As we've reported here before, the Los Angeles Department of Water and Power is embarking on a program in which it will buy solar energy from smaller-scale installations within city limits. The program has taken some heat for setting its sights too low, but one distributed generation expert with impeccable credentials has just given the program his seal of approval.
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DWP has taken some heat, including here at ReWire, for thinking too small in setting up the first phase of its feed-in tariff program. 100 megawatts pales in comparison to LADWP's actual demand, which is generally above 6,000 megawatts. And 17 cents doesn't offer nearly as much of an incentive to develop solar as similar programs in other states, which can run up to 25 cents per kilowatt-hour, or even, in the case of one Oregon program, 30 cents.
But John Farrell, who works on renewable energy issues at the think-tank the Institute for Local Self Reliance (ILSR), applauded the program recently despite acknowledging its limits. In an article this week, Farrellcompared LADWP's program to others in the United States. Though feed-in tariffs in other parts of the country may cover a larger percentage of local demand, LADWP's program ranks near the top of the list in sheer size.
As you can see from the chart, LADWP''s program is outranked size-wise by just three other programs, none of which offer a better price per kilowatt-hour. That 17-cent offering is an average: the utility will pay more or less for individual kilowatt-hours depending on peak demand and the time of year. Some batches of power will bring their generators as much as 38.3 cents per kilowatt-hour; the average price during peak months will more likely be in the neighborhood of 18 cents and change, says Farrell.
That's for the first tranche of projects: DWP will be rolling out 20 megawatts' worth of projects at a time, and the average tariff paid will drop by a penny per kilowatt-hour with each tranche, ending at 13 cents for the last 20 megawatts.
In his article this week Farrell, who has long advocated for decentralizing and democratizing the nation's energy infrastructure as much as possible, points out three aspects of LADWP's CLEAN program that he especially likes:
The program limits participation to one project per property parcel, helping to widen the opportunity. Projects have 18 months to reach commercial operation (perhaps still a bit too long given the aggressive price declines in the industry), but lower than the 3 years in Ontario, for example, where premium contracts are awaiting fulfillment as profit-oriented developers wait to lock in ever-lower panel prices. The third is that while the queue for the program is "first come, first served," projects that apply within the first 5 business days are treated as coincident, with a lottery selecting the winners from that pool. This helps community-based and smaller projects compete against large developers with the in-house resources to get the paperwork together.
"The program may not make a huge dent in the city's collective energy spend or its peak demand," concludes Farrell, "but its design highlights the careful consideration of the policy and makes it a likely success."
That sounds good to us, though we'd still like to see payments of 20 cents or more per kilowatt-hour and targets of a quarter or so of LADWP's demand. Careful readers will note that the chart above shows the United States' total feed-in tariff-spurred solar capacity, at 132 megawatts, is one-four-hundredth -- yes, hundredth! -- the size of Germany's. And Germany's current offering per kilowatt-hour is lower than DWP's will be at first, but that''s because Germany's former higher price (around 25 cents) was so successful that its solar industry doesn't need as much help anymore.