed with training.
The Future of SB1, and the Progress of AB1920:
Over time, SB1 decreases financial incentives to consumers. The theory behind reduction in incentives is that as efficiencies increase in delivering solar energy systems, consumers will not need financial incentives to subsidize costs. Some fear this will stall SBl. To maintain the momentum of solar installations, state assembly member Jared Huffman has proposed ABl920, the California Solar Surplus Act. AB1920 aims to increase incentives for residential energy generators by proposing many amendments to SBl, including changes to the energy netting policies of utility companies.
Energy netting is a system where consumers who generate more electricity than they use feed electricity back into the grid. In this way, consumers can earn credits redeemable against their energy but if consumers generate enough electricity from their own systems, theoretically their overal1 annual production will exceed their overall annual consumption. Under current legislation, if a consumer has unused credits at the end of the calendar year, those credits wilt not roll over to the next year, and the utility sets the consumer’s credit account back to zero. Under AB1920, consumers will earn a retail rate for the surplus power they produce. That cash is credited against their energy bill, and if consumers annually produce more energy than they use, consumers are provided a cash rebate or that energy.
With literally billions of dollars being thrown at the consumer level solar energy industry, it’s a good time for contractors and developers to offer installation of solar energy systems as a service. Who thought infrastructure could be so small?
Do you want to find out how much solar energy a lot or home can generate? Go to http://sf.solarmap.org/ and enter any San Francisco address. Oakland is coming out with a similar map shortly, and CH2MHill, the sponsor of the map, plans to offer it to communities nationwide.
Steve Sacks
