>  Bruce Karney
>  The Future of Solar Energy Incentives in California
> California’s movement toward a renewable energy future has been
> accelerated by government subsidies for solar-produced electricity,
> notably the California Solar Initiative’s (CSI) Million Solar Roofs
> Program.  The Million Solar Roofs Program launched in 2007 with the goal
> of stimulating the installation of 3,000 megawatts of new solar power
> systems by 2016.
> Subsidies were initially set at $2,500 per AC kilowatt or 39 cents per
> kWh produced in the first 5 years.  That covered about 20% of the cost
> of a system, and federal tax credits paid for another 30%. The incentive
> program was designed so that the incentives would reduce in steps over
> the 10 years of the CSI. These reductions have taken place somewhat
> faster than expected.  The incentive is now $250 per AC kilowatt in PG&E
> territory.
> As the CSI program approaches its end and other programs such as net
> metering are facing scrutiny from utilities, there is concern from
> environmental organizations and solar equipment makers that California’s
> movement toward a cleaner energy future may stall.  Experience in other
> countries has shown that poorly designed and administered incentives and
> requirements can produce a boom and bust cycle in the solar business.
> Bruce Karney has been involved in solar photovoltaics since he organized
> a group purchase of solar panels in 2007 in which 119 Mountain View
> homeowners bought solar PV from a single vendor at a deep discount.  
> Since then he has worked in marketing and customer finance at SolarCity,
> California's leading residential solar design, installation and
> financing company.  He is currently Marketing Operations Manager at
> Skyline Solar, a Mountain View based manufacturer of
> medium-concentration photovoltaic systems.  Bruce will review the state
> of solar subsidies in California and elsewhere and offer his thoughts on
> what the future may hold.

Bruce began by breaking the role of government in solar pricing over time into three eras. The first was the era of carrots, the second the era of sticks, and the third will be the era of market forces. The era of carrots was started back in the 1970s, when government instituted subsidies to jump start the industry. This era is expected to end in 2013. The second era is the era of sticks, when regulations require a certain percentage of renewables in utility portfolios. The third era is going to be the era of market forces, when supply and demand will meet in the marketplace at a price set by negotiation.

Carrots usually take the form of tax credits or rebates. For example, when Bruce got together a solar buying club in 2007 there was a $2,500/kilowatt incentive from the State of California (part of the Million Solar Roofs program). In addition, the U.S. Govt. offered tax credits for such systems that lowered the cost by $2000. The CSI program will end in 2013 in PG&E territory, and it is unlikely to be renewed. The explosive growth of solar panel supply, coupled with a slowing of the growth of demand, caused solar panel prices to fall by 50% last year and price reductions are expected to continue in 2012-13, though at a much slower pace.

Sticks are expected to take the form of portfolio resupply and demand are not adjusted by government regulations. In such an environment, for renewable energy For example, PG&E is expected quirements. For example, PG&E is expected to provide 25% renewables by 2016 and 33% renewables by 2020. Because utilities have found that people get much more angry when the power goes out than they do when the price goes up, it is expected that price signals (higher utility bills) will be a key part of adjusting power demand so that the available renewable supply will be the mandated percentage of total power generation.

Market forces determine price when the supply and demand are not adjusted by government regulations. In such an environment, for renewable energy For example, PG&E is expected to provide 25% renewables by 2016 and 33% renewables by 2020.to succeed it must be cheaper on a per kW/Hr basis than the same amount of coal based power. Currently that price is about six cents per kilowatt-hour. Bruce explained how market forces work with the following graph of California's power pricing by our largest utility.

Customers who spend more than $132/Month on power are paying 33.9 cents per kWh for some of their power. It is a no brainer to install solar systems that supply that percentage of the load. Many, many people and companies have done so. If Texas had a pricing policy like this one, they would have much more installed solar than they do. Texas is hot compared to California. Since every kWh used there costs the same coming out of the plug there people have no incentive to conserve the way we do here.

Solar systems come in a variety of configurations. The most cost effective is a grid tied system, using the power grid as a battery. The way that works is that the system pumps energy into the grid during the day, when the sun is shining. (That's the green area on the chart.) This works out well for the utility, since most of their peak demand comes during the day. Then at night the system absorbs power from the grid. A properly sized system will balance out supply and demand, so that at the end of the year the net cost to the owner is low.

For years and years the government has set the percentage of the power portfolio that can be supplied by solar. At first it was 1%, then later 2%. Now it is up to 5%, but the utilities are haggling with the incumbents over what that means. Five percent of total possible supply? Five percent of a normal days supply? The differences between these numbers are large enough that the lobbyists are investing a lot in the discussion.

During Q&A a number of interesting points came up:

If your power bill is in the $100-$150 per month range, a solar system would cost you about $8000 to install, and will pay for itself in about five to eight years.

No new Municipal Utility Districts have been started in California recently, although Marin County and San Francisco are at least talking about it.

If you want to get rid of First Solar panels, just call up the company and they will come get them. This is partly because they contain Cadmium and Tellurium, toxic metals. Most solar panels contain a bit of silver. Maybe you could get a few cents from scraping it off. In most systems the power inverter fails before the panels, which amounts to a roll-on suitcase sized ewaste pill when it's replaced. The solar panels themselves can last many years.

Solar policy positions aren't enough by themselves to decide which Presidential candidate to vote for, but clearly Obama's solar policies are better than Romney's.