The price of solar in California

Original article: http://www.renewablesinternational.net/the-price-of-solar-in-california/150/511/29293/
California's Division of Ratepayer Advocates (DRA) says that although the price of solar has plummeted in recent years, the bids for utility-scale projects in the state are paradoxically rising.

In the study (PDF) released last Tuesday entitled "California's solar PV paradox: declining California solar initiative prices and rising investor owned utilities bid prices," the DRA authors Nika Rogers and Derek Fletcher of the California Public Utilities Commission (CPUC) find that the price of retail solar PV – the small rooftop systems on family homes and small businesses – dropped by 19-22 percent from Q4 2008 to July 2010. However, the price of utility-scale solar projects (defined as “mostly 10 MW or more”) slightly increased from 2007 to 2009.

The authors identify three main risks behind the latter:

• difficult credit markets,
• deadlines for California's RPS, and
• the CPUC’s “reluctance to reject high-priced contracts providing a disincentive for developers to price their bid competitively.”

The authors also make a number of recommendations about how to fix the problem, including having the CPUC reject pricey bids. The authors recommend that California's solar market be compared to New Jersey's “with a specific eye toward whether New Jersey experienced the same discrepancy in utility and consumer-side price trends,” although the authors stop short of saying that the California market should be compared to other markets abroad, such as Ontario's booming PV sector or the many thriving solar markets in Europe. In the final sentence of the report, the authors do, however, recommend "further research" into "expanded feed-in tariff provisions to allow for excess solar energy to be sold back to the grid," which clearly shows that the authors are bound to the notion of net-metering and that feed-in tariffs should only be paid for power not consumed by the array owner – even though no such provisions apply to any solar feed-in tariffs anywhere.

John Geesman, a former member of the California Energy Commission (CEC), says he is not surprised by the study's findings as his criticism of California's RPS goes along similar lines: "the lack of transparency creates little downward pressure on price; the feel good, happy talk about contracts signed creates little pressure for actual delivered energy; and the distinction between flexible compliance and regulatory capture remains murky.” It is interesting to note that, while feed-in tariffs for solar have been accused of overpaying, feed-in tariffs have been plummeting in countries like France and Germany during the timeframe under investigation here, whereas the policy used in the US has apparently been overpaying solar.

The California Solar Initiative at the heart of the study only covers solar rooftops, not utility-scale field arrays, and some of the largest solar projects announced recently concerned concentrated solar power (CSP), not photovoltaics, but one of the study's authors Nika Rogers told Renewables International that "we only looked at solar PV projects and filtered out any solar thermal or solar trough projects.” Overall, the study provides an interesting overview of the California solar market for anyone looking to understand it better.

By Craig Morris (cm)

This article brought to you by the Indiana Renewable Energy Association.