Though the Los Angeles Department of Water and Power won wide acclaim for approving a plan to buy 100 megawatts of solar power from rooftops and vacant lots in Los Angeles last week, some observers have criticized the program for offering too little cash to too few Angelenos.
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Jim Jenal, founder & CEO of the Pasadena-based rooftop solar company Run on Sun, slammed the new DWP FiT in a post on his company's site late last week. Jenal noted that one of the problems DWP had with its initial 10-megawatt pilot FiT project was that the utility had set its price far too low to attract participants:
Anxious that it could not reliably pick a defensible price point that would thread the needle of getting subscribers without gouging rate payers, DWP set up a 10 MW demo program last spring. However, since DWP was using it for price discovery, each proposed project had to set its own price and then DWP picked the successful bids based on lowest cost. Or at least that was the plan. Unfortunately, the program was far from fully subscribed: only 26 projects were initially proposed accounting for only 7.2 MW of the intended 10. Out of those 26, only 17 passed DWP's screeners (worth just 4.6 MW) and as of today, 14 projects (from the original 26) are awaiting contract signing (despite the published "deadline" for contract execution by the end of November), amounting to only 3.7 MW at an average price of 17.5 cents/kWh.
So... the demo program "discovered" that at 17.5 cents/kWh it could only successfully subscribe 37 percent of the desired target -- but the 100 MW program is going to start below that price and it hopes to be successful? Yet the primary point of discussion during the hearing was whether that starting price was too high. So much for learning from the demo program.
The 100-megawatt version of the DWP FiT offers 17 cents per kilowatt-hour for facilities in the first "tranche" of the program, which is limited to 20 megawatts. The offering price drops a cent per kilowatt-hour with each successive 20-megawatt tranche, meaning that the final 20 megawatts offered in the FiT program will earn only 13 cents per kilowatt-hour.
ReWire's also seen grumbling from some renewable energy mavens about the 30-kilowatt minimum capacity of qualifying projects, which limits participation to large commercial or industrial rooftops, and perhaps to third-party leasing firms who can aggregate significant numbers of residences' arrays. Contrast this with current rates in Germany's exemplary feed-in tariff, which has been credited with making that cloudy country the world leader in solar power generation: installations of less than 10 kilowatts, which means most residential rooftops, get around 19 cents (Euro) per kilowatt hour, which works out at current exchange rates to about 25 cents U.S. -- and that's after Germany has cut its FiT substantially.
Seeing as recent state law requires public utilities serving more than 75,000 ratepayers to establish FiTs, we can assume quite a few utilities will be watching DWP to see if paying only 17 cents works to bring people on board.