It's rather fitting that California's state animal is the
grizzly bear. The Golden State has been one of the hardest
states hit by the recession, with unemployment rising to
12.2% in August, and budget woes mounting.
Despite these macro difficulties, California has not
abandoned its very ambitious renewable energy goals. Last
month, Governor Schwarzenegger signed an executive order
boosting the state's Renewable Portfolio Standard to 33% by
2020. This week, the state took several steps to advance its
arguably quixotic quest.
On Sunday, the Governator signed a bill that allows
homeowners to get paid by utilities for the excess
electricity generated by their solar arrays (or wind
installations). Utilities like
Pacific Gas & Electric (NYSE: PCG)
already credit customers for excess generation under current
net metering rules, but unused credits get wiped out at the
end of the year. Now utilities have to either roll those
credits over, or pay for the excess electricity.
Another piece of legislation signed into law on Sunday
expands the state's
feed-in tariff(FIT), which was launched last year. The
project cap has been doubled from 1.5 megawatts to 3
megawatts. That keeps the focus on homeowners and commercial
users like
Wal-Mart (NYSE: WMT) and
eBay (Nasdaq: EBAY), rather than
higher-profile utility-scale projects that run into the
hundreds of megawatts. The FIT program is also now capped at
750 megawatts, up from 500 MW.
Last year, the consensus was that California's FIT rate
was set too low, since utilities were only required to offer
the going rate for electricity from a gas-fired power plant.
The result, according to California's Public Utilities
Commission (CPUC): "While this program has been effective at
attracting landfill gas, small hydro, and some biomass and
small wind projects, the program has not resulted in any
solar development."
This new iteration of the FIT offers little in the way of
improvement. A spokesman from
Suntech Power (NYSE: STP) confirmed this,
commenting that the bill "won't result in a high enough fixed
price to stimulate solar projects." The head of
First Solar (Nasdaq: FSLR) backed SolarCity,
a leading installation firm that's
going great gunslately, was also definitive in its dim
assessment of the program.
Companies like
SunPower (Nasdaq: SPWRA) and Recurrent Energy
appear to be holding out hope for an alternative FIT plan,
proposed by CPUC this past August. The commission is pushing
for a market-based pricing mechanism, in which projects would
go to the lowest bidders at auction.
Yingli Green Energy 's (NYSE: YGE)
showed the pitfallsof such an approach, but I do think
this could be a powerful program if crafted correctly.
This article was originally published as
2 Big Bills for Solaron
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